Mitropoulos v Hancock Corporation Pty Ltd (ACN 083 735 513) - [2006] SASC 379

SUPREME COURT OF SOUTH AUSTRALIA
(Miscellaneous Appeal: Application)
MITROPOULOS v HANCOCK CORPORATION PTY LTD (ACN 083 735 513) & ORS
[2006] SASC 379
Judgment of The Honourable Justice Layton
20 December 2006
APPEAL AND NEW TRIAL - APPEAL GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES - FROM INTERLOCUTORY DECISIONS - LEAVE TO APPEAL
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
Application for permission to appeal to a single judge of the Supreme Court from a decision of a District Court Judge - the Judge dismissed an appeal against the decision of a Master to refuse an application for security for costs - consideration of approach to interlocutory appeals - consideration of principles in granting permission to appeal where it would be a second appeal on a question of practice and procedure - Held: The applicant failed to demonstrate any point of law of difficulty and general importance, or error in the previous decisions which would cause manifest injustice - previous judicial conclusions open on evidence - permission refused.
Corporations Act 2001 (Cth); District Court Rules 1987 (SA); District Court Act 1991 (SA) s 43; Supreme Court Rules 2006 (SA), referred to.
Woods Bagot Pty Ltd & Ors v Stapledon & Anor [2005] SASC 346, applied.
FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 33 ACSR 739; Hamilton-Smith v Bernsteen Pty Ltd (in liq) [2005] SASC 190; Rouse v IOOF Australia Trustees Ltd (No 5) [1999] SASC 294, considered.

MITROPOULOS v HANCOCK CORPORATION PTY LTD (ACN 083 735 513) & ORS
[2006] SASC 379
LAYTON J.

This is an application for permission to appeal to this Court from the judgment of a Judge of the District Court, who dismissed an appeal from a decision of a Master of the District Court.
On 7 July 2006, the Master refused the applicant’s (the second defendant) application that the respondent provide security for costs. The decision of the Master was an interlocutory judgment within the meaning of the District Court Act 1991 (“the Act”). The appeal from the Master to a single judge of the District Court was brought pursuant to s 43 of the Act.
On 29 September 2006, a single judge of the District Court dismissed the appeal. This judgment was an interlocutory judgment. Accordingly, any appeal from this judgment would lie to a single judge of this Court pursuant to s 43(2)(b) of the Act.
The applicant now seeks permission to appeal to this Court, pursuant to Rule 285(1)(b)(ii) of the Supreme Court Rules 2006. This application was made in the absence of any other party.
The plaintiff commenced proceedings against the defendants for a sum of approximately $50,000, in relation to the supply and installation of computer equipment. By application dated 18 November 2005, the second defendant (now the applicant) sought an order for security for costs in the sum of $10,000. The application was brought pursuant to DCR100.01(d), relying on s1335(1) of the Corporations Act 2001 (Cth) which provides:
Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
In order to show that there was reason to believe the plaintiff would be unable to pay the costs of the proceedings, the applicant relied on the following facts:
·That the plaintiff had been deregistered then reinstated by ASIC;
·The plaintiff’s delay in satisfying an earlier and unrelated judgment debt, and the fact that the debt was ultimately paid by way of cheque drawn on the account of persons other than the plaintiff; and
·The fact that the plaintiff does not own any real estate.
The applicant also argued that the financial documents produced by the plaintiff were insufficient to accurately reflect the true financial position of the plaintiff.
The Master set out the test to be applied in considering an application for security for costs under s1335 of the Corporations Act, and said:
[3] The defendant bears the onus of establishing on credible testimony that there is reason to believe that the plaintiff will be unable to pay the defendant’s costs in the event the defendant is successful. The credible evidence test is an objective test. To make an order for security I must be satisfied the matters/evidence relied upon by the defendant objectively give rise to a “reason to believe” the plaintiff will be unable to pay the costs of the defendant: see FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 33 ACSR 739.
The Master gave thorough consideration to the evidence provided in support of the application, and concluded that:
[13] Having regard to the affidavits filed by the parties and the submissions made, I consider the evidence led in support of the application, namely ASIC deregistration and the judgment debt together with the plaintiff’s evidence, does not objectively give rise to the necessary belief that the plaintiff is not in a position to pay costs.
[14] In my view, the defendant has not placed on the record credible testimony but has attempted to satisfy the threshold test by inference (emphasis added): see paragraph 11 FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (supra) below:
“…Here the applicant is not seeking to prove the state of the company’s finances. The applicant is required to do no more than place on the record credible testimony and the exercise of the court at this stage is in judging the testimony and its quality rather than seeing if a matter has been proved by inference. The company, at this stage, is not being asked to explain or contradict something for the purposes of avoiding and inference being drawn. If there is credible testimony, then the court has jurisdiction to make the order and a company which called no evidence to show it could meet a costs order would run the risk of having an order made against it.”
On appeal before the District Court Judge, counsel for the applicant submitted that the Master had erred in paragraph [14] in suggesting that reason to believe could not be established by inference. The Judge on appeal accepted that if that was a correct interpretation of the Master’s reasons, then the Master had erred in that respect. However, the Judge considered that the real basis for the Master’s decision was her statement in paragraph [13] that the evidence led in support of the application did not give rise to the necessary belief that the plaintiff is not in a position to pay costs.
The Judge in his reasons also undertook a detailed consideration of the evidence given by the applicant in support of her application for security for costs. His Honour in his ex tempore reasons concluded:
[T]he criterion which the defendant must satisfy is that the plaintiff will not be able to pay, or perhaps I should say, not be able to meet the cost’s order in favour of the defendant. The onus is with the defendant to put forward credible evidence to establish that fact. I do not think that the defendant has done that… In my opinion the defendant has not satisfied the relevant criterion (emphasis added).
By summons dated 13 October 2006, the applicant now seeks permission to appeal against the decision of the District Court Judge. Counsel for the applicant argued that the Master erred in paragraph [14] of her reasons, in stating that the applicant had not placed on the record credible testimony, but had attempted to satisfy the threshold test by inference. It was further argued that, on appeal, the District Court Judge in the above paragraph also put the threshold test too highly. Rather, it was submitted that the threshold test merely requires that the applicant establish a “reason to believe”,[1] and that there was no onus on the applicant to establish that the plaintiff was unwilling or unable to pay, as a fact.
[1] FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 33 ACSR 739.
It is settled that an appellate court will be reluctant to interfere with decisions of primary Judges relating to matters of practice and procedure that do not determine substantive rights of the parties.[2] Furthermore, this application is seeking to re-argue by a second appeal the decision of a Master on a point of practice and procedure. Such appeals are rarely entertained by superior courts. As noted by Perry J in Woods Bagot Pty Ltd and Ors v Stapledon and Anor [2005] SASC 346:
…it would have to be an extraordinary case which could possibly justify a second appeal, being an appeal to this Court from the District Court, on a matter of practice and procedure. Leave to appeal in such a case could only be granted if the case gave rise to a point of law of difficulty and general importance, or to avoid a manifest injustice.
[2] Hamilton-Smith v Bernsteen Pty Ltd (in liq) [2005] SASC 190.
Similarly, in Hamilton-Smith v Bernsteen Pty Ltd (in liq) the Full Court noted that to obtain leave to appeal against an order for costs would in the ordinary course require the identification of an important question of principle requiring resolution.[3]
[3] Ibid.
Counsel for the applicant did not submit before me that this was a case giving rise to a point of law of difficulty or general importance. Rather, it was argued that the Master at first instance, and the District Court Judge on appeal, had erred in their application of the test for security for costs under s 1335 of the Corporations Act. However this does not of itself give rise to a point of law of difficulty and general importance, which justifies the grant of permission. Counsel for the applicant has not suggested that the application of the test in s1335 is unsettled, and I therefore consider there is no reason to revisit it on appeal.
I also do not consider that a manifest injustice would result if permission to appeal is not granted. In all applications for permission to appeal, an applicant must show that a failure to grant permission could give rise to an injustice to the applicant.[4] Counsel for the applicant submitted that injustice would be suffered in the event that the applicant succeeds in defending the claim made against her, as the applicant would already have expended costs, and would be prejudiced if she was unable to recover her costs. At this stage, however, I consider such alleged injustice to be purely speculative, and dependent on a number of variables, including the outcome of a trial and the terms of any costs order. Importantly, the refusal of permission to appeal will not impede the applicant in successfully defending the claim against her. In these circumstances, I do not consider the injustice to the applicant to be “manifest”.
[4] Rouse v IOOF Australia Trustees Ltd (No 5) [1999] SASC 294.
Moreover, it is to be remembered that this is an application for permission to appeal for a second time against a discretionary decision. Section 1335(1) of the Corporations Act 2001 (Cth) does not require the court to order security for costs whenever there is reason to believe that a corporation will be unable to pay the costs of the defendant. Rather, where such reason to believe is demonstrated, it is within the discretion of the court to make, or refuse to make, an order for security for costs. In this case, both the Master and the District Court Judge undertook a detailed consideration of the evidence before them, and both came to the conclusion that security for costs was not warranted in this case. This conclusion was clearly open on the evidence. Accordingly, I do not consider that a manifest injustice will result from the refusal of permission to review this discretionary decision for a second time.
I refuse permission to appeal.