Hurst-Meyers v Hoy (No 2)
[2022] ACTCA 38
•14 July 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Hurst-Meyers v Hoy (No 2) |
Citation: | [2022] ACTCA 38 |
Hearing Dates: | 15 June 2022 and 14 July 2022 |
DecisionDate: | 14 July 2022 |
ReasonsDate: | 22 July 2022 |
Before: | Loukas-Karlsson J |
Decision: | See [56] |
Catchwords: | PRACTICE AND PROCEDURE – SECURITY FOR COSTS – whether security for costs should be ordered – where appellants are unrepresented – appropriate amount of security |
Legislation Cited: | Court Procedures Rules2006 (ACT) rr 1900-1902, 5302 |
Cases Cited: | Haides Pty Ltd v Canberra Drilling Rigs Pty Ltd [2018] ACTCA 68 |
Parties: | Ralph George Noel Nancy Hurst-Meyers (First Appellant) RHM Industries Pty Ltd (Second Appellant) Gavin Robert Hoy (Respondent) |
Representation: | Counsel Self-represented (Appellants) A Costin (Respondent) |
| Solicitors Self-represented (Appellants) Elringtons Lawyers (Respondent) | |
File Number(s): | ACTCA 20 of 2022 |
Decision under appeal: | Court/Tribunal: Supreme Court of the ACT Before: Elkaim J Date of Decision: 30 March 2022 Case Title: Hoy v Hurst-Meyers (No 2) Citation: [2022] ACTSC 58 |
LOUKAS-KARLSSON J
Introduction
Mr Hoy is the applicant in this application. I will refer to him as the respondent in these reasons as he is the respondent on the appeal, and Mr Hurst-Meyers and RHM Industries Pty Ltd will be referred to as the appellants.
On 14 July 2022, I made an order that the appellants provide security for the respondent's costs of the appeal within 28 days of the date of these orders fixed in the sum of $35,000. I indicated that my reasons would be published at a later date. My reasons follow.
This is an application for security for costs filed by the respondent, Mr Hoy. The respondent sought orders requiring the appellants, Mr Hurst-Meyers and a company of which Mr Hurst-Meyers is the sole shareholder and director, to pay security for the anticipated costs of the appeal. I heard the matter as the Court of Appeal constituted by a single judge pursuant to s 37J of the Supreme Court Act 1933 (ACT).
This matter was originally listed before me on 15 June 2022. At that time, I adjourned the matter part-heard to 14 July 2022 to allow time for the appellants to prepare. This was on the basis that the first appellant indicated at that time that he had only just become aware of the listing of the matter on that day.
By the application, the respondent sought the following orders:
(a)An order pursuant to Rule 1900 of the Court Procedure Rules (ACT) that the appellants give security by lodging with the Registrar of the ACT Supreme Court the sum of $50,000.00 in cash or an irrevocable bank guarantee unlimited as to time (‘Security’);
(b)The appeal is stayed pending the giving of the Security;
(c)If the appellants fail to give the Security within 28 days of the date ordered by the Court, that the appeal will be deemed to have been dismissed and the appellants pay the respondent’s costs of the appeal to that date as agreed or assessed; and
(d)Costs; and
(e)Any other orders that the Court considers appropriate.
Background to the Appeal
The dispute between the parties concerned two documents; a purported Residential Contract for sale of land and a Partnership Agreement. The respondent’s case before the primary judge was that the parties were only bound by the Partnership Agreement, while the appellants’ case was that both the Partnership Agreement and the Residential Contract were enforceable.
I adopt the useful summary set out by Kennett J in his Honour’s judgment concerning a separate application filed by the appellants: Hurst-Meyers v Hoy [2022] ACTCA 36. By that application, the appellants sought to adduce further evidence on appeal. In particular, at [2]-[6], Kennett J stated:
The respondent to the appeal (Mr Hoy) claimed an amount of $200,000 from Mr Hurst-Meyers. He filed his Originating Claim on 31 July 2019.
Mr Hoy relied on a written agreement, signed by him and Mr Hurst-Meyers and dated 18 August 2016, described as a partnership agreement and apparently intended to facilitate property development activities that they proposed to undertake together (the partnership agreement). The partnership agreement provided for Mr Hoy to make a contribution of $200,000, and he made three funds transfers adding up to that amount to Mr Hurst-Meyers in the days following the execution of the agreement. The partnership agreement also contained what the parties referred to as a “parachute clause”, which permitted Mr Hoy to leave the partnership at a time of his choosing and to receive a full refund of his contribution. On or about 15 September 2017, Mr Hoy invoked that clause and sought the return of the $200,000 he had contributed. There was evidence that Mr Hurst-Meyers had at least initially accepted an obligation to pay him this amount. However, the amount was not paid, and in July 2019 Mr Hoy commenced proceedings.
Central to Mr Hurst-Meyers’s case was a form of contract for the sale of land signed by Mr Hoy and dated 19 July 2016 (the sale contract). (He raised the sale contract in an amended Defence and Counterclaim filed on 21 April 2020 that was subsequently struck out, and it remained prominent in the final version of his pleading.) The land to which that contract related was a block within a subdivision of land in Old Reynella, South Australia (the land), which Mr Hurst-Meyers was seeking to subdivide and develop. He and Mr Hoy had discussed the possibility of the latter investing in the project.
Two versions of the sale contract were in evidence before Elkaim J. The version tendered by Mr Hurst-Meyers specified an amount of $200,000 in the space provided for the amount of the deposit. On this basis, Mr Hurst-Meyers apparently contended that the $200,000 paid to him by Mr Hoy was in fact a deposit paid pursuant to this contract, and not a contribution to the partnership in respect of which Mr Hoy could rely on the parachute clause. However, the version tendered by Mr Hoy (which was a copy of the document as signed by him and transmitted to Mr Hurst-Meyers), did not include any amount by way of deposit. An evidentiary contest thus arose as to whether there was a contract that provided for payment of $200,000 by way of deposit. In that connection, Mr Hurst-Meyers called oral evidence from Mr Craig Poole in an attempt to prove that Mr Hoy had given instructions for the amount of $200,000 to be inserted. However, the evidence that Mr Poole was able to give was very limited and did not establish that Mr Hoy had given any instruction to insert the sum of $200,000 (or indeed any sum) in the contract.
The primary judge articulated several reasons for not accepting that Mr Hoy had made any promise to pay the sum of $200,000 by way of deposit under the sale contract, and therefore holding that the amounts he had paid to Mr Hurst-Meyers were paid pursuant to the partnership agreement and subject to the parachute clause. These were, in summary, as follows.
(a) The discrepancy between the two versions of the contract, and the lack of any satisfactory evidence that Mr Hoy had agreed to the inclusion of the sum of $200,000 in it, made it hard to accept that there was any binding contract involving payment of that amount.
(b) The terms of the email under cover of which Mr Hoy had returned the signed sale contract to Mr Hurst-Meyers (which, as well as referring to the parachute clause, expressed an understanding that the contract “will not be ‘acted upon’”) suggested that there was no intention to create legal relations.
(c) Even if the contract was binding, it included a provision stating that it was “subject to” a plan of division for the land being accepted for deposit by the registrar-general of the land titles office on or before a specified date. That did not occur.
(d) Mr Hurst-Meyers had at least initially accepted an obligation to repay the sum of $200,000 when Mr Hoy sought repayment.
(e) There had been no attempt to rely upon or enforce the contract of sale.
During the course of the proceedings before the primary judge, the appellants made an application that Elkaim J recuse himself on the basis of judicial bias. This application was rejected by his Honour, and reasons published, on 22 March 2022.
In a decision dated 30 March 2022, Elkaim J made the following orders:
(a)Verdict and judgment for the plaintiff against the defendants, jointly and severally, in the sum of $220,142.19.
(b)The defendants, jointly and severally, are to pay the plaintiff’s costs of the proceedings.
On 27 April 2022, the appellants filed their notice of appeal, and on 27 May 2022 the respondent filed the present application for security for costs.
Relevant Rules and Legal Principles
Rule 5302 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules) provides that security for costs of an appeal is not required, unless the Court of Appeal otherwise orders.
Applications for security for costs are brought under r 1900 of the Court Procedures Rules:
1900 Security for costs—application and order
(1) On application by a defendant, the court may order the plaintiff to give the security it considers appropriate for the defendant’s costs of the proceeding.
(2) An application must be supported by an affidavit setting out the facts relied on and the grounds on which the order is sought.
Rule 1901 provides guidance on when a Court can make an order for security for costs
1901 Security for costs—when court may make order
The court may order a plaintiff to give security for costs under rule 1900 only if satisfied—
(a)the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or
(b)the plaintiff is suing for the benefit of someone else, rather than for the plaintiff’s own benefit, and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or
(c)the plaintiff’s address is not stated, or is misstated, in the originating process, and there is reason to believe that the failure to state an address, or the misstatement of the address, was made with intention to deceive; or
(d)the plaintiff has changed address since the start of the proceeding and there is reason to believe this was done to avoid the consequences of the proceeding; or
(e)the plaintiff is ordinarily resident outside Australia; or
(f)the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient fixed and permanent property in Australia available for enforcement to pay the defendant’s costs if ordered to pay them; or
(g)a territory law authorises the order to be made; or
(h)the justice of the case requires the order to be made.
Rule 1902 outlines the factors to be taken into account in deciding whether to make this order:
1902 Security for costs—discretionary factors
(1) In deciding whether to make an order for security for costs under rule 1900, the court may have regard to any of the following matters:
(a)the means of the people standing behind the proceeding;
(b)the prospects of success or merits of the proceeding;
(c)the genuineness of the proceeding;
(d)for rule 1901 (a)—the corporation’s lack of financial resources;
(e)whether the plaintiff’s lack of financial resources is attributable to the defendant’s conduct;
(f)whether the plaintiff is effectively in the position of a defendant;
(g)whether an order for security for costs would be oppressive;
(h)whether an order for security for costs would stop or limit the progress of the proceeding;
(i)whether the proceeding involves a matter of public importance;
(j)whether there has been an admission or payment into court;
(k)whether delay by the plaintiff in starting the proceeding has unfairly prejudiced the defendant;
(l)whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
(m)the estimated costs of the proceeding.
(2) This rule does not limit the matters to which the court may have regard.
I considered the relevant rules and legal principles related to security for costs in University of Canberra v Zierholz@UC Pty Ltd [2020] ACTA 45 (Zierholz). As I outlined at [11]-[12]:
…The discretionary factors of r 1902 are to some extent a codification of the well-settled general law factors taken into account by the courts in exercising their discretion: Seminars Australia Pty Ltd v ABN Amro Morgans Ltd [2006] ATSC 101 at [6].
Nevertheless, as Davies JA stated in Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 at [2] (Natcraft), “it is impossible to state comprehensively the factors that are relevant to assessment of an application [for security for costs]”: see also Davey v Herbst (No 2) [2012] ACTCA 19 at [18] (Davey).
Grounds of Appeal
The appellants are unrepresented. The challenges of appearing unrepresented are manifest in the grounds of appeal as contained in the notice of appeal. The notice of appeal does not separately and distinctly clearly identify each of the grounds of appeal.
Nevertheless, the central challenge to the primary judgment appears to be an allegation that the primary judge was biased. As outlined in the notice of appeal, the appellants also sought to adduce further evidence, including calling new witnesses on the appeal.
Application to adduce further evidence on appeal
As I have outlined above, during the period between 15 June 2022 and 14 July 2022, the appellants filed an application in proceeding seeking to adduce further evidence on appeal. This matter was heard by Kennett J on 6 July 2022.
This application was dismissed, and reasons handed down by his Honour, on 14 July 2022.
I note that it appears the parties did not raise the outstanding security for costs application as a matter relevant to a potential adjournment of the hearing of the application to adduce further evidence.
The dismissal of the application to adduce new evidence has narrowed the potential grounds of appeal to the sole issue of judicial bias.
As the respondent correctly submitted, this is relevant to the prospects of success of the appeal. This is a factor the court may have regard to in determining whether an order for security for costs is appropriate. That fact, as I will come to later in these reasons, is also relevant when assessing the quantum of security required as it has significantly narrowed the scope of the appeal.
Affidavits
In support of the application for security for costs, the respondent relied upon the following affidavits:
(a)The affidavit of Mitchell John Evelyn, solicitor for the respondent, affirmed on 27 May 2022. I will refer to this as the primary affidavit.
(b)The affidavit of Matthew George Bridger, a senior litigator at Elringtons lawyers, affirmed on 30 May 2022.
(c)The supplementary affidavit of Mitchell John Evelyn, solicitor for the respondent, affirmed on 11 July 2022.
The primary affidavit sets out a general chronology of the proceedings which are the subject of the appeal, the estimated costs of the appeal and the security for costs application, and provides background relating to the prospects of success of the appeal. It also addresses the appellants’ capacity to pay the costs of the respondent were the appeal to be dismissed and a costs order made.
The primary affidavit provided a ‘lower’ and ‘upper’ estimate for costs as follows:
(a)For the Application in proceeding (security costs application): $12,829.92 - $13,797.93
(b)For the Appeal Proceedings: $26,312 - $45,595
(c)Total estimated cost: $39,141.92 – $59,392.93.
Those estimates provided estimates of the total costs that would be incurred, and did not account for any reduction that would occur were the costs to be taxed. The affidavit of Mr Matthew George Bridger confirms the correctness of the cost estimates.
On 12 July 2022, the respondent filed a supplementary affidavit. This affidavit was provided to update the Court with respect to those costs and other matters that arose in the intervening period.
The supplementary affidavit provided an updated estimate of total untaxed costs and disbursements at both a ‘lower’ and ‘upper’ range, for this application, the application heard by Kennett J, and the appeal proceedings generally. The updated total costs estimate was $57,724.58 - $77,695.58.
Grounds of application for security for costs
The grounds of the application are as follows:
(a)The orders sought are necessary to protect the respondent from being forced to defend an unmeritorious appeal.
(b)The appellants have been heard on the merits of their defence and were wholly unsuccessful.
(c)The appeal has poor prospects of success.
(d)The appeal is not genuine.
(e)The appeal seeks to reagitate all of the issues which have already been decided by the Court in the original jurisdiction with no attempt to narrow the issues in dispute.
(f)The appeal relies on patently incorrect grounds of appeal.
(g)The notice of appeal does not particularise the grounds of appeal to allow the respondent to sufficiently understand the appellants’ case in order to be able to respond appropriately.
(h)The appellants may be impecunious, or any assets they may have jointly or severally, may be insufficient to discharge the orders made in the original jurisdiction or after the appeal is heard.
(i)The appellants have a history of failing to comply with the rules and Court’s directions which caused the respondent to incur unnecessary costs.
Appellants’Submissions
The appellants submitted that they have sufficient assets to satisfy any adverse costs order made in the event their appeal was unsuccessful. In support of this submission, the appellants relied upon a financial analysis, prepared by the first appellant.
In particular, the appellants relied upon a significant volume of documentary evidence contained in two large folders, under the heading ‘Annexure 1’ (a Red Exhibit Folder) and ‘Annexure 2’ (a Blue Exhibit Folder). Some of this material outlined assets that the appellants claimed they would have access to in order to satisfy any adverse costs order. In particular, the appellants submitted that they held various properties that would be sufficient to satisfy any adverse costs order.
While some of the documentation filed by the appellants was purportedly evidence of their financial situation, on a review of the material, much of the documentation was directed at issues not relevant to the security for costs application. Of the material that is relevant, as the respondent correctly submitted, much of that evidence is better categorised as assertions advanced by the appellants.
The appellants further submitted that the first appellant may have access to funds in the form of a loan from a charity for which the first appellant is a chairperson.
Consideration
The relevant principles to be applied in this case are uncontroversial.
In Twining v Curtis [2014] ACTCA 19 (Twining), Refshauge J stated at [13]:
… the purpose of such applications is to protect a successful litigant from the injustice caused by being forced to contest a claim for a second time without a probability of obtaining the costs thus expended and thereby to provide a fund to defray such costs and to discourage frivolous and unmeritorious appeals.
On the first occasion of the hearing of this application, the respondent submitted that in their experience with the appellants, over a period exceeding two years, there have been numerous instances of non-compliance with procedural orders of the court relating to the filing of documents, thereby causing the respondent to accrue additional costs. The respondent submitted there was a real risk that the appellants may take “unusual” steps on the appeal, thereby furthering the costs they will incur to defend the proceedings.
The supplementary affidavit outlines the not-insubstantial costs incurred after this application was adjourned part-heard as a result of the appellants’ conduct as follows. This includes the appellants’ failure to appear initially on 15 June for this application resulting in its adjournment, the bringing of the application to adduce new evidence before Kennett J, which was dismissed by his Honour, and the failure to comply with court directions relating to the Appeal Index.
The respondent further submitted that timing is a relevant factor. This application was made very quickly, as soon as possible after the appellants’ appeal documents were filed. In addition, the respondent submitted that the proceedings were commenced following the appellants being provided with an opportunity to make security for costs, and being put on notice with regard to the respondent’s intention in relation to this application. It was clear that these steps occurred, and I accept the submissions.
The respondent submitted that the appeal has very little or no prospects of success and that the appeal is not genuine. In particular, the respondent submitted that the notice of appeal is identical to the application for judicial bias advanced before the primary judge. The respondent submitted that the issues raised in the notice of appeal were heard and determined by the primary judge following a three-day hearing.
I accept the respondent’s submission that the appeal has poor prospects of success. It is clear that a significant aspect of the appeal was directed to new evidence the appellants sought to rely upon. That aspect of the appeal has fallen away due to the orders made by Kennett J. In the result, the only remaining appeal issue is, as outlined above, the question of whether the primary judge was biased. Without delving into the issue in great depth, it is apparent that the primary judge outlined in his reasons why he refused the application that he recuse himself for bias. Having regard to those careful reasons, and the notice of appeal, in my view, the appellant’s prospects of success can be described as poor.
Consequently, it is unnecessary to decide whether the appeal has been genuinely brought. In relation to that submission, I simply note that self-represented appellants may not have the resources of represented parties and that, in those circumstances, some repetition of grounds advanced before a primary judge are common. The fact that a self-represented party has copied grounds raised below does not in my view determine whether the appeal is genuinely commenced.
The respondent provided extensive material to support the submission that the appellants may be impecunious, or any assets they may have jointly or severally may be insufficient to discharge the orders made in the original jurisdiction or after the appeal is heard. This included a number of searches in relation to the first and second appellant. These searches purport to reveal, amongst other things, the following:
(a)The First Appellant has one half-interest in a property in the ACT subject to a mortgage, and owns a property in South Australia, also subject to a mortgage.
(b)An unsatisfied judgment debt is registered against the latter property.
(c)The Second Appellant owns a property in NSW, subject to a mortgage.
(d)On 1 March 2022, ASIC published a ‘Notice of Proposed Deregistration’ in relation to the Second Appellant for failure to pay ASIC fees.
(e)An application was made against the First Appellant for bankruptcy in 2021.
(f)There are three costs orders already made against the appellants in the proceedings which will not be displaced, regardless of the outcome of the appeal.
Conclusion
I am satisfied that an order for security for costs is called for. I make this finding for the following reasons.
In relation to the claim that the first appellant may have access to assets held by a charity with which he is affiliated I do not accept those submissions. There was no clear explanation advanced as to how assets held by a charity (prima facie trust property) would be able to satisfy any adverse costs order made against the first appellant. Accordingly, I do not accept the submission that the Court should be satisfied that an adverse costs order could be satisfied by assets held by the charity.
In relation to the appellants’ claims regarding various assets held I do not accept that the evidence rises to a level to satisfy me that these assets are sufficient to discharge costs orders following an appeal. I accept the respondent’s evidence in relation to the various claims that have been made over that property. In particular, the properties referred to by the appellant are subject to mortgages and a registered judgment debt.
As I outlined in Zierholz, where an impecunious appellant has lost at first instance, that impecuniosity may be a relevant ground for ordering security for costs of an appeal. This is a matter discussed in Benjamin v GB Franchising Australia [2008] ACTCA 11; 1 ACTLR 287 (Benjamin) at [30]:
Although there is much similarity between security for costs at trial and security for costs on appeal, there are some important differences … the major difference is that while impecuniosity is not a ground for ordering security for costs at trial (Cowell v Taylor (1885) 31 Ch D 34 at 38), it may be a ground for ordering security for costs on appeal (Rainbow v Kittoe [1916] 1 Ch 313 at 318).
As I further noted in Zierholz, care must be taken in assessing whether an order for security for costs of an appeal is appropriate. This is so where an appellant is impecunious and an action may be stifled, that should, in the interests of justice, be heard and determined on its merits: Benjamin at [31]. These matters are founded on the fundamental notion of access to justice: Porzelack KG v Porzelak (UK) Ltd [1987] 1 WLR 420 at 426.
Further, as McHugh J outlined in PS Chellaram & Co v China Ocean Shipping Co (1991) 65 ALJR 642 at 643:
To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed.
A trial judgement is presumed to be correct until such time as it is set aside: Haides v Canberra Drilling Rigs [2018] ACTCA 68 at [28]; Twining at [15]; Zierholz at [29]. It is apparent that the prospects of success of the appeal are relevant in the circumstances of this case. In particular, where, as in this case, the prospects of success on the appeal can only be described as very low or poor.
In my view, the respondent has established that an order for security for costs is appropriate in this case. The question remains as to what amount is appropriate.
Relevant to this assessment are two matters. First, as I outlined above, the cost estimate was originally prepared on the basis of a complexity of appeal that included possible new evidence being led by the appellants. In responding to such an appeal it is apparent that the respondent may have had to make investigations about the evidence and may have sought to bring on further evidence themselves.
That prospect has now been eliminated by the resolution of the issue before Kennett J, as emphasised earlier. This means that the appeal is limited to the single issue concerning judicial bias, resulting in an appeal of a narrower compass. This matter was conceded by counsel for the respondent.
Second, the costs estimates contained in the respondent’s material outline the total costs incurred by the respondent in defending the matter to date. While not a firm rule, it is worth noting that at least some of these costs would not be recoverable on a party-party basis were costs to be taxed. The respondent in oral submissions stated that whether this would occur “depends on the outcome of the security for costs [application] … In principle, it could but it very much might not.” In my view it is appropriate to make a reduction to the quantum of security sought to reflect the fact that it is likely that some amount of the costs sought in the application would not be recoverable were costs to be taxed.
Taking into account all relevant matters, I am satisfied that security in the sum of $35,000 is appropriate in this case.
In coming to that quantum, I repeat the comments I made in Zierholz that in a self-represented appeal, the quantum of security for costs ordered should be the lowest level necessary in the circumstances of the case.
Orders
I confirm the orders I made on 14 July 2022 as follows:
(i)Pursuant to r 1900 of the Court Procedures Rules the appellants are to provide security for the respondent's costs of the appeal within 28 days of the date of these orders fixed in the sum of $35,000.
(ii)The security may be provided, at the option of the appellants, either by a deposit into court or a guarantee in favour of the respondent from an Australian bank or an Australian authorised deposit-taking institution.
(iii)The appeal is stayed pending the provision of security as outlined above.
(iv)If the appellants fail to provide the security within 28 days of the date of these orders, the appeal will be deemed to have been dismissed and the appellants are to pay the respondent's costs of the appeal to that date as agreed or assessed.
(v)The appellants are to pay the costs of this application.
(vi)The upcoming listing on 21 July 2022 is vacated as a result of today’s orders.
| I certify that the preceding fifty-six [56] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Rebecca Emder Date: 22 July 2022 |
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