Moon v Whitehead

[2014] ACTCA 16

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

MOON v WHITEHEAD

Medium Neutral Citation:

[2014] ACTCA 16

Hearing Date(s):

2 April 2014

DecisionDate:

2 April 2014

Reasons Date:

21 May 2014

Before:

Penfold J

Category:

Court of Appeal

Catchwords:

PROCEDURE – Costs – application by allegedly impecunious respondent to appeal for security for costs – appellant had transferred property in his residence to family members – whether this constituted changing his address to avoid the consequences of the proceedings – whether the justice of the case required order to be made – whether appellant ought to be prevented from testing judgment – whether respondent ought to be required to defend judgment with no prospect of recovering her costs – order  made for security for part of estimated costs of appeal.

Legislation cited:

Court Procedures Rules 2006 (ACT), rr 1900, 1901, 1901(d),(h), 1902, 1902(1)(b),(c),(g),(h),(m), 5001(2), (3), 5302

Supreme Court Act 1933 (ACT), s 37J

Cases cited:

Hughes v Janrule Pty Ltd [2011] ACTCA 15

Mazzei v Industrial Relations Commission of NSW in Court Session [2000] NSWCA 104

Sharon Whitehead v Michael Moon [2013] ACTSC 243

Decision:

1.    The appellant is to provide security for the respondent’s costs in the amount of $10,000 within three months from the date of this order.

2.    The appeal is stayed until security is lodged with the Court or until a further order of the Court.

3.    The time for lodging an appeal against the order for security for costs is extended until seven days after  reasons for making the security for costs order are delivered.

4.    The parties have liberty to relist the matter on five days notice.

5.    Costs of this application are reserved until after  reasons for making the security for costs order are delivered.

Parties:

Michael Moon (Appellant)

Sharon Whitehead (Respondent)

File Number(s):

ACTCA 1 of 2014

SCC 1044 of 2008

Introduction

1. Sharon Whitehead took action against Michael Moon in tort for personal injury caused by what she said was non-consensual sexual intercourse imposed on her by Mr Moon on 13 August 2007.

1. On 5 December 2013, Ms Whitehead was awarded damages of $668,856 against Mr Moon (Sharon Whitehead v Michael Moon [2013] ACTSC 243).

1. Mr Moon lodged a notice of appeal on 2 January 2014, and it was filed on 6 January 2014.

1. Ms Whitehead sought an order that Mr Moon provide security for her costs of the appeal.

Orders

1. On 2 April 2014 I ordered that Mr Moon provide security for Ms Whitehead’s costs in the amount of $10,000, and gave him three months to do so. I made several further orders, being:

(a)that the appeal is stayed until security is lodged with the Court or until a further order of the Court;

(b)that the time for lodging an appeal against the order for security for costs is extended until seven days after I have delivered my reasons for the order for security for costs;

(c)that the parties have liberty to relist the matter on five days notice; and

(d)that costs are reserved until I deliver my reasons for the security for costs orders.

1. These are my reasons for making those orders.

Reasons

Relevant facts

1. This case is an unusual personal injuries case in that there is no insurance company involved, and so there is no obvious source of funds to meet the liabilities of an unsuccessful defendant.

1. In support of her application for security for costs, Ms Whitehead provided an affidavit from her solicitor which relevantly deposed to the following matters:

(a)That a historical search of the Queanbeyan property listed as Mr Moon’s address in the originating claim had shown that on 25 June 2009, six months after Ms Whitehead had begun her action against Mr Moon, he had transferred ownership of property to two people also having the surname Moon; the interest of one of those recipients had later been transferred to another person also with the same surname.

(b)That Ms Whitehead’s estimated costs of defending the judgment in her favour were likely to be in the range of $15,000 to $20,000.

(c)That a request made to Mr Moon’s lawyers on 3 February 2014 by the solicitor for information about Mr Moon’s financial position had elicited a letter dated 11 March 2014 stating only that he is currently unemployed; receives a pension of $800.88 per fortnight; has minimal savings in bank and credit union accounts; has no assets; and has current liabilities of $12,336.08.

1. Mr Moon tendered no evidence in response to Ms Whitehead’s application. At the hearing, his lawyer said that his instructions were that the property transfer had been made in the context of proceedings in the Family Court, but this was clearly not evidence in the matter. Nor was there any explanation for the failure to provide either this information, or the information about Mr Moon’s employment status, in the form of sworn evidence.

The law

1. The provision of security for costs is not a pre-requisite for an appeal to the Court of Appeal (Court Procedures Rules 2006 (ACT), r 5302), but may be ordered under r 1900 as applied by r 5001(3). Such an order may be made by a single judge exercising the powers of the Court of Appeal (Supreme Court Act 1933 (ACT), s 37J(1)(K); Hughes v Janrule Pty Ltd [2011] ACTCA 15 at [62]). The circumstances in which such an order may be made are set out in r 1901 and the matters to be considered in determining whether to make such an order are listed in r 1902. Those rules are as follows:

1901    Security for costs—when court may make order

The court may order a plaintiff to give security for costs under rule 1900 only if satisfied—

(a)the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant's costs if ordered to pay them; or

(b)the plaintiff is suing for the benefit of someone else, rather than for the plaintiff's own benefit, and there is reason to believe the plaintiff will not be able to pay the defendant's costs if ordered to pay them; or

(c)the plaintiff's address is not stated, or is misstated, in the originating process, and there is reason to believe that the failure to state an address, or the misstatement of the address, was made with intention to deceive; or

(d)the plaintiff has changed address since the start of the proceeding and there is reason to believe this was done to avoid the consequences of the proceeding; or

(e)the plaintiff is ordinarily resident outside Australia; or

(f)the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient fixed and permanent property in Australia available for enforcement to pay the defendant's costs if ordered to pay them; or

(g)a territory law authorises the order to be made; or

NoteA territory law includes these rules (see Legislation Act, s 98).

(h)the justice of the case requires the order to be made.

1902Security for costs—discretionary factors

(1)In deciding whether to make an order for security for costs under rule 1900 , the court may have regard to any of the following matters:

(a)   the means of the people standing behind the proceeding;

(b)  the prospects of success or merits of the proceeding;

(c)   the genuineness of the proceeding;

(d)  for rule 1901 (a)—the corporation's lack of financial resources;

(e)   whether the plaintiff's lack of financial resources is attributable to the defendant's conduct;

(f)   whether the plaintiff is effectively in the position of a defendant;

(g)   whether an order for security for costs would be oppressive;

(h)  whether an order for security for costs would stop or limit the progress of the proceeding;

(i)   whether the proceeding involves a matter of public importance;

(j)   whether there has been an admission or payment into court;

(k)  whether delay by the plaintiff in starting the proceeding has unfairly prejudiced the defendant;

(l)   whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;

(m) the estimated costs of the proceeding.

(2)This rule does not limit the matters to which the court may have regard.

1. Under r 5001(2), these rules apply to appeals “with any necessary changes”. For present purposes I note that I read references to plaintiffs and defendants as references to appellants and respondents respectively.

Power to order security of costs

1. Counsel for Ms Whitehead relied on rr 1901(d) and (h) to permit the making of an order for security for costs.

Change of address

1. I do not consider that r 1901(d) provides any help for Ms Whitehead. There is no evidence that Mr Moon has changed his address – indeed, he may still be living in the property that was transferred in 2009 to people who are presumably family members. Given that the address was in Queanbeyan and therefore already outside this jurisdiction, I cannot see how any change of address short of leaving Australia would improve Mr Moon’s chances of avoiding the consequences of the proceeding. Even if Mr Moon does in fact live somewhere else, there is no basis for believing that this has been done to avoid the consequences of Ms Whitehead’s proceedings against him.

1. It seems to me that the reference to changing address to avoid the consequences of the proceeding refers to attempts to escape the jurisdiction of the court or to evade enforcement of any judgment; it would be a very obscure way to refer to a litigant divesting himself of property to avoid enforcement of a judgment, if only because a person’s address need not bear any relationship at all to the resources available to a person to satisfy a judgment.

The justice of the case

1. Counsel conceded that the application relied mainly on r 1901(h), that the justice of the case required the order to be made. He pointed to the evidence that Mr Moon had divested himself of his interest in the residential property where he had been living, and also the claim that he was unemployed and receiving very limited income support benefits, as indications that Mr Moon would not be able to meet Ms Whitehead’s costs if his appeal were unsuccessful.

Discretionary considerations in ordering security for costs

1. As to the discretionary considerations set out in r 1902, those set out in rr 1902(1)(b), (c), (g), (h) and (m) might at first glance appear to be relevant.

Impact of a security for costs order

1. However, there is no evidence before me as to the impact of an order for security for costs generally or that such an order would be oppressive (r 1902(1)(g)) or would stop, or limit the progress of, the appeal (r 1902(1)(h)). Even if I accepted the truth of the unsworn claim made by Mr Moon’s solicitor that Mr Moon is unemployed and receiving welfare benefits and has no assets, this does not exclude the possibility that Mr Moon retains or can expect to have access to other resources that will enable him to pursue the appeal. Nor does it explain why Mr Moon, who at the time of the incident from which this matter arose had an apparently distinguished career in the Navy behind him and was working in the information technology industry, is now living on welfare benefits.

The appeal

1. As to the appeal, I have no reason to believe that it is other than genuine (r 1902(1)(c)). The appellant’s prospects of success (r 1902(1)(b)) cannot be dismissed as fanciful, or even poor.  The proceedings involved facts and circumstances that are not common in personal injuries litigation, but that raise questions about a variety of aspects of human behaviour in sexual relationships, about the nature of such “relationships” and about civil liability for what was described in the Master’s judgment as “badly misreading the signs” in a particular sexual encounter in the context of a history of sexual encounters between the parties.

The costs of the appeal

1. The evidence provided on behalf of Ms Whitehead about her likely costs of the appeal (r 1902(1)(m)) appears to me to be a reasonable estimate or even possibly an underestimate.

1. Counsel for Ms Whitehead, in reliance on Mazzei v Industrial Relations Commission of NSW in Court Session [2000] NSWCA 104 at [17], submitted that Mr Moon’s failure to seek a stay of judgment pending resolution of the appeal suggested some kind of bad faith. In a case involving a possibly impecunious appellant, I cannot see that it is sensible or justifiable to conclude, in the absence of enforcement proceedings by the respondent, that the appellant’s failure to seek a stay of the judgment shows any kind of bad faith.

Conclusions

1. The factors that persuaded me that I should make an order for security for costs, but not an order covering the full estimated costs, were these:

(a)The decision at first instance raises difficult issues, and there is clearly room for argument about whether the decision was correct.

(b)The judgment at first instance was for a substantial sum of money.

(c)For both these reasons, the appellant should not lightly be deprived of an opportunity to challenge the first instance decision.

(d)However, given that there is no indication of any attempt by, or any capacity for, Mr Moon to meet the judgment awarded against him, Mr Moon should not be allowed to force Ms Whitehead to defend her judgment through the Court of Appeal with no expectation that any of her costs will be met if that defence is successful.

(e)Nor should Mr Moon be able to pursue the appeal without, in effect, having anything to lose from an unsuccessful appeal (there is no evidence before me about the basis on which Mr Moon has obtained legal representation).

1. In summary, the order for security for costs was made, and was made in the form specified, to provide some protection for Ms Whitehead in relation to the costs of the appeal and to require Mr Moon to accept some risk in conducting the proceedings, but without imposing an insuperable barrier to Mr Moon’s pursuit of an appeal that could not be said to have no prospects of success.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Penfold.

Associate:

Date:

Representation:

Counsel:

Mr S Tierney (Appellant)

Mr S Hausfeld (Respondent)

Solicitors:

Ken Cush & Associates (Appellant)

Stacks (Respondent)