Kvist v GippsAero Pty Ltd
[2023] VSC 484
•16 August 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2022 02645
BETWEEN:
| BARBO KVIST & ORS (according to the attached Schedule) | Plaintiffs |
| v | |
| GIPPSAERO PTY LTD (ACN 140 764 138) & ANOR (according to the attached Schedule) | Defendants |
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JUDGE: | Irving AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 August 2023 | |
DATE OF RULING: | 16 August 2023 | |
CASE MAY BE CITED AS: | Kvist v GippsAero Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2023] VSC 484 | First Revision: 17 August 2023 |
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PRACTICE AND PROCEDURE – Costs – Security for costs – Plaintiffs claiming damages for personal injuries – Discretion to order security enlivened – Whether discretion to order security should be exercised – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 62.02(1)(a) – Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J Ribbands | T F Grundy Lawyer as town agents for IALPG PTY LTD (International Aerospace Law & Policy Group) |
| For the Defendants | Mr G Harris KC with Mr A Baker | HFW Australia |
HIS HONOUR:
Introduction
This proceeding is an action in negligence, brought by the relatives of individuals who died in a plane crash in Sweden, against the manufacturer of the plane and the company responsible for certifying its airworthiness. None of the plaintiffs reside in Australia. The background facts of the proceeding are more fully set out in the judgment of J Dixon J Kvist v GippsAero Pty Ltd v Anor [2023] VSC 275. I rely on his Honour’s summary.
The defendants have brought an application for orders that the plaintiffs pay security for costs pursuant to r 62.02(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) and the Court’s inherent jurisdiction. The defendants’ application seeks security in a total amount of $104,539.10. That sum is made up of past costs (excluding the costs of the defendants’ earlier forum non conveniens application) in the amount of $52,192.60 and future costs up to and including the filing of the defence in the amount of $52,346.50.
For the reasons that follow I have decided to order that the plaintiffs provide security for costs in the amount of $65,000.
The parties’ materials on the security for costs application
The defendants relied upon the affidavit of Brendan James McCashin sworn 7 July 2023 and written submissions that were supplemented by oral submissions.
Mr McCashin, solicitor for the defendants, deposed:
(a) he has over 21 years of relevant experience, including 14 years as a solicitor in Victoria, where he has been involved in complex, multi-party litigation in superior courts in Australia;
(b) he regularly advises clients about defence costs, quantum of claims and costs recovery;
(c) in late 2022 the parties corresponded on the issue of security for costs without reaching agreement;
(d) further discussion of the issue between the parties following J Dixon J’s judgment in May 2023 also did not result in agreement;
(e) the defendants have incurred costs to date (excluding the forum non conveniens application) in the amount of $52,192.60 ($38,972.60 in professional costs and $13,220 in counsel’s fees);
(f) the defendants expect to incur costs of $52,346.50 for steps in the proceeding up to and including the costs of the security for costs application and the filing of a defence ($22,533.40 for the security for costs application – professional costs of $9,203.40 and counsel’s fees of $13,330) ($29,813.10 for the defence – professional costs of $15,973.10 and counsel’s fees of $13,840); and
(g) if the proceeding continues past the filing of the defence the defendants intend to make further applications for security.
The defendants submitted:
(a) as the plaintiffs are not resident in Australia the Court’s jurisdiction to order security is enlivened;
(b) the issues for determination are:
(i) whether the Court should exercise its discretion to order security; and
(ii) if the discretion is to be exercised, the appropriate quantum and form of security.
The plaintiffs relied upon the affidavit of Joseph Charles Wheeler sworn 25 July 2023 and written submissions that were refined by oral submissions.
Mr Wheeler, who is the Australian lawyer for the plaintiffs’ principal Swedish law firm, deposed:
(a) the Swedish lawyers engaged by the plaintiffs are acting on a contingency basis;
(b) none of the plaintiffs have the financial means to finance the litigation by way of provision of security in the amount sought by the defendants;
(c) the plaintiffs’ costs to date are substantially less than the costs sought by the defendants by way of their security application;
(d) if an order for security was made the proceeding will be terminated, unless an external funding source can be procured;
(e) Mr Wheeler’s inquiries of litigation funders have so far been unsuccessful in securing a funder prepared to meet the security for costs requirements; and
(f) if the proceeding is terminated in Australia there is no recourse available to the plaintiffs in Sweden as it is statute barred there.
The plaintiffs did not dispute that the Court’s discretionary power to order security has been enlivened. The plaintiffs’ counsel made oral submissions on the following issues and otherwise relied on his written submissions:
(a) whether the Court should exercise its discretion to order security given the nature of the proceeding, being a claim in personal injury; and
(b) if so, the quantum of security to be ordered.
The defendants’ counsel objected to Mr Wheeler’s evidence on the issues of stultification and impecuniosity on the basis that it amounted to inadmissible hearsay and, even if admissible, was insufficient to establish either the plaintiffs’ impecuniosity or that a security for costs order would stultify the proceeding. The defendants’ counsel also submitted that the plaintiffs had not provided any evidence to support a submission that the proceeding raised matters of public interest and importance.
Notwithstanding Mr Wheeler’s shortcomings in identifying the basis of his beliefs, I am prepared to admit his evidence. It appears to me, however, that the evidence of impecuniosity, stultification and public interest is expressed at such a level of unsupported generality that I should give it almost no weight.
The relevant provisions and principles
Rule 62.02(1) of the Rules provides:
(1) Where—
(a) the plaintiff is ordinarily resident out of Victoria;
(b)the plaintiff is a corporation or (not being a plaintiff who sues in a representative capacity) sues, not for the plaintiff’s own benefit, but for the benefit of some other person, and there is reason to believe that the plaintiff has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so;
(c)a proceeding by the plaintiff in another court for the same claim is pending;
(d)subject to paragraph (2), the address of the plaintiff is not stated or is not stated correctly in the plaintiff’s originating process;
(e)the plaintiff has changed the plaintiff’s address after the commencement of the proceeding in order to avoid the consequences of the proceeding;
(f) under any Act the Court may require security for costs—
the Court may, on the application of a defendant, order that the plaintiff give security for the costs of the defendant of the proceeding and that the proceeding as against that defendant be stayed until the security is given.
The principles relevant to an application for security for costs are well settled and were not in dispute between the parties. In Yara Australia Pty Ltd v Oswal,[1] Priest JA[2] surveyed the authorities to distil the following principles:
[1](2013) 41 VR 245.
[2]Ibid [115] (with Redlich JA and Macaulay AJA agreeing).
[F]irst, the purpose of ordering security against a plaintiff ordinarily resident out of Victoria – and with no assets within it – is so that a successful defendant will have a fund in Victoria against which it can readily enforce an order for costs;
secondly, to make or refuse an order for security is a discretionary judgment;
thirdly, since such a judgment is discretionary, the court must weigh all relevant circumstances;
fourthly, the weight of any one circumstance must depend not only on its own persuasiveness, but must be considered against the impact other circumstances might have against it;
fifthly, a circumstance of great weight, but not necessarily decisive, is that the plaintiff is resident out of Victoria and has no assets within it;
sixthly, the weight of that circumstance may be outweighed by the plaintiff being able to point to other countervailing circumstances; and
seventhly, the ultimate question must always be — how is justice best served in the particular circumstances of the case?
In Trkulja v Dobrijevic,[3] the Court of Appeal considered security for costs in personal injury claims:
It has been remarked, on a number of occasions, that it is virtually “unheard of” for a plaintiff/appellant, in a personal injury case, to be ordered to provide security. Indeed, it is extremely rare for a defendant/respondent, in such a case, to venture to an appellate court to seek such an order. As pointed out by White J in the case of McVicar v S & J White Pty Ltd, there are particular reasons for that long and well established practice. They include that “… the courts have recognised the special interest of those whose physical or mental integrity has been compromised by injury to vindicate their rights”. The same considerations do not apply to other proceedings in tort that are brought to vindicate personal rights, including claims for defamation. There are sound reasons for the maintenance of that practice in personal injury claims, that are not relevant to other such claims in tort.
[3][2015] VSCA 281, [46] (Kyrou, Kaye JJA and Ginnane AJA) (citations omitted).
The reference to White J’s statements in McVicar v S & J White Pty Ltd (McVicar)[4] is a reference to the following passage:
In the particular circumstances of this case, I do not regard the appellant’s impecuniosity as constituting special circumstances for the purposes of r 95.13.[5] Two interrelated factors lead me to that conclusion. First, the plaintiff’s allegation is that he has suffered a major loss of his earning capacity by reason of a tort by the respondent. The Courts have not generally required plaintiffs whose impecunious state results (or is alleged to result) from the act of the defendant which is the subject of the litigation to give security for costs in order that they might enforce their claims.
The second is that claimants for damages for personal injury have generally been understood as being in a special category. In De Groot v The Nominal Defendant, Handley JA said that it was “practically unheard of” for a plaintiff/appellant in personal injury cases to be ordered to provide security. He described the ordering of security in such cases as “contrary to the long established practice of the Court”. I also note that in Wood v Merck Sharpe & Dohme (Australia) Pty Ltd, O’Meally P said:
I do not know of, nor have counsel been able to refer me to, any case in which an order for security of costs has been given in a personal injury case.
The reluctance of Courts to order security for costs in personal injury claims may be because impecuniosity of a personal injury litigant is an ordinary, rather than special, circumstance, or because the majority of personal injury damages claims are defended on behalf of defendants by insurers exercising rights arising under insurance contracts and are therefore, in reality, forensic contests between injured individuals on the one hand, and substantial financial corporations on the other. Alternatively, it may be because the Courts have recognised the special interest of those whose physical or mental integrity has been compromised by injury to vindicate their rights. Alternatively again, it may be because personal injury claims are a common illustration of the type of case mentioned earlier, namely, cases in which the plaintiff’s impecuniosity results (or is alleged to result) from the very conduct of the defendant of which the plaintiff complains in the action. It may result from a combination of all these factors.[6]
[4][2006] SASC 233 (McVicar).
[5]Rule 95.13(b) of the Supreme Court Rules 1987 (SA), now repealed, provided that the South Australian Supreme Court ‘may if there are special circumstances order that such security as the Court thinks fit be given for the costs of the appeal’.
[6]McVicar (n 4) [23]–[24] (citations omitted).
The parties’ submissions
The plaintiffs submitted that White J’s statements in McVicar were directly applicable to this case and so the Court should not exercise its discretion to order security for costs. Counsel emphasised that the Court should be cautious in taking guidance from cases involving commercial disputes as this case was more akin to a personal injury matter.
The plaintiffs submitted that their costs to date, which they used as a comparator to the defendants’ past costs figure, have been significantly less than that of the defendants. Counsel for the plaintiffs submitted that:
(a) the purpose of security is not to indemnify the applicant party for all their costs but rather to ensure that there is a fund available in this jurisdiction which can be called upon in the event that an order for costs is awarded against the plaintiffs;
(b) on a security for costs application the Court does not conduct a process akin to a taxation of costs; and
(c) a broad brush approach to quantum is appropriate.
The defendants submitted that McVicar was not apposite to this case because the main factor considered by the Court in that case was the impecuniosity of the appellants, which in this case had not been established.
In relation to quantum the defendants submitted that their evidence was credible having been prepared by a very experienced solicitor in accordance with the Court’s scale of costs. Additionally, counsel for the defendants submitted that the plaintiffs have not provided any contrary evidence of substance on quantum.
Consideration
I accept the defendants’ submission that the factors relevant to the Court’s reluctance to order costs in personal injury cases are not made out on the evidence in this case. First, there is scant, if any, evidence that the plaintiffs are impecunious and no evidence that any inability to access funds has been caused by the defendants. Second, the parties in this case agree that the Court’s discretion to order security is enlivened on the basis that the plaintiffs are all resident out of Victoria and have no available assets within the jurisdiction. Again, the plaintiffs’ lack of assets within the jurisdiction is not the result of any action by the defendants. Third, full particulars of the loss and damage claimed by the plaintiffs remains to be provided. The plaintiffs are the relatives of the deceased and their loss is said to be the loss of support and assistance provided by each of the deceased to their respective family members. The incomes of six of the deceased for 2018 and 2019 are set out. I accept that the proceeding is at a very early stage however as currently articulated the extent of the loss of support on each of the plaintiffs is not apparent. Finally, it is possible, perhaps even likely, that the defendants have recourse to insurers. In this way their situation is not unlike one scenario canvassed by White J in McVicar. What sets this matter apart and must be given significant weight is the absence of the plaintiffs from the jurisdiction. It appears to me that this factor outweighs the asserted impecuniosity of the plaintiffs.
Accordingly, in all the circumstances of this case I am not satisfied that the Court should not exercise its discretion to order security for costs because of the nature of the proceeding.
That being the case it is necessary to consider the appropriate quantum of security in the circumstances of this case.
I cannot accept the defendants’ submission that because the plaintiffs have not put on their own evidence on quantum the Court should accept the defendants’ evidence. Even in the absence of competing evidence, the Court must be satisfied that the quantum of security is appropriate. So much is implicit in the need for the Court to decide how justice is best served in the particular circumstances of the case. Additionally, Associate Judges of this Court, being costs judges, are well placed to assess costs.
Having considered the defendants’ evidence it appears:
(a) the defendants’ costs of the forum non conveniens application have been appropriately excluded from the defendants’ past costs;
(b) the defendants’ costs are limited to considering the statement of claim and taking initial instructions, preparing the security for costs application and preparing the defence;
(c) the past costs include over 70 hours ($32,081.40) of the solicitor’s time attributed to liaising with clients, undertaking enquiries, research and considering strategy and a further 11 hours ($4,400) of junior counsel’s time and 9 hours ($8,820) of senior counsel’s time considering strategy, reviewing the statement of claim, providing advice and attending conferences;
(d) the defendants’ evidence is presented in a way that does not distinguish between professional costs and disbursements; and
(e) the defendants’ evidence does not include any allowance for reduction of professional costs on taxation.
Even though the facts of this case are unusual and involve some consideration of Swedish law, the figure allowed for past costs, given it excludes the costs associated with the forum non conveniens application and the security for costs application, appears high. In my view some adjustment to the amount sought is also justified on the basis that the defendants’ estimate is likely to include some duplication of work by solicitor and counsel. Additionally, despite the optimism of the defendants’ solicitors, it is almost inevitable that professional costs will be reduced on taxation.
An application for security is not a taxation. Taking a broad brush approach, I have determined that the plaintiffs should pay security in the amount of $65,000.
Conclusion
For the reasons given above I have decided that the plaintiffs should pay security in the amount of $65,000.
I request that the parties confer and provide draft orders giving effect to this ruling, including on the question of the costs of the defendants’ application.
SCHEDULE OF PARTIES
| S ECI 2022 02645 | |
| BETWEEN: | |
| BARBO KVIST | First Plaintiff |
| GERHARD KARLSSON | Second Plaintiff |
| SANDRA WILKSTROM | Third Plaintiff |
| MALIN KARLSSON | Fourth Plaintiff |
| ESTER KATARINA JOKIAHO | Fifth Plaintiff |
| HENRY OLOF ANUNDI | Sixth Plaintiff |
| JOHAN JOKIAHO | Seventh Plaintiff |
| JULIA JOKIAHO | Eighth Plaintiff |
| DONALD WILKINSON | Ninth Plaintiff |
| JULIE WILKINSON | Tenth Plaintiff |
| ROBIN HELGESSON | Eleventh Plaintiff |
| JENS CARLEFRED | Twelfth Plaintiff |
| LINA HELGESSON | Thirteenth Plaintiff |
| BARBRO HELGESSON | Fourteenth Plaintiff |
| JAN SODERHOLM | Fifteenth Plaintiff |
| BRITT MARIE SODERHOLM | Sixteenth Plaintiff |
| TOBIAS SODERHOLM | Seventeenth Plaintiff |
| SEBASTIAN SODERHOLM | Eighteenth Plaintiff |
| MARGARETA HAGGLOF | Nineteenth Plaintiff |
| DANIEL HAGGLOF | Twentieth Plaintiff |
| - v - | |
| GIPPSAERO PTY LTD (ACN 140 764 138) | First Defendant |
| GA8 AIRVAN PTY LTD (ACN 119 523 830) | Second Defendant |
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