Fleming v Marshall

[2010] NSWCA 356

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Fleming v Marshall [2010] NSWCA 356
This decision has been amended. Please see the end of the judgment for a list of the amendments.

FILE NUMBER(S):
2010/62931

HEARING DATE(S):
10 December 2010

EX TEMPORE DATE:
10 December 2010

PARTIES:
Francis G Fleming (First Appellant)
Marc S Moller (Second Appellant)
Steven R Pounian (Third Appellant)
James P Kreindler (Fourth Appellant)
David C Cook (Fifth Appellant)
David Beekman (Sixth Appellant)
Bianca I Rodriguez (Seventh Appellant)
Noah H Kushlefsky (Eighth Appellant)
Robert J Spragg (Ninth Appellant)
Brian J Alexander (Tenth Appellant)
Justin T Green (Eleventh Appellant)
Margaret Lesley Marshall (First Respondent)
Kim Neil Marshall (Second Respondent)

JUDGMENT OF:
Macfarlan JA Sackville AJA    

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
2009/11113

LOWER COURT JUDICIAL OFFICER:
Rothman J

LOWER COURT DATE OF DECISION:
19 February 2010

LOWER COURT MEDIUM NEUTRAL CITATION:
Marshall v Fleming [2010] NSWSC 86

COUNSEL:
P Braham SC/E Bishop (Appellants)
C J Bevan (Respondents)

SOLICITORS:
Kennedys (Appellants)
Turner Freeman (Respondents)

CATCHWORDS:
PRACTICE AND PROCEDURE - Uniform Civil Procedure Rules rr 51.50 and 42.21 - security for costs of appeal against refusal to stay proceedings on the forum non conveniens basis - whether "special circumstances" established - whether foreign appellants should be required to provide security before issue of forum resolved

LEGISLATION CITED:
Uniform Civil Procedure Rules

CATEGORY:
Procedural and other rulings

CASES CITED:
Charara v Integrex Pty Ltd [2010] NSWCA 342
Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247
Transglobal Capital v Yolarno Pty Ltd [2004] NSWCA 136; (2004) 60 NSWLR 143

TEXTS CITED:

DECISION:
Subject to the orders made by Handley AJA, the Notice of Motion is dismissed with costs, including such costs of the Notice of Motion as were reserved by Handley AJA.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 2010/62931

MACFARLAN JA
SACKVILLE AJA

10 DECEMBER 2010

FLEMING v MARSHALL

Judgment – Security for Costs

1. MACFARLAN JA:  Earlier this morning the Court granted leave to appeal from the decision of Rothman J of 19 February 2010 in this matter and fixed the appeal for hearing on 25 February 2011.  The proceedings are ones in which the respondents claim damages from the appellants, who are New York attorneys, for breach of contract and of tortious duty of care, and for conspiracy.  It remains for the Court to deal with that part of the respondents’ Notice of Motion filed on 10 June 2010 that sought an order that the appellants provide security for costs of the proceedings in this Court.

2. Power to order security in respect of the costs of an appeal is conferred by the Uniform Civil Procedure Rules r 51.50. This rule permits security to be ordered only where “special circumstances” exist. The rule provides that the Court’s general powers to order security, under r 42.21, are not affected by the rule. However I consider that where the question is whether security should be ordered for the costs of an appeal, security should not be ordered without “special circumstances” as contemplated by r 51.50 being found to exist.

3. As this Court pointed out in Transglobal Capital v Yolarno Pty Ltd [2004] NSWCA 136; (2004) 60 NSWLR 143, to be “special”, circumstances must be “out of the ordinary” or “unusual” (at [20]).

4. In my view there are no special circumstances present here that would warrant an order for security being made.

5. The respondents do not contend that the appellants are, or may be, impecunious.  Indeed they expressly disavow any such contention.  They do however contend something that is of a not dissimilar nature, namely, that there are, or may be, difficulties in enforcing any order for costs, or indeed any judgment, against the appellants in New York.

6. I do not consider that the argument should be accepted as justifying an order for security.

7. First, the respondents have chosen to commence proceedings in Australia against the New York resident appellants.  If the respondents have doubts as to their ability to enforce in New York any judgment or order obtained by them, these doubts constitute risks that the respondents must have been prepared to assume by taking action in Australia.  They are a natural concomitant of the course chosen by the respondents and do not in my view constitute relevant special circumstances.

8. Secondly, even if the respondents’ case had risen to alleging and proving impecuniosity of the appellants, that would not of itself ordinarily have established the existence of relevant special circumstances (Transglobal at [31]; Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18]).

9. Factors militating against the respondents’ application for security include the following.  For the purpose of considering the appellants’ application for leave to appeal it was necessary for the Court to examine the judgment at first instance and also detailed written submissions of the parties as to the merits of an appeal.  Such examination indicated that the appeal would be a distinctly arguable one, raising important and difficult questions concerning the grant of a stay on the forum non conveniens basis.  The subject appeal is accordingly not “hopeless, unreasonable or of an harassing nature”, these being factors that, if present, might well have rendered an order for security appropriate (Preston at [18] and [36]).

10. A further factor pointing against an order for security is that this is not a case in which the respondents have succeeded at first instance in obtaining a final judgment in their favour.  As yet there has of course been no determination of the merits of their allegations of breach of contractual retainer and of duty of care, and of conspiracy.  There is accordingly no presumption to be made, prima facie or otherwise, that those allegations are correct (compare Transglobal at [22]). Rather, the position is that the respondents are attempting to have their claims heard in Australia, that the appellants are resisting that occurring and that there has been a determination at first instance but not yet on appeal as to whether that should be allowed. At least until the issue of forum has been resolved against them (if that in fact occurs), the appellants should not in my view be required to bring funds into the jurisdiction to provide security for the respondents.

11. The respondents’ application for security embraces the costs of the application for leave to appeal that was determined this morning, as well as those of the appeal itself.  As indicated by the decision of McColl JA in Charara v Integrex Pty Ltd [2010] NSWCA 342, r 51.50 is only applicable to the costs of an appeal, not an application for leave to appeal (see at [10]). Rule 42.21 and the inherent jurisdiction are sources of power to order security in respect of an application for leave to appeal. Although these sources of power do not necessarily require special circumstances to be established, the reasons I have given earlier for not ordering security in respect of the appeal in my view also lead to the conclusion that security should not be ordered in respect of the application for leave to appeal, or indeed in respect of the application for an extension of time for leave to appeal that was made.

12. For these reasons, the respondents’ application for security for costs should be rejected.  As certain orders were made by Handley AJA on 28 June 2010 pursuant to the respondents’ Notice of Motion, the appropriate order to be made now is that, subject to the orders made by Handley AJA, the Notice of Motion be dismissed with costs, including such costs of the Notice of Motion as were reserved by Handley AJA.

13. SACKVILLE AJA:  I agree with the order proposed by the Presiding Judge and with his Honour’s reasons.  I add only that I am not satisfied, apart from the matters referred to by the Presiding Judge, that the evidence establishes that there will be substantial difficulty in enforcing any order for costs in New York.  That may be the case but if it is to be relied upon it should be the subject of evidence establishing a sound basis for a finding to that effect. 

14. MACFARLAN JA:  The orders that the Court makes are those which I have proposed earlier. 

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AMENDMENTS:

15/02/2011 - Case Title - Paragraph(s) Coversheet

LAST UPDATED:
15 February 2011