Lesses v Maras - [2016] SASC 117

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
LESSES v MARAS
[2016] SASC 117
Judgment of The Honourable Justice Doyle (ex tempore)
26 July 2016
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
The respondent successfully sued the appellant in defamation. The appellant commenced an appeal, and the respondent seeks an order granting security for costs of the appeal.
Held (per Doyle J), granting the application:
1. It is appropriate to order security for the respondent’s costs of the appeal.
Supreme Court Civil Rules 2006 (SA) r 295(1)(g), referred to.
Fleming v Advertiser News Weekend Publishing Company Pty Ltd (No 3) [2016] SASC 81; Diakos v Mason [2010] SASC 108; Sands v State of South Australia [2013] SASC 105; Schuller v S J Webb Nominees Pty Ltd [2015] SASC 8, considered.

LESSES v MARAS
[2016] SASC 117
Civil.
DOYLE J (ex tempore):

The respondent seeks an order granting security for its costs of the appellant’s appeal.
Background
By way of background, the parties are both members of the Greek Orthodox Community of South Australia Incorporated, or GOCSA. The respondent sued the appellant in defamation. The claim alleged three defamatory publications, each of which was said to give rise to imputations that the appellant was untrustworthy and did not care about the GOCSA churches.
The respondent's claim succeeded. In summary, the trial judge held that the imputations were conveyed and were defamatory. In relation to the common law defence of qualified privilege, while the relevant imputations were conveyed on an occasion of privilege, the defence was defeated by a finding of malice. The finding of malice was also fatal to the existence of a statutory defence of qualified privilege. The defences of truth and fair comment or honest opinion were also not made out. Damages in the amount of $75,000 were awarded. The claim for aggravated damages was dismissed. The trial judge subsequently ordered that the appellant pay 90 per cent of the respondent's cost of the action on an indemnity basis.
The appellant has appealed on various grounds. Grounds 1-8 involve a challenge to the trial judge's finding of malice. Ground 9 involves an allegation the trial judge failed to properly consider the appellant's defence of fair comment or honest opinion. Grounds 10-12 involve a challenge to the findings that the two imputations relied upon by the respondent were conveyed and defamatory. There is also a notice of cross-appeal and alternative contention in which the respondent seeks to challenge the trial judge's finding that the publications occurred on an occasion of privilege.
The application for security for costs
This application for security for costs is brought pursuant to r 295(1)(g) of the Supreme Court Civil Rules 2006 (SA). Under the current version of that rule, the discretion to grant security is not conditioned upon a finding of special circumstances. Rather the court has an unfettered discretion, albeit one that must, of course, be exercised judicially and having regard to established principles.[1]
[1] Fleming v Advertiser News Weekend Publishing Company Pty Ltd (No 3) [2016] SASC 81 at [13]-[14].
Those established principles make it plain that in the circumstances of the present matter the following considerations are relevant.
First, the application is for security for the costs of an appeal rather than a trial. Courts will more readily order for security in the former category of case because the appellant has already had the opportunity to have the matter litigated, and has had the benefit of a judicial determination of the underlying controversy.[2] On the other hand, it is also a relevant factor (and to some extent weighs against an order for security) that the appellant was the defendant below and not the plaintiff.
[2] Diakos v Mason [2010] SASC 108 at [10]; Sands v State of South Australia [2013] SASC 105 at [32].
Secondly, the appellant is impecunious. This is not in dispute. The appellant does not have any real estate registered in his name, has no wage or salary and is facing bankruptcy proceedings against him. The appellant has not paid the judgment sum or his costs liability associated with the proceedings to this point. It is accepted that there is a significant risk, if not inevitability, that if no order for security is made, and the appeal fails with an order for costs in the respondent's favour, then the appellant will not be in a position to meet that costs order from his own resources.
The respondent contends that not only is the appellant impecunious, but also that back in February 2012 he transferred his interest in two pieces of real estate into the name of other members of his family so as to defeat the respondent's claim for damages or costs in these defamation proceedings. The defamatory publications occurred in June 2011, a concerns notice was sent in November of that year, and proceedings were commenced in June 2012. While the affidavit evidence before me establishes that the two transfers occurred, and did so at a time that is consistent with the allegation they were undertaken so as to avoid the potential financial consequences associated with this litigation, I am not in a position to make any finding as to the motivation for the transfers, or the circumstances in which they occurred.
The appellant filed an affidavit in opposition to this application, which was ultimately tendered and relied upon by the respondent, in which he deposed to the transfers being made for the purpose of maximising his pension entitlements. But in the absence of the issue being explored further in the evidence I am not in a position to make any finding. Accordingly I do not take this allegation into account in my determination of the application. However, for the reasons I will shortly explain, the fact of the transfers nevertheless remains relevant in relation to the issue of stultification.
This is not a case in which the appellant's impecuniosity is said to have been caused by the conduct of the respondent. Further, whilst one may infer a difference between the financial positions of the two parties from the reference in the trial judge’s reasons to the respondent being a successful property developer, in my view there is no basis to infer that the present application, or indeed these proceedings more generally, are in any way being used as an instrument of oppression.
It is significant that despite the appellant's impecuniosity, the evidence falls short of establishing that the appeal will be stultified if the order for security is made. The appellant has managed to defend the litigation to this point, from what one might infer to be the support of outsiders, be it either members of his family, his solicitors or some other third party. In his affidavit (that he did not ultimately rely upon) the appellant contended that the effect of an order for security would be stultification. However, by the time of his written and oral submissions on this application, his position had softened to one that the litigation may be stultified or alternatively that there was a risk of stultification. In my view, a mere risk of stultification, as opposed to a proven likelihood or inevitability of stultification,[3] does not weigh heavily against an order for security. In this case the evidence does not support an inference of likely, let alone inevitable, stultification. I also consider it relevant in this context that the appellant relatively recently transferred his interest in two pieces of real estate to other members of his family. Not only does this leave open the possibility of some capacity (and perhaps inclination) on the part of his family to provide him with some financial support, but also it suggests that any stultifying effect of an order for security may be in part a consequence of the appellant’s own conduct, or own decision as to how to organise his financial affairs.
[3] Schuller v S J Webb Nominees Pty Ltd [2015] SASC 8 at [14], [17], [20].
Finally, it is relevant on applications such as the present to have some regard to the merits of the proposed appeal. However, the extent to which it is possible or appropriate to do so depends to some extent upon the nature of the matter and the issues raised. In this case it is difficult to take the matter much further than to make a few broad observations. The first is that I am satisfied the appeal is not hopeless. It is a bona fide appeal with at least some prospects of the success. The second is that it appears the real battleground on the appeal will be the challenge to the trial judge's finding of malice. In this respect it is relevant that the appellant will need to overcome, either by overturning or navigating his way around, a series of factual findings made by the trial judge to the effect that the appellant did not believe various of the statements made in the defamatory publications. Further, it would appear that at least some of those findings were made on the basis of admissions by the appellant. While the appeal will involve a rehearing in which the appeal court will need to undertake an independent assessment of the evidence and reach its own conclusion on the various issues of fact, it will, nevertheless, do so having regard to the findings of the trial judge, and in particular those that are based upon, or involved a use of, the trial judge's advantage of having heard and seen the relevant witnesses. In my view, in the circumstances, the most that can be said about the appeal’s prospects of success is that they are moderate.
Conclusion
In summary, it is relevant that the application for security relates to an appeal; that the appellant is impecunious (with the result that there is a significant risk, if not inevitability, that absent an order for security for costs the respondent will be unable to recover his costs if the appeal is unsuccessful); that there is no suggestion that the respondent’s conduct in any way caused that impecuniosity; that the evidence does not establish the appeal will be stultified if I were to order security; and that the appeal has only moderate prospects of success. Bearing all of these considerations in mind, I consider it appropriate to order security for the respondent’s costs of the appeal. I propose to do so in the sum of $25,000.
I order that the prosecution of the appeal is stayed until the appellant has paid into Court the sum of $25,000 to secure the respondent’s costs of the appeal.