Guss v Johnstone

[1999] FCA 646

FEDERAL COURT OF AUSTRALIA

Guss v Johnstone [1999] FCA 646

JOSEPH GUSS v RAYMOND JOHNSTONE AND GEELONG BUILDING SOCIETY (IN LIQUIDATION)
V 1 OF 1999

DOWSETT J
7 MAY 1999
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 1 OF 1999

BETWEEN:

JOSEPH GUSS
Appellant

AND:

RAYMOND JOHNSTONE
First Respondent

GEELONG BUILDING SOCIETY (IN LIQUIDATION)
Second Respondent

JUDGE:

DOWSETT J

DATE OF ORDER:

7 MAY 1999

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.The appellant, Joseph Guss, give security for the costs of the appeal incurred and to be incurred by the second respondents, Geelong Building Society (In Liquidation) in the amount of $5,000 in a form acceptable to the District Registrar at Melbourne, such security to be provided on or before midday 17 May 1999.

2.Liberty to apply.

3.In the event that such security is not provided by that date, the appeal is to be stayed until further order.

4.The second respondent is to have its costs of this application and they are to be the petitioning creditor’s costs in the bankruptcy.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 1 OF 1999

BETWEEN:

JOSEPH GUSS
Appellant

AND:

RAYMOND JOHNSTONE
First Respondent

GEELONG BUILDING SOCIETY (IN LIQUIDATION)
Second Respondent

JUDGE:	DOWSETT J
DATE:	7 MAY 1999
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. This is a motion for security for costs in connection with an appeal listed for argument in Melbourne on next Thursday week, 20 May 1999.  I am to be a member of the court.  Because of circumstances quite beyond the control of the parties, the hearing of this application has been seriously delayed.  The notice of motion was filed in February, not long after the lodgment of the notice of appeal, but the first hearing date offered was late in April.  Unfortunately, that hearing date had to be vacated because the judge in question was ill. I was asked, on Wednesday of this week, if I could hear the matter.  Some of the information to which I have referred was provided to me through the registry channels rather than by the parties, but I don't think that it is in any sense controversial. 

2. An application for security should be brought on promptly.  It is regrettable that those responsible for listing this matter should have allowed this situation to arise.  One of the reasons why promptness is desirable is because the other party to the proceedings is likely to be incurring costs which may be thrown away if an order for security is made which cannot be met.  Other difficulties attend the resolution of the matter.  Some of the affidavits to which the parties wish to refer are not in Brisbane.  However, it seems that their contents are not of particular importance, and their effect has been related to me. 

3. I start from the proposition that security for costs ought generally not be ordered simply upon the basis of impecuniosity.  The position is, however, somewhat different in the case of an appeal, where both parties have been previously heard and have had the benefit of a considered decision.  The order in question in this case is a sequestration order made by Kenny J in December last year.  Obviously, the question of security for costs will often be much more important in bankruptcy matters than in other litigation.  A successful petitioning creditor will inevitably wish to be secured in respect of the costs of an appeal against a bankruptcy order made on his petition. 

4. There are, I think, three relevant considerations in this case.  The first is that the appeal relates to the significance which ought to have been attributed by her Honour to a claim which the bankrupt has, or asserts he has, against the petitioning creditor, arising out of the creditor's exercise of a power of sale as mortgagee.  It is said that proper steps were not taken to obtain market price.  I do not mean to detract from the potential merits of the bankrupt's case by saying that such an argument is regularly heard as a basis for resisting a sequestration order, but is rarely successful.  It appears that her Honour scrutinised the evidence of various valuers and formed a view in the exercise of a discretion.  The present appellant is therefore faced with the need to upset that exercise, having regard to the considerations laid down in House v The King (1936) 55 CLR 499. I have formed the view, although only provisionally, that this is not going to be an easy task for the appellant. As I am to participate in the appeal, it would be inappropriate for me to take the matter any further for present purposes. I say only that it is a difficult argument for an appellant to mount.

5. The second factor is that the bankrupt’s claim appears to have been in the air, as it were, for quite some time.  Although the cause of action apparently arose in about 1995, no steps were taken to enforce it until about 1998.  It seems that numerous judges have expressed views about it in associated litigation.  None has expressed a view favourable to the appellant.  That does not mean that he does not have a good claim, but it is difficult to treat it as such for present purposes.

6. The third relevant factor arises out of a consideration of the surrounding circumstances in this case, including the lateness of this hearing and the absence of any allegation by the appellant that he will not be able to meet any order for security.  The evidence suggests that the appellant has taken substantial steps in preparation for the appeal.  It is true that he is himself a solicitor, but nonetheless, it seems to me that as he is practising on his own account, there is no reason why such costs would not be recovered in the event that he was successful in his appeal.  I think it appropriate to take that matter into account.  Thus, the delay in seeking security may do an injustice to the appellant.  On the other hand, he has not said so.

7. In all of the circumstances I have come to the conclusion that I can do substantial justice as between the parties by making an order for security, but by limiting the amount to the amount which seems reasonably attributable to the prospective costs of representation by one counsel at the appeal.  Having regard to the material put before me, I have suggested in argument the figure of $5000.  Nothing which has been said to me has demonstrated that this figure is other than appropriate.  I note that in a case to which I have just been referred, Maas, a decision of Beaumont J on 9 June last year, his Honour fixed security in respect of what appears to have been a short appeal, in the amount of $6000.  This tends to indicate that my own instinctive figure is not unreasonable.

8. I do not for a moment pretend that I have done absolute justice as between the parties in what I have done today.  The circumstances are such that it is not possible to do so.  An application of this kind cannot be permitted to take on the proportions of the hearing of the appeal itself.  Some reasonable relationship must be established as between the amount of time spent on an application of this kind and the substantive matters in issue.  It is also, I think, necessary to give some effect to the fact that the application has come on so late through no fault on the part of the applicant.  Nonetheless, that does not minimise or in any way ameliorate the potential for prejudice to the appellant.

9. In the circumstances, I will order that the appellant, Joseph Guss, give security for the costs of the appeal incurred and to be incurred by the respondents, Geelong Building Society (in liquidation), in the amount of $5000, in a form acceptable to the District Registrar at Melbourne, such security to be provided on or before 14 May this year.  The appellant has asked for a longer period of time, but in the circumstances I consider that to be a reasonable period.  In the event that the security is not provided by that date, the appeal is to be stayed until further order.

   DISCUSSION RE COSTS
   
   

   HIS HONOUR:   Since the applicant for security has been largely successful, it should have its costs of today.  I will order that it have its costs, and that they be the petitioning creditor's costs in the bankruptcy. 

   MR WATTS:   Your Honour, I have just been asked if I could just raise one matter - or just perhaps raise two matters.  If we could have liberty to apply in relation to the security.

   HIS HONOUR:   Yes, liberty to apply.

   MR WATTS:   The second issue I would just raise is that by making the date the 14th, what that does is to give my client effectively four working days.  The 14th is a Friday.

   HIS HONOUR:   Do you want it the following Monday?

   MR WATTS:   The following Monday is what we would be seeking, your Honour.

   HIS HONOUR:   Does that make any difference to you, midday on the 17th?

   MR WATTS:   Sorry, if we could have 4 o'clock on the 17th, your Honour.

   HIS HONOUR:   No, you can have midday on the 17th.  Did you want to say anything, Mr Gardiner?

   MR GARDINER:   We prefer the other date, but a fair compromise is midday as long as ‑ ‑ ‑

   HIS HONOUR:   Midday on the 17th can go into the order.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett .

Associate:
Dated:            7 May 1999

Counsel for the Appellant:	Mr L Watts
Solicitor for the Appellant:	Mr J Guss
Counsel for the Second Respondent:	Mr S Gardiner
Solicitor for the Second Respondent:	Minter Ellison
Date of Hearing:	7 May 1999
Date of Judgment:	7 May 1999