Dagenham Nominees Pty Ltd v Shanks - [2011] SASC 163

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
DAGENHAM NOMINEES P/L T/A BANWELL MARINE SERVICE v SHANKS
[2011] SASC 163
Judgment of The Honourable Justice Blue
30 September 2011
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
The respondent seeks security for its costs of the appellant's appeal to the Full Court against a judgment of the District Court - whether the appellant is a “plaintiff” for the purposes of s 1335 of the Corporations Act - whether there are “special circumstances” within the meaning of r 296(1)(g) of the Supreme Court Rules - whether the appellant will be unable to pay costs if unsuccessful - consideration of the factors leading to the making of an order for security for costs.
Held: Appellant to provide security for costs.
Corporations Act 2001 (Cth) s 1335; Supreme Court Civil Rules 2006 r 295, referred to.
Archer Pty Ltd v Woodhead Australia Pty Ltd (unreported, Supreme Court of South Australia, Lander J, 29 March 2008); Bell Wholesale Co Ltd v Gates Export Corporation (1984) FCR 1; Citicorp Australia Ltd v Cirillo [2003] SASC 204; Foxgold Pty Ltd v Paterson [2005] SASC 376; Harrington Services Pty Ltd (in liq) v Harington [2003] NSWCA 89; Hession v Centurey 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120; Kennedy v McGeechan [1978] 1 NSWLR 314; Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344, applied.
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 19) (1995) 134 ALR 187; BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339; Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301; Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association of Australasia Ltd [1998[ TASSC 86; Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WASCA 171; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Fletcher v Federal Commissioner of Taxation (1992) 37 FCR 288; FPM Constructions Pty Ltd v The Council of the City of Blue Mountains [2005] NSWCA 147; J & M O'Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (1983) 70 FLR 261; J M Properties Pty Ltd v Strata Corporation No 13975 Inc [2006] SASC 227; John Arnold's Surf Shop Pty Ltd (in liq) v Heller Factors Pty Ltd and Allert (1979) 22 SASR 20; Merribee Pastoral v ANZ Banking Group (1998) 193 CLR 502; North Groongal Pty Ltd v ANZ McCaughan Ltd (1993) 61 SASR 302; O'Callahgn v Duhst [1931] SASR 369; Octocane Pty Ltd v SRJ Property Development Pty Ltd (1999) 74 SASR 471; Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443; Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 35 SASR 294; Winnote Pty Ltd (in liq) v Page (2005) 65 NSWLR 244; Yanil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542; Collins v Emacord Autos Pty Ltd [1997] SASC 6418; Cowell v Taylor (1885) 31 Ch D 34; Lall v 53-55 Hall Street Pty Ltd [1978] 1 NSWLR 310, considered.

DAGENHAM NOMINEES P/L T/A BANWELL MARINE SERVICE v SHANKS
[2011] SASC 163
Civil

BLUE J. The appellant, Dagenham Nominees Pty Ltd (“Dagenham”), appeals to the Full Court of this Court against a judgment of a Judge of the District Court.
The respondent, Mr Shanks, seeks an order that Dagenham provide security for costs of the appeal in the sum of $35,000.
Facts
The facts set out below are based on the affidavits filed by the parties where not in dispute and the court records.
Dagenham is and was the trustee of the Banwell Family Trust, which formerly carried on business (under the name Banwell Marine Services) of manufacturing and installing marine fittings. Dagenham and the Trust have not traded since 2003.
Mr and Mrs Banwell are and were the sole directors and shareholders of Dagenham and, I infer, the beneficiaries of the Trust.
In 2000, Dagenham designed, manufactured and installed a new mast and rigging to Mr Shanks’ yacht, Doctel Rager.
In about January 2001, Dagenham carried out certain other work to Rager for Mr Shanks, for which it rendered invoices totalling $4,873.97 plus a further invoice for $4,913.07.
On 3 February 2001, Rager’s mast broke while it was sailing in a race off Outer Harbour.
Dagenham brought an action in the Magistrates Court (subsequently transferred to the District Court) against Mr Shanks claiming the sum of $9,807.04 being the invoices rendered in about January 2001.
Mr Shanks counterclaimed, amongst other things, for the cost of replacing the mast and rigging in consequence of an alleged breach of contract by Dagenham by reason of the mast not being fit for its purpose.
In August 2010, the trial of the action and counterclaim proceeded before a Judge of the District Court. During the course of the trial, the parties agreed the quantum of Dagenham’s claim at $4,873.97 and the quantum of Mr Shanks’ counterclaim (subject to an issue of alleged failure to mitigate) at $74,556.78.
On 3 June 2011, the trial Judge granted judgment in favour of Mr Shanks on the counterclaim for a net sum of $69,643.21 plus interest of $50,089.69 plus costs of the action to be taxed on a solicitor-client basis.
On 23 June 2011, Dagenham filed a notice of appeal to the Full Court of this Court against that judgment.
On the application for security for costs, I received:
1.two affidavits by Mr Shanks’ solicitor, sworn on 16 and 31 August 2011;
2.two affidavits by Mr Barnwell, one sworn on 21 July 2011 in the District Court action (in support of a stay application),[1] and the other sworn on 5 September 2011 in the appeal proceedings.
[1] Exhibited to Mr Shanks’ solicitor’s first affidavit.
Application under s 1335
Mr Shanks’ application for security for costs is made, in part, under s 1335(1) of the Corporations Act 2001 (Cth) (“the Act”).
Section 1335(1) provides:
Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is a reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his … defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
Is Dagenham a “plaintiff”?
Mr Shanks contends that Dagenham is a “plaintiff” within the meaning of and for the purposes of s 1335(1) in respect of the appeal proceeding.
It has been held that the word “plaintiff” in s 1335 encompasses a defendant in his, her or its capacity as claimant on a cross-claim, and that the word should not be given a restricted or technical meaning but should be given a substantive meaning to refer to the person who “complains that he is being deprived of some legal right”.[2]
[2] See eg Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 at 306-307 per Street CJ; 310 per Hutley JA.
There is now a considerable body of authority to the effect that “plaintiff” encompasses an appellant in appellate proceedings.[3]
[3] J &M O’Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (1983) 70 FLR 261 at 263 per Bowen CJ; Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association of Australasia Ltd [1998] TASSC 86 per Evans J; Harrington Services Pty Ltd (in liquidation) v Harrington [2003] NSWCA 89 at [31] per Hodgson JA; Winnote Pty Ltd (in liq) v Page (2005) 64 NSWLR 244 [2005] NSWCA 362 at [17]-[19] per Mason P; J M Properties Pty Ltd v Strata Corporation No 13975 Inc [2006] SASC 227 at [10] per Layton J; Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WASCA 171 at [2005] NSWCA 362 [5]-[7] per Buss JA.
This question was decided affirmatively by the New South Wales Court of Appeal in Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd.[4] That decision is either effectively binding on me[5] or of persuasive authority.
[4] [2007] NSWCA 344 at [20] per Baston JA (Tobias and McColl JA agreeing).
[5] If the principle in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135] applies to rules of court which have common wording across at least two jurisdictions to require a judge at first instance to follow the decision of an intermediate appellate court in another jurisdiction interpreting such a provision unless convinced the interpretation is plainly wrong.
Dagenham argues, in the alternative to its primary contention, that an appellant is only a “plaintiff” within the meaning of s 1335 when it was the plaintiff at first instance. Dagenham argues that, in substance, Dagenham was the defendant in the District Court, because there was no real dispute about its modest claim, and the trial was devoted to Mr Shanks’ counterclaim, with Mr Shanks being dux litus.
I accept the minor premise of this argument, but not the major premise.
First, in a number of the authorities security for costs was ordered or considered on the merits in circumstances in which:
1.the appellant was the defendant at first instance;[6]
2.the appellant had been the defendant to a counterclaim which had succeeded at first instance (even though the appellant had also been an unsuccessful plaintiff in that action or a related action).[7]
[6] Harrington Services Pty Ltd (in liquidation) v Harrington [2003] NSWCA 89 at [31] per Hodgson JA.
[7] FPM Constructions Pty Ltd & Anor v The Council of the city of Blue Mountains [2005] NSWCA 147; J M Properties Pty Ltd v Strata Corporation No 13975 Inc [2006] SASC 227 at [10] per Layton J; Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WASCA 171 at [5]-[7] per Buss JA; Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344 at [20]per Baston JA (Tobias and McColl JA agreeing).
Secondly, the manner of expression, and the substance, of the reasoning in the authorities is expressed broadly to apply to an appellant qua appellant, as opposed to being confined to the person who was plaintiff at first instance and who is now appealing.
Thirdly, the purpose of s 1335 appears to encompass a situation in which the applicant for security is the respondent to an appeal, regardless of the position of the parties at first instance.
Accordingly, Dagenham is a “plaintiff” within the meaning of s 1335.
Is there reason to believe?
Mr Shanks contends that the affidavits of Mr Banwell establish that there is “reason to believe that [Dagenham] will be unable to pay the costs of [Mr Shanks] if successful”. Dagenham does not seriously argue that this threshold test is not met.
In any event, according to Mr Banwell’s affidavits:
1.Dagenham and the Trust have not traded since 2003;
2.Dagenham “does not have many assets”.
3.Dagenham owes Mr Banwell $372,155.26 being loans advanced by him to pay the costs incurred in the District Court action, together with $286,509 being fees payable for a retainer to him over the period 2001 to 2011;
4.Dagenham owes to one of the experts it engaged in the District Court proceedings $190,663;
5.Banwell owes to its solicitor $8,212.39;
In these circumstances, the threshold test has been satisfied.
Exercise of discretion
Legal Principles
Once the threshold test has been satisfied, I have a discretion to be exercised considering all of the circumstances of the case, without that discretion being fettered and with no single factor necessarily being decisive.[8]
[8] John Arnold’s Surf Shop Pty Ltd (in liq) v Heller Factors Pty Ltd (1979) 22 SASR 20 at 34 per Mitchell J (Bray CJ and Legoe J agreeing); Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 35 SASR 294 at 300 per Bollen J (Zelling and Wells JJ agreeing).
It is a corollary that the mere fact that Dagenham will be unable to pay Mr Shanks’ costs if Mr Shanks is successful on appeal does not dictate that security for costs should necessarily be ordered.[9]
[9] John Arnold’s Surf Shop Pty Ltd (in liq) v Heller Factors Pty Ltd (1979) 22 SASR 20 at 34 per Mitchell J (Bray CJ and Legoe J agreeing); Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd (1998) 193 CLR 502; [1998] HCA 41 at [26] per Kirby J.
If it is established that the proceedings will be stultified if security for costs is ordered, this is a factor to be taken into account.[10]. However:
1.the ability of not only the company but also those who stand behind it is to be considered for this purpose;
2.the onus of proof that neither the company nor those who stand behind it are able to provide the security and that an order would stultify the proceeding is upon the company;
3.as part of discharging the onus of proof, the company is normally expected to put before the court a full and frank statement of the assets and liabilities of the company and of those who stand behind it.[11]
[10] Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 at 545 per Clarke J; Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3 per Sheppard, Morling and Neaves JJ.
[11] Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3 per Sheppard, Morling and Neaves JJ; Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR 120 at 123 per Meagher JA (Kirby P and Cripps JA agreeing); BPM Pty ltd v HPM Pty Ltd (1996) 131 FLR 339 at 345 per Anderson J.
If the inability to pay the other party’s costs if unsuccessful is due to the allegedly wrongful conduct of the other party the subject of the proceedings, that is a factor to be taken into account in the exercise of the discretion.[12]
Stultification of Appeal
[12] North Groongal Pty Ltd v ANZ McGaughan Ltd (1993) 61 SASR 302 at 306 per Perry J; Octocane Pty Ltd v SRJ Property Development Pty Ltd [12] (1999) 74 SASR 471 at 477 per Olsson J.
One factor addressed by both parties in their submissions in some detail is stultification.
Dagenham contends that an order for security will stultify the appeal in the sense that it will not be able to provide the security and will not be able to proceed with the appeal.
However, Dagenham has not adduced sufficient evidence to prove this. The evidence contained in Mr Banwell’s two affidavits is confined to the following:
1.the “financial circumstances of [Mr and Mrs Banwell] are modest”;
2.“[Mr and Mrs Banwell] do not have the capacity to provide security of costs of the appeal as well as funding the costs of an appeal”;
3.“if Dagenham is required to provide security of costs, it will not be possible to proceed with the appeal”;
4.“[Mr Banwell] is prepared to loan $5,000 to Dagenham but will not be in a position to loan any further moneys until approximately January 2012”.
Dagenham has not adduced evidence of the assets of Mr and Mrs Banwell, or of material facts relevant to their ability to provide or raise the funds necessary to provide security for costs. The evidence contained in Mr Banwell’s two affidavits falls far short of discharging the requisite onus of proof referred to above.
Cause of Impecuniosity
Dagenham also contends that its inability to pay costs if unsuccessful on the appeal (“impecuniosity”) was caused by the wrongful conduct of Mr Shanks.
Dagenham does not contend that Mr Shanks’ non-payment of Dagenham’s modest claim the subject of the District Court action caused its impecuniosity. Rather, Dagenham contends that its impecuniosity has been caused by the litigation itself (which has an unusual and unfortunate history) and the irrecoverable costs incurred by Dagenham in that litigation.
The relevant history of the litigation is as follows:
1.The first trial of the action proceeded before a different trial Judge in September-October 2002, and resulted in judgment in favour of Mr Shanks for $69,662.31 plus interest and costs to be taxed.
2On 14 August 2003, the Full Court of this Court allowed Dagenham’s appeal against that judgment, with no order as to costs, and remitted the action for further hearing.
3.The second trial of the action proceeded before the original trial Judge between November 2004 and April 2005. The evidence from the first trial was treated as evidence in the second trial, but further evidence was also called. This again resulted in judgment in favour of Mr Shanks for $69,662.31 plus interest and costs to be taxed.
4.On 29 June 2007, the Full Court of this Court allowed Dagenham’s appeal, with no order as to costs, and remitted the action to the District Court for re-trial.
5.The third trial proceeded before a different trial judge in August 2010 on new evidence.
It is apparent that the costs incurred by each party in the action have been vastly in excess of, and disproportionate to, the amounts in dispute. It is also apparent that the costs incurred by Dagenham in the litigation have resulted in its impecuniosity. However, this does not provide a basis for Dagenham to contend that its impecuniosity is the result of the wrongful conduct of Mr Shanks.
Other Factors
Other factors to be considered in the exercise of my discretion include the following:
1.Dagenham is the initiating party on the appeal.
2.The application for security was brought reasonably promptly after the receipt by Mr Shanks of Mr Banwell’s affidavit sworn on 21 July 2011.
3.I am satisfied that the appeal is bona fide.
4.Mr Shanks does not contend that the appeal is not reasonably arguable, nor does Dagenham contend that it is bound to succeed on appeal. I am not in a position to assess Dagenham’s prospects of success on appeal, and this factor is neutral.
5.Dagenham is a representative party in the sense that it is trustee of the Banwell Family Trust (and hence effectively brought the action and is prosecuting the appeal for Mr and Mrs Banwell).
6.Mr and Mrs Banwell have not offered to guarantee the payment by Dagenham of Mr Shanks’ costs of appeal if Dagenham is unsuccessful.
7.The history of the litigation has resulted in both Dagenham and Mr Shanks incurring very considerable legal costs which have become irrecoverable because fresh trials were ordered on appeal.
8.Mr Shanks is likely to suffer prejudice in the event that he is successful on the appeal as he is unlikely to recover anything on account of his costs of appeal.
9.Dagenham would suffer prejudice if an order for security stultifies the appeal, but, on the evidence adduced by Dagenham, I cannot assess the likelihood of this occurring or conclude that this will occur.
10.Mr Banwell’s affidavit on one reading suggests that Dagenham has the capacity to pay its own legal costs of appeal but not those of the respondent if unsuccessful.
In all of the circumstances, it is appropriate that security for costs be granted in favour of Mr Shanks.
Rule 295
Rule 295(1)(g) of the Supreme Court Civil Rules 2006 provides:
the Court may, in special circumstances, order that security be given for the costs of an appeal
Strictly, I do not need to address this power, as I am satisfied that an order for security for costs should be made pursuant to the Corporations Act. However, I address it in case I am wrong about s 1335.
Special Circumstances
In Kennedy v McGeechan,[13] the New South Wales Court of Appeal ordered security for costs under the rules of court against an individual appellant. The relevant rule was virtually identical to r 295(1)(g). Moffitt P and Hutley and Samuels JA said at 315:
While there are reported decisions which are helpful as a guide, each case must be judged on its own merits as to whether special circumstances exist, leaving the Court in its discretion to order security for costs of the appeal. The impecuniosity of an appellant may constitute ‘special circumstance’ leading the Court to order security, in that it is a circumstance which may deprive or delay a respondent receiving his costs of the appeal, if the appeal fails, which costs a successful respondent can usually expect he will actually receive. In an appellate situation, a respondent seeking security is in a stronger position than a defendant at first instance, to the extent that he has a decision in his favour, which is presumably right until displaced.
However, impecuniosity may not conclude the matter. Considerations of possible frustration of an apparently genuine appeal or concerning the subject matter of the appeal, such as appeals involving matters of great moment or the liberty of the subject, may provide reasons to refuse an order. The foregoing observations are made not to circumscribe the discretion, but in order to indicate its width.
[13] (1978) 1 NSWLR 314.

In Lall v 53-55 Hall Street Pty Ltd[14], the New South Wales Court of Appeal ordered an individual appellant to provide security for costs. Moffitt P and Reynolds and Glass JA said:
While the lack of means of the appellant is an important matter for consideration and may provide ‘special circumstances’, it should be added, as this Court said in Kennedy v McGeechan ‘impecuniosity may not conclude the matter …’
[14] (1978) 1 NSWLR 310 at 312.
The decision in Kennedy v McGeechan has been followed and applied in at least three cases in South Australia.[15]
[15] Archer Pty Ltd v Woodhead Australia Pty Ltd (unreported, Supreme Court of South Australia, Lander J, 29 March 1998, BC 9503154); Citicorp Australia Ltd v Cirillo [2003] SASC 204 at [19]-[23] per Sulan J; Foxgold Pty Ltd v Paterson [2005] SASC 376 at [9], [19] per Perry J.
The rule as to security for costs on appeal is different to the rule as to security for costs at first instance.
The general principle under the general law was that the mere fact that an individual plaintiff was impecunious would not give rise to an order for security for costs.[16] It appears that principle did not apply to a limited company.[17]
[16] Cowell v Taylor (1885) 31 Ch D 34 at 38 per Bowen LJ; Collins v Emacord Autos Pty Ltd [1997] SASC 6418 per Lander J (Doyle CJ and Bleby J agreeing).
[17] See eg Pearson v Naydler [1977] 1 WLR 899 at 902 per Megarry VC; Rajski v Computer Manufacturers and Design Pty Ltd [1982] 2 NSWLR 443 at 449-450 per Holland J.
One exception to the common principle (even for individuals) was that it did not apply to appeals.[18]
[18] Cowell v Taylor (1885) 31 Ch D 34 at 38; O’Callaghan v Duhst [1931] SASR 369 at 374 per Angas Parsons and Richards JJ.
Under the Supreme Court Civil Rules 2006, r 194(1) empowers the court to order a plaintiff to provide security for costs at first instance if:
(a)the action is brought in a representative capacity and the plaintiff is insolvent or would have insufficient resources to meet an order for costs;
(b)the plaintiff is ordinarily resident outside Australia;
(c)there are reasonable grounds to suspect that the action may have been brought for an ulterior purpose;
(d)the order is authorised by statute [eg s 1335 of the Corporations Act];
(e)the order is necessary in the interests of justice.
The predecessor to r 194, namely r 100.01 of the Supreme Court Rules 1987, made similar provision, except that the last category was “where for special circumstances the justice of the case so requires”, as opposed to its being necessary in the interests of justice.[19]
[19] Paragraph (c) also differed, but that is not presently material.
In Collins v Emacord Autos Pty Ltd,[20] the Full Court dealt with an application for security for costs at first instance against an individual plaintiff and said:
The defendant’s application relied upon r 100.01(e). An order for security for costs under that rule can only be made where special circumstances exist. The fact that the plaintiff is impecunious would not, of itself, give rise to the making of an order,[21] although of course, impecuniosity would be a highly relevant factor in determining whether an order should be made. There must, at the end, be special circumstances which will demonstrate that the justice of the case requires the making of the order.
[20] [1997] SASC 6418 per Lander J (Doyle CJ and Bleby J agreeing).
[21] Cowell v Taylor [1885] 31 Ch D 34 at 38; Pearson v Naydler (1997) 1 WLR 899 at 902 per Megarry VC; Fletcher v Federal Commissioner of Taxation (1992) 37 FCR 288 at 290 per Hill J.
The cases cited by the Full Court arose either under the general law or under rules of court which did not refer to “special circumstances’, and involved the application of the general law principle referred to above.
I consider that the correct approach to r 295(1)(g) is that:
1.impecuniosity of the appellant (at least in the case where the appellant is a company) can suffice to enliven the discretion of the court;
2.the mere fact that the appellant is impecunious does not mean that the discretion ought to be exercised in favour of granting security for costs (in the same manner as pursuant to s 1335).
I reach this conclusion for the following reasons.
1.It accords with, and applies, the decisions of the New South Wales Court of Appeal in Kennedy v McGeechan and Lall v 53-55 Hall Street, where the relevant rule and context were essentially identical to the present and which have been applied on at least three occasions in this Court.
2.The traditional general law approach described in Cowell v Taylor distinguished between actions at first instance (where impecuniosity did not justify an order for security) and appeals (which were an exception to that general rule).
3.The Full Court in Collins v Emacord Autos applied the traditional general law approach in the context of an application for security for costs at first instance and to a natural person.
4.The reference to “special circumstances” in the predecessor to r 194 was in a very different context to the reference in r 295(1)(g) in that it was the last and residual category after four more specific categories were enumerated, and those specific categories themselves included impecuniosity in paragraph (a) (impecuniosity plus nominal plaintiff) and (d) (circumstances authorised by statute, including s 1335 of the Corporations Act).
5.Rule 295(1)(g) uses the criterion “in special circumstances” as the sole criterion to cover every appeal in which security for costs may be sought. This will include both individual and corporate appellants and will also include any of the circumstances in which r 194 would be satisfied (eg appellant resident outside Australia, appeal brought for ulterior purpose etc).
Accordingly, the mere fact that Dagenham will be unable to pay Mr Shanks’ costs if Mr Shanks is successful on appeal enlivens the discretion of the court to order security for costs pursuant to r 295(1)(g).
In any event, if I am wrong in that conclusion, the combination of that fact, together with the fact that Dagenham sues in a representative capacity as trustee of the Dagenham Family Trust and the fact that Dagenham has not established that an order for security will stultify the appeal, comprises special circumstances which do not rely upon impecuniosity alone.
In relation to the exercise of my discretion, the considerations are similar to those arising under s 1335 of the Corporations Act. I would exercise my discretion in the same manner for the same reasons.
Amount of Security
Security for costs is usually assessed on a party/party basis.[22]
[22] Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd(No 19) (1995) 134 ALR 187 at 199-200 per Lindgren J.
In his second affidavit, the solicitor for Mr Shanks states that counsel has provided an estimate of fees of $20,000 and the solicitor has estimated solicitor’s fees on the assumption that an instructing solicitor will spend a similar amount of time at approximately $14,000 with an allowance of $1,000 for disbursements.
It is not apparent from the solicitor’s affidavit that he has estimated the costs recoverable on a party/party basis (as opposed to a full indemnity basis), and he does not identify how the broad figures to which he refers are calculated. An estimate ought to be made on an elemental basis.
In these circumstances, I must make a broad brush assessment of the likely party/party costs recoverable by Mr Shanks in the event that he is successful.
I take into account that, while new evidence was adduced at the third trial and the issues on appeal appear extensive, the evidence overlapped to a degree with that adduced at the first and second trials, and further that previous experience in the three trials and two appeals should result in costs lower than otherwise.
In all of the circumstances, I assess an appropriate figure for party/party costs at $19,000 exclusive of GST.
I will hear the parties as to the precise orders to be made.