Faris v Savage
[2019] ACTSC 94
•11 April 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Faris v Savage |
Citation: | [2019] ACTSC 94 |
Hearing Date: | 22 March 2019 |
DecisionDate: | 11 April 2019 |
Before: | McWilliam AsJ |
Decision: | See [39] |
Catchwords: | PRACTICE AND PROCEDURE – SECURITY FOR COSTS –Appeal from Magistrates Court – whether the appellant is impecunious – whether the appeal is without merit – security for costs ordered |
Legislation Cited: | Building Act 2004 (ACT) Competition and Consumer Act 2012 (Cth) sch 2 ss 60, 61, 62 Magistrates Court Act 1930 (ACT) s 276 |
Cases Cited: | Benjamin v GB Franchising Australia Pty Ltd [2008] ACTCA 11; 1 ACTLR 287 Burns v Man Automotive (Aust) Pty Ltd (1986) 161 CLR 653 Twining v Curtis [2014] ACTCA 19 |
Parties: | Rabea Hatem Faris (Appellant/Respondent) Gail Savage (Respondent/Applicant) |
Representation: | Counsel Mr J Cohen (Appellant/Respondent) Ms P Bindon (Respondent/Applicant) |
| Solicitors Mitry Lawyers (Appellant/Respondent) Aulich Civil Law (Respondent/Applicant) | |
File Number: | SCA 47 of 2018 |
Decision under appeal: | Court/Tribunal: ACT Magistrates Court Before: Magistrate Fryar Date of Decision: 24 August 2018 Case Title: Savage v Fairs (sic) Citation: [2018] ACTMC 17 |
McWilliam AsJ:
In April 2015, the appellant, Mr Rabea Faris, carried out landscaping and renovation work for the plaintiff, Ms Gail Savage, at a property owned by her in Theodore in the Australian Capital Territory (ACT). The work involved painting, rendering, closing in the open garage and some landscaping.
Ms Savage later brought proceedings against Mr Faris in the Magistrates Court for defective works which now require rectification. She sought damages in negligence, contract and a statutory action under Schedule 2, ss 60-62 of the Competition and Consumer Act 2012 (Cth) (Australian Consumer Law) for loss suffered as a result of the works performed by Mr Faris. She was successful, and the magistrate in the court below awarded her $107,819.24 plus interest: Savage v Faris [2018] ACTMC 17. For the sake of clarity, I note that the title of the published decision in the Court below contained a typographical error. I have referred to it in this decision using the correct spelling of Mr Faris’ name.
Mr Faris has appealed the decision of the Magistrates Court. In defending the appeal, Ms Savage filed an application on 21 December 2018 seeking security for her legal costs on appeal in the sum of $50,000 and that the appeal proceedings be stayed until such security is lodged by the appellant in the form required by the Court.
The Court’s power to award security for costs of an appeal
The application was made under r 5055 of the Court ProceduresRules 2006 (ACT) (the Rules), which provides:
5055Appeals to Supreme Court—security for costs
(1)Security for costs of an appeal is not required, unless the Supreme Court otherwise orders.
(2)This rule does not limit division 2.17.8 (Security for costs).
The court’s power to order security for costs is can be found in r 1900(1) of the Rules:
1900Security for costs—application and order
(1)On application by a defendant, the court may order the plaintiff to give the security it considers appropriate for the defendant’s costs of the proceeding.
…
Rule 1901 relevantly provides:
1901 Security for costs—when court may make order
The court may order a plaintiff to give security for costs under rule 1900 only if satisfied—
…
(h)the justice of the case requires the order to be made.
A number of discretionary factors are set out in r 1902 as follows:
1902Security for costs—discretionary factors
(1)In deciding whether to make an order for security for costs under rule 1900 , the court may have regard to any of the following matters:
(a)the means of the people standing behind the proceeding;
(b)the prospects of success or merits of the proceeding;
(c) the genuineness of the proceeding;
(d) for rule 1901 (a)—the corporation's lack of financial resources;
(e) whether the plaintiff's lack of financial resources is attributable to the defendant's conduct;
(f)whether the plaintiff is effectively in the position of a defendant;
(g)whether an order for security for costs would be oppressive;
(h)whether an order for security for costs would stop or limit the progress of the proceeding;
(i)whether the proceeding involves a matter of public importance;
(j)whether there has been an admission or payment into court;
(k)whether delay by the plaintiff in starting the proceeding has unfairly prejudiced the defendant;
(l)whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
(m)the estimated costs of the proceeding.
(2) This rule does not limit the matters to which the court may have regard.
Applicable principles
Rule 5055 confirms that a security for costs order may be made in relation to an appeal to the Supreme Court: Matsebula v Reynolds [2016] ACTSC 55 (Matsebula) at [21] per Murrell CJ.
A security for costs order seeks to protect a defendant by ensuring an available fund to defray costs incurred in defending a frivolous claim, and to discourage the filing of unmeritorious and frivolous claims which may amount to vexatious harassment: Davey v Herbst (No 2) [2012] ACTCA 19 at [15] and Twining v Curtis [2014] ACTCA 19 at [13] per Refshauge J.
In Matsebula at [22], Murrell CJ observed that the applicant must satisfy one of the requirements set out in r 1901 before the Court may exercise its discretion. In the present application, the applicant relies solely on r 1901(h).
In deciding whether the “justice of the case” requires the order to be made, the Court may have regard to the non-exhaustive list of factors set out in r 1902(1): Matsebula at [24]; Hughes v Janrule Pty Ltd [2011] ACTCA 15; 177 ACTR 1 (Hughes) at [72] per Penfold J.
Where the security for costs is in respect of an appeal, impecuniosity of an individual (r 1902(1)(a)) becomes a “very relevant factor”: Matsebula at [25]; Benjamin v GB Franchising Australia Pty Ltd [2008] ACTCA 11; 1 ACTLR 287 at [38] per Refshauge J; Twining at [15].
The prospects of success or merits of the appeal (r 1902(1)(b)) is also a significant factor for consideration, given that the appellant starts from a position where there has already been a hearing and a judgment has been ordered against him: see Twining at [14]-[15]; Matsebula at [25]; Hughes at [85].
Should an order for security for costs be made?
A number of the considerations listed above may be dealt with in short compass. Any lack of financial resources on the part of the appellant is not attributable to Ms Savage. Mr Faris is not to be seen as being in a position of a respondent, he is truly the moving party on the appeal. Subject to the considerations set out below, the amount sought does not appear to be oppressive and there is nothing to persuade me that such an order would in some way stultify the appeal. The proceeding does not involve a matter of public importance. There have been no admissions and no delay in commencing the appeal by Mr Faris which has prejudiced Ms Savage. Nor has there been any conduct on the part of Ms Savage which might be relevant to the Court’s consideration of whether an order for security should be made.
All of these discretionary considerations are either neutral or appear to be in favour of a grant of security. The key issues on which the parties focused their attention were the merits of the appeal and the potential impecuniosity of Mr Faris.
Is Mr Faris impecunious?
Mr Faris is a joint owner of a property in Harrison. It was valued in September 2018 at $1,310,000. It is encumbered by a mortgage with a little over $500,000 owed to the mortgagee. In affidavit evidence filed by the solicitor for the appellant (with leave) after the application was heard, Mr Faris asserts he is unable to borrow any money to satisfy an order for security for costs. It does not appear that he has explored the possibility of a bank guarantee, and he has not seen fit to disclose any other funds or bank accounts.
I do not accept that Mr Faris is impecunious, although I do accept that he may have limited resources and that what wealth he does have is more in the form of equity rather than liquid assets.
Is the appeal without merit?
The merits of the appeal are questionable. The amended notice of appeal filed on 22 March 2019 contains seven grounds. Broadly, they are as follows:
(a) Error in admitting into evidence expert evidence tendered by Ms Savage, and further error by applying an incorrect standard in determining the quality of work undertaken by Mr Faris.
(b) Error in the following factual findings:
(1) That Ms Savage paid $20,000 to Mr Faris.
(2) That damages should be calculated at $107,819.24.
(3) That Mr Faris did not render services with due care and skill.
(4) That the work carried out by Mr Faris was not fit for purpose.
(5) That the work carried out by Mr Faris was below the appropriate standard.
(6) That Mr Faris did not complete the work within a reasonable timeframe.
(c) Error in admitting evidence of Ms Savage insofar as it related to Mr Faris signing receipts for the receipt of money.
(d) Error in concluding that the work carried out by Mr Faris did not have any intrinsic value to Ms Savage and accordingly should be set off against any amount Ms Savage claimed.
(e) Error in failing to take judicial notice and accepted that the amount allowed for the removal work was manifestly excessive. Further error in failing to apply the principle that damages for breach of contract are compensatory.
(f) Error in finding that Mr Faris was negligent, and failure to have regard to the correct legal principles in relation to negligence and the scope of duty of care owed by Mr Faris.
(g) Error in the application of the correct legal principles in relation to ss 60, 61 and 62 of the Australian Consumer Law.
The case below was put on three different bases – in negligence, contract and breaches of the statutory guarantees set out in ss 60, 61 and 62 of the Australian Consumer Law. Those statutory guarantees are that: the services are to be rendered with due care and skill, that they will be of such a nature and quality that they might be reasonably expected to achieve that result, and that they will be supplied within a reasonable time frame.
However, regardless of the cause of action, the same conduct was in question (namely, whether the work fell below the applicable standard) and thus the findings of the magistrate that each case had been proved relied on the same factual findings. Accordingly, although a number of these grounds challenge element(s) of a specific cause of action, they substantially overlap.
Several arguments relate to ‘the correct legal principles’ in relation to the scope or standard of care owed by Mr Faris, or finding that he was negligent or breached a statutory guarantee. The standard by which Mr Faris said he ought to be judged was that of a painter or home handyman. The magistrate found that was not the correct standard, as Mr Faris held himself out as being capable of doing the work he was contracted to do, and that as it was building work, minimum building standards applied in accordance with the Building Code of Australia (the Code) and the Building Act 2004 (ACT) (the Building Act).
Mr Faris now wants to argue on appeal that there was no valid basis for applying the Code. I will refrain from expressing any final view on the issue, having not yet heard the argument fully developed on appeal. However, the point made by the magistrate (who accepted the expert evidence led on behalf of Ms Savage) is that it does not matter what the qualifications of the person performing the work are, it is the nature of the work being done that needs to meet the standards set by either the Code or the Building Act. When a house façade is rendered or a stencilled concrete slab laid on a driveway, it must comply with the applicable construction standards.
The factual errors alleged all relate to the magistrate’s acceptance of Ms Savage’s evidence in preference to that of Mr Faris, having seen them cross-examined in the witness box and formed views about the plausibility of their statements. It is well established that factual findings made by the presiding judicial officer in the original proceedings based on an evaluation of the credit of witnesses, while not immune from challenge, are not to be lightly overturned due to the advantages enjoyed by the trial judge: see Fox v Percy [2003] HCA 22; 214 CLR 118 (Fox v Percy) at [23], [26]; Theodorelos v Nexus Projects Pty Limited [2009] ACTSC 149 at [78]; Connelly v Allan [2011] ACTSC 170; 212 A Crim R 320 at [12].
The asserted error of the magistrate in wrongfully admitting certain evidence appears to be more directed towards a complaint regarding the magistrate’s acceptance of certain evidence. No particular principle of law was identified as founding an argument that the magistrate had erred in the exercise of her discretion to admit the evidence. If the argument is directed to the acceptance of the evidence led for Ms Savage, then that is really a complaint about the merits of a factual finding and the grounds of the appeal do not identify why the magistrate was wrong to accept the evidence.
The reference to failing to take judicial notice of a particular fact is entirely unclear. It appears to relate to costs of removing the defective work. Section 144(1) of the Evidence Act 2011 (ACT) may assist Mr Faris to understand when judicial notice may be taken of a fact. It provides:
(1) Proof is not required about knowledge that is not reasonably open to question and is—
(a) common knowledge in the place in which the proceeding is being held or generally; or
(b) capable of verification by reference to a document the authority of which cannot reasonably be questioned.
Costs of removing defective construction works are plainly not matters about which judicial notice may be taken. At present, it is difficult to understand the error that Mr Faris alleges the magistrate made.
The asserted legal errors also have difficulties. Mr Faris seeks to argue that damages for breach of contract are compensatory. As part of this argument, counsel for Mr Faris argued that because the contract between the parties was only for $30,000, to award an amount for removal of $60,000 and rectification of $57,000 gives Ms Savage a windfall.
The starting point for the assessment of damages for breach of contract is to place the innocent party in the same situation, so far as money can do it, as he or she would have been in if the contract had been performed, subject to the rules as to remoteness of damage and to the plaintiff’s duty to mitigate his loss: Burns v Man Automotive (Aust) Pty Ltd (1986) 161 CLR 653 at 667, 672; Hungerfords v Walker (1989) 171 CLR 125 at 143.
All that the magistrate appears to have found is that removal and rectification is what was required to put Ms Savage in the same position that she would have been in had the contract been competently performed. The magistrate made it clear that the amount did not include the remainder of the contracted work that had not been commenced. That it costs more than the value of the original contract to restore Ms Savage to the position she would have been in due to the actions of Mr Faris does not amount to a ‘windfall’. The Magistrate found that Ms Savage had paid for the work.
Again, the substantive argument has not been fully developed, but a limited review of the merit of the legal argument that this Court is entitled to undertake on applications such as this does not reveal any obvious error by the magistrate in the approach her Honour took to determining quantum.
In short, having traversed the grounds of appeal, there is sufficient doubt about the merits of each that I consider that, combined with the other factors referred to above which slightly favour Ms Savage’s application, an order for security for costs is warranted.
What is the appropriate amount of security?
Mr Faris is seeking leave of the Court to adduce further expert evidence on appeal. The nature of the evidence is said to be from an expert in the building, construction and landscaping industry, and from a handwriting expert.
Ms Savage has already foreshadowed her objection to such evidence being led on appeal. That issue will need to be determined before the appeal, as it will affect the time allocated for the hearing of the appeal, whether expert evidence in reply will be required and whether the parties will need to cross-examine the experts if such evidence is led.
Before agitating that issue, the parties will need to give consideration to the fact that an appeal to this Court from the Magistrates Court is by way of re-hearing, not a hearing de novo: Hussain v Tam [2015] ACTSC 197 at [10]. The appellant will need to persuade this Court on appeal that it ought to grant leave to adduce further evidence pursuant to s 276 of the Magistrates Court Act 1930 (ACT). On a rehearing, the discretion to receive further evidence is exceptional rather than the default position: Fox v Percy at [22]. The circumstances here are that the nature of the evidence, being from expert witnesses, is material that could have been obtained prior to the hearing in the court below.
This issue is relevant to the quantum of security because it has the potential to expand what is an otherwise straightforward appeal into something akin to a hearing at first instance.
Given that Mr Faris has not yet been given leave to adduce the further evidence he has foreshadowed, I will not proceed on the basis that it will form part of the appeal. In the event that an order granting leave to adduce the expert evidence is subsequently made, liberty may be reserved to Ms Savage to apply for further security, to protect her position.
The quantum aspect of the application is supported by the affidavit of Mr Aulich, Ms Savage’s solicitor. His estimate of fees and disbursements (including counsel’s fees) is approximately $43,000. However, the estimate for solicitors’ fees of almost $30,000 includes multiple legal representatives attending conferences with counsel, reading the transcript, considering affidavit evidence, undertaking research, and preparing a draft outline of written submissions. This may be excessive, and may be duplicating work done by counsel, who is also briefed. The estimate is also on a solicitor/client basis, rather than on the ordinary basis.
That is not to say that the solicitors may not ultimately reasonably incur the fees that have been estimated by Mr Aulich. Rather, at this stage of the proceedings, I am not satisfied that it is appropriate to make provision for those costs by way of security. Having regard to those matters, the appropriate quantum of security is $20,000. If Ms Savage’s costs, reasonably incurred, approach the limit of the security that is currently considered to be appropriate, Ms Savage may seek to revisit the question of security in due course.
Conclusion
The orders are as follows:
(1) On or before 31 May 2019, the appellant is to provide security for costs in the amount of $20,000 either by paying such sum into court or by providing an irrevocable bank guarantee unlimited in time, or by otherwise providing security for the said amount in a manner satisfactory to the respondent.
(2) In the event of default of Order 1, the appeal will be stayed until the security is paid.
(3) The appellant is to pay the respondent’s costs of the application, such costs not to be recoverable until the appeal proceeding is concluded.
(4) Liberty is reserved to the respondent to apply for further security on 7 days’ notice to the appellant.
(5) The matter is to be placed in the Registrar’s callover list on Thursday 2 May 2019.
| I certify that the preceding thirty-nine [39] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: |
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