Margaretic v Western Australian Trotting Association [No 2]
[2023] WASC 130
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MARGARETIC -v- WESTERN AUSTRALIAN TROTTING ASSOCIATION [No 2] [2023] WASC 130
CORAM: KENNETH MARTIN J
HEARD: ON THE PAPERS
DELIVERED : 24 APRIL 2023
FILE NO/S: CIV 2373 of 2022
BETWEEN: DURO MARGARETIC
Plaintiff
AND
WESTERN AUSTRALIAN TROTTING ASSOCIATION
Defendant
Catchwords:
Practice and procedure - Rules of the Supreme Court - Security for costs application - Plaintiff is individual natural person - Defendant points to plaintiff's likely impecuniosity and inability to meet an adverse costs order upon the plaintiff's action failing at trial - Expedited trial looming - Plaintiff's respectably arguable case - Compliance and governance aspect to application regarding defendant's by-laws - No motivating circumstances to require security beyond plaintiff's likely inability to meet adverse costs order - Application refused
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application for security for costs refused
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Law One (WA) Pty Ltd |
| Defendant | : | JDK Legal Services |
Case(s) referred to in decision(s):
Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2016] WASC 353
Attorney-General of Botswana v Aussie Diamond Products Pty Ltd [2009] WASC 299
Bhatia v Gill [2022] WASC 341
Lawless v Mackendrick [No 3] [2011] WASC 298
Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35
KENNETH MARTIN J:
This action by the plaintiff has been set down for a two-day expedited trial across 26 and 27 April 2023 (with a further day held in reserve).
The plaintiff commenced the action by writ on 23 December 2022 (folio 1). At that time the plaintiff was seeking an urgent interlocutory injunction restraining the defendant from proceeding any further with aspects of a proposed sale in respect of portions of its land at Gloucester Park, East Perth. The injunction was sought by the plaintiff on the basis of alleged deficiencies or non-compliances with the defendant's internal regulating by-laws - in particular, with the by-laws regulating the defendant's voting processes (either physically by post or electronically) for a referendum proposal that the defendant needed to conduct with its members in order for it to obtain the authorisation to proceed with such a proposed sale of any its land.
When the interlocutory injunction application returned for argument on 17 January 2023, I accepted a limited undertaking proffered by the defendant promising to provide written notice of any dealing concerning the defendant's land to the plaintiff (see order 2 of my orders dated 17 January 2023) (folio 16).
Otherwise, at that time I made further orders and directions to facilitate an expedited trial of the plaintiff's action upon exchanged affidavits, and without any pleadings or discovery. The further directions of that day provided for a mutual exchange of statements of facts, issues and contentions by the parties and for a mediation to be conducted before a registrar of this court prior to the fixed trial dates.
By further consent, on 23 March 2023 I issued directions - including directions towards an interlocutory application being then advanced by the defendant the same day seeking security for costs from the plaintiff in the amount of $90,000. I refer to the letter attached to the defendant's lawyers' email to my Associate sent on 23 March 2023, advising inter alia:
That conferral has been unsuccessful, and the defendant hereby makes application for the plaintiff to provide security for costs if [sic] the action in the sum of $90,000.
That application did not, as the plaintiff observes, expressly seek the orthodox counterpart to such a security for costs order - being an order to stay the action in the wake of a failure within the time allowed to provide such security were it to be ordered by the court. See, however, O 25 r 6 of the Rules of the Supreme Court 1971 (WA) (RSC). Evidently, from the written materials filed by the defendant in support of the application, the outcome of a stay in the event of security not being provided is intended.
On the same day as the defendant's notification of its formal application for security for costs, the court also received a memorandum of consent orders dealing with issues concerning cross‑examination, objection to affidavits, documents for trial and, importantly, for progression to determination of the defendant's security for costs application (folio 38). To that end, the consent orders agreed between the parties and subsequently issued by the court on 23 March 2023 (folio 39) provided, under orders 3 through 6, as follows:
3.The plaintiff to file any affidavit in opposition to the defendant's application for Security for Costs by 29 March 2023.
4.The defendant to file submissions in relation to the application for security for costs on or before 30 March 2023.
5.The plaintiff to file submissions in response to the defendant's submissions on security for costs on or before 6 April 2023.
6.His Honour Justice Kenneth Martin determine, by the provision of summary reasons only, the application for security for costs on the papers.
What follows next are my summary reasons for decision upon the defendant's security for costs application as envisaged under order 6 above.
The security for costs application materials
The defendant's security for costs application is the subject of the defendant's lawyers' written submissions of 30 March 2023 (folio 42). As a matter of evidence, the application by the defendant is supported by an affidavit of its chief executive, Mr Michael Terence Radley, sworn on 22 March 2023 and filed on 23 March 2023 (folio 37). That affidavit essentially, by attachment MTR7, discloses a foreshadowed security for costs application communicated by the defendant and issued by the defendant's lawyers to the plaintiff's lawyers on 13 March 2023.
Attachment MTK8 to Mr Radley's affidavit provides the defendant's lawyers' communication to the plaintiff's lawyers of 17 March 2023, seeking assurances towards the plaintiff's ability to meet an adverse trial costs order against him.
That communication gave rise to the plaintiff's lawyers' response of 20 March 2023 (see attachment MTR9) advising at par 2 that, in effect, the plaintiff was unlikely to be able to satisfy any order made against him to pay a substantial amount of (trial) costs were that to eventuate. The response concluded by indicating that the plaintiff would rely upon the defendant's attempted delay in bringing the security application as a further ground of opposition. The 17 March 2023 letter had, in effect, rebuffed the application seeking assurance about the payment of costs and emphasised the alleged merits of his case for trial from the plaintiff's perspective.
Attachment MTR10 is the defendant's lawyers' advice to the plaintiff's lawyers on 20 March 2023. It advised that unless the plaintiff agreed to provide security in the amount of $90,000 by close of business the following day, the defendant would file and serve an application for security for costs and seeks orders from the court to that effect.
The foreshadowed security for costs application by the defendant finally issued under the defendant's lawyers' communication of 23 March 2023 to my Associate.
The plaintiff, in resisting the defendant's security for costs application, relies on his lawyers' written outline of submissions filed 10 April 2023 (folio 44), emphasising, in effect, the merits of his arguments for the trial against the defendant. He also raises the defendant's asserted delay, as he would contend, in the bringing of its application for security for costs. The plaintiff contends, in effect, that an award of security for costs, coupled with a stay order enforcing such an ordered provision of security, would stifle his just claim.
The plaintiff's application is supported by his own affidavit sworn and filed 29 March 2023 (folio 41). At par 27 of that affidavit, the plaintiff says he has paid out approximately $35,300 in legal costs and disbursements to date and that both his lawyers of record and counsel have indicated that they will only enforce payment of further legal fees from him to the extent that he is successful in recovering legal costs from the defendant in the action. At par 24 the plaintiff says:
I do not have funds available to me from any third party to provide any amount of security for the Defendant's costs in this action.
Further, at par 25 he says:
If security for the Defendant's costs is ordered, I cannot conceive how I will be able to provide that security.
The strength of the plaintiff's action
Given the summary character of these reasons, I do not need to canvass again the well-travelled and multiple case authorities governing interlocutory security for costs applications. They are not in dispute and are well understood. The present application is made pursuant to RSC O 25 (I assume). RSC O 25 r 1 provides:
The Court may order security for costs to be given by a plaintiff, but 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 him.
RSC O 25 r 2 then non-exclusively sets out and identifies some nine distinct scenarios which, without limiting the generality of RSC O 25 r 1, will support a court rendering an order for security for costs to be furnished by a plaintiff. None of those explicitly identified scenarios under RSC O 25 r 2 apply here.
Nonetheless, the court holds what is referred to as an unfettered discretion to order security and by RSC O 25 r 3 it is provided by mandatory terminology that:
The granting of security shall be in the discretion of the Court, and in determining whether an order should be made the Court shall take into consideration -
(a)the prima facie merits of the claim;
(b)what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff;
(c)whether the normal processes of the Court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff. (my emphasis in bold)
See also RSC O 25 r 6 which says:
Where security is ordered the action or other proceeding shall be stayed until the security is furnished, unless the Court otherwise orders.
In terms of the first of the mandatory criteria as identified under RSC O 25 r 3(a), I am necessarily looking at the dispute now, prior to its trial. I would presently assess that the plaintiff holds a prima facie respectably arguable case towards the alleged non-compliance by the defendant with its own by-laws concerning the conducting of a referendum with its members which was necessary for the defendant to obtain the required authority to sell any portion of its land at Gloucester Park.
It is difficult to assess the relative strength of the case advanced by the plaintiff at this stage. The most I can safely say presently, is that he presents what is a respectably arguable case for trial.
If, of course, the plaintiff is successful at trial, then that outcome will have significant adverse consequences for the sell-off plans of the defendant's committee who advocate the proposed sell-off, as well as indirectly, for its members regarding a proposed disposition to a third party of a proportion of the defendant's land at Gloucester Park.
Also present, I am satisfied, is some element of a wider and legitimate governance concern underlying the plaintiff's action seeking to enforce, in effect, as he sees matters, a proper level of compliance by the defendant with its own by‑laws.
The defendant, of course, resists all suggestions of any infringement of its by-laws. But the arguments raised in the action look to be complex and only safely to be resolved on a final basis in the context of a hearing of full arguments at a trial.
Other considerations on the disposition of the security for costs application of the defendant
As I have now indicated, there is no dispute between the parties concerning the applicable principles governing the making of a security for costs orders. Indeed, the exchanged written submissions between the parties, in effect, accept that to be so. Towards identifying those principles I refer to some of my past reasons for decision given in determining security for costs applications for other actions, including: Attorney-General of Botswana v Aussie Diamond Products Pty Ltd [2009] WASC 299 at [1], [3], [16] and [21]; Lawless v Mackendrick [No 3] [2011] WASC 298 at [6] - [8]; Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35 at [27] - [35], in particular, concerning applications for security against plaintiff natural persons at [33] - [35]; Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2016] WASC 353 at [45] - [47]; and Bhatia v Gill [2022] WASC 341 at [2], [3], [5] and [6].
Towards the mandatory criteria of RSC O 25 r 3(a), I have already observed on the reasonably arguable character of the plaintiff's action assessed at this time. Notwithstanding some suggestion of the defendant by its submissions towards the motivations of the plaintiff, I do not conclude on the materials put before me that he is acting otherwise than in good faith in bringing the present action.
I am satisfied that property of the plaintiff within the jurisdiction of Western Australia may be available to satisfy any adverse costs order ultimately made against him. But such property would only be of a relatively small value. Further, whilst normal execution processes of the court, including a pursuit of his bankruptcy, would be available to the defendant in the event of an unsatisfied adverse trial costs order against the plaintiff, the plaintiff enjoys no jurisdictional protection against enforcement processes seeking to recover such an unmet award of costs.
Decision
On the basis of the materials put before the court, I am not left satisfied that the defendant has done enough beyond showing the plaintiff's likely inability to meet the full extent of an adverse trial costs order in the event of such an order being made against the plaintiff - ie, in the wake of the trial being lost to the plaintiff and with adverse costs orders issuing against him. From the defendant's written submissions, I am unable to detect any substantive further considerations bearing upon the making of a security for costs order - extending beyond the plaintiff's likely impecuniosity in the event of an adverse costs order being made in the wake of the trial specifically towards the plaintiff as a natural person litigant and disgruntled member of the defendant association.
None of the express criteria collected under RSC O 25 r 2(a) - (i) are established.
None of the considerations invoked under the defendant's written submissions are persuasive to the end of showing something warranting a security for costs order beyond the mere likely impecuniosity of the plaintiff should he lose the trial.
Furthermore, for present circumstances, if the plaintiff's arguable case is ultimately established, then the defendant will have been shown to have effectively breached the jurisdictional threshold set within its own by-laws concerning the mandatory criteria that it must meet in the conduct of a referendum in order to obtain authority to dispose of all or part of its land. That argument raises a significant governance consideration which as a matter of wider importance goes beyond the mere interests of the plaintiff as a litigant member of the defendant association who is disgruntled by the defendant's conducting of the required referendum.
There is then, as I would assess matters, an element of wider justification for this action beyond merely the plaintiff's personal interest as a member of the defendant association.
To the extent that it is relied upon by the defendant as a consideration, I would reject as irrelevant to the present exercise the fact that the plaintiff is facing a criminal trial in October 2023 in the District Court upon a sexual assault charge - to which he has made a 'not guilty' plea. The plaintiff is entitled presently to the full weight of the law's presumption of innocence of such charges until his guilt is otherwise established beyond reasonable doubt at a fair trial.
I am also of the view that the application for security for costs has not been pursued with the level of requisite urgency that I would have expected in present circumstances. It was, in effect, something that was only accelerated in the wake of a failed attempt at mediation during March 2023. Given my orders of 17 January 2023, I would have thought that an application of the present nature ought to have been pressed more urgently even though this action is proceeding to an expedited trial at the end of April 2023. There was certainly scope for an earlier security for costs application to be made within this CMC case managed action.
The plaintiff's grievance towards the asserted delay is therefore not without a degree of force, although it is not the primary reason for failure of the application.
Result
In all the circumstances, the security for costs application fails. The plaintiff should receive his costs of the interlocutory application heard on the papers - which should follow the interlocutory outcome in his favour.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VC
Associate to the Honourable Justice K Martin
24 APRIL 2023
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