Gladwin-Grove v Zinzan (WA) Pty Ltd - [2019] WADC 68

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   GLADWIN-GROVE -v- ZINZAN (WA) PTY LTD [2019] WADC 68
CORAM:   DAVIS DCJ
HEARD:   25 MARCH 2019
DELIVERED          :   17 MAY 2019
FILE NO/S:   APP 106 of 2018
BETWEEN:   CHANTELLE MAREE GLADWIN-GROVE
Appellant
AND
ZINZAN (WA) PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :   MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram:   MAGISTRATE DARGE
File Number             :   PER/GCLM/1426/17

Catchwords:

Appeal from Magistrates Court - Application by appellant to adduce further evidence - General principles on an application for leave to adduce further evidence in an appeal

Legislation:

District Court Rules 2005, r 50
Magistrates Court (Civil Proceedings) Act 2004, s 40

Result:

Application allowed

Representation:

Counsel:

Appellant	:	Ms A A Cooper
Respondent	:	In Person

Solicitors:

Appellant	:	Murcia Pestell Hillard
Respondent	:	Not applicable

Case(s) referred to in decision(s):

Devereaux-Warnes v Hall [No 2] [2006] WASCA 268
FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241
Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd [2007] WASCA 10; (2007) 33 WAR 182
Lackovic v Insurance Commission of Western Australia [2006] WASCA 38; (2006) 31 WAR 460
Prow Pty Ltd v Commissioner for Police [2012] WASC 363
Sammut v AVM Holdings Pty Ltd [2011] WASC 194
Saunders v The Public Trustee [2015] WASCA 203
Shenton v Touchstone Farms Pty Ltd [2015] WASCA 252
Shilkin v Taylor [2011] WASCA 255
Veneziano Coffee Roasters WA Pty Ltd v Healthy Nut Café Pty Ltd [2018] WASC 363
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57

DAVIS DCJ:

On 22 October 2018 the appellant, Ms Gladwin-Grove, filed an appeal from a decision of Magistrate Darge of the Magistrates Court, delivered on 1 October 2018, dismissing her application for security for costs from the respondent company, Zinzan (WA) Pty Ltd (Zinzan). That company was the plaintiff or claimant in the Magistrates Court proceedings.
Ms Gladwin-Grove has filed an application in this appeal for leave to adduce further evidence, and leave to amend her grounds of appeal.
For the reasons which follow, I allow the application.

Background to this appeal

Zinzan is a private company with a share capital of $100. Its sole director and shareholder is Mr Ian Hugh Sargent.
Zinzan operated a real estate business known as WA Prestige Properties and Mr Sargent was the principal of the business, with each of Zinzan and Mr Sargent holding licenses under the Real Estate and Business Agents Act 1978.
On 19 April 2017 Zinzan filed a general procedure claim in the Magistrates Court, claiming a selling fee from Ms Gladwin-Grove, payable pursuant to a written listing authority, following the sale of her Subiaco property.
Ms Gladwin-Grove filed a defence on 18 May 2017. In essence, the defence was that she had sold the property as a result of an unsolicited approach from a representative of the eventual purchaser and Zinzan had not been involved at all in the sale. Accordingly, Zinzan was not the effective cause of the sale of the property and did not have any contractual entitlement to a selling fee.
On 26 June 2018 Ms Gladwin-Grove filed an application seeking orders that Zinzan provide security for costs in the sum of $40,000. The application for security for costs was made pursuant to s 1335(1) of the Corporations Act 2001 or alternatively pursuant to r 94B and r 95F of the Magistrates Court (Civil Proceedings) Rules 2005.
The application was supported by two affidavits, one from Ms Gladwin‑Grove and another from her lawyer, both sworn 25 June 2018. Among the annexures to Ms Gladwin-Grove's affidavit were the following documents:
(a)An Australian Securities and Investment Commission (ASIC) search of Zinzan.
(b)An ASIC notification, registered on 10 November 2017, that a controller had been appointed to property held by Zinzan. That property was an Audi 8 motor vehicle.
(c)An article published online by Consumer Protection (the Department of Commerce) concerning a decision of the State Administrative Tribunal (SAT) to reprimand Zinzan trading as WA Prestige Properties and its sole director and licensee Mr Sargent, resulting in a nine month suspension of Zinzan's real estate agent licence commencing 1 June 2016.
(d)A copy of the SAT decision, which was dated 4 April 2016, and orders made as published online.
Relevantly for this application, the orders made by SAT included the following (where the 'First Respondent' is a reference to Zinzan and the 'Second Respondent' is a reference to Mr Sargent):
4. Being satisfied by reason of the Respondents' admissions that the First Respondent contravened section 61(4), 61(5), 68(4) and 68(5) of the Real Estate Business and Agents Act 1978, and that the Second Respondent contravened section 7(1) of the Code of Conduct for Agents and Sales Representatives 2011 and in order to give effect to the agreed terms of settlement of the proceedings, it is ordered pursuant to section 54(8) of the State Administrative Tribunal Act 2004:
(a)The First and Second Respondents are officially reprimanded by the Tribunal pursuant to section 103(1)(a) of the Real Estate and Business Agents Act 1978;
(b)Pursuant to section 103(c) of the Real Estate and Business Agents Act 1978, the First Respondent's licence and triennial certificate be suspended until the later of:
(i) the expiration of nine months from the date of the commencement of the suspension; or
(ii) the date upon which the sum referred to in paragraph 4(e) below is paid;
(c)Pursuant to section 103(c) of the Real Estate and Business Agents Act 1978, the Second Respondent's licence and triennial certificate be suspended until the later of:
(i) the expiration of nine months from the date of the commencement of the suspension; or
(ii) the date upon which the sum referred to in paragraph 4(e) below is paid;
(d)The suspension is referred to in paragraphs 4(b) and 4(c) above commence on 1 June 2016 or the date that the $50,000 is paid through cleared funds to the Department of Commerce, whichever is the earlier;
(e)The First and Second Respondents pay $50,000 to the Department of Commerce on or before 1 June 2016 pursuant to section 103(1)(d)(i) of the Real Estate and Business Agents Act 1978;
(f)The First and Second Respondents pay the Applicant's costs of $2000 pursuant to section 87(2) of the State Administrative Tribunal Act 2004.
Zinzan opposed the application for security for costs and Mr Sargent filed an affidavit sworn 16 July 2018. Among other things, he stated that:
(a)He had reached an agreement with the controller of the Audi 8 for the 'eventual refinancing and return' of the vehicle. Mr Sargent stated that the amount to be refinanced was $15,000 and he produced a letter from the controller dated 13 July 2018 setting out a repayment plan of $200 a month for six months which would 'bring loan below 365 days delinquent'. It was anticipated that once the 6 month trial was satisfied, the vehicle would be returned.
(b)Zinzan had not traded from 1 June 2016 as a result of the suspension of real estate licences and did not recommence trading until June 2017, as a sub-contractor in the new homes construction industry, marketing house and land packages and then from January 2018 in the capacity of sub-contract work in the building industry. Income from that was ongoing.
(c)Zinzan had not yet completed or lodged income tax returns for 2016/2017 or 2017/2018. It had requested its accountant to produce a balance sheet and profit and loss statement from 1 January 2018 and a list of managements currently held for the claimant at M & M Property, 'as well as a list that will be transferred by other landlords once the claimant relaunches WA Prestige Properties'.
(d)He had been in a PAYG position for M & M Property since September 2017. As a sales representative he had commenced what he had described as 'parking managements' with them also, with the intention of signing them over to WA Prestige Properties 'when it is time to recommence trading'. Mr Sargent expected that to happen within the next six months and that moving forward, Zinzan would cease activity in the building industry and recommence trading as WA Prestige Properties, as well as importing and distributing lifts, escalators and travelators.
(e)He anticipated that by the time the matter reached trial 'from early next year' there would be no issue of Zinzan meeting the payment related to an adverse costs judgment.
(f)He was considering setting up a 'Go Fund Me' page to obtain funds to take the Magistrates Court proceedings to trial.
The hearing of the application for security for costs took place on 31 August 2018.
In submissions, both oral and written filed on 31 August 2018, Ms Gladwin-Grove emphasised the following facts and circumstances to establish that Zinzan would be unable to pay the costs of the action if she was successful:
(a)Zinzan is a private company with limited liability and an issue share capital of $100;
(b)the appointment of a controller to Zinzan's assets on 10 November 2017;
(c)Zinzan did not own any real property;
(d)Zinzan's business, WA Prestige Properties, ceased to trade for 12 months from 1 June 2016 following a suspension of its real estate licence, following the decision made by SAT;
(e)the publication of that decision online by the Department of Commerce (Consumer Protection); and
(f)Ms Gladwin-Grove's reasonable concern that the financial viability of Zinzan's business would be adversely affected by the decision of SAT, which is available online, and the publication of that decision by the Department of Commerce (Consumer Protection).
On 1 October 2018 his Honour Magistrate Darge dismissed Ms Gladwin‑Grove's application, delivering written reasons for doing so.

The learned magistrate's reasons for decision

The magistrate correctly set out that there was a 'threshold' requirement on an application for security for costs brought pursuant to s 1335(1) of the Corporations Act 2001, as set out in the Court of Appeal decision in FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241, 247 [20] (Pidgeon & Owen JJ). The test is to ask whether there is the existence of credible testimony that there is reason to believe that the corporation will be unable to pay a successful defendant's costs.
The magistrate also recognised that if the threshold requirement is met, the matters relevant to the exercise of the discretion to order security for costs are those as set out by Edelman J in Westonia Earthmoving Pty Ltd vCliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [6] (although that is not an exhaustive list).
The magistrate went through all of the matters set out in the affidavits of each of Ms Godwin-Grove, her lawyer and Mr Sargent. The magistrate observed in [16] of his reasons that Mr Sargent, while accepting the financial problems that he and Zinzan endured following the SAT decision and the suspension of his and Zinzan's licence, did not admit the impecuniosity of Zinzan.
The magistrate expressly found in [17] of the reasons that Mr Sargent's affidavit had described 'with some limited degree of precision' the financial status of Zinzan and had not yet been able to produce accurate financial records, but that Mr Sargent's affidavit suggested that the company had been carrying out work in the building sector and that it would be operating the WA Prestige Properties business in the near future.
The magistrate also:
(a)Noted that Mr Sargent was candid from the bar table that neither he nor Zinzan was in a position to pay the large sum claimed as security if required to pay it now, but believed that the business of Zinzan would be improving: reasons at [18].
(b)Stated that he did not consider the share capital of $100 had any great significance as the issued share capital of a company is not a direct reflection of its value but simply how the directors amongst themselves wish to allocate a value: reasons at [20].
(c)Addressed the appointment of the controller to Zinzan which as the magistrate observed was 'a more complicated proposition'. The magistrate referred to the arrangements that Mr Sargent had made in relation to payments for the Audi 8 motor vehicle, and ultimately came to the view that while this appointment of the controller showed a past impecuniosity, it was not overwhelming proof of a current impecuniosity or of a reasonable basis for belief that Zinzan would be unable to pay costs: reasons at [23] to [26].
(d)Noted that it had not been disputed by Zinzan that it had no real property in its name, but expressed doubts that this was proof of Zinzan's impecuniosity: reasons [27].
(e)Noted that Zinzan had ceased to trade from 1 June 2016, the date of the suspension (the reasons state the date as '1 June 2017', but I consider that to be a typographical error), until 1 June 2017, 'a few months after the suspension was listed [sic – lifted]'. The magistrate made the observation that the information went to support a suggestion that Zinzan was financially challenged during the period of suspension but did not go to its current financial position: reasons at [28].
(f)Addressed concerns raised by Ms Gladwin-Grove in her affidavit about the effect of the publication of the SAT decision on Zinzan's money making potential. The magistrate observed that while it was easy to accept that this may have influenced the profitability of the company at the time, he doubted the suspension and publication would prevent Zinzan from marketing itself in August 2018. He also did not believe Ms Gladwin-Grove's concerns was a relevant consideration: reasons at [29] to [31].
The magistrate concluded as follows at [32] - [34] of his written reasons:
For reasons stated above I am of the view that the Defendant has not established to my reasonable satisfaction that the Claimant would be unable to pay the legal costs if it was unsuccessful in its claim.
This is based on the fact that the information put forward suggests that at a time in the fairly recent past the Claimant underwent an extreme financial challenge due to it and its directors, [sic] suspension from practising in its prime profession. However, the evidence does not satisfy me that the company would be unable to pay the costs at the present moment of the Defendant or the costs at the time this matter is likely to proceed to trial.
I recognise the difficulty facing the Defendant in making such an application however it is important to appreciate that the difficulty is inherent in the common law and that the legislation. In his dissenting judgement in FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd Murray J said, at 51:
"Having said that, I have sympathy for the position of the Defendant who, as was apparently the case with the Applicant, has difficulty in assembling the credible testimony necessary to establish the jurisdictional threshold facts required of it by the section. However, such consideration may not, of course, divert the court from a clear view as to the meaning and the requirements of the law".
After dismissing the application, in case he was wrong about the failure to meet the threshold, the magistrate went on to consider the discretionary factors as set out by Edelman J in Westoniaand also set out in r 95D(2) of the Magistrates Court (Civil Proceedings) Rules (reasons [36] onwards).
While noting that the application for security for costs was denied on the basis that there was an insufficiency of testimony establishing that Zinzan would be unable to pay costs if Ms Gladwin-Grove was successful in the action, the learned magistrate stated at [70] that he would have exercised the discretion in favour of Zinzan in any event, principally due to the merits of its claim.

The grounds of appeal

The current appeal grounds address both the threshold requirement of credible evidence that there is reason to believe that Zinzan will be unable to pay Ms Gladwin-Grove's costs if she were successful in her defence in the Magistrates Court proceedings and the exercise of discretion. The grounds are lengthy, with a number of particulars, and what follows is necessarily a short summary.
Ground 1 is that the magistrate erred in failing to find that there was reason to believe that Zinzan will be unable to pay Ms Gladwin-Grove's costs if she is successful in her defence in the Magistrates Court proceedings.
Ground 2 sets out that the magistrate gave insufficient weight to the evidence or circumstances relied upon by Ms Gladwin-Grove (most of which I have set out in [13] above) to establish there was a reason to believe that Zinzan was unable to pay those costs.
Ground 3 sets out that the magistrate erred in making certain factual findings, in particular those which I have set out in [19] above.
Grounds 3 and 4 also set out errors in the exercise of discretion by the magistrate, including making an erroneous assessment of the merits of Zinzan's claim, and also giving undue weight to his assessment of the merits compared to other discretionary factors.

The further evidence sought to be adduced by the appellant in this appeal

The further evidence sought to be adduced consists of:
(a)a creditor's petition filed 22 August 2018 in Federal Circuit Court proceedings, PEG436/2018 and the supporting affidavit verifying the creditor's petition of Andrea Louise Wilson dated 20 August 2018. This was a creditor's petition filed by the Department of Mines, Industry Regulation and Safety, formally the Department of Commerce, (the Department) to recover $48,600, being the outstanding amount of $50,000 ordered to be paid jointly by Zinzan and Mr Sargent, pursuant to O 4(e) of the orders made by SAT on 14 April 2016; and
(b)information set out in the affidavit of Ms Gladwin-Grove sworn 12 February 2019 in support of the application in this appeal, par 16(a), regarding the fact that payments to the Department totalling $1,400 were made by Mr Sargent towards the $50,000 debt.
This evidence, which I will refer to as the 'further evidence', relates to the non-payment by Zinzan of the $48,600 to the Department. For ease of reference, I will refer to the outstanding sum of $48,600 as the 'judgment debt'.
On the basis that the application for leave to adduce the further evidence is successful, the second part of Ms Gladwin-Grove's application is for leave to amend her grounds of appeal. The proposed amendments are to add grounds of appeal that the court ought to be satisfied, both by reason of the evidence which was before the magistrate at first instance and the further evidence, that there was and is reason to believe that Zinzan will be unable to pay Ms Gladwin‑Grove's costs if she is successful in her defence in the Magistrates Court proceedings, and that the court's discretion ought to be exercised in favour of Ms Gladwin‑Grove.
The circumstances of the discovery of the further evidence are set out in the affidavit of Ms Gladwin-Grove sworn 12 February 2019.
After the commencement of this appeal, her lawyers became aware, during the course of a case management hearing on 27 November 2018, that Mr Sargent was involved in Federal Court proceedings.
The lawyers undertook inquiries and discovered that these were bankruptcy proceedings brought by the Department and that the Department had filed the creditor's petition on 22 August 2018.
Ms Gladwin-Grove's lawyers then undertook a search of Mr Sargent on the National Personal Insolvency Index on 28 November 2018. That did not reveal details of the creditor's petition issued by the Department.

However, on or around 5 December 2018, Ms Godwin-Grove's lawyer telephoned the Department and requested a copy of the creditor's petition. That was provided under cover of a letter from the Department dated 6 December 2018.
I should record that I was advised during the hearing of this application that the bankruptcy proceedings by the Department against Mr Sargent had been dismissed on 12 February 2019 by consent of the parties.

General principles on an application for leave to adduce further evidence in an appeal

Considerations relevant to the exercise of the discretion to permit the admission of fresh or new evidence will vary depending upon the statutory context in which the discretionary power is conferred: Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd [2007] WASCA 10; (2007) 33 WAR 182 [13].
The District Court Rules 2005 r 50 provides that:
(1)An appeal to the court must be by way of a reconsideration of the evidence that was before the primary court, unless the parties agree otherwise.
(2)At the hearing of an appeal, a party must not adduce evidence that was not adduced in the primary court except with the leave of the court.
(3)The court is not to grant such leave unless satisfied there are special grounds for doing so.
(4)The rule is subject to the written law that provides for the appeal to be made to the court.
The written law that provides for the appeal to be made to the court is s 40 of the Magistrates Court (Civil Proceedings) Act 2004 (MCCPA). Pursuant to s 40(4) of the MCCPA this court must decide the appeal on:
(a)the material and evidence that were before the magistrate; and
(b)any other evidence that it gives leave to be admitted.
Section 40(5) of the MCCPA provides that leave may only be given to admit other evidence in 'exceptional circumstances'.
It is not helpful to attempt to describe what constitutes 'exceptional circumstances'. The variety of circumstances that might arise is inexhaustible and restating the statutory test in different words would serve no useful purpose: Shilkin v Taylor [2011] WASCA 255 [68].
Another consideration is whether the evidence is new or fresh evidence: Devereaux-Warnes v Hall[No 2] [2006] WASCA 268 [26]; Saunders v The Public Trustee [2015] WASCA 203 [88]. Fresh evidence is evidence that could not have been obtained with reasonable diligence at the time. New evidence, on the other hand, is evidence which could have been so obtained: Devereaux-Warnes v Hall [25]; Shenton v Touchstone Farms Pty Ltd [2015] WASCA 252 [25].
Generally, the discretion will be exercised against admitting evidence which is not fresh: Saunders [88].
It will also be relevant to consider the strength of the evidence and whether it is contested. If evidence is contested, that will be a factor counting against its admission in the appeal: Goninan [11]; Saunders [89].
Ordinarily the court will refuse to admit additional evidence unless satisfied that it is 'highly likely' that the evidence would have led to a different result if it had been led in the court below: Lackovic v Insurance Commission of Western Australia [2006] WASCA 38; (2006) 31 WAR 460, 484 - 487 [10], [103], [114]-[115]; Shilkin v Taylor [67]. That is, because unless that condition is satisfied it will seldom, if ever, be in the interests of justice to deprive the respondent of the orders made in the court below: Shilkin v Taylor [67].
(The Court of Appeal in Saunders [89] spoke of a 'significant possibility' that the evidence would have led to a different result. I will apply the 'highly likely' test.)
Notwithstanding the above criteria, the overriding consideration will be whether it would be unjust to refuse to admit the evidence in the appeal: Lackovic v Insurance Commission of Western Australia [112] - [114]; Devereaux-Warnes v Hall [26]; Goninan [12]; Saunders [90].

The submissions of the appellant

On behalf of Ms Gladwin-Grove it was submitted that the further evidence was fresh evidence. It could not have been discovered any earlier with reasonable diligence because:
(a)Searches of Zinzan would not reveal the existence of the bankruptcy notice or the creditor's petition as those matters concerned Mr Sargent only.
(b)A Personal Insolvency Index search of Mr Sargent would not have revealed the existence of the bankruptcy notice or the creditor's petition (relying on the fact that the existence of these documents were not disclosed in her Personal Insolvency Index search carried out by Ms Gladwin-Grove's lawyers on 28 November 2018).
(c)No searches were available in order to obtain information about Zinzan's liabilities or to ascertain whether the debt of $50,000 had been paid to the Department.
(d)Reasonable requests had been made of Zinzan to provide information concerning its liabilities, but those requests had remained unanswered (details about this were set out in the affidavit of Ms Gladwin-Grove's lawyer sworn 25 June 2018, which was before the magistrate).
Submissions were made, both written and orally, to the effect that:
(a)The further evidence revealed that as at the date of the hearing before the magistrate on 31 August 2018, the judgment debt of $48,600 was still owing to the Department more than two years after it had fallen due.
(b)The further evidence demonstrated that Zinzan did not have the capacity to pay the judgment debt, as at the date of the hearing before the magistrate. This had a significant impact on the viability, future prospects and continued existence of Zinzan and its ability to conduct any business, as had been suggested to the magistrate by Mr Sargent.
(c)By pars 4(b) and (d) of the orders made by SAT, Zinzan's real estate agent licences were suspended and would remain suspended until the payment of the judgment debt. Accordingly as at the date of the hearing, the suspension was continuing on an indefinite and potentially very long term basis.
It was also submitted that during the hearing before the magistrate, Ms Gladwin-Grove had complained that Zinzan had failed to provide cogent or documentary evidence concerning its financial circumstances. The further evidence which had now come to light and which was highly relevant had been withheld by Zinzan from the magistrate, while Mr Sargent asserted and submitted that Zinzan would have the capacity to satisfy any adverse costs order.
It was submitted that the further evidence strengthens the argument that there was a reason to believe that Zinzan would be unable to pay an adverse costs order, and if the further evidence had been adduced before the magistrate, he would have concluded that there was a reason to believe Zinzan would be unable to pay Ms Gladwin-Grove's costs if she was successful in the Magistrate's Court proceedings, and granted the application for security for costs.
It was finally submitted that it would be unjust to deprive Ms Gladwin‑Grove of the opportunity to adduce the further evidence in the appeal in circumstances where if it had been available and adduced before the magistrate, it is highly likely that it would have produced an opposite result.

Submissions on behalf of the respondent

In the Magistrates Court proceedings, Mr Sargent as the sole director of Zinzan represented that company, as he was entitled to do, pursuant to s 44 of the MCCPA.
However, in the District Court Zinzan is not entitled to carry on proceedings or defend an action otherwise than by a legal practitioner: Rules of the Supreme Court 1971 O 4 r3(2) and O 12 r(1); District Court Rules r 6. Those basic rules have been held to apply in the case of an appeal: Sammut v AVM Holdings Pty Ltd [2011] WASC 194; Prow Pty Ltd v Commissioner for Police [2012] WASC 363.
Subject to the filing of a notice of intention by a legal practitioner on behalf of Zinzan (which has now been filed), I granted leave to Mr Sargent to appear as advocate on behalf of the company at the hearing of this application only, on the basis of the inherent jurisdiction of the court as outlined in Sammut [15] - [18].
This leave does not permit Mr Sargent to take any step in the proceedings or file any other document on behalf of the company. That can only be done by a lawyer: Sammut [19].
Mr Sargent conceded that the judgment debt had not been paid. He advised me from the bar table that he had made an arrangement for the repayment of the judgment debt, he will meet that arrangement and he did not see that the judgment debt would have any bearing by the time the matter in the Magistrates Court proceeded to trial.
Mr Sargent pointed out that he had never submitted to the magistrate that the judgment debt had been paid. He had told the magistrate that Zinzan was operating through the building industry. The magistrate was aware that the real estate business WA Prestige Properties was not operating, but that Mr Sargent had the intention of operating WA Prestige Properties in the near future.
In essence the submission from Mr Sargent was that his affidavit evidence, coupled with the orders made by SAT, must have indicated to the magistrate that the judgment debt had not been paid. Mr Sargent told me that he was proceeding on the basis that until the judgment debt was paid, both he and Zinzan were still under suspension in accordance with the SAT orders and that this must have been understood by the magistrate.
His final submission was that I should not allow the further evidence in this appeal and the appeal should proceed solely on the evidence that was before the magistrate and the existing grounds of appeal.

Consideration and conclusion of the application for leave to adduce further evidence

I am not satisfied that the further evidence sought to be adduced in the appeal is fresh evidence. Ms Gladwin-Grove and her lawyers were aware of the SAT decision, and the terms of the orders made by SAT, as these were before the magistrate at first instance. While a Personal Insolvency Index search of Mr Sargent may not have revealed the existence of any bankruptcy notice or creditor's petition issued by the Department, whether or not the judgment debt had been paid by either Zinzan or Mr Sargent could, with reasonable diligence, have been ascertained prior to the hearing before the magistrate by making inquiries directly with the Department. That is, in fact, the inquiry which Ms Gladwin-Grove's lawyers made when their Personal Insolvency Index search on 28 November 2018 revealed nothing – they contacted the Department and obtained the creditor's petition.
That the further evidence is not fresh evidence is a factor which weighs against its admission as evidence in this appeal. However, there are a number of other factors which in my view mean that it would be unjust to refuse the admission of the further evidence in this appeal.
First, the evidence of Zinzan's non-payment of the judgment debt is strong and is not contested.
Secondly, notwithstanding Mr Sargent's submissions to the contrary, having read the reasons of the magistrate, I am not satisfied that he proceeded upon the basis that as Zinzan was still under suspension, the judgment debt had not been paid. That is contrary to the magistrate's observation in his reasons at [28] that Zinzan had ceased to trade from 1 June 2016 until 1 June 2017, a few months after the suspension was lifted. This observation indicates to me that the magistrate proceeded on the basis that the suspension was for a finite period of nine months.
The magistrate went on to observe that this suggested that Zinzan 'was financially challenged during the period of the suspension but does not go to its current financial position'. In my view the magistrate would not have made that observation if he had known that the judgment debt had not been paid and $48,600 still remained outstanding. An outstanding debt of $48,600 must go to Zinzan's current financial position.
Thirdly, I am satisfied that the further evidence, if adduced at the hearing, is highly likely to have produced a different result on the threshold question of whether there is credible evidence that there is reason to believe that Zinzan will be unable to pay Ms Gladwin-Grove's costs if she were successful in her defence in the Magistrates Court proceedings.
In my view a debt of $50,000 which, apart from two payments totalling $1,400, has been outstanding for over two years is, to use the words of the magistrate in his reasons when discussing the appointment of the controller, overwhelming proof of a current impecuniosity or of a reasonable basis for belief that Zinzan would be unable to pay costs.
The existence of the judgment debt in addition to the debt owed by Zinzan on the Audi 8 vehicle also casts considerable doubt on the statements made by Mr Sargent in his affidavit (see [11](e) above) and to the magistrate and this court from the bar table, that there will be no issue with Zinzan meeting an adverse costs order.
Fourthly, I am satisfied that it is highly likely (although not certain) that the further evidence would have led to a different result in the magistrate's consideration of the exercise of the discretion to grant the application for security for costs. This is because as explained by Le Miere J in Veneziano Coffee Roasters WA Pty Ltd v Healthy Nut Café Pty Ltd [2018] WASC 363 [6]:
A corporation's impecuniosity is itself a factor favouring the court ordering security. Not only does proof of the unsatisfactory financial position of the corporate plaintiff trigger the court's discretion, but that evidence is also a substantial factor in the exercise of the discretion: Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 at [56] ‑ [57]; Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664 at [36]. Indeed it has been said that once the defendant has shown that the corporate plaintiff will be unable to meet the defendant's reasonable costs, the evidentiary burden shifts to the plaintiff to satisfy the court that, taking into account all relevant factors, the court should exercise its discretion by refusing to order security or by ordering security of a lesser amount than the defendant seeks: Idoport at [60]-[62], Fiduciary at [36].
All of the above considerations which I have set out in [62] to [68] above weigh in favour of the exercise of discretion to admit the further evidence. In my view, these are exceptional circumstances and it is in the interests of justice to admit that evidence in this appeal.
It follows that I will also allow the proposed amendment to the grounds of appeal.
I will therefore allow Ms Gladwin-Grove's application. I will hear from the parties as to the orders which should be made, including directions for the hearing of the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DC
Associate to Judge Davis
17 MAY 2019