Nelson v Harvey

[2015] WADC 106

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   NELSON -v- HARVEY [2015] WADC 106

CORAM:   PRINCIPAL REGISTRAR MELVILLE

HEARD:   19 AUGUST 2015

DELIVERED          :   2 SEPTEMBER 2015

FILE NO/S:   APP 62 of 2014

BETWEEN:   MARIA GERTRUDE NELSON

Appellant

AND

ERIC HARVEY
SHELLEY HARVEY
First respondents

ANDREW NELSON
Second respondent

ON APPEAL FROM:

Jurisdiction              :  MAGISTRATES COURT OF WESTERN AUSTRALIA

Coram  :MAGISTRATE ATKINS

File No  :AR GCLM 458 of 2011

Catchwords:

Security for costs of appeal

Legislation:

District Court Rules 2005
Rules of the Supreme Court 1971

Result:

Application dismissed

Representation:

Counsel:

Appellant:     Mr W Vogt

First respondents           :     Mr A K Searle

Second respondent        :     No appearance

Solicitors:

Appellant:     Vogt Graham Lawyers

First respondents           :     Searle Construction Lawyers

Second respondent        :     Not applicable

Case(s) referred to in judgment(s):

Ailakis v Olivero [2013] WASCA 91

Cowell v Taylor (1885) 31 Ch D 34

Farrell (by her next friend Ronald Charles Waugh) v Royal Kings Park Tennis Club (Inc) [2007] WASCA 173

Joseph v Joseph [2007] WASCA 27

Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127

1. PRINCIPAL REGISTRAR MELVILLE:  The first respondents have applied for an order that the appellant pay into the court the sum of $15,000 by way of security for the first respondents' costs of the appeal and in the event security is not provided, the proceedings be stayed until such time as it is.

2. In this case the appellant, in June 2014, lodged an appeal from a magistrates' decision of 29 May 2014 in which the first respondents were successful in their application before the magistrate and in which the appellant was successful in her counterclaim.  The learned magistrate awarded the appellant $3,000 for distress and inconvenience she suffered as a result of work having not been completed to the correct standard by the respondents as found by the Building Disputes Tribunal and the State Administrative Tribunal.

3. The appellant's notice of appeal started with seven grounds, most of which were directed to the learned magistrate's assessment of damages for distress and inconvenience in the amount of $3,000.  This involved more particularly, complaints that the learned magistrate had made errors in her consideration of the period of the appellant's distress and inconvenience and the magistrate's reasoning in relation to a failure to mitigate, or to take steps to mitigate, the distress and inconvenience that was said to have flowed from the effective works.

4. By application dated 1 September 2014 the appellant added two further grounds of appeal, complaining by the seventh ground that the learned magistrate had erred in how she applied the burden of proof in respect of an allegation of failure to mitigate, and had failed to give adequate reasons for decision on how or why the respondents had discharged their burden of proof on this issue and in respect to the appellant's claim for pain and suffering.

5. On 23 December 2014 a ninth ground of appeal was added which, to broadly state it, contained allegations of a denial of procedural fairness, and on 21 January 2015, the appellant applied to add a further tenth ground of appeal which application was subsequently abandoned. 

6. The respondents filed a notice of intention giving notice that they intended to take part in the appeal and that they would argue the learned magistrate's decision should be upheld for the reasons she gave.

7. The appeal was listed for hearing on 21 January 2015.  This was adjourned to 28 January 2015 due to what is described in the court's order as 'personal tragic reasons' relevant to the appellant's counsel.  The court further ordered 'costs thrown away'.  Reference to the transcript indicates his Honour made it clear that the respondent was to obtain the costs thrown away but he left open the question as to who should pay them (ts 19 dated 21 January 2015). There was also, at that time, some discussion regarding the unavailability of the transcript from the Magistrates Court.

8. When the matter came back before his Honour on 28 January 2015, the appeal was again adjourned due to unavailability of relevant parts of the transcript. Apart from ordering the appellant to pay the second respondents' costs of the abandoned application to add a ground 10 to the appeal, the costs order of 21 January 2015 was not addressed and the costs of 28 January 2015 were reserved.

9. The respondent in its submissions in support of the application for security for costs makes a number of submissions which essentially distil to the following:

   (a)the grounds of appeal are manifestly weak;

   (b)the appellant's conduct of the appeal is resulted in two adjournments and two costs orders against the appellant, to be taxed; and

   (c)the appellant is impecunious and will be unable to pay the costs of the appeal in the event she is unsuccessful.

10. The respondent referred to the case of Joseph v Joseph [2007] WASCA 27, drawing an analogy between the facts of that case and the facts of this. The appellant in Joseph v Joseph had said regardless of the outcome of the trial, she would not pay the respondent any money or costs under any circumstances.  In this case the appellant's solicitors had said 'my client does not have the financial capacity to pay any sum in satisfaction of the costs order'.

11. The respondent said (at par 3(d) of its submissions) it was the response of the appellant that was the real impetus for the application.  It is clear that the essential issue revolves around the appellant's impecuniosity and inability to make payment of any costs order in the event one was ordered against her.

The law

1. By r 5 of the District Court Rules 2005 (DCR) it is provided that the DCR apply to and in respect of every case.  Rule 3 defines 'case' as 'any proceeding in the Court involving or in connection with the Court's civil or appellate jurisdiction, irrespective of how it was commenced'.

2. Rule 6 provides that the Rules of the Supreme Court 1971 (RSC) apply to and respect of any case in the court but the DCR prevail where there is a conflict or inconsistency between the DCR and the RSC.

3. The DCR do not deal with the question of applying for security for costs in the context of an appeal. Accordingly, it is my view that O 25 of the RSC apply. By O 25 r 1 it is made clear that no order for security for costs 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 or her.

4. Order 25 r 2 sets out a number of criteria to which the court may have regard in deciding whether to order security of costs and O 25 r 3 requires the court to take into account a number of considerations constituted by:

   (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; and

   (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.

5. In my opinion, the criteria set out in O 25 is not markedly different to the common law position described by Pullen J in Ailakis v Olivero [2013] WASCA 91 as a well‑established rule that a natural person who sued would not be ordered to give security for costs.

6. However his Honour noted that at common law there was an exception in the case of appeals.  In this regard he cited without disapproval the comments of Bowen J in Cowell v Taylor (1885) 31 Ch D 34, 38 suggesting the purpose of the exception was to protect a respondent being dragged from one court to another by an insolvent appellant.

7. Pullen J went on to say whether the common law rule applies depends on statutory provisions empowering a court to order security for costs and then turned his attention to the Supreme Court (Court of Appeal) Rules 2005, noting that special circumstances did not have to be shown in the Court of Appeal Rules in order to obtain a costs order and that there was no prohibition on making an order for security 'merely' on account of the poverty of the plaintiff.

8. In my view Pullin J's decision suggests the conclusion that the common law position is that impecuniosity is not a barrier to a security for costs order but it is displaced by any relevant statutory exception.

9. In my view O 25 r 1 displaces the common law on this issue. However in the end this conclusion does not affect the result in this case having regard to other considerations. Pullin J went on to consider a number of factors, he said not to be exhaustive, set out in Farrell (by her next friend Ronald Charles Waugh) v Royal Kings Park Tennis Club (Inc) [2007] WASCA 173 [32] as relevant coming to a decision. They were:

   (a)The appellant's prospects of success on the appeal.

   (b)The appellant's financial position. As a general rule, a court will not order security against an individual appellant solely on the ground of impecuniosity. Compare O 25 r 1 of the Rules of the Supreme Court; Fletcher v Commissioner of Taxation (1992) 37 FCR 288 at 290, 293.

   (c)The bankruptcy of an individual appellant is sufficient to enliven the discretion to order security, but, as a general rule, a Court will not order security in that circumstance if the appellant is not a nominal appellant (that is, if the appellant is suing solely for his or her own benefit) and is unable to provide the security requested of him or her. Compare Coyne v West Australian Newspapers Ltd (No 1) (1996) 15 WAR 51 per Steytler J (as his Honour then was) at 71; Bride v The Australian Bank Ltd [1999] WASCA 88 per Miller J (with whom Wallwork J agreed) at [11], [17]; Shenton v Commonwealth of Australia [2005] WASCA 96 per Pullin JA (with whom Wheeler JA agreed) at [21].

   (d)A respondent to an appeal who applies for security is in a stronger position than a defendant at first instance, to the extent that the respondent has a judgment in his or her favour, which is presumed to be correct until displaced. See Kennedy v McGeechan [1978] 1 NSWLR 314 at 315; Fletcher at 292; Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 at [9].

   (e)An impecunious appellant should not be ordered to provide greater security than is absolutely necessary. See Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1 at 3 - 4; Natcraft at [9].

   (f)Any delay in the respondent filing the application for security.

10. I am satisfied that the appellant is impecunious and that there is a strong likelihood that the defendant, if successful in the appeal, will not be paid. However, given the effect of O 25 r 1, this consideration in itself is not sufficient to justify the order. Even if I am wrong in applying the provisions of O 25 r 1 and the question of whether security of costs should be ordered in the context of an appeal should be decided in the courts of common law principles referred to by Pullen J above, I would still be of the view that this consideration in itself, having regard to all of the circumstances, is insufficient. In so saying, I should make it clear that I do regard the fact that it is unlikely the defendant will recover its costs if successful on the appeal as a weighty consideration in favour of an order for security for costs.

11. However, the weight of this consideration is offset by the following matters:

    1.To order security for costs would effectively stifle the appeal.

    2.Further, in my view, there is merit in the appeal.  That is not to say that it would ultimately be successful, but on the face of it, there seems a reasonably arguable case.  In Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127, an arbitrator had awarded the sum of $32,000 to a property owner for damages for distress and disappointment. Hence, it is not inconceivable that the plaintiff could obtain an award under this heading for more than $3,000. In so saying, I am cognisant of the fact that an award of this type is a discretionary award and there may be a presumption as to its correctness the appellant will have difficulty overcoming. Nevertheless, I would be unable to say that the appellant would be unable to do so. Further, the grounds of appeal complain that the learned magistrate failed to give adequate reasons to explain how she arrived at this figure and on my perusal of the grounds of appeal and transcript and evidence in respect thereof, it seems to me there is a reasonable argument that can be advanced to this effect.

    3.Further, in my view the case of Joseph v Joseph is distinguishable.  In that case the appellant, who resided overseas, had evidenced an intention not to pay any costs that might be awarded against her, not because of any impecuniosity, but simply out of contrariness.  This case is very different.

    4.Further, I give the respondent's complaints that there have been two adjournments of the appeal in this matter as a consequence of the default of the appellant and non‑payment of subsequent costs orders little weight.  The first adjournment on 21 January 2015 was the consequence of a personal tragedy affecting the appellant's counsel.  This cannot be regarded to suggest any form of contumelious conduct on behalf of an appellant intent on using the appellate process for an improper purpose.

    5.Further, although the respondent was entitled to an award of costs on that occasion, there has been no determination that the appellant is liable to pay them, this issue having been reserved.

    6.On 28 January 2015 the appeal was adjourned and costs were reserved.  The appeal was adjourned due to the absence of the full transcript being before the court.  In my view the responsibility for that deficiency cannot be laid solely at the feet of the appellant personally, bearing in mind she was represented by a legal practitioner and, in my view, is entitled to expect that legal practitioner to ensure that all the relevant materials are before the appeal court, and bearing in mind the oversight of others involved in ensuring the transcript was obtained from the Magistrates Court.

    7.Another relevant consideration is the delay associated with bringing this application for security for costs.  Between the time the appeal was lodged on 17 June 2014, the appellant has incurred considerable expense in pursuing the appeal, and the expense associated with the appeal being set down for hearing on two occasions, being 21 January and 28 January 2015, along with several directions hearings, both before and after 28 January 2015, before the application for security of costs was lodged on 7 May 2015.

12. In my view, having regard to the totality of those countervailing factors, the scale is tipped in favour of the appellant, and that this application for security of costs should be dismissed.