Freitas Dos Santos v Moore
[2020] WASC 12
•28 JANUARY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: FREITAS DOS SANTOS -v- MOORE [2020] WASC 12
CORAM: REGISTRAR WHITBY
HEARD: 21 OCTOBER 2019
DELIVERED : 28 JANUARY 2020
PUBLISHED : 28 JANUARY 2020
FILE NO/S: CIV 3052 of 2017
BETWEEN: ELSA MARIA FREITAS DOS SANTOS
Plaintiff
AND
KIM IVAN MOORE
First Named First Defendant
MIDORI MOORE
Second Named First Defendant
Catchwords:
Costs - Application for security of costs - Rules of the Supreme Court 1971 (WA) O 25 r 1 - Security for costs where defendants say plaintiff is unable to meet any costs order
Legislation:
Rules of the Supreme Court 1971 (WA) O 25 r 1, O 25 r 3
Result:
Application refused
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr C Mcintosh |
| First Named First Defendant | : | Mr W Vogt |
| Second Named First Defendant | : | Mr W Vogt |
Solicitors:
| Plaintiff | : | J K Legal |
| First Named First Defendant | : | Vogt Graham Lawyers |
| Second Named First Defendant | : | Vogt Graham Lawyers |
Case(s) referred to in decision(s):
Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Cowell v Taylor [1885] 31 ChD 34
Gutta v Ierina [2010] WASC 402
Jenny Lee Boase ATF The Boase Family Trust v Brook [No 2] [2016] WASC 1
Lawless v MacKendrick [No 3] [2011] WASC 298
Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132
Spence Financial Group Ltd v GE Commercial Corporations (Australia) Pty Ltd [2007] WASC 15
Sugarloaf Hill Nominees Pty Ltd v Reward Projects Ltd [2011] WASC 19
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57
Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542
REGISTRAR WHITBY:
This is the defendants' application dated 14 October 2019 for orders as follows:
(a)Pursuant to O 25 r 1 of the Rules of the Supreme Court (WA) (RSC) the plaintiff do give security for the defendants' costs of the action in the sum of $83,863.40 by payment of that amount into the court; and
(b)that the plaintiff's claim by stayed pursuant to O 25 r 8 RSC.
For the reasons set out below, I am satisfied that an order for security for costs should not be made.
In support of the application the defendants rely upon the:
(a)affidavit of Willfried Vogt in support of defendants' application for security for costs sworn 14 October 2019; and
(b)defendants' outline of submissions in support of application for security for costs dated 21 November 2019.
In opposition to the defendants' application, the plaintiff relies upon the:
(a)affidavit of Elsa Maria Freitas Dos Santos sworn 28 October 2019; and
(b)plaintiff's submissions in opposition to the defendants' application for security for costs dated 3 December 2019.
The proceeding
The proceeding was commenced by writ of summons filed on 1 September 2017. Since the commencement of the proceeding, the plaintiff has amended both the indorsement of claim and the statement of claim (on a number of occasions). The most recent substituted statement of claim was filed on 26 September 2019 as the result of a successful application by the defendants to strike out a portion of the plaintiff's statement of claim.[1]
[1] Order of Acting Principal Registrar Whitby made on 22 July 2019.
In this proceeding, the plaintiff seeks a declaration that the defendants hold, on constructive trust for her, her undivided half share in 24 Crossfield Street, Thornlie (the Property).
The plaintiff pleads that a declaration for a constructive trust arises due to the following circumstances:
(a)in 1996, the plaintiff and the first defendant purchased the Property as joint tenants;
(b)on 12 August 1999, the defendants executed a transfer of land document for the transfer of the plaintiff's undivided share in the Property to the second defendant for the amount of $41,750;
(c)although the transfer is purportedly signed by the plaintiff, she did not in fact sign the transfer; and
(d)the transfer was executed by the defendants when the defendants knew that the plaintiff had not agreed to transfer her interest in the Property and that the plaintiff's signature on the transfer had been forged.[2]
[2] Plaintiff's substituted statement of claim filed 26 September 2019.
The defendants plead that the plaintiff has no interest in the Property and that the plaintiff executed the transfer - therefore, the defendants did not forge the transfer.[3]
[3] Defence of the first and second defendants to the plaintiff's substituted statement of claim filed 10 October 2019.
Legal principles
Order 25 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) provides:
The court may order security for costs to be given by a plaintiff, but no order shall be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him.
Examples of the grounds upon which an order for security for costs may be made are set out in O 25 r 2 RSC. None of those examples are applicable to this application.
Order 25 r 3 RSC provides:
The granting of security shall be in the discretion of the court, and in determining whether an order should be made the court shall take into consideration –
(a)the prima facie merits of the claim;
(b)what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff; and
(c)whether the normal processes of the court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff.
The court has an unfettered discretion to order security for costs. The discretion is to be exercised with regard to the circumstances of each particular case.[4] As Newnes J observed in Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd:[5]
It is well established that the discretion to order security for costs is unfettered and depends upon an examination of all of the relevant circumstances. The circumstances in which the discretion should be exercised cannot be stated exhaustively. They will vary from case to case and the weight to be given to any circumstance in a particular case will depend not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. (citations omitted)
[4] Spence Financial Group Ltd v GE Commercial Corporations (Australia) Pty Ltd [2007] WASC 15 [33] ‑ [34].
[5] Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 [57].
In Westonia Earthmoving Pty Ltd,[6] Edelman J listed the 'most commonly cited, non‑exclusive factors' (emphasis added) which guide the court's discretion:
[6] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [4].
(i)the strength and bona fides of the plaintiff's case;
(ii)the likelihood of the plaintiff being unable to pay the defendant's costs;
(iii)whether the plaintiff's impecuniosity was caused by the defendant's conduct which is the subject of the claim;
(iv)whether the application for security is oppressive;
(v)whether the award of security would deny an impecunious applicant a right to litigate;
(vi)whether there are persons standing behind the plaintiff who were likely to benefit from the litigation;
(vii)whether the persons standing behind the plaintiff have offered any security or personal undertaking to be liable for the costs, and if so, the form of such an undertaking;
(viii)whether the applicant was in substance a plaintiff or proceedings were defensive in the sense of directly resisting proceedings already brought or seeking to halt the defendant's self‑help procedures;
(ix)whether the application for security had been brought promptly;
(x)whether the applicant has any rights which it can exercise against assets of the plaintiff to satisfy an order for costs in its favour; and
(xi)any factors relating to public interest.
The defendants bear the onus of satisfying the court that it should exercise its discretion and order security for costs.[7]
[7] Sugarloaf Hill Nominees Pty Ltd v Reward Projects Ltd [2011] WASC 19 [34(f)].
The defendants submit that an exercise of the court’s discretion to award security for costs is supported by the following grounds:
(a)the impecuniosity of the plaintiff is manifest;
(b)the plaintiff has outstanding costs orders against her in respect of this matter which remain undischarged; and
(c)the plaintiff's claim is relatively weak.
Impecuniosity of the plaintiff
The plaintiff admits that she has no ability to pay any order for security for costs and that there is no‑one who can advance funds to her to satisfy any order for security for costs.[8] It follows that the plaintiff is unlikely to be able to meet an award for taxed costs made against her in the event she is unsuccessful at trial.
[8] Affidavit of Elsa Maria Freitas Dos Santos sworn 28 October 2019 pars 16 ‑ 18.
Establishing the impecuniosity of the plaintiff is, in isolation, insufficient to justify the making of a security for costs order. It is one of the circumstances that must be weighed with the other relevant circumstances of the case.
Viewed from another perspective, the plaintiff's impecuniosity can serve as a compelling factor against the making of an order for security for costs. The court’s role is to guard the rights of an individual to access justice, even where he or she is impecunious. This is reflected in the drafting of O 25 r 1 RSC. It is a well‑established principle that poverty is no bar to a litigant.[9] In Yandil Holdings Pty Ltd v Insurance Co of North America,[10] Clarke J said:
[t]he fact that the ordering of security will frustrate the plaintiff's rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the court's discretion in the plaintiff's favour.' (emphasis added)
[9] Cowell v Taylor [1885] 31 ChD 34, 38.
[10] Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542, 545.
In my view, the impecuniosity of the plaintiff is a compelling reason not to order security for costs against the plaintiff. To make such order would have the effect of stultifying the plaintiff's action.
Undischarged costs orders
The plaintiff does not dispute that there is an undischarged costs order in favour of the defendant for $495. This fact is evidence of the plaintiff's impecuniosity.
The undischarged costs order is a factor to consider. However, in my view it does not outweigh the overriding consideration that to order security for costs would stultify the plaintiff's action.
Strength and bona fides of the plaintiff's case
In Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd,[11] French J (as he then was) said:
As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.
[11] Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, 514.
In Jenny Lee Boase ATF The Boase Family Trust v Brook [No 2],[12] Chaney J adopted the general rule espoused in Bryan Fencott:
I do not propose, in the context of this interlocutory application, to embark upon a detailed analysis of the parties' respective cases on the pleadings and the 23 affidavits filed by the plaintiff. In the absence of any evidence from the defendant, the documents to be relied upon at trial, evidence that may emerge in cross-examination, and the benefit of the parties' submissions at trial, any assessment of the relative merits of the respective cases would be at best unreliable. At this advanced stage of the proceedings, it is appropriate to proceed on the basis of what Beazley J described as the 'general rule' that the claim is bona fide with a reasonable prospect of success.
[12] Jenny Lee Boase ATF The Boase Family Trust v Brook [No 2] [2016] WASC 1 [29].
In Lawless v MacKendrick,[13] Kenneth Martin J, in considering an application for security for costs pursuant to O 25 r 1 RSC, observed:
It is rarely appropriate (or feasible for that matter), on a security for costs application, to minutely assess the potential merits of a case that must ultimately be determined at a trial by the resolution of conflicting factual evidence.
[13] Lawless v MacKendrick [No 3] [2011] WASC 298 [25].
Counsel for the defendants submits that upon a review of the plaintiff's pleadings, there is a conspicuous absence of any material facts which give rise to an indication that there is any actual evidence of the defendants either engaging in an act of forgery, or actual knowledge of any forgery.
Counsel for the defendants refers to the case of Gutta v Ierina,[14] as authority for the proposition that the court's determination of the plaintiff's evidence is of fundamental importance to her success in this case and cites the following passage from the judgment of Mazza J:
Unless I believe her evidence that she did not sign the transfer, her claim, as pleaded, must fail. Accordingly, her evidence must be closely analysed.[15]
[14] Gutta v Ierina [2010] WASC 402.
[15] Gutta v Ierino [127].
Counsel for the defendants relies upon the fact that the plaintiff has failed to adduce any expert evidence on handwriting in relation to whether the signature on the transfer of land document is a forgery, which is a matter to be proven by the plaintiff, in support of the defendants’ application for security for costs. While counsel accepts that the court is not in a position to assess the evidence, counsel submits that the court is in a position to assess the material facts which are contained in the substituted statement of claim to support the contention of forgery or actual knowledge of forgery.
I am satisfied that the statement of claim contains sufficient material facts to disclose a cause of action. It is not appropriate, nor possible, for me to assess the merits of this case. The decision in Gutta v Ierino was reached after a trial and a detailed analysis of the plaintiff's evidence. I am of the view that this application should be determined on the basis that the plaintiff's claim is bona fide with a reasonable prospect of success. It is a matter for the trial judge to determine the strength, or otherwise, of the plaintiff's evidence and her credibility.
Conclusion
For the reasons set out above I find that, having considered all of the circumstances of the case, an order for security for costs should not be made. I will hear the parties as to the appropriate form of order.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Court Officer28 JANUARY 2020
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