| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2022 0022 |
| ZOEY MIKKELSEN AND JAN MIKKELSEN | Applicants |
| v | |
| ZHIREN LI AND BAOTONG LIU | Respondents |
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| JUDGES: | KYROU and WALKER JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 17 June 2022 |
| DATE OF JUDGMENT: | 29 June 2022 |
| MEDIUM NEUTRAL CITATION: | [2022] VSCA 126 |
| JUDGMENT APPEALED FROM: | [2021] VCC 2027 (Judge Burchell) |
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PRACTICE AND PROCEDURE – Application for security for costs – Applicable principles – Meaning of ‘impecuniosity’ – Relevance of cross-appeal – Whether judgment debt subject to appeal should be taken into account in assessing applicants’ financial position – Order for security for costs made – Supreme Court (General Civil Procedure) Rules 2015, r 64.38(4).
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| Counsel | |||
| Applicants: | Mr D Connors | ||
| Respondents: | Mr PH Caillard | ||
Solicitors | |||
| Applicants: | VMC Legal | ||
| Respondents: | Accuro Maxwell | ||
KYROU JA
WALKER JA:
Introduction and summary
On 8 September 2016, the respondents, Zhiren Li and Baotong Liu, purchased shares in Forever Exotic Pty Ltd (‘company’) from the first applicant, Zoey Mikkelsen. On 14 December 2021, a judge of the County Court held that Ms Mikkelsen and the second applicant, Jan Mikkelsen, had engaged in misleading and deceptive conduct and made negligent misstatements in relation to the sale of the shares and ordered them to pay damages to the respondents.[1] The amount of the damages was reduced by 15 per cent to give effect to the judge’s finding that the respondents’ own negligence contributed to their loss.
[1]Li v Mikkelsen [2021] VCC 2027. See [42] below.
The applicants have sought leave to appeal against the judge’s award of damages. The respondents have sought leave to cross-appeal against the judge’s finding of contributory negligence.
The respondents have also applied for an order for security for costs in the amount of $67,774. These reasons deal with that application.
The only substantive issue in dispute in relation to that application was whether the financial position of the applicants was such that there was an unacceptable risk that they would not be able to meet any costs order that might be made against them if their application for leave to appeal, or any appeal consequent upon the granting of leave, was unsuccessful.
The applicants did not seek to challenge the quantum of the security sought by the respondents.
For the reasons that follow, we will order the applicants to provide security for costs in the amount of $67,774.
Applicable legal principles
The Court has power under r 64.38(4) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) to make an order that security be given for the costs of an application or appeal on such terms as the Court thinks fit. The power to order security for costs involves an exercise of discretion.[2]
[2]Wu v Bi [2022] VSCA 22, [11] (‘Wu’). The principles set out in Wu were drawn from Djordjevich v Rohrt [2021] VSCA 279, [7]–[15].
For ease of reference, we will consider the principles that the Court is to apply in deciding…
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- Mikkelsen v Li [2022] VSCA 126
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- [2022] VSCA 126
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CaseChat Overview and Summary
The court reviewed the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2015, specifically rule 64.38(4), which deals with the assessment of financial circumstances for the purpose of ordering security for costs. The court found that the term 'impecuniosity' should be interpreted in the context of the applicant's overall financial position, taking into account all relevant assets and liabilities. It was determined that the cross-appeal did not alter the applicant's financial circumstances as they stood at the time of the application for security for costs. The judgment debt that was subject to appeal was not considered in the assessment of the applicant's financial position because it was not a current liability but rather a matter pending appeal.
The court concluded that the applicant met the criteria for being deemed impecunious, given their limited financial resources and the substantial legal costs incurred. The order for security for costs was made in favour of the respondent. The court emphasised that the assessment of financial circumstances is a factual determination that requires careful consideration of all relevant evidence. The court's decision underscores the importance of accurately assessing the financial position of parties in applications for security for costs.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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