Jenny Lee Boase ATF the Boase Family Trust v Brook [No 2]
[2016] WASC 1
•13 JANUARY 2016
JENNY LEE BOASE ATF THE BOASE FAMILY TRUST -v- BROOK [No 2] [2016] WASC 1
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 1 | |
| Case No: | CIV:2061/2013 | 19 OCTOBER 2015 | |
| Coram: | CHANEY J | 13/01/16 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | JENNY LEE BOASE ATF THE BOASE FAMILY TRUST ALAN MICHAEL BROOK |
Catchwords: | Security for costs Principles Merits of parties' cases Delay Representative proceedings |
Legislation: | Rules of the Supreme Court 1971 (WA), O 18 r 12, O 25 r 1, O 25 r 2, O 25 r 3 Supreme Court Act 1935 (WA), s 37 |
Case References: | Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 Carnie v Esanda Finance Corp Ltd [1995] HCA 9; (1995) 182 CLR 398 Cunningham v Olliver (Unreported, FCA, BC9400251, 21 November 1994) KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 Timothy Boase and Jenny Lee Boase as trustee for the Boase Family Trust v Brook [2015] WASC 23 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ALAN MICHAEL BROOK
Defendant
Catchwords:
Security for costs - Principles - Merits of parties' cases - Delay - Representative proceedings
Legislation:
Rules of the Supreme Court 1971 (WA), O 18 r 12, O 25 r 1, O 25 r 2, O 25 r 3
Supreme Court Act 1935 (WA), s 37
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr J A Robertson
Defendant : Ms W F Gillan
Solicitors:
Plaintiff : Williams & Hughes
Defendant : Tang Legal
Case(s) referred to in judgment(s):
Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Carnie v Esanda Finance Corp Ltd [1995] HCA 9; (1995) 182 CLR 398
Cunningham v Olliver [1994] FCA 1004
KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189
Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132
Timothy Boase and Jenny Lee Boase as trustee for the Boase Family Trust v Brook [2015] WASC 23
1 CHANEY J: These proceedings were commenced on 4 July 2013. On 28 January 2015, I published reasons deciding that the action should not continue in the form which it then took, being an application by the then first plaintiffs, Timothy Boase and Jenny Lee Boase as trustees for the Boase Family Trust, as representatives of 25 named persons - see Timothy Boase and Jenny Lee Boase as trustee for the Boase Family Trust v Brook [2015] WASC 23 (Representation Decision). Since that time, a re-amended substituted statement of claim has been filed, and the action has continued as a representative proceeding pursuant to O 18 r 12 of the Rules of the Supreme Court 1971 (WA), with Jenny Lee Boase as trustee for the Boase Family Trust as the current plaintiff.
2 On 20 August 2015, the defendant, Alan Michael Brook, filed a chamber summons seeking orders pursuant to O 25 r 1 of the Rules of the Supreme Court that the plaintiff give security for the defendant's costs of the action in the sum of $75,000 by payment of that amount into court within 14 days of the date of the order, and that in the meantime all further proceedings be stayed. It is that application to which these reasons are directed.
3 The grounds of the defendant's application can be broadly summarised by the following contentions:
(i) the plaintiff appears to be impecunious and therefore unlikely to be able to satisfy any adverse costs order in the defendant's favour;
(ii) the plaintiff brings the action on behalf of 24 others, a fact which gives rise to significant complexity in the proceeding, and which is likely to result in very significant costs and a trial of at least 10 days;
(iii) the plaintiff's case is weak; and
(iv) there is a reasonable explanation for the delay in bringing the application for security.
4 In response, the plaintiff contends that:
(i) the defendant, particularly having regard to his being a solicitor, ought not be permitted to frustrate the action against him by utilising interlocutory procedures;
(ii) it is within the defendant's capacity to limit the length of trial by cross-examining only a selected few of the 24 represented parties and thus to avoid unnecessary cost;
(iii) the plaintiff's case is strong; and
(iv) an application for security for costs should not be entertained at such a late stage in the proceedings.
The history of the action
5 At [2] to [14] of the Representation Decision I set out the history of the proceedings up to that point as follows:
[2] On 4 July 2013, proceedings were commenced against the defendant by Timothy Boase and Jenny Lee Boase in their capacity as trustees of the Boase Family Trust (First Plaintiff). The writ contained a generally indorsed claim and was prepared by Timothy Boase (Mr Boase) in person. It claimed damages of $74,418 and other relief for various breaches of the Trade Practices Act 1974 (Cth) and for breaches of contract and negligence.
[3]Mr Boase had previously attempted to file a writ on 26 June 2013, which described the plaintiff as 'Timothy Boase and Jenny Lee Boase as trustees for the Boase Family Trust and the other persons named in the schedule'. The writ attached a schedule naming 25 plaintiffs and signed by each of them. That writ had been rejected by the Central Office of the Court in the absence of a clear basis upon which Mr Boase had the authority to issue the writ on behalf of all of the named plaintiffs.
[4]The writ issued on 4 July 2013 (original writ) was described by Mr Boase, in an affidavit dated 15 July 2013, as an 'interim' writ designed to 'alleviate any possible statute of limitations issues which may or may not arise in the upcoming proceedings'.
[5]On 15 July 2013, Mr Boase also filed a notice of motion seeking to amend the writ. The amendments to the writ were to add to the title of the action 'other parties/persons named in the first schedule' described as 'plaintiffs', insert a recital that Mr Boase 'pursuant to O 4 r 3 and O 18 r 12(1) sues the defendant in a representative capacity as the representative of the persons/parties recorded as plaintiffs in the first schedule herein', amend the damages claim to $1,276,278, amend the claim for relief to add a claim for loss of use of monies, and add a schedule naming 25 plaintiffs (Represented Plaintiffs) including the plaintiff in the original writ.
[6]On 1 August 2013, the Master granted leave to amend the writ in terms of Mr Boase's motion.
[7]On 5 August 2013, Mr Boase filed a statement of claim, and the defendant entered a conditional appearance on 15 August 2013. The defendant, Mr Brook, is a solicitor and the appearance nominated his firm, Brook Legal, as the solicitors for the defendant.
[8]On 29 August 2013, the defendant issued a chamber summons seeking to strike out the writ. An affidavit in support of the application sworn by Mr Brook asserted that Mr Boase 'should not be granted standing to represent' 24 of the plaintiffs (that is all 'plaintiffs' except the First Plaintiff), that the action was time-barred and that there was a divergence of interest between Mr Boase and the 24 other plaintiffs by reason of Mr Boase's potential conflict of interest.
[9]That application was dealt with by the Master on 28 November 2013, but was not finally resolved. The Master considered that the position might become clearer after a defence had been filed, and he adjourned the summons sine die.
[10]On 23 September 2013, Mr Brook appointed Jackson McDonald to act as his solicitors in place of Brook Legal. On the same day, a further affidavit by Mr Brook was filed in support of the application to strike out the writ.
[11]On 31 October 2013, a notice of appointment of solicitor was filed by Gadens Lawyers (Gadens) stating that the firm 'act[s] for the plaintiff in this matter'. Gadens subsequently clarified in correspondence with Mr Brook's solicitors that it only acted for the First Plaintiff and not for the Represented Plaintiffs. Nothing further appears to have occurred on the file until Gadens filed a substituted statement of claim which stands as the current pleading. I note in passing that the substituted statement of claim was headed differently from the amended writ in that, instead of 'the other parties/persons named in the first schedule - Plaintiffs', it referred to 'the class of plaintiffs particularised in schedule 1 to the substituted statement of claim - Represented Plaintiffs'. It stipulated that it was filed on behalf of the first plaintiff, being Mr and Mrs Boase as trustees for the Boase Family Trust.
[12]A defence was filed on 31 January 2014, and a reply on 13 May 2014.
[13]On 3 September 2014, Tang Legal filed a notice of change of solicitors advising that it now acted for Mr Brook in place of Jackson McDonald.
[14]On 4 September 2014, I made directions referring the matter to mediation. Shortly afterwards, on 12 September 2014, Mr Boase filed a notice of intention to act in person in place of Gadens. As a result of that development, the mediation did not proceed, and the defendant sought orders that the proceedings be dismissed in so far as they purport to relate to a representative action, or alternatively, that they not continue as a representative action.
6 Following delivery of the Representation Decision, I made orders that the then first plaintiff cease to act as representative of the members of the class particularised in the statement of claim, and ordered that a copy of those orders and the Representation Decision be provided to each member of the class. The matter was then adjourned to a directions hearing to enable the represented parties to have the opportunity to indicate whether they wished to continue to be involved in the proceedings.
7 Subsequently, the plaintiff's present solicitors were appointed. Those solicitors then applied to substitute the present plaintiff as plaintiff. On 19 March 2015, I made orders substituting Jenny Lee Boase as trustee for the Boase Family Trust as plaintiff, and removing the represented plaintiffs as parties to the action. I also made orders directed to enabling parties who wished to be represented by the plaintiff to be identified and thereby to become represented group members. The orders also provided for a mechanism by which represented group members could opt out by filing a notice. I also directed that the plaintiff file and serve a minute of amended statement of claim.
8 An amended substituted statement of claim was subsequently filed on 23 March 2015.
9 In April 2015, the parties gave discovery of documents. In May 2015, the plaintiff issued a number of subpoenas for the production of documents.
10 In late June 2015, the parties attended a resumed mediation conference. That conference failed to resolve the matter.
11 On 6 August 2015, a directions hearing was held. Directions were made for the plaintiff to file and serve a further re-amended substituted statement of claim and affidavits of evidence to be relied upon at the trial of the action. A direction was also made for the defendant to file and serve any application for security for costs by 20 August 2015. The possibility of the defendant making an application for security for costs had been raised at the directions hearing on 19 March 2015, but had not been pursued.
12 In accordance with the orders of 6 August 2015, the defendant filed the application for security for costs on 20 August 2015, together with two affidavits in support. One was an affidavit of the defendant, in which he deposed to the fact that he first became aware that he could bring a security for costs application following adjournment of the first mediation conference on 4 November 2014. He said that, at that time, he instructed his solicitors to pursue the strike out application, which was subsequently the subject of the Representation Decision. He said that he did not instruct his solicitors to bring an application for security for costs at that time because, among other things, he considered that the strikeout application would render any application for security for costs unnecessary. Following delivery of the Representation Decision and the directions hearing on 19 March 2015, Mr Brooks did not instruct his solicitors to bring an application for security for costs because he did not wish to incur costs prior to the resumed mediation and because he was informed by his solicitors that they were obtaining financial information from the plaintiff.
13 The second affidavit filed was an affidavit of Anfernee Hok Ming Lai, the solicitor with the conduct of the action for the defendant. She deposed to enquiries as to the plaintiff's financial position which had been undertaken in April 2015, and as to correspondence during May and June 2015 between the parties' solicitors dealing with various matters, including requests by the defendant's solicitors for information as to the financial position of the Boase Family Trust. No financial information was provided pursuant to those requests.
14 On 8 October 2015, directions were made for the hearing of the application for security for costs, and the time for the filing of affidavits to be relied upon by the plaintiff in the substantive action was extended to 12 October 2015. On 12 October 2015, numerous affidavits were filed by the plaintiff in accordance with those directions.
The principles to be applied
15 The application is brought pursuant to O 25 r 1 of the Rules of the Supreme Court. That rule permits the court to order security for costs but provides that 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 her. Order 25 r 2 identifies certain circumstances under which the court may order security for costs, although those circumstances do not limit the generality of O 25 r 1. None of the specific grounds referred to in O 25 r 2 arises in this case.
16 Order 25 r 3 provides that the granting of security shall be in the discretion of the court and requires the court to take into consideration the prima facie merits of the claim, what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff, and whether the normal processes of the court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff. Much emphasis was placed in this application on the parties' respective views as to the merits of the plaintiff's case. I will return to that issue below. The defendant also argued that, no evidence having been adduced by the plaintiff as to her financial position, or the financial position of the Boase Family Trust, and the defendant's searches having revealed no real property assets owned by the plaintiff in Western Australia, the plaintiff appears impecunious and may be unlikely to be able to satisfy a costs order against her. I will also return below to the issue of the plaintiff's impecuniosity. There is no question in this case that the normal processes of the court would be available for enforcement of any order for costs.
17 As previously stated, the circumstances enumerated in O 25 r 2 do not limit the general discretion to order security under O 25 r 1. As Newnes J observed in Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 [57]:
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: PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] 102 ALR 321, 323.
18 In KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197, Beazley J referred to the review of authorities by French J (as he then was) in Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 509 and identified well-established guidelines which the court typically takes into account. Her Honour said:
Notwithstanding the broad unfettered discretion with which the Court approaches an application for security for costs, there are a number of well established guidelines which the court typically takes into account in determining any such application. They are:
1. That such applications should be brought promptly. This is a principle of longstanding: see Grant v The Banque Franco-Egyptienne (1876) 1 CPD 143; see also Smail v Burton [1975] VR 776 per Gillard J at 777; Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311 at 313; Bryan E Fencott Pty Ltd at 514 …
2. That regard is to be had to the strength and bona fides of the applicant's case are relevant considerations: see M A Productions Pty Ltd v Austarama Television Pty Ltd & Anor (1982) 7 ACLR 97 at 100; Bryan E Fencott Pty Ltd at 514. 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. (Bryan E Fencott at 514).
3. Whether the applicant's impecuniosity was caused by the respondent's conduct subject of the claim: see M A Productions Pty Ltd v Austarama Television Pty Ltd at 100.
4. Whether the respondent's application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate: see M A Productions v Austarama Television at 100; Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 per Clarke J at 545; Bryan E. Fencott at 513. In Yandil Holdings at 545 Clarke J stated the principle in these terms:
'[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.'
Plaintiff's financial position
20 In the plaintiff's written submissions handed up at the hearing on 19 October 2015, the proposition that the plaintiff is impecunious was not accepted by the plaintiff's counsel. Counsel for the plaintiff contended that the plaintiff's refusal to disclose her net asset position occurred because she was not obliged to disclose her position in circumstances where, in the plaintiff's submission, no factor listed in, or analogous to, the matters set out in O 25 r 2 had been established. That submission does not sit comfortably with the submission by the plaintiff that the imposition of a requirement to provide security for costs would effectively frustrate the action.
21 The capacity of the plaintiff to meet an adverse costs order cannot be determined on the basis of the evidence available. On balance, however, it is reasonable to deal with this matter on the basis that the plaintiff is likely to have difficulty in herself meeting any adverse costs order. It was, however, conceded by the plaintiff that the court has a wide discretion under s 37 of the Supreme Court Act 1935 (WA) to make an order for costs against persons who are not formally parties to the proceedings. Such an order would only be made in exceptional circumstances. The likelihood, in the event that the defendant is successful, of an order for costs being made against group members cannot be determined at this time. The possibility is, however, a matter about which the group members have been advised by the plaintiff's solicitors. All that can be said is that that possibility is a factor which may ultimately affect the extent to which the defendant, if successful, might recover costs.
The plaintiff's representative status
22 The defendant submits that the fact that the plaintiff brings the action in a representative capacity is a factor beyond impecuniosity, and is in the nature of those factors enumerated in O 25 r 2 as justifying the grant of an order for security.
23 In the Representation Decision, at [29] - [33], I discussed the nature of representative proceedings under O 18 r 12(1) of the Rules of the Supreme Court. I referred to the 'obvious purpose' of the rule being to facilitate the administration of justice by enabling parties having the same interests to secure a determination in one action rather than in separate actions - see Carnie v Esanda Finance Corp Ltd [1995] HCA 9; (1995) 182 CLR 398.
24 The defendant relied upon the unreported decision of Burchett J of the Federal Court of Australia in Cunningham v Olliver [1994] FCA 1004, which concerned a claim brought in circumstances where the plaintiff had entered into an arrangement with his creditors by which he agreed to hold 66% of the net proceeds of the claim for the benefit of his creditors. Burchett J said:
It is an important principle, which was stated in quite strong terms by Morling J in Barton v Minister for Foreign Affairs (1984) 2 FCR 463 at 469, and has been applied since in such cases as my own decisions in Camerons Units Services Proprietary Limited v Kevin R Whelpton and Associates Australia Proprietary Limited (1986) 13 FCR 46 at 53 and Weston v Beaufils (1993) 43 FCR 292 of 298, that an impecunious natural person is entitled to rely on the general rule that poverty is no bar to a litigant. The applicant's impecuniosity should not close the door of the court against his claim. However, to the extent that the claim is put forward on behalf of others, it is appropriate to regard this principle as qualified. In all the circumstances of the present case, if the claim for provision of security had been made promptly, I think I would have considered it appropriate to make an order, not indeed in the amount sought or any amount approaching that figure, but nevertheless in a more than nominal amount, having regard to the significant degree to which this claim, though not actually brought otherwise than for the benefit of the applicant, is nevertheless a claim brought in significant measure for the benefit of others.
25 Significantly, in the context of this case, Burchett J continued:
But, there is also a principle that a claim for provision of security for costs ought to be made promptly, and that it is a ground on which it may be appropriate to refuse an application that it has been too long delayed. I think that principle is important for more than one reason. It is important as a matter of fairness to an applicant who may have spent a considerable sum of money on the prosecution of his claim, and apart from money, may have invested in it a considerable amount of time, energy and attention, and who may then be met by a claim raising at the least a real risk that all his effort will have gone for nothing, and that he will never even be able to get inside the door of the court. I think it is also an important principle for reasons of the proper functioning of the court itself, in the interests both of efficiency and of the court's continued adherence to the principle that justice should not only be done but plainly and manifestly be done.
26 The fact that these proceedings are brought not only for the benefit of the plaintiff, but also for the benefit of the group members, is a matter relevant to the question of whether security for costs might be ordered. It is a factor capable of amounting to a ground, going beyond the mere impecuniosity of the plaintiff, sufficient to support an order for security. It is a circumstance which must be weighed with the other relevant circumstances of the case.
The merits of the parties' cases
27 The defendant invited consideration of the affidavit filed by the plaintiff as her proposed evidence at trial, and the numerous affidavits of the group members containing their evidence for trial. Counsel for the defendant submitted that those affidavits failed to address important aspects of the claim and the defence, and demonstrated that the plaintiff's claim is unsustainable.
28 In response, the plaintiff's counsel asserted that the defendant's liability would be demonstrated at trial by reference to particular documents and undisputed facts.
29 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.
30 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.
The delay in bringing the application
31 These proceedings were commenced in 2013. They have followed an unusual path by reason of their representative character. The defendant has sought, at various stages, to strike out the proceedings. Two attempts at mediation have occurred. The plaintiff has incurred significant legal costs in progressing the action to the point where the application for security for costs was made. Very significant costs have undoubtedly been incurred since then. It appears common ground that the making of an order for security for costs will effectively prevent this matter going to trial, and the money, time and energy that has been expended by the plaintiff will be wasted.
32 The defendant chose to pursue strikeout applications rather than seeking security for costs at an early stage in the proceedings. Although the defendant deposed, somewhat surprisingly given he is a solicitor, to not knowing until November 2014 that he might be able to make an application for security for costs, he had been represented by experienced litigation solicitors since the action commenced. The security application was then foreshadowed four months later in March 2015 but not actually commenced until 20 August 2015. In my view, the concerns referred to by Burchett J in Cunningham v Olliver, set out in the passage above, are particularly apposite to this case.
Conclusion
33 The fact that these are representative proceedings, the uncertainty as to the plaintiff's financial position and the potential difficulty of recovery of costs from the represented group members, are all factors which weigh in favour of the defendant's application. On the other hand, the stage to which these proceedings have reached, the length of time that they have been on foot before security for costs was sought, and the time and energy which has been expended by the plaintiff to bring the action to this point, all weigh in favour of refusing the application for security for costs.
34 Granting the application will, it seems, prevent the action from ever getting to trial. As noted above, frustration of a plaintiff's right to litigate is a powerful factor in the exercise of the discretion in the plaintiff's favour. I have reached the conclusion that that factor, coupled with the delay in bringing the application, tip the balance in the plaintiff's favour.
35 The application for security for costs will be dismissed.
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