Eustice v Channel Seven Adelaide Pty Ltd - [2020] SASC 94

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
EUSTICE v CHANNEL SEVEN ADELAIDE PTY LTD & ORS
[2020] SASC 94
Judgment of The Honourable Justice Kelly
5 June 2020
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
This is an application for an order for security of costs.
The respondents were defendants in an action for defamation brought by the appellant as plaintiff. The appellant sued the respondents in relation to articles that were published by the first respondent in November 2012. The articles conveyed imputations that the appellant was misleading and deceptive in conducting his business as a second-hand motor vehicle dealer.
At trial, the Judge found that seven out of the eight imputations were defamatory, yet justified. The Judge ordered that the appellant pay the respondent’s costs on an indemnity basis. The appellant subsequently filed a notice of appeal with this Court.
The respondents now seek an order that the appellant pay the sum of $50,000 as security for the costs of the appeal, and that the appeal be stayed until such security is paid into Court.
Held, allowing the application:
1. The appellant is ordered to pay into Court the sum of $30,000 in security for the costs of the respondents.
2. If the appellant fails to comply, the action shall be stayed until further order.
Second-hand Vehicles Dealers Act 1995 (SA) Part 2, Division 1; Supreme Court Civil Rules 2006 (SA) r 116, r 117, r 295(1)(g); Uniform Civil Rules 2020 (SA), referred to.
Diakos v Mason [2010] SASC 108; Fleming v Advertiser News Weekend Publishing Company Pty Ltd (No 3) [2016] SASC 81; Food and Beverage Australia Ltd v PJ Nash Pty Ltd (No 2) [2020] SASC 82; Moore v Macks [2007] FCA 509; Nanosecond Corporation Pty Ltd v Glen Carron Pty Ltd [2019] SASC 124; Sarifdeen v TM25 Holdings BV [2016] FCA 1429, applied.
Eustice v Channel Seven Adelaide Pty Ltd & Ors [2020] SASC 4; Eustice v Channel Seven Adelaide Pty Ltd & Ors (No 2) [2020] SASC 35; Jones v Dunkel (1959) 101 CLR 298; L’Estrange v Graucob Ltd [1934] 2 KB 394, discussed.

EUSTICE v CHANNEL SEVEN ADELAIDE PTY LTD & ORS
[2020] SASC 94
Civil: Application
KELLY J.

This is an interlocutory application brought by the respondents (Channel Seven Adelaide Pty Ltd, Mr Frank Pangallo and Ms Faith Okoegwale) for an order that, unless the appellant (Mr Benjamin Andrew Eustice) provides security in the sum of $50,000, his appeal be stayed.
Background
The three respondents were defendants in an action for defamation brought by the appellant as plaintiff. The appellant sued the respondents in relation to an article that was broadcast by Channel Seven Adelaide Pty Ltd (‘the first respondent’) on the ‘Today Tonight’ program in November 2012. The article was produced by a journalist, Mr Pangallo (‘the second respondent’), and featured Ms Okoegwale (‘the third respondent’). After the broadcast, the article was truncated and uploaded online. The online version was then broadcast by interstate television providers.
The articles portrayed the appellant to have sold the third respondent two second-hand motor vehicles. The third respondent returned the first vehicle and received credit to use in the purchase of the second vehicle, specifically a 1998 Nissan Skyline. The third respondent claimed that the appellant had deceived her by representing the vehicle he sold her as a vehicle manufactured in 2010. The third respondent returned the vehicle to the dealership within 24 hours of purchasing it and sought a refund from the appellant. The appellant, with the assistance of his father, Andrew Eustice, who was employed in the business, rebuffed the third respondent’s repeated demands for a refund.
At the trial, the appellant contended that the articles conveyed a number of imputations defamatory of the appellant. The appellant complained of eight imputations said to be conveyed by the articles:
(i)that the appellant serially rips off customers;
(ii)that the appellant is a crook;
(iii)that the appellant is a snake;
(iv)that the appellant is a snake by reason of the fact that he engaged in misleading and deceptive conduct by telling a “whopper of a lie”;
(v)that the appellant is a fraudster;
(vi)that the appellant is a fraudster by reason of the fact that he engaged in misleading and deceptive conduct by telling a “whopper of a lie”;
(vii)that the appellant is a convicted criminal; and
(viii)that the appellant is a career criminal.
The articles were alleged to have further imputed that the appellant’s business was not compliant with the provisions in Part 2, Division 1 of the Second-hand Vehicle Dealers Act 1995 (SA) (‘the Act’), as the appellant, along with his father, held convictions for criminal offences and therefore were not entitled to carry on business as dealers of second-hand vehicles. It was further alleged that the appellant was operating the business contrary to the Act by using his grandfather’s dealer’s licence.
At trial, the respondents raised the defences of justification, contextual truth, qualified privilege, fair comment, honest opinion and triviality.
After 22 sitting days, the trial Judge found that seven of the eight pleaded imputations had been made and were justified, although defamatory. Accordingly, the appellant’s claim was dismissed.
In the course of a very detailed and thorough judgment, the Judge made a number of factual findings which were damning of the appellant’s credibility. They included findings that the appellant was illegally conducting the second-hand car dealership by using his grandfather’s licence when his grandfather was not properly involved in the business as required under the Act; that he employed his father who had serious criminal convictions to be a salesman contrary to the Act; and that he himself had prior convictions from another jurisdiction which he did not disclose.
The appellant denied his convictions at the trial. The respondents were required to prove the existence of the convictions recorded in the New South Wales jurisdiction by leading, and comparing, documentary and handwriting evidence.
At the conclusion of the trial, the Judge found that the appellant had conducted his case on the basis of evidence which he knew to be false. As a result of his finding, the Judge considered that an order for indemnity costs against the appellant was justified.
On 6 February 2020, the appellant filed a notice of appeal with this Court. On 16 April 2020, the respondents filed the interlocutory application. The respondents seek an order that the appellant pay to the Court the sum of $50,000 in security for costs. The respondents seek an additional order that the appellant pay the costs of this application.
The respondent’s application was brought pursuant to r 295(1) of the Supreme Court Civil Rules 2006 (SA). As the application was lodged prior to the commencement of the Uniform Civil Rules 2020 (SA), the 2006 rules remain applicable to the determination of this application.
On 22 May 2020, I heard argument. Counsel for the respondents, Mr Doyle, relied on two affidavits in support of his submissions, namely the fifth and seventh affidavits of Mr Peter Campbell. The thrust of Mr Doyle’s submission was that the appellant is unable to meet the financial burden demanded by an appeal of this nature due to his apparent impecuniosity. Mr Doyle further contended that the appeal is unlikely to succeed given that all of the grounds of appeal are manifestly weak.
Mr Campbell had deposed to the estimated costs of the appeal being in the order of approximately $100,000. It is on that basis that the respondents seek an order for security for costs in the amount of $50,000.
Counsel for the appellant, Mr Heywood-Smith QC, submitted that, contrary to Mr Doyle’s submissions, the appeal has good prospects of success. The appellant accepts the fact that he is impecunious, but does so on the premise that his impecuniosity is causally connected to the respondents’ defamatory conduct. He further submits that if an order for security for costs is to be made his appeal would be stultified. In the event that he can establish that the appeal would be stultified, Mr Heywood-Smith argued that this Court is not justified in making any order for security for costs.
Analysis
The considerations relevant to the exercise of the Court’s discretion to award security for costs are well established. Without necessarily being exhaustive, they include whether the appellant is impecunious and, if so, whether the cause of his impecuniosity is attributable to the conduct of the respondent; the prospects of success on appeal; whether an order for security would result in stultification of the appeal; and the risk that if the appeal fails the appellant will be unable to satisfy any costs order.
Here, all of those factors are relevant to the determination of this application.
It is not in dispute that the appellant is impecunious and is unlikely to have sufficient means to pay the respondents’ costs. Although the appellant asserts that his current financial state is “unquestionably” the direct result of the respondents’ conduct, that matter is, however, in dispute.
The appellant asserts that prior to the publication of the article he had a reasonable expectation that his business would generate enough income to support him and his dependent child. The respondents, on the other hand, pointed to evidence led at trial that the appellant had a history of financial difficulties well before the publication. Documentary evidence reveals that the appellant never earned an income above approximately $15,000 per annum prior to the publication. The respondents argued that following publication the appellant earned more than that figure for a period of time.
The appellant’s submission overlooks the finding made by the trial Judge that the appellant’s prospects of conducting a financially successful second-hand car business were, at best, modest. Moreover, notwithstanding the appellant’s assertion to the contrary, there is no evidence to which I was referred which supports the appellant’s submission that his impecuniosity is a consequence of the respondents’ conduct. In fact, the evidence such as it is, points to the contrary conclusion.
However, it is not in dispute and I accept that if an order for costs is made the proceedings are likely to be stultified.
In Fleming v Advertiser News Weekend Publishing Company Pty Ltd (No 3),[1] in refusing an application for security for costs made by the successful respondents in that action, Stanley J found that the respondent’s conduct was a significant contributing factor to the appellant’s impecuniosity and that the appeal proceedings would be stultified if an order for security was made. His Honour refused the application principally on that basis.
[1] [2016] SASC 81.
Although Fleming has some parallels with the facts here, there are some differences. One important distinction between the appellant in Fleming and the appellant here is that, in the former case, it was not in dispute that a significant contributing factor to the appellant’s impecuniosity was the respondent’s publication.
Second, it does not appear that his Honour in Fleming was referred to a number of authorities which discussed the relevance of the considerations which apply to proceedings at first instance, and the different emphasis to be placed on those considerations in respect of appeal proceedings. I am referring now to Diakos v Mason,[2] Sarifdeen v TM25 Holding BV,[3] and Moore v Macks.[4]
[2] [2010] SASC 108.
[3] [2016] FCA 1429.
[4] [2007] FCA 509.
In Sarifdeen, Murphy J held that, having regard to the weakness of the appeal grounds, the appellant’s precarious financial position, the significant costs already incurred, the fact that the appeal did not raise any wider issue of public interest, and the fact that the appellant already had the benefit of a trial, an order for security for costs was appropriate.
In the course of reaching that conclusion, the Judge in Sarifdeen[5] relied on the earlier authority of Moore:
[47]An application for security for costs in an appeal attracts different considerations from an application in a proceeding at first instance. In Cowell v Taylor (1885) 31 Ch D 34 at 38 Lord Justice Bowen said:
The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty’s courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another.
[48]In Moore v Macks [2007] FCA 509 Mansfield J approved the statement by Lord Justice Bowen, and also cited the observation of Spender J in Skyring v Sweeney [1999] FCA 61 at [6] where his Honour said:
Impecuniosity is a factor which can be taken into account as justifying the grant of security. Impecuniosity ought not to be a bar to a person prosecuting at first instance a claim, but the position on appeal seems to me to be fundamentally different. In effect, in the absence of an order for security for costs in the circumstances of this case, Mr Skyring, in effect, is given a free hit, and that seems to me to be intrinsically unfair.
[49]In Tait v Bindal People [2002] FCA 322 at [3]-[4] Spender J made a similar observation (cited with approval in Soh v Commonwealth [2008] FCA 1524 at [11] per Moore J):
... [t]he difference is that, at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust.
[5] Sarifdeen v TM25 Holding BV [2016] FCA 1429 at [47]-[49].
More recently, Judges of this Court have emphasised the relevance of the distinction. Doyle J in Food and Beverage Australia Ltd v PJ Nash Pty Ltd (No 2) stated:[6]
[42]The first matter to take into account is that the application is for security for the costs of an appeal rather than a trial. Courts will more readily order security in the former category of case because the appellant has already had the opportunity to have the matter litigated, and has had the “benefit” of a judicial determination of the underlying controversy. On the other hand, it is also a relevant factor, and to some extent weighs against an order for security, that the appellant was the defendant below and not the plaintiff.
[Footnotes omitted]
[6] [2020] SASC 82 at [42].
In Nanosecond Corporation Pty Ltd v Glen Carron Pty Ltd, Peek J said: [7]
[7] [2019] SASC 124 at [50]-[53].
[50]A fourth factor to be considered is that the balancing process here occurs in the context of an appeal rather than a trial. Thus in Thompson v Robinson, Keane JA stated:
6. … The learned primary judge found that the applicant “has no funds or assets available to satisfy a costs order on an appeal”, and the applicant continues to assert that he is impecunious. While the appellant’s apparent lack of funds would have weighed strongly against ordering security at first instance, as such an order might have effectively closed the door of the court to him, it is of much less importance on appeal. [Citations omitted]
[51]And in Sands v State of South Australia, White J stated:
The provision of security with respect to appeals has always been distinguished from the provision of security at the trial stage. So much is apparent from the well-known statement of Bowen LJ in Cowell v Taylor:
The general rule is that poverty is no bar to a litigant; that, from time memorial, has been the rule, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty’s Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another. [Citations omitted]
[52]And in Lesses v Maras, Doyle J stated:
First, the application is for security for the costs of an appeal rather than a trial. Courts will more readily order for security in the former category of case because the appellant has already had the opportunity to have the matter litigated, and has had the benefit of a judicial determination of the underlying controversy. … [Citations omitted]
[53]Apart from the basic proposition that an appellant has already had the benefit of a full Supreme Court trial, there are other more specific justifications for the distinction. In my view, the most important is that a Court is generally far better placed to assess the prospects of success of an appeal than it is to forecast in advance how a trial will turn out. I respectfully agree with the following observation by Kourakis CJ in Diakos v Mason:
… An order for security for costs by a trial Judge may deny a plaintiff the important right to a judicial determination of his or her claim for redress of a wrong. However, the appellant has had the benefit of a judicial determination of the underlying controversy. The statutory right of a further review by way of appeal is a safeguard against error, but the fact remains that the plaintiff has had his side of the controversy judicially determined and in fact determined adversely to him. Moreover, the risk of injustice to an appellant if an order for security is prohibitive can be assessed with greater certainty on appeal than at first instance. [Emphasis added]
[Footnotes omitted]
As the authorities show, the fact that an appellant has had all of the issues he wishes to agitate on appeal already determined at trial is a very important consideration in the determination of an application for security for costs.
Another important consideration is whether the appeal has any prospects of success. It is always difficult to assess the prospects of success on appeal without delving into the issues to be raised on appeal to such an extent as in effect to pre-hear the appeal. This was a complaint which Mr Heywood-Smith made at the conclusion of Mr Doyle’s submissions. Doing the best I can, without transgressing into matters to be fully argued on the proposed appeal, I would make the following observations in respect of the grounds of appeal which have been filed in this matter.
The first observation I make is that just because a litigant launches a wide-ranging and detailed attack on a trial Judge’s findings does not, without more, provide any illumination as to the prospects of success of those complaints. Sometimes less is more when it comes to the assessment of the strength of appeal grounds.
As to the first ground of appeal, the appellant’s complaint that the imputation that the appellant serially rips off customers was “plainly open” is, on close analysis, actually plainly wrong. The appellant’s submission flies in the face of the publication construed in its proper context. The articles made it abundantly clear that the allegation was directed to the appellant’s father and grandfather, not the appellant. Indeed, the articles revealed that the appellant had only just joined the business.
The trial Judge’s reason for finding that the imputation did not arise, and even if it did, that the imputations were justified, meant that it would have made no difference to the outcome.

The complaint in ground two, that the trial Judge erred in finding three imputations could be justified by reference to one “whopper of a lie”, is based on a misinterpretation of the Judge’s reasons as a whole. Put simply, the trial Judge’s carefully articulated reasons made it clear that his conclusion depended on many of his factual findings concerning the appellant’s conduct, not simply on the one example of the lie about the age of the vehicle sold to the third respondent. This complaint cannot be substantiated.
The complaint in ground four, that the finding that the appellant was a career criminal was not open on the evidence and was reached without considering the appellant’s submissions, once again flies in the face of the evidence and the Judge’s reasons, in which he expressly acknowledged the appellant’s submissions on that particular topic.
The complaints made about the Judge’s failure to apply the legal principles in Jones v Dunkel,[8] along with the correct contractual principles in L’Estrange v Graucob Ltd,[9] similarly lack foundation.
[8] (1959) 101 CLR 298.
[9] [1934] 2 KB 394.
I do not propose to descend into any further detail except to make the general observation that the balance of the grounds proposed to be argued will require the appellant to persuade the appeal court to overturn findings which encompassed the entire subject matter of the trial. Some of these findings were made on the assessment of the credibility of the witnesses, in particular, the appellant’s evidence. The findings made about the appellant were damning.
I accept that any appeal will be lengthy and will involve more substantial costs to both parties. I was informed by Mr Doyle that the costs already approximate $700,000.
The trial Judge gave lengthy, detailed and careful reasons for each and every one of the findings he made. The appellant has not pointed to any errors of law or principle which I consider an appeal court is likely to overturn. For these reasons, I have formed the view that the appellant has limited prospects of success on appeal.
Balancing all of these considerations and accepting that the appeal may well be stultified, I nevertheless consider that the interests of justice in this case require an order to be made that the appellant give security in the sum of $30,000.
In the context of the costs incurred to date, that sum may seem insignificant. However, as Mr Doyle did not seriously press the application for the full amount of $50,000, it is appropriate to order that the appellant provide security for costs in the amount of $30,000.