Joseph Hedrlin v Proprietors of Strata Plan 367

IN THE FEDERAL COURT OF AUSTRALIA 1

BANKRUPTCY DISTRICT OF THE STATE

NO. 448 Of 198'3

OF NEW SOUTH WALES AND THE

1 1

AUSTRALIAN

C PITAL

ERRITORY

BETWEEN:

JOSEPH

EDRLIN

Appellant

AND :

PROPRIETORS OF STRATA PLAN 367

Respondent

Morling J.

4 August 1983

EX TEM~ORE

JUDGMENT

This is an application under Order

52 rule 20 of the

Federal Court rules. The application is brought by the

respondent to an appeal to the Full Court from

a decision

of Lockhart

The respondent made an application for

a bankruptcy

notice to be issued against the appellant. The notice was

based on an order

of the Supreme Court of New South Wales

that the appellant should pay to the respondent its costs

of proceedings in that court.

A bankruptcy notlce dated

20 November 1981 was

served on

the appellant, who thereupon filed an affidavit

under s.41(7) of the Bankruptcy Act claimlng that he had

a counter claim, set off

or cross demand equal to

exceeding the

sum specified in the bankruptcy notice.

On 14 April 1982 Lockhart J held that he was not

satis€ied that the appellant had such

a counter claim, set

off or cross demand. The appellant has appealed from

that decision to the Full Court.

The papers disclose that the appellant has not

complied with the rules regarding the prosecution of the

appeal. However, that matter is not before me today.

All that is before the court today is

a mot on that the

appellant give security for the costs of the appeal. In

support of the motion, evidence has been filed which

discloses fairly clearly that the appellant has failed

to pay

the costs awarded against him in the Supreme Court.

As I have said,

it is that failure which gave rise to the

issue of the bankruptcy notice.

However, there is no evidence at all before me

that the appellant will not be able to pay the respondent's costs of the appeal should an order be made in its favour.

Mr Bush, who appeared for the respondent, has

frankly conceded that it is not his cllent's case that

the appellant does not have sufficient assets to meet any

order for costs that may be made on the hearing of the

appeal. The assertion which is made is that the

3 .

appellant will refuse to pay the respondent's costs. This

assertion is made because

of the appellant's past refusal

to pay costs ordered against him.

Clearly, I have jurisdiction to direct that the

appellant give security for costs under Order 52 rule

20.

But I do not think an order should be made in circumstances

where it is not shown that the appellant will

be unab e to

meet any order for costs which may be made against him.

If an appellant adopts the attitude that he will

not pay costs awarded against him, then the usual processes

of thr law will be zvailable

to the respondent to enforce

any order for costs

in his favour. Authorities such as

stock and Another

v. Woods and Another (1957)

Q.S.R. 62 at p.55

and Brown v Braven (1957)

Q.L.R.

at p.49 make it clear that

it is

a party's inabiiity to pay cc~sts, rather than his

unwillingness to pay costs, which	1 s the relevant matter
for consideration.

Gnder those circunstances, although

I have

considerable sympathy for the respondent, I do not think

I should accede to this motion. It will, therefore, be

dismissed.

prececllng p a p s are a true copy of the

I certify that thls and the &+S 6)

R e a o ~ s

for Judgmenthere inofh isHonour

The Federal Court of Australia heard an application by the Proprietors of Strata Plan 367 against Joseph Hedrlin. The dispute pertains to a bankruptcy notice issued against Hedrlin based on a Supreme Court order for costs. Hedrlin had filed a counterclaim, set-off, or cross-demand in response to the notice, which was rejected by Lockhart J. Hedrlin appealed this decision, but the court focused on whether he should provide security for the costs of the appeal. The respondent argued that Hedrlin's past refusal to pay costs indicated he would not comply with any future cost orders. However, the court determined that it lacked evidence Hedrlin would be unable to pay any future costs.

The legal issues before the court were whether Hedrlin's past refusal to pay costs could justify requiring him to provide security for future costs and whether the court should make such an order despite the absence of evidence regarding his financial ability to pay. The court examined the authority under Order 52 rule 20 of the Federal Court Rules, which allows the court to require security for costs. It considered whether Hedrlin's unwillingness to pay, rather than his inability, should be the basis for requiring security. The court concluded that the relevant consideration was Hedrlin's financial ability, not his willingness, to pay.

In its reasoning, the court noted that while it had jurisdiction to require security for costs, it should only do so if there was evidence Hedrlin would be unable to pay. Authorities cited, such as Stock v Woods and Brown v Braven, supported the view that inability to pay, not unwillingness, was the pertinent issue. The court held that even though it sympathised with the respondent, it should not make an order for security because there was no evidence Hedrlin could not pay any future costs. Therefore, the motion was dismissed.

No final orders were made regarding the security for costs. The court's decision focused solely on the motion for security for costs in the appeal, leaving the substantive appeal regarding the bankruptcy notice unresolved.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established