Foxgold Pty Ltd v Paterson

[2005] SASC 376

Supreme Court of South Australia

(Miscellaneous Appeal)

FOXGOLD PTY LTD v PATERSON

Judgment of The Honourable Acting Chief Justice Perry (ex tempore)

22 September 2005

PROCEDURE - COSTS - SECURITY FOR COSTS

The appellant was without means, all of her money having been applied towards payment of the District Court judgments from which she had appealed - consideration of the question whether her impecuniosity amounted to special circumstances within the meaning of SCR r 95.13b so as to justify the making of an order for security for costs - application granted.

SCR r 95.13b, referred to.
Fletcher and Ors v Federal Commissioner of Taxation (1992) 110 ALR 233; Chapman v Luminis Pty Ltd Federal Court, Tamberlin J, 24 April 2002, judgment No [2002] FCA 496; Archer Pty Ltd v Woodhead Australia Pty Ltd Supreme Court of South Australia, Lander J, 29 March 1995, judgment No S5020; Citicorp Australia Ltd v Cirillo (2003) 228 LSJS 132; Kennedy v McGeechan [1978] 1 NSWLR 314, considered.

FOXGOLD PTY LTD v PATERSON
[2005] SASC 376

Civil

1. PERRY ACJ.  (ex tempore)            The appellant, Gail Lorraine Paterson, has appealed to this Court against two judgments entered against her following a trial in the District Court.

2. As to the first judgment, the trial judge ordered that judgment be entered against the appellant in favour of the respondent, who was the plaintiff in the proceedings, for $210,350.35. That judgment was pronounced on 30 March 2005. The trial judge reserved questions of interest and costs.

3. In a separate judgment delivered on 29 June 2005 the trial judge held that a trust arose in favour of the respondent from the proceeds of sale of a house which had been owned by the appellant, to the extent of the amount which he had earlier found due to the respondent.

4. The notice of appeal was filed in this Court on 13 July 2005. Mr Milazzo for the respondent conceded that there was no question of the appeal being out of time. It appears that the judgment under appeal, that is the first of the judgments, was not sealed at the time, and that the questions of interest and costs were still at that stage outstanding, as was, for that matter, the issue of the trust.

5. The moneys derived from the sale of the house were held in a solicitor’s trust account. In view of the second of the judgments delivered by the trial judge, those moneys have now been paid out of the solicitor’s trust account to or for the benefit of the respondent. There is, however, a substantial amount of costs still due, being the costs of the District Court proceedings which the trial judge held were not to be paid out of the moneys held on trust.

6. The respondent now applies for security for costs of the appeal. The application is based essentially upon the impecuniosity of the appellant, and the fact that there is already a substantial amount of costs owing with respect to the District Court proceedings with no prospect of them being paid.

7. Mr Margitich, who appeared for the appellant on the hearing of the application for security of costs, very candidly conceded that his client had no assets and no ability to put up anything by way of security for costs of the appeal. The moneys which had been held in trust were the only moneys otherwise available to her. She is now destitute, as is her husband, and they have no source of income apart from social security. Furthermore, she has other creditors whom she is not in a position to pay.

8. Mr Margitich argued against the making of an order for security for costs on the ground that any order would effectively stifle her ability to proceed with an appeal, and that this would be unfair to her given the substantial amount involved in the judgment and the fact that the effect of the judgment has been to reduce her to a penurious state.

9. The application is brought pursuant to Supreme Court rule 95.13b. It has been well established that within the meaning of that rule, the impecuniosity of an appellant may amount to a special circumstance justifying an order for security. However, in exercise of the discretion the court must take into account any other relevant factor.

10. About the only other relevant factor which is identifiable in this case, is the question of the prospects of the success of the appeal.

11. I have perused the reasons for judgment of the District Court judge relating to both judgments which he pronounced. Without going into detail as to the nature of the claim, determination of the proceedings turned upon questions of credit of the parties and other witnesses. Their evidence was relevant to an alleged oral agreement which the respondent is said to have reached with the appellant. Pursuant to the alleged agreement, the appellant had, on the respondent’s case, agreed to repay moneys advanced to a bakery business with which the appellant was associated, or at least with which her husband was associated, the repayment to be effected from the proceeds of the sale of her house.

12. The trial judge did not accept the credit of any of the parties to the proceedings, but found that there was some corroboration of evidence given by the director who controlled the respondent as to the terms of the relevant conversation said to have constituted the contract, in the evidence of a witness whom he was prepared to accept, being a third party not directly involved in the matter.

13. As Mr Milazzo points out, this will be a difficult appeal, in the sense that to succeed, the appellant will have to overturn findings of credit made by the trial judge, which were largely made on the basis of his assessment of the witnesses.

14. I have carefully considered the matter, but in my view I am unable to find that the appeal has substantial merit. I would not rank the chances of success very high.

15. In all the circumstances, I am of the view that there are special circumstances justifying the making of an order for security for costs.

16. Furthermore, in the circumstances, I would exercise my discretion in favour of the making of the order sought.

17. I order that the appellant pay into court, by way of security for costs of the appellant, to the credit of the appeal the sum of $7500. Such amount to be paid into court on or before Friday, 7 October 2005.

18. Failing payment into court by that date the appeal will stand dismissed.

19. I should mention that in reaching the view which I have just expressed, I have taken into account the following authorities. Fletcher and Ors v Federal Commissioner of Taxation;[1] Chapman v Luminis Pty Ltd;[2] Archer Pty Ltd v Woodhead Australia Pty Ltd;[3] Citicorp Australia Ltd v Cirillo;[4] and Kennedy v McGeechan.[5]

    [1] (1992) 110 ALR 233.

    [2] Federal Court, Tamberlin J, 24 April 2002, judgment [2002] FCA 496 (unreported).

    [3]  Supreme Court of South Australia, Lander J, 29 March 1995, judgment No S5020 (unreported).

    [4] (2003) 228 LSJS 132.

    [5] [1978] 1 NSWLR 314.

20. I order that the appellant pay the costs of and incidental to the application for security for costs to be taxed.