Kirkham v Tassone
[2015] SASC 3
•22 January 2015
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
KIRKHAM v TASSONE
[2015] SASC 3
Reasons for Ruling of The Honourable Chief Justice Kourakis
22 January 2015
PROCEDURE - COSTS - SECURITY FOR COSTS
Mr Kirkham filed an application to appeal to the Full Court against a decision of a Judge in the District Court whereby judgment was entered for Mr Tassone in the amount of $176,408.81. Mr Tassone now applies for security for costs of that appeal.
Per Kourakis CJ (allowing the application):
Mr Tassone has established “special circumstances” pursuant to rule 295(1)(g) of the Supreme Court Civil Rules 2006. Mr Kirkham is to provide security for costs in the sum of $20,000. [at 27]
Supreme Court Civil Rules 2006 (SA) s 295; Bankruptcy Act 1966 (Cth) s 185C, referred to.
Viscariello v Livesey & Anor [2014] SASCFC 49, applied.
WORDS AND PHRASES CONSIDERED/DEFINED
"Impecuniosity", "Special Circumstances"
KIRKHAM v TASSONE
[2015] SASC 3Civil
KOURAKIS CJ: This is an application by Mr Tassone for security of costs on an appeal brought by Mr Kirkham against the decision of a Judge of the District Court (the Judge) to the Full Court of this Court. On 24 September 2014 the Judge entered judgment for Mr Tassone in the sum of $176,408.81 plus costs in his defamation action against Mr Kirkham.
The application for security for costs was initially heard by Judge Dart; however the application was subsequently referred to me to decide in chambers, with the consent of both parties, as security for costs applications in the Full Court fall outside of the jurisdiction of Masters of the Supreme Court.
Both Mr Tassone and Mr Kirkham were correctional services officers. The defamatory publication on which Mr Tassone brought his action was an email sent to numerous correctional services officers and other public servants with whom he worked. The email was sent by someone improperly using Mr Tassone’s work email account, but made to appear as if it emanated from Mr Tassone. It read:
hello people, just a note to say that i am a homosexual and i am looking for like minded people to share time with
Records concerning the use of Mr Tassone’s computer terminal showed that Mr Kirkham had an opportunity to use Mr Tassone’s email account. At trial Mr Kirkham denied using Mr Tassone’s email account to send the email even though on the very day the email was sent, he had admitted to doing so to an investigator.
Mr Kirkham testified in the proceedings before the Judge that he did not send the email. He gave evidence that he was coerced into making a false confession. Mr Kirkham called another correctional services officer, Mr Murti, who was in the relevant office at the time to support his account. The Judge observed that inconsistencies between the testimony of Mr Kirkham and Mr Murti on the one hand, and their records of the interview with the Department of Correctional Services investigators reflected “very poorly on the integrity of both of them”. The Judge concluded:
Mr Kirkham’s evidence was wholly unreliable. He was evasive and prone, in examination in chief, to attempting to avoid answering the question asked by discoursing on a different topic. He asserted that he had never sent an email from his account, though he had forwarded some. A record of his email activity was tendered, which showed that he had, in fact, constructed and sent emails prior to 18 July 2011.
The Judge found that Mr Kirkham had composed and sent the email.
The Judge found that even though it was not defamatory to say of someone that he is homosexual, the email contained the defamatory imputations that Mr Tassone:
·is promiscuous;
·is of loose moral character;
·is seeking to solicit sexual relationships with people he does not otherwise know; and
·is a person who used his employment to solicit sexual relationships and was thereby acting in an inappropriate manner in the course of his employment.
The Judge accepted that the email might have been sent by Mr Kirkham as a joke but found that:
[I]t is unlikely that the ordinary, reasonable recipient of the email would spontaneously have made the assumptions necessary to render the email harmless. The ordinary, reasonable recipient of the email would have imputed the meanings to the email pleaded by the plaintiff, all but the first of which, I have determined, are defamatory.
Until just after the judgment on liability was pronounced, Mr Kirkham and his wife were the owners of a home at 39 Jordon Street, Munno Para West as joint tenants. On 31 July 2014 Mr Kirkham executed a transfer of the fee simple in the home for a consideration of $273,000. Settlement took place on 2 September 2014.
On 2 May 2013, after Mr Tassone had initiated his action, Mr Kirkham’s solicitor wrote to Mr Tassone’s solicitor in the following terms:
We confirm that our client has been unemployed since July 2011.
My client and his wife are joint tenants of the property in which they reside. My client’s wife is now solely responsible for the regular mortgage payments on this property on a loan of $280,000 with a minimal equity.
My client and his wife also jointly own three motor vehicles also subject to lease repayments and again, my client’s wife is now solely responsible for the regular chattel mortgage payments on these motor vehicles.
It will be appreciated that my client is not in a position to satisfy any judgment sum and your client will incur considerable legal costs to no avail.
We invite you to take instructions from your client to discontinue on the basis that each party bear its own legal costs.
On 30 September 2014 Mr Tassone served on Mr Kirkham a short form claim for costs of the trial in the sum of $110,320.39. On 28 October 2014 Mr Kirkham through his solicitors served a response in which he did not agree to any of the respondent’s costs or offer any amount at all for them.
On 9 October 2014 Mr Tassone brought an interlocutory application in this Court seeking a freezing order over the property of Mr Kirkham and an order that he provide security for costs of the appeal.
In an affidavit sworn in support of the application, Mr Tassone’s solicitor estimated that solicitor’s costs and disbursements of the appeal would come to $19,237.41, inclusive of GST. He estimated senior and junior counsel fees in the sum of $9,487.50 inclusive of GST. The estimate of total costs was later increased to $29,824.64.
An affidavit of Mr Kirkham sworn on 27 November 2014 was received on the application for security. Mr Kirkham deposes that he has not been employed since 25 January 2012. He deposes that his only assets are a half share in a 2004 Holden Statesman vehicle, with an estimated value of $8,000, and a half share in various household items, with an estimated value of $5,000. Mr Kirkham explains in his affidavit that because of his inability to pay his creditors he entered into a “debt repayment arrangement” effective from 28 May 2014. Exhibited to Mr Kirkham’s affidavit is a debt agreement proposal made pursuant to s 185C of the Bankruptcy Act 1966 (Cth). The purpose of the agreement appears to be to compromise an outstanding Bank SA personal loan in the sum of $19,478.86 for $16,500. The loan is said to be a joint loan taken out by both Mr Kirkham and his wife.
Mr Kirkham also deposes that he and his wife formerly owned a home at 39 Jordon Street, Munno Para West but that it was sold to satisfy outstanding debts. A vendor’s statement exhibited to Mr Kirkham’s affidavit shows that after the repayment of a loan secured by a mortgage, the balance due to Mr Kirkham and his wife on the sale of the house was $31,834.37.
Mr Kirkham deposed that that balance was disbursed by payment of:
·a personal loan taken out by his wife on a vehicle - $16,500;
·a personal loan taken out by Mr Kirkham and his wife in respect of another vehicle - $3,800;
·a bond for rental premises at 3 Longview Road, Windsor Gardens - $2,370;
·three months rent in advance - $4,740;
·various incidental expenses comprising phone installation, vehicle registration, property, water, car repairs, excess payments on vehicle, storage and new CPAP machine - $4,991.
An exhibit to Mr Kirkham’s affidavit shows that the landlord of the rental premises is Uvae Pty Ltd. No explanation is given as to why the landlord required three months rent in advance. The principals of that company are not disclosed.
Discussion
Rule 295(1) Supreme Court Civil Rules 2006 provides:
(1)The Court may exercise any of the following powers in relation to an appeal or an application for permission to appeal—
(a) the Court may extend the time for commencing the appeal or making the application or taking any step in the appeal;
(b) the Court may permit a party to amend an appeal notice or other document filed in the Court in relation to the appeal;
(c) the Court may make, vary or reverse interlocutory orders in relation to the appeal or application for permission to appeal, or vary or reverse interlocutory orders of the court or tribunal from which the appeal arises;
(d) the Court may direct that notice of the appeal or application be given to a nominated person;
(e) if an appeal arises from the judgment of another court or a tribunal, the Court may request the court or tribunal, or a judge, magistrate or other officer of the court or tribunal, to provide a report on questions relevant to the appeal or application;
(f) the Court may direct a party to prepare and file in the Court a written statement of its case prepared in accordance with the Court's directions and to give copies of the statement of case to the other parties to the appeal or application;
(g) the Court may, in special circumstances, order that security be given for the costs of an appeal;
(h) the Court may summarily dismiss the appeal if it is obvious that it cannot succeed.
In Viscariello v Livesey & Anor[1] Peek J summarised the state of existing authority on the question whether impecuniosity can in itself constitute “special circumstances” for the purpose of 6SCR 295(1).
There is now an impressive group of single Judge decisions in South Australia in favour of the proposition that a demonstrated risk of impecuniosity may alone suffice to constitute “special circumstances”. In chronological order, they include: Archer v Woodhead Australia Pty Ltd,[2] Citicorp v Cirillo,[3] Foxgold Pty Ltd v Paterson,[4] Dagenham Nominees Pty Ltd (trading as Banwell Marine Service) v Shanks[5] and Morgan v WorkCover Corporation.[6]
However, it has also been noted that there may remain room for debate on this matter in the Full Court: see McVicar v S & J White Pty Ltd (trading as Arab Steed Hotel),[7] Morgan v WorkCover Corporation,[8] Sands v State of South Australia,[9] and Ramstrom v Baldino.[10]
[footnotes in original]
[1] [2014] SASCFC 49 [9] & [10].
[2] [1995] SASC 5020.
[3] (2003) 228 LSJS 132 (Sulan J).
[4] (2006) 245 LSJS 177 (Perry J).
[5] (2011) 110 SASR 577 (Blue J).
[6] [2013] SASC 47 (Stanley J).
[7] (2006) 245 LSJS 177 (White J).
[8] [2012] SASC 190 (Vanstone J).
[9] [2013] SASC 105, [10]-[11] (White J).
[10] [2014] SASC 29 (Nicholson J).
It is not necessary in this case to finally decide the question whether impecuniosity in itself is sufficient to constitute special reasons. Indeed it may never be necessary. Seldom will impecuniosity be an isolated circumstance. The nature of the proceedings below, whether the appellant was the plaintiff or defendant, the estimated costs of the appeal, the prospects of success on appeal and the course of the litigation generally are all matters which may, in combination with each other and the impecuniosity of the appellant, constitute special circumstances. It is sufficient to observe that the effect of 6SCR 295(1)(g) is to enact a rule that security will not be ordered in the generality of cases. The special circumstances which enliven the Court’s discretion to order that security for costs be given must be such as to take the appeal in which security is sought outside the generality of circumstances contemplated by the rule.
The circumstances of this case are illustrative of the way in which circumstances of the kind to which I have just referred may combine with an appellant’s impecuniosity to constitute special circumstances. First, Mr Kirkham does not contest now that he did send the email. It follows that it is now uncontested that he deliberately caused Mr Tassone embarrassment for his own amusement by sending that email. Moreover, it follows that he unnecessarily added to the costs of the proceedings before the Judge by denying that he had done so. Indeed he enlisted the witness, Mr Murti, in support of that false position.
Secondly, even though I am prepared to accept that it is arguable that a reasonable person would not have drawn the imputations found by the Judge, Mr Tassone’s case was, and remains, a strong one. Some recipients of the email may have known Mr Tassone well enough to realise that he did not send the email. Some other recipients may have realised that the email was a prank. However, to succeed on appeal the appellant must show that the correct normative and evaluative judgment in the circumstances of this case, mediated as it must be through the concept of the ordinary reasonable person, is that the email must be taken to have been sent in jest.
Thirdly, Mr Tassone has suffered greatly as a result of the prank. He was shocked when he first discovered that the email had been sent. A psychiatrist, Dr Gill, found Mr Tassone to be suffering from an Adjustment Disorder with mixed anxiety and depressive reaction. Mr Tassone was away from work from 19 July 2011 to 19 April 2012 over which time his compensation payments gradually reduced to 80 per cent of his full salary. A trial return to work in April 2012 failed. There was another failed attempt in September 2012. Mr Tassone has not worked since.
Fourthly, if Mr Tassone, as seems likely, is successful his costs of the appeal for which he has no prospect of recovery, will substantially detract from the award he has received.
Fifthly, Mr Kirkham has no assets at risk if the judgment stands. If the judgment stands it is unlikely ever to be satisfied and Mr Kirkham is unlikely to suffer any loss other than perhaps bankruptcy.
On 15 January 2015 my chambers sent the following email to the parties:
Dear Sirs
Stephen Kirkham v Cosimo Tassone – SCCIV-14-1341
The Chief Justice has instructed me to write to give Mr Kirkham an opportunity to provide evidentiary material or make submissions on the following questions:
(a) Did Mr Kirkham personally fund the defence of the proceedings below?
(b) If not, did another person pay his legal costs and, if so, who is that person?
(c) Did Mr Kirkham’s solicitors act on a speculative basis?
(d) Is Mr Kirkham funding the appeal personally?
(e) Are his solicitors acting on a speculative basis on the appeal?
(f) Has a third person agreed to pay Mr Kirkham’s legal costs and if so who is that person?
The above requests are no more than an invitation to make further submissions or provide further evidentiary material. Mr Kirkham has not been directed or ordered to make any response. If Mr Kirkham declines to answer all or any of the questions you are invited to make submissions as to the grounds on which Mr Kirkham has declined. You are also invited to make submissions as to why, in the absence of a reply to all or some of the questions, an inference should not be drawn that Mr Kirkham’s legal costs are being paid by a third person or that he has another source of funds which he has not disclosed. You may wish to make submissions, for example, that the provision of funds by a third party is not relevant to a security for costs application.
Any submissions or other material must be filed and served by close of business on 21 January 2015.
Mr Kirkham’s solicitor responded on even date answering “no” to questions (a), (b), (d) and (f), and “yes” to questions (c) and (e). The circumstance that Mr Kirkham’s appeal has been facilitated by a contingency arrangement with his solicitors is a consideration which supports the making of an order for security for costs.
Conclusion
In the totality of the circumstances, Mr Kirkham’s impecuniosity is likely, if the appeal fails, to add insult to injury to Mr Tassone. I find that Mr Tassone has established special circumstances. I order that Mr Kirkham provide security for costs in the sum of $20,000.
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