Etcell t/as Ikonic Homes v F & J Investment Assets Pty Ltd atf the Mustafa Property Trust
[2024] VSCA 245
•23 October 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2024 0090 |
| PAUL ETCELL T/AS IKONIC HOMES (ABN 73 533 047 610) | Applicant |
| v | |
| F & J INVESTMENT ASSETS PTY LTD (ACN 621 866 180) ATF THE MUSTAFA PROPERTY TRUST & ORS (ACCORDING TO THE SCHEDULE) | Respondents |
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| JUDGES: | MACAULAY and LYONS JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 10 October 2024 |
| DATE OF JUDGMENT: | 23 October 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 245 |
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PRACTICE AND PROCEDURE – Security for costs – Application for leave to appeal –Applicant is impecunious – Whether unacceptable risk that respondents’ costs would not be paid if applicant unsuccessful – Whether order for security for costs would stultify appeal – Significance of risk of stultification on appeal – Relevance of number and nature of grounds of appeal – Prospects of success – Broad brush approach as to prospects of success – Security ordered.
Supreme Court (General Civil Procedure) Rules 2015, r 64.38(2).
Djordjevich v Rohrt(in his capacity as liquidator of ACN 091 518 302 Pty Ltd (in liquidation) ACN 091 518 302) [2021] VSCA 279, applied; Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434; Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151, approved.
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| Counsel | |||
| Applicant: | Mr JR Gurr SC with Mr LJ Hogan | ||
| Respondents: | Mr W Thomas | ||
Solicitors | |||
| Applicant: | Ward & Co Legal Consultants | ||
| Respondents: | Lander & Rogers | ||
MACAULAY JA
LYONS JA:
Summary
The respondents have applied for security for their costs of the application for leave to appeal and, if leave is granted, the appeal. The amount sought is $71,040. In summary, the respondents seek security on the basis that the applicant is impecunious with the result that the applicant will not be able to pay any costs awarded against him in this Court, and the proposed appeal does not enjoy good prospects of success.[1]
[1]Relying upon the affidavit of their solicitor Natasha Eloise Stojanovich affirmed 30 August 2024 and the affidavit the applicant affirmed 8 August 2024 in support of an application to stay the trial orders.
The applicant opposes any order for security. While he concedes that he is impecunious, he contends that the appeal has good prospects of success or is otherwise reasonably arguable, and that a security order for costs would stultify or prevent him from continuing the application for leave to appeal or the appeal.[2]
[2]Relying upon the applicant’s affidavits affirmed 8 August 2024 and 16 September 2024, and the affidavit of his solicitor Zvinodaishe Joerg Kusangaya affirmed 16 September 2024.
In response, the respondents submit that the applicant’s affidavits do not establish that an order for security would stultify the appeal: rather the information provided as to his financial position is unclear, incomplete and inconsistent.
For the reasons that follow, we have determined to order security in the sum of $50,000 to be paid by 18 December 2024, to stay the application until security is given, and to dismiss the application if security is not given within the time specified.
Background facts
The applicant seeks leave to appeal from the orders of his Honour Judge Anderson in the County Court of Victoria pursuant to reasons delivered 7 May 2024.[3] Orders were made against the applicant in relation to building works that he undertook.
[3]F & J Investment Assets Pty Ltd v Etcell [2024] VCC 594 (‘Reasons’).
In summary, the applicant is a self‑employed builder who undertook building works at 12 Bridge Street, Eltham to construct a childcare centre on land owned by Jetmir Mustafa (‘Mr Mustafa’) and Florije Mustafa (‘Mrs Mustafa’) (together, ‘the Mustafas’ who are the second and third respondents). The sum for the building works was agreed to be $1,472,847 (including GST), pursuant to a contract signed on or around 26 October 2017 (the ‘Contract’).[4]
[4]Ibid [3].
The Mustafas have been, at all material times, the directors and equal shareholders of F & J Investment Assets Pty Ltd (‘F & J Investment’), which is the first respondent.[5] The Mustafas were, from 1 February 2017, the trustees of the Mustafa Property Trust. Upon the retirement of the Mustafas as trustees of the Mustafa Property Trust on 9 October 2017, F & J Investment was appointed the trustee of the Mustafa Property Trust.[6]
[5]Ibid [2].
[6]Ibid [2], [71(b)].
The Contract was signed by Mr Mustafa ‘for and on behalf of the Mustafa Property Trust’. Under the Contract, the Mustafa Property Trust was named as the ‘Client’ and the applicant was named as the ‘Builder’. F & J Investment was not named. It was not in dispute that the first time the applicant had heard of F & J Investment was when he received the writ in this proceeding.
Disputes arose between the parties during the performance of the building works, including in relation to payment of progress claims (and the related right to suspend works), the quality of the building works and delays.[7] Notices were issued by both parties, the validity of which were disputed. The Contract was then terminated by the respondents on 24 August 2018 based upon these notices. In response, the applicant asserted that the respondents’ termination was invalid, amounting to a repudiation which he accepted, thereby terminating the Contract himself.
[7]Ibid [5].
On 23 January 2019, F & J Investment commenced proceedings in the County Court against the applicant seeking, inter alia, damages for breach of contract and a declaration that the contract was validly terminated by F & J Investment. In defence and counterclaim, the applicant:
(a)denied any contract with F & J Investment, asserting a contract with the Mustafas instead;
(b)disputed that the Contract had been validly terminated, including because the notice to show cause dated 1 August 2018 (on which the termination was based) was not issued by F & J Investments as the Client and was invalid for other reasons, and because the respondents had elected not to rely upon that notice in a letter dated 17 August 2018;
(c)disputed the damages claimed by reason of any termination of the Contract by F & J Investment; and
(d)by a counterclaim, relied on his own termination of the Contract claiming amounts due and payable under the Contract, together with interest, damages for loss of profit and damages reflecting monies spent and liabilities incurred.[8]
[8]Ibid [12].
Following an 18‑day trial in late 2022, the Reasons were delivered on 7 May 2024. Two further sets of reasons were subsequently delivered on 31 May 2024[9] and 7 June 2024[10] in relation to questions of interest and costs, respectively. As to the parties to the Contract, the judge found that, objectively assessed, the parties intended that the ‘Client’ in the Contract was the trustee of the Mustafa Property Trust. Whereas F & J Investment was the trustee when the Contract was entered into, the judge found that all parties mistakenly believed that Mr (or Mr and Mrs) Mustafa was the trustee at that time.[11] As to the termination of the Contract, the judge found that the Contract was terminated validly by the ‘Client’ based on the 1 August 2018 notice to show cause and the 24 August 2018 letter, with the result that the judge ordered damages to F & J Investment.[12] Consequently, the claims for damages by the applicant in the counterclaim were dismissed.
[9]F & J Investment Assets Pty Ltd v Etcell (Interest) [2024] VCC 772.
[10]F & J Investment Assets Pty Ltd v Etcell (Costs) [2024] VCC 822.
[11]Reasons, [19], [75].
[12]Ibid [27], [450].
As a result, the judge:
(a)ordered that the Contract be rectified and the name of the Client to be F & J Investment as trustee for the Mustafa Property Trust;
(b)made a declaration that the Contract was validly terminated on 24 August 2018 by F & J Investment;
(c)entered judgment for F & J Investment against the applicant in the sum of $564,117.16 plus interest of $349,639.06, totalling $1,003,756.22 (‘judgment sum’); and
(d)ordered that the applicant pay to F & J Investment costs on a standard basis up to and including 18 June 2021 at 11.00 am, and thereafter on an indemnity basis.
The application for leave to appeal
The applicant filed an application for leave to appeal on 8 August 2024, seeking that the orders made by the judge be set aside and, in their place, it be ordered and declared that:
(a)the proceeding brought by the respondents is dismissed;
(b)the parties to the Contract were the applicant and the Mustafas;
(c)the applicant validly terminated the Contract; and
(d)there be judgment for the applicant on his counterclaim for damages to be assessed, with the proceeding to be remitted to the County Court.
The application for leave to appeal runs for 37 pages and sets out 47 proposed grounds of appeal with numerous sub‑grounds of appeal. For example, proposed ground 1 asserts in summary that the judge failed to give sufficient reasons in light of the submissions made at trial by the applicant: it extends for over eight pages and contains 24 sub‑grounds.
In summary, the proposed grounds of the application for leave to appeal contend that:
(a)the judge erred in that he failed to provide findings and reasons sufficient to understand the basis of the judgment;
(b)the judge erred in finding that F & J Investment was a party to the Contract or that the Contract should be rectified to name F & J Investment as the Client;
(c)the judge erred:
(i)in construing provisions of the Contract relevant to the counterclaim, including the applicant’s right to suspend under cl 17 of the Contract; and
(ii)in making findings as to the applicant’s entitlement to extensions of time, including concerning the commencement date and the date of practical completion under the Contract;
(d)the judge erred in finding that F & J Investment validly terminated the Contract including for the reasons set out in [10(b)] above;
(e)the judge erred in relation to the quantification of damages of F & J Investment including on the basis that the works performed by the applicant were defective; and
(f)the applicant was entitled to damages on his counterclaim.
On 8 August 2024, the applicant filed for an extension of time to file an application for leave of 27 days. The respondents consented to this extension. In addition, the applicant sought a stay of the County Court orders. At that time, the Mustafas had issued a bankruptcy notice against the applicant. The applicant relied upon his 8 August 2024 affidavit in which he deposed to his financial position, in particular that he had no money, could not pay the judgment sum and was relying upon his solicitors to prosecute the application for leave to appeal on a contingency basis. The stay application was resolved by consent on the basis that the respondents do not proceed with the creditor’s petition until the hearing and determination of the applicant’s application for leave to appeal, and if leave be granted, the appeal. In making the consent order, Judicial Registrar McCann noted in ‘Other Matters’ that having read the applicant’s 8 August 2024 affidavit, she considered that ‘the appeal is not devoid of merit’.[13]
[13]Order of McCann JR in Etcell t/as Ikonic Homes v F & J Investment Assets Pty Ltd atf The Mustafa Property Trust (Court of Appeal, S EAPCI 2024 0090, 16 September 2024).
The relevant principles
Under rr 64.38(2) and (4) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’), this Court may order that security be given for the costs of an application or appeal on such terms as the Court thinks fit.
Rules 64.38(2) and (4) of the Rules provide:
64.38 Costs
…
(2)A party may apply to the Court of Appeal for an order—
(a)that the applicant or appellant give security for the costs of the application or appeal, and for the manner, time and terms for giving the security;
(b)that the application or appeal be stayed until security is given; and
(c)that, if the applicant or appellant fails to comply with the order to provide security within the time specified in the order, the application or appeal be dismissed.
…
(4)An order that security be given for the costs of an application or appeal may be made on such terms as the Court of Appeal thinks fit.
…
The terms of these rules indicate the broad nature of the discretion as to security, which ultimately depends upon what the interests of justice require. This Court has confirmed that on an application for leave to appeal different considerations apply to those that apply at the trial stage. That is because, at the appeal stage, there has already been a determination adverse to the impecunious applicant.[14] So too in the New South Wales Court of Appeal, Meagher JA said in Boros v Pages Property Investments Pty Ltd:[15]
Ordinarily, the risk of stifling access to the courts by requiring security will be of less significance in an appeal proceeding, where there ‘has already been a determination adverse to the person against whom security for costs is sought’, than it is where a natural person has commenced proceedings as plaintiff.
[14]Djordjevich v Rohrt(in his capacity as liquidator of ACN 091 518 302 Pty Ltd (in liquidation) ACN 091 518 302) [2021] VSCA 279, [14] (McLeish and Macaulay JJA) (‘Djordjevich’); Jafari v 23 Developments Pty Ltd [2019] VSCA 16, [7] (Whelan and Hargrave JJA).
[15][2021] NSWCA 50, [25] (Meagher JA) (citations omitted).
The principles relevant to this Court’s discretion to award security for costs are well established and include that:
(a)a security for costs order is designed to ameliorate a risk which is ‘unacceptable in all the circumstances’ that a successful respondent, put to the expense of defending a first instance decision in their favour, will be unable to recover costs against an unsuccessful applicant;
(b)essential to any application for such an order is therefore the identification of the ‘nature and extent’ of that risk; and
(c)the party making the application for security bears the onus of establishing the matters which give rise to the risk.[16]
[16]Djordjevich [2021] VSCA 279, [7]–[8] (McLeish and Macaulay JJA).
The factors which inform the Court’s discretion relevantly include: the quantum of the risk that an order for costs against the applicant would not be satisfied, the prospects of success of the appeal, whether the making of the order would be oppressive in that it would stifle a reasonably arguable appeal, whether any impecuniosity of the applicant arises from the conduct of the respondents, and whether there are any particular discretionary matters.[17]
[17]Ibid.
While the respondents carry the onus of establishing that security for costs should be ordered, the applicant has the evidentiary onus of establishing that any order for security would stultify the appeal.[18]
[18]Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151, [41] (Stern JA).
As to the prospects of success on appeal, as this Court is not considering the application for leave to appeal, or the appeal, the approach on applications for security has been described as necessarily ‘provisional’ and ‘broad brush’.[19] Relatedly, we agree with the view expressed by Gleeson JA in Hannaford v Commonwealth Bank of Australia[20] that on such applications, as a general rule, ‘[i]t is unnecessary and inappropriate to undertake any detailed examination of the appeal grounds and their likely prospects’.[21]
[19]Djordjevich [2021] VSCA 279, [7] n 8 (McLeish and Macaulay JJA); Rozenblit v Vainer [2019] VSCA 164, [46] (McLeish and Niall JJA).
[20][2013] NSWCA 472 (Gleeson JA) (‘Hannaford’).
[21]Ibid [48] (Gleeson JA).
In relation to whether extensive grounds of appeal such as those put forth by the applicant are a relevant consideration, Ward JA stated in Ballard v Brookfield Australia Investments Ltd (‘Ballard’)[22] that:
Mr Ballard is seeking a rehearing on almost all the issues thrown up in the first instance hearing and hence the scope of the appeal will be extensive.
…
The scope of the appeal that Mr Ballard intends to bring is such that there must be a very real risk that costs will be unnecessarily incurred by the respondents to the appeal (in the sense that if the appeal were confined to more narrow grounds of appeal those costs would be minimised).[23]
[22][2012] NSWCA 434 (Ward JA) (‘Ballard’).
[23]Ibid [27]–[28] (Ward JA).
The evidence and submissions
We have set out a summary of the submissions of the parties at the commencement of these reasons.
The amount of security sought
As to the quantum of security sought, the respondents relied upon the affidavit of their solicitor who estimated that the total legal costs on a full indemnity basis of the application for leave and any appeal (including the costs of this application for security) would be $118,400 and that approximately 60 per cent would be recoverable on taxation on a standard basis in the sum of $71,040. These estimates were not challenged by the applicant.
The financial position of the applicant
Based on the applicant’s affidavits as to his current assets, liabilities and income, the applicant submitted that any order for security would stultify the appeal. In summary, the applicant deposed that:
(a)his only source of income is as a self‑employed builder and carpenter with little current work;
(b)given the nature, extent and length of the County Court proceeding, and the costs involved (and in light of the impact of COVID‑19), his finances were ‘stretched to the brink’; and
(c)based on his financial position, he is unable to meet the judgment sum and he does not have the resources to contest any taxation of the costs owing under the costs order.
In addition, as a result of his financial position, the applicant deposed the following in respect of his application for leave to appeal:
(a)he is unable to pay for the costs of the application for leave to appeal personally;
(b)he approached two litigation loan agencies to fund the appeal but was unable to procure finance;
(c)he was only able to commence his application for leave to appeal because of an arrangement between his solicitors and counsel who are acting on a ‘contingency basis’; and
(d)he does not have any family or friends capable of providing the necessary funds or assisting him to raise funds if required.
As to his assets, he deposed that:
(a)his only real property asset is a home in Chelsea Heights, Victoria (the ‘Chelsea Heights property’) which was sold in July 2024 for $900,000 with settlement on 7 October 2024. At the hearing we were informed that the sale is yet to be completed;
(b)the Chelsea Heights property is subject to three mortgages with the total sum owing of $892,419.39. However, there are several sale expenses (the agent’s commission and conveyancing fees) totalling approximately $21,000 with the result that there will be no surplus funds from the sale: indeed the sale expenses will have to be paid for from other resources; and
(c)he has no interest in any other real estate.
As to his other assets and liabilities, the applicant deposed that:
(a)he owns a motor vehicle, a Ford Ranger, which he estimated is valued at approximately $9,000;
(b)he has no shares, investment properties, savings or superannuation;
(c)he has small credits in his bank accounts;
(d)he has liability of $18,000 to Pioneer Credit Solution Pty Ltd and has entered into a payment plan to make 36 monthly instalments of $500; and
(e)he has a liability to the Australian Taxation Office of $19,399.05.
As to his income, the applicant deposed that he was on JobSeeker payments from 13 December 2022 to mid‑February 2024 when he secured a new building contract relating to a property in Lyall St, Cranbourne with a contract sum of $1,386,000. Those contract works are nearing completion and he has ‘derived very little profit from the job, largely due to increased costs of trades, subcontractors and suppliers’.
Further, the applicant deposed that he signed (in partnership with another builder) a further building contract on 1 May 2021 relating to a property in Dennis St, Highett with a contract sum of $1,190,000. The applicant deposed that he is very unlikely to derive any profit for several months from this contract and estimated that overall he will earn $30,000 upon completion, about 10–11 months away.
The applicant deposed that he is currently earning approximately $4,000 per month from ‘piecemeal jobs’ as a carpenter.
The applicant exhibited a number of documents relating to his financial position, most relevantly, a statement of financial position in support of an application to his home loan lender dated 22 June 2024 for deferral of interest payments for May 2024 to June 2024 (the ‘June statement’), a statement of current financial position as at 16 September 2024 (the ‘September statement’) and two statements from the ATO for the January 2024 to March 2024 quarter and the April 2024 to June 2024 quarter (the ‘ATO statements’).
The respondents submitted that the Court ought not accept that an order for security would stultify the appeal based on the applicant’s material. In summary, this is because:
(a)the material of the applicant proceeds on the basis that he could not fund security in any sum: there is no basis for this contention;
(b)the judge made serious adverse credit findings against the applicant in the reasons, with the result that this Court should review his assertions as to his financial position with caution;[24] and
(c)in any event, the material in the applicant’s affidavits is inconsistent, incomplete and unclear as to his true financial position.
[24]Reasons, [61(b)]–[61(c)] to the effect that the judge considered his evidence ‘as essentially a version of the facts that he thought best supported his case [which] [i]n many instances … was demonstrably inaccurate or untrue’.
Most relevantly, the respondents submitted that:
(a)the applicant has not been fulsome in disclosing the true nature of his ‘contingency arrangement’. He has not disclosed whether it is a ‘no win — no fee’ arrangement or a deferred fee payment arrangement which might affect his ability to obtain other finance;
(b)the applicant has not explained the purpose and nature of the loan made in early 2024 for $300,000 which is secured by the second of the three mortgages over the Chelsea Heights property. The terms of that loan provide that he was to confirm how he was to fund the monthly interest payments (with interest payable at a rate of 16.5 per cent per annum) and the repayment of the principal in 12 months. No such confirmation or information has been disclosed by the applicant. Further, no information has been disclosed as to how these loan funds were applied;
(c)the applicant has not explained how the sales expenses on the Chelsea Heights property are to be paid;
(d)few details are given in relation to his bank account: for example, no current bank statement is produced for his personal accounts; and
(e)it is unclear from his affidavits what his current or ‘normal’ income is or what his likely future income will be.
Further, the respondents submitted that there are inconsistencies between his affidavits and between the June statement and the September statement. For example:
(a)the June statement estimated that his motor vehicle was valued at $25,000 while the September statement (which formed the basis of his 16 September affidavit) estimated its value at $9,000;
(b)the June statement referred to his current monthly income of $5,126, comprising ‘net salary/wages (monthly salary/wages after tax)’ of $3,800 plus ‘Unemployment/Disability benefits’ of $1,356. By contrast, in his 16 September affidavit, the applicant deposed his JobSeeker payments terminated in mid‑February 2024 and his only other income was as a builder/carpenter; and
(c)the September statement refers to average pre‑tax earnings for the last 12 months of $89,000 with a total gross weekly income of $1,711.53.
In response, counsel for the applicant submitted that these criticisms were in part incorrect. As to the value of his motor vehicle, the applicant exhibited extracts from online car valuation sites which supported a valuation of $9,000. In any event, counsel submitted that this vehicle was clearly necessary for the applicant to earn income as a builder/carpenter. Further, counsel noted that the applicant’s income was in the order of $5,000 to $6,000 per month, which is broadly consistent with the June statement, the September statement and the April 2024 to June 2024 ATO statement.
In any event, counsel submitted that these criticisms were not a basis to conclude that any order for security would not stultify the appeal. Counsel submitted that, looked at as a whole, the applicant had affirmed in some detail as to the dire nature of his financial position with the result that the Court could clearly be satisfied that the appeal would be stultified if security was ordered.
Prospects of success
While counsel for the respondents conceded that the prospects of success are not hopeless or unarguable, the respondents submitted that the applicant does not enjoy good prospects of success. Consistent with the authorities referred to in [23] above, counsel submitted that it was ‘unnecessary’ and ‘undesirable’ to consider the merits of the proposed grounds in detail in such an application.[25]
[25]Hannaford [2013] NSWCA 472, [48] (Gleeson JA), cited with approval in Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151, [46] (Stern JA).
The respondents further submitted that the complexity and ‘kitchen sink’ approach to the extensive proposed grounds of appeal should be discouraged and indicated the difficulty in identifying substantive errors in the judge’s reasons.[26]
[26]Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257, 277 [66] (French J); [2002] FCAFC 183.
While conceding that detailed consideration of the prospects of success is not required on such an application, the applicant submitted that he has good prospects of success. Each proposed ground is submitted to have been deliberately framed and with a proper basis, and the breadth of proposed grounds of appeal reflects the length of the trial judgment and the manifest inadequacy of the judge’s reasons. The applicant submitted that the judge’s reasons fail to grapple with the applicant’s submissions at trial, for the reasons outlined at [15] above. In these circumstances to grant the security for costs application would, in effect, deny the applicant the opportunity to understand the judge’s reasons and therefore be contrary to the interests of justice.
Consideration
In our view, it is appropriate that the respondents obtain an order for security for a proportion of their costs in relation to the application for leave to appeal. In reaching this view, we have taken into account the following matters.
First, in such applications, consistent with authority, it is appropriate to form a broad brush view of the prospects of success. This is particularly true in this case because of the number and nature of the proposed grounds of appeal which challenge a considerable number of legal and factual findings of the judge. We are conscious that we only heard limited argument confined to the terms of the judgment and the applicant’s submissions below. However, it is clear that some grounds of appeal, if successful, would result in all or part of the judgment sum being set aside.
As a result, consistent with the concession of counsel for the respondents, the appeal is not hopeless or unarguable or, in the words of Judicial Registrar McCann, ‘devoid of merit’. Beyond that, it is neither necessary nor desirable to form or express any view.
Second, as summarised in [15] above, we are mindful that there are a large number of grounds of appeal. The number and nature of the grounds of appeal indicate, in the words of Ward JA in Ballard, that there is ‘a very real risk that costs will be unnecessarily incurred by the respondents to the appeal’.[27]
[27]Ballard [2012] NSWCA 434, [28] (Ward JA).
Third, we have had regard to the nature of the applicant’s financial material. While it seems that the applicant is in a dire financial position, we accept that the inconsistencies in, and omissions from, the applicant’s affidavit material raise issues about his ability to meet an order for security for costs. As a result, while we are not satisfied that an order for security will necessarily stultify the appeal, we accept that there is significant risk that it will. Nevertheless, we are conscious that stultification on an application for leave to appeal has less force than at a trial because there has already been a determination by a judge adverse to the applicant.
Fourth, and by contrast, we are satisfied that the respondents will not be able to recover their costs from the applicant if the appeal is unsuccessful. Thus we are satisfied that there is an unacceptable risk that the respondents, put to the expense of prosecuting their case and defending the counterclaim against them, and with a first instance decision in their favour, will be unable to recover costs against the applicant if he is unsuccessful in the appeal.
Fifth, there is no suggestion that the impecuniosity of the applicant arises from the conduct of the respondents.
Last, although it may be obvious, it is worth emphasising that the point at which an order for security will stultify a reasonably arguable appeal is rarely defined by a neat line between ‘it will’ and ‘it will not’. First, the applicant’s financial resources, while poor, may (in given circumstances) still be capable of yielding some amount of money for security if the applicant re‑orders priorities, makes certain arrangements and/or is given generous terms. Second, the concept of ‘reasonably arguable’, itself, involves a scale of reasonability. Bearing those matters in mind, whatever weight is to be placed upon the risk of stultifying an arguable appeal, that value is then to be measured against the injustice to a respondent should he, she or it be put to defending an appeal against a decision in their favour without any realistic prospect of recovering the costs of doing so. The extent of that injustice will also vary depending on the particular circumstances. Hence, the ‘equation’ will involve inherently variable factors such that the mere existence of a risk of stultification does not, of itself, preclude the making of an order for security. This is a good example of such a case.
In all these circumstances, we have formed the view that the interests of justice require that the respondents are entitled to security for costs. But we are conscious that, in light of the applicant’s financial position, it appears that the larger the amount of security ordered, the greater the likelihood that the application for leave will be stultified. As a result, we will order the applicant to give security for the costs of the application for leave to appeal and the appeal in the sum of $50,000 by 18 December 2024, stay the application until security is given, and dismiss the application if security is not given within the time specified.
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SCHEDULE OF PARTIES
PAUL ETCELL T/AS IKONIC HOMES (ABN 73 533 047 610) Applicant v F & J INVESTMENT ASSETS PTY LTD (ACN 621 866 180) ATF THE MUSTAFA PROPERTY TRUST First respondent and JETMIR MUSTAFA Second respondent and FLORIJE MUSTAFA Third respondent
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