Mathews v All Options Pty Ltd

Case [2019] FCA 1972

FEDERAL COURT OF AUSTRALIA

Mathews v All Options Pty Ltd [2019] FCA 1972

File number: VID 997 of 2019
Judge: O’BRYAN J
Date of judgment: 22 November 2019
Catchwords: PRACTICE AND PROCEDURE – appeal – application for security for costs – where orders for security only resisted against natural person appellant – whether orders for security would stultify appeal – security for costs of appeal ordered
Legislation:

Federal Court of Australia Act1976 (Cth) s 56

Federal Court Rules 2011 r 36.09

Cases cited:

Carey v Freehills [2014] FCA 325

Clack v Collins (No 1) [2010] FCA 513

Cooper v Universal Music Australia Pty Ltd [2006] FCA 642

Cowell v Taylor (1885) 31 Ch D 34

Flujo Holdings Pty Ltd v Merisant Co [2019] FCA 594

Moore v Macks [2007] FCA 509

Norcast S.ar.L v Bradken Limited & Ors [2012] FCA 765

Sheather v Staples Waste Removals Pty Limited [2012] FCA 998

Skyring v Sweeney [1999] FCA 61

Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293

Voxson Pty Ltd v Telstra Corporation Ltd (No 8) [2017] FCA 1427

Date of hearing: 15 November 2019
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 38
Counsel for the Appellants: Mr K E Mihaly
Solicitor for the Appellants: Aughtersons Lawyers Pty Ltd
Counsel for the Respondent: Mr D F McAloon
Solicitor for the Respondent: HWL Ebsworth Lawyers

ORDERS

VID 997 of 2019
BETWEEN:

DARREN MATHEWS

First Appellant

FLIGHTDECK GEELONG PTY LTD

Second Appellant
AND:

ALL OPTIONS PTY LTD (ACN 123 320 169)

Respondent

JUDGE:

O’BRYAN J

DATE OF ORDER:

22 NOVEMBER 2019

THE COURT ORDERS THAT:

1.Pursuant to s 56 of the Federal Court of Australia Act1976 (Cth) and r 36.09(1)(a) of the Federal Court Rules2011, the appellants are to give security for the respondent’s costs of the appeal in the sum of $62,000 to be provided by payment into Court in this proceeding pursuant to r 2.42 of the Federal Court Rules2011.

2.Pursuant to r 36.09(1)(b) of the Federal Court Rules2011, the appellants’ appeal be stayed until the security for costs has been provided by the appellants pursuant to Order 1.

3.Pursuant to r 36.09(1)(c) of the Federal Court Rules2011, the appellants’ appeal be dismissed if the security for costs has not been provided by the appellants pursuant to Order 1 by 4.00pm on the forty second (42nd) day after the date of these Orders.

4.The costs of the respondent’s interlocutory application for security for costs are to be costs in the appeal.

5.The remaining orders are to apply subject to Orders 1 to 3.

6.The appeal be listed before a Full Court in Melbourne during May 2020 for hearing of the appeal.

7.The hearing be listed for an estimate of one day.

8.In accordance with Practice Note APP 2, the appellants file and serve Parts A and B of…

Continue reading Mathews v All Options Pty Ltd

Sign in free to access the full text

Details
AGLC
Mathews v All Options Pty Ltd [2019] FCA 1972
Case
[2019] FCA 1972
Decision Date

CaseChat Overview and Summary

In Mathews v All Options Pty Ltd, the respondent sought security for costs of the appeal from the appellants, who were the defendants in the proceeding below. The primary issue before the court was whether the appellants should be required to provide security for the costs of the appeal, and if so, in what amount. The court considered the principles governing security for costs, particularly in the context of an appeal, and assessed the financial position of the appellants. The court found that there was a substantial risk that a costs order made against the appellants in respect of the appeal would not be satisfied. The court also noted that the appellants had been able to retain legal representation for the appeal and to contest a bankruptcy application, suggesting access to funds for legal proceedings. Therefore, the court ordered that the appellants provide security for the costs of the appeal in the amount of $62,000. The appeal was to be stayed until the security was provided and dismissed if not provided by the specified deadline. The court further outlined the procedural requirements for the appeal, including the filing and serving of various documents and outlines of submissions.

Orders

Orders of the court

1. Pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) and r 36.09(1)(a) of the Federal Court Rules 2011, the appellants are to give security for the respondent’s costs of the appeal in the sum of $62,000 to be provided by payment into Court in this proceeding pursuant to r 2.42 of the Federal Court Rules 2011.

2. Pursuant to r 36.09(1)(b) of the Federal Court Rules 2011, the appellants’ appeal be stayed until the security for costs has been provided by the appellants pursuant to Order 1.

3. Pursuant to r 36.09(1)(c) of the Federal Court Rules 2011, the appellants’ appeal be dismissed if the security for costs has not been provided by the appellants pursuant to Order 1 by 4.00pm on the forty second (42nd) day after the date of these Orders.

4. The costs of the respondent’s interlocutory application for security for costs are to be costs in the appeal.

5. The remaining orders are to apply subject to Orders 1 to 3.

6. The appeal be listed before a Full Court in Melbourne during May 2020 for hearing of the appeal.

7. The hearing be listed for an estimate of one day.

8. In accordance with Practice Note APP 2, the appellants file and serve Parts A and B of the Appeal Book by 28 February 2020.

9. In accordance with Practice Note APP 2, not later than 4.00pm 20 business days before the hearing, the appellants file and serve on the respondent an outline of submissions and chronology of the relevant events.

10. In accordance with Practice Note APP 2, not later than 4.00pm 15 business days before the hearing, the respondent file and serve on the appellants an outline of submissions, a chronology of the relevant events and a list of materials to be included in Part C of the Appeal Book.

11. In accordance with Practice Note APP 2, not later than 4.00pm 10 business days before the hearing, the appellants file and serve on the respondent any submissions in reply.

12. In accordance with Practice Note APP 2, not later than 4.00pm 5 business days before the hearing, the appellants file four copies and serve on the respondent an appropriate number of copies of Part C of the Appeal Book.

13. Outlines of submissions are not to exceed 15 pages in length, including any annexures, and be easily legible using a font size of at least 12 points and one and a half line spacing throughout, including in any footnotes and annexures. Italics or underlining must be used for legislation and case citations and boldface or italics may be used for occasional emphasis.

14. Each party file and serve a list of authorities and legislation in accordance with Practice Note APP 2.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons that follow, I will order the appellants to give security for the respondent’s costs of the appeal in the amount of $62,000.Background The respondent commenced the proceeding below in August 2016. For some time, the appellants were legally represented by their current solicitors, Aughtersons. However, Aughtersons ceased to act in March 2018 and the appellants were not legally represented at the trial in September 2018. The obligations of the appellants under the orders made by the Court on 23 August 2019 are joint and several. Neither of the appellants has paid any amount to the respondent in respect of the orders, nor have they sought or obtained a stay in respect of the operation of the orders. Unbeknownst to the respondent, Flightdeck was deregistered as a company by ASIC on 2 March 2018, following an application for voluntary deregistration. However, its registration was reinstated following an application made by the respondent in May 2019. The respondent has issued a bankruptcy notice in respect of Mr Mathews’ failure to pay the amounts required by the orders made by the Court on 23 August 2019. Mr Mathews has filed an application to set aside that bankruptcy notice.Principles governing the application The application for security is made under s 56(1) of the Federal Court of Australia Act1976 (Cth) and rule 36.09(1) of the Federal Court Rules2011. Section 56(1) authorises the Court or a Judge to order an appellant to give security for the payment of costs that may be awarded against him or her. Rule 36.09(1) provides that a party may apply for an order that:(a)an appellant give security for the costs of an appeal, and for the manner, time and terms for giving the security;(b)the appeal be stayed until security is given; and(c)if the appellant fails to comply with the order to provide security within the time specified in the order, the appeal be stayed or dismissed. The applicable principles were explained by Tamberlin J in Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 at [11] and [12]:[11] The Court has a wide discretion in relation to the grant of security for costs. There is no general rule because each case depends upon its own circumstances. In relation to an appeal, Courts have given weight to the injustice that might be caused to a successful litigant if the litigant is compelled to contest the matter for a second time without the probability of obtaining the costs if ultimately successful: Cowell v Taylor (1885) 31 Ch D 34 at 38. In Equity Access v Westpac Banking Corp (1989) ATPR 40‑972, Hill J at 50,635 listed some of the relevant matters to be considered when deciding whether security for costs ought to be awarded:•the prospects of success;•the quantum of risk that a costs order will not be satisfied;•whether the making of an order would be oppressive in that it would stifle the reasonably arguable claim;•whether any impecuniosity of the appellants arises out of the conduct complained of;•whether there are aspects of public interest which weigh in the balance against such an order;•whether there are any particular discretionary matters peculiar to the circumstances of the case.[12] Although Courts will be reluctant to make an order for security for costs against a natural person on account of his or her impecuniosity, there is no general principle that prevents the making of such an order.

Evidence

Evidence Before The Court

That principle, that the court will more readily grant security against a litigant who is impecunious in the case of appellate proceedings, has been followed and applied on many occasions: see for example Skyring v Sweeney [1999] FCA 61 at [6] per Spender J; Moore v Macks [2007] FCA 509 at [20] per Mansfield J; Clack v Collins (No 1) [2010] FCA 513 at [7]‑[8] per Jagot J; Sheather v Staples Waste Removals Pty Limited [2012] FCA 998 at [18] per Nicholas J; Carey v Freehills [2014] FCA 325 at [16]-[17] per Marshall J.Evidence concerning the financial position of Flightdeck and Mr Mathews Evidence concerning the financial position of Flightdeck and Mr Mathews was given by both Mr Siva and Mr O'Brien. In relation to Flightdeck, the application for voluntary deregistration was premised upon the company having no material assets. There is no evidence to suggest that Flightdeck has, in the period since its reinstatement in May 2019, acquired assets. Mr O'Brien deposed that Flightdeck "to his knowledge has no assets in its name". As noted above, Flightdeck did not oppose an order for security being made against it. The evidence concerning Mr Mathews is inconclusive. Mr Siva deposed that, in the course of the original proceeding and particularly during August and September 2018, Mr Mathews made various statements to the effect that neither he nor Flightdeck had sufficient funds to retain lawyers in connection with the proceeding. Further, neither of the appellants have made any payment by way of satisfaction or reduction of their liability under the orders made against them, despite a demand for payment having been made in August 2019. Mr O'Brien deposed that he is instructed that:(a)Mr Mathews does not hold any real property in his personal name;(b)a property in Mansfield with certificate of title volume 11827 folio 857 (Mansfield property) is held by Mr Mathews and his wife as trustees for the DVTT Group Superannuation Fund;(c)Mr Mathews is not of an age where he can access assets held in the superannuation fund; and(d)Mr Mathews currently has $374.19 in a bank account in his name. I regard the foregoing evidence as inconclusive about Mr Mathews' financial position for the following reasons. First, the subject of the original proceeding was the sale of a trampoline business by Flightdeck to the respondent for a sale price of $1,525,000. There is no evidence as to what became of the sale proceeds. Second, Mr O'Brien's affidavit exhibited a transfer of land by which the Mansfield property was transferred on 21 June 2017 by Mr Mathews to the DVTT Group Superannuation Fund. At the time of the transfer, the original proceeding was set down for trial in September 2017 (the trial date was subsequently vacated on the application of the appellants). The transfer records that the consideration for making the transfer was the "desire to make a gift". At the very least, the transfer raises an inference that Mr Mathews has access to sufficient financial support as would allow him to contribute the Mansfield property, owned by him, into a superannuation fund.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Fifth, the evidence indicates that Mr Mathews has retained Aughtersons to act on his behalf in this appeal, and has also retained counsel. Further, Mr Mathews has retained Aughtersons to act on his behalf in seeking to set aside the bankruptcy notice. It is apparent that Mr Mathews has been able to access funds in order to retain Aughtersons, whether those funds belong to Mr Mathews or to someone who is willing to provide funding to Mr Mathews. Consideration The respondent's primary submission is that there is a substantial risk that a costs order made against the appellants in respect of the appeal will not be satisfied. The submission is based on the facts that, first, the appellants have not satisfied the orders made against them on 23 August 2019 and, second, the evidence raises a material doubt as to the ability of the appellants to satisfy a costs order in the appeal and the ability of the respondent to recover costs against the appellants. The respondent notes that the appellants do not suggest that an order for security will stultify the appeal and that, even if that argument was advanced, it would be given less weight by the Court in the context of an appeal. The respondent accepts that, given the issues raised by the notice of appeal, it is difficult for the Court to assess the merits of the appeal; in those circumstances, the respondent argues that that factor is neutral in the assessment of security. The respondent submits that there are no other relevant factors on this application. As noted earlier, Flightdeck does not oppose an order for security to be given by it. Mr Mathews opposes an order being made against him on the basis that he is impecunious and does not have the funds to satisfy a costs order. He does not submit, however, that an order for security would stultify his appeal. In my view, an order for security against both appellants is justified in the present case, largely for the reasons advanced by the respondent. The evidence shows that, while the financial position of Mr Mathews is far from clear, there is a substantial risk that a costs order made against him in respect of the appeal will not be satisfied. His counsel, on instructions, submitted that he does not have the funds to satisfy a costs order, but expressly did not submit that the appeal would be stultified if an order for security were to be made. As Mr Mathews has been able to retain lawyers for the appeal, and to contest the bankruptcy application against him, it appears that he has access to a source of funds for the purposes of legal proceedings. Even if there were a risk that the appeal would be stultified by an order for security, that would not be conclusive on the question whether an order for security should be made in the context of an appeal. I do not consider that any other discretionary factor weighs for or against the making of an order for security. In that regard, I note that:(a)it is not realistic to form any assessment of the merits of the appeal at this stage;(b)the asserted impecuniosity of Mr Mathews does not arise out of the conduct of the respondent;(c)there is no other aspect of public interest which weighs in the balance against the order; and(d)there are no particular discretionary matters peculiar to the circumstances of this case.Quantum of security to be ordered