Devenish v Jewel Food Stores Pty Ltd

[1990] HCA 35

HIGH COURT OF AUSTRALIA

Mason C.J.

MICHAEL GERARD DEVENISH AND ORS v. JEWEL FOOD STORES PTY. LIMITED

15 August 1990

Decision

MASON C.J. This is an application under O.70, r.7 of the High Court Rules by the respondent to the appeal for an order for security for costs in the form of an irrevocable bank guarantee in the sum of $25,000 to be provided by the second appellant, the respondent having agreed with the first appellants not to seek to enforce any order for costs against those appellants. The sum of $25,000 is estimated to be the costs still to be incurred by the respondent in connection with the preparation of the appeal on its side of the record.

The applicant's case for security for costs rests on two grounds: one, that the significance of the proceedings to both parties now relates solely to costs; and, two, that the second appellant will be unable to meet an order to pay the respondent's costs of the appeal in the event that the appeal is dismissed and that the appeal is being funded by a third party.

The first ground may be disposed of shortly. There is no material which supports an inference that the costs of the proceedings is the only subject of contention in the appeal. The Court's decision to grant special leave establishes that the appeal involves a matter of public importance. Moreover, it seems that counsel for the respondent briefly argued that the application for special leave should be refused because the costs of the proceedings had become the real bone of contention between the parties. In deciding to grant special leave, the Court must be taken to have rejected this argument.

Although that is sufficient to dispose of the first ground, I should make the additional point that the nature of the argument is such that the appropriate time to raise it was on the hearing of the special leave application itself, rather than on an application for security for costs. I say that because the argument goes to the question whether special leave to appeal should be granted at all, an argument which might, in appropriate circumstances, sustain an application for revocation of an order granting special leave to appeal. But I do not suggest that the circumstances of the present case are appropriate to the making of such an application.

The second ground advanced by the respondent rests on the proposition that the second appellant will no longer have available to it a source of funds from which it has hitherto defrayed the costs of the litigation. So much is accepted. It is admitted by the second appellant that the source of funds previously available to it is no longer available to it and that a sum of $123,576 has been provided from that fund by an outside body to the second appellant in connection with the costs of the proceedings previously incurred.

However, the evidence falls short of establishing satisfactorily to my mind that the second appellant will be unable to meet an adverse order for costs in the appeal. The second appellant's balance sheets as at 30 June 1988 and 30 June 1989 have been tendered, as well as a draft balance sheet as at 30 June 1990. The draft balance sheet shows a surplus of assets over liabilities of $142,737. It also shows a deficiency in current assets as against current liabilities of $232,090. The capacity of the second appellant to meet an adverse order for costs of the appeal may depend upon the second appellant's capacity to realize its principal asset which consists of shares in a proprietary company at valuation. I have no means of knowing whether this event is likely or not. The evidence is deafeningly silent upon the point. In this situation, I am not prepared to infer that the second appellant will be unable to meet an adverse order for costs.

In any event, even if that matter had been established, I would not, in the exercise of my discretion, make the order sought. There are two significant factors telling against the exercise of a discretion in favour of the respondent to the appeal.

The first is delay arising from the history of the proceedings. The judgment of the Full Court of the Federal Court from which the appeal is brought was delivered on 23 November 1989. The application for special leave was filed on 14 December in that year. The hearing of that application took place on 6 April 1990 when special leave was granted. Due to the appellants' failure to file the notice of appeal within time, a further application for special leave was filed on 30 April this year, followed by a hearing and the grant of special leave on 11 May. The actual notice of appeal was filed on 17 May and the appeal book was filed on 22 June. The appeal is now fixed for hearing in the week commencing 28 August and almost certainly will be heard on 30 August.

In these circumstances, it is obvious that the major steps preparatory to the hearing of the appeal have been taken, so that the appeal is ready for hearing and the bulk of the costs of the appeal would already have been incurred by the second appellant. In the result, the application for security comes at the heel of the hunt. What is more, the respondent has had reason to believe, at least since 8 March 1990, that the source of funds previously available to the second appellant was no longer available. In this situation, the respondent was in a position to seek security as early as 11 May 1990 when special leave was granted on the second occasion. As a general rule, applications for security for costs should be made promptly and before significant expense is incurred by the appellant.

The second factor is that the case is one of public importance involving, as it does, a question concerning the interpetation and application of s.45D of the Trade Practices Act 1974 (Cth). The public importance of the appeal is evidenced by the Court's decision to grant special leave to appeal. Having regard to that circumstance, it would not be right to prejudice the appellant's prosecution of the appeal at this late stage by ordering security for costs.

Accordingly, these two factors would in any event incline me in the exercise of the discretion which I have under O.70, r.7 to refuse the application.

For the reasons I have just given, the application is refused.

Orders

Application refused.