Parker v Parker
[2016] TASSC 41
•1 August 2016
[2016] TASSC 41
COURT: SUPREME COURT OF TASMANIA
CITATION: Parker v Parker [2016] TASSC 41
PARTIES: PARKER, Garth Leslie
v
PARKER, Tony Edward
FILE NO/S: 61/2006 and 381/2009
DELIVERED ON: 1 August 2016
DELIVERED AT: Hobart
HEARING DATE: 27 July 2016
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Procedure – Security for costs – Power to order – Inherent power – Natural person, not being a nominal plaintiff, will not be ordered to give security because of impecuniosity.
Aust Dig Procedure [1741]
REPRESENTATION:
Counsel:
Plaintiff: S B McElwaine SC
Defendant: C Hobbs
Solicitors:
Plaintiff: McGrath & Co Solicitors
Defendant: Baker Wilson Lawyers
Judgment Number: [2016] TASSC 41
Number of paragraphs: 17
Serial No 41/2016
File Nos 61/2006
381/2009
GARTH LESLIE PARKER v TONY EDWARD PARKER
REASONS FOR JUDGMENT HOLT AsJ
1 August 2016
By interlocutory application filed 5 July 2016 the defendant has applied for an order requiring the plaintiff to provide security for the costs of the defendant in the sum of $350,000, with the proceedings to be stayed pending provision of such security.
By two actions, commenced in 2006 and 2009, the plaintiff has sued as administrator (incorrectly referred to as "Executor" in the heading of the writ in the second action) of the estate of his late father, Ira Parker. The defendant in each action is the plaintiff's brother. It is not clear why there are two actions rather than one. Both claims are concerned with the appropriation by the administrator of claimed estate property, including things in action. It has been ordered that the actions are to be heard and determined together and the trial has been set down to commence on 30 August this year.
In the 2009 action the plaintiff has pleaded that Ira Parker was a partner in a partnership with the defendant. The partnership property included, amongst other things, some farmland. The partnership was dissolved by the death of Ira Parker. These allegations are admitted. The plaintiff contends that by virtue of the provisions of the Partnership Act 1891 the farm was held in trust by the registered proprietor, being the defendant, for the benefit of the partners and that upon the dissolution of the partnership the estate of Ira Parker became entitled to a half-share in the farm.
The farm was valued in 2008 in the sum of $1.85 million. If this remains the current value the result would be, if the plaintiff is successful, that $925,000 would be paid to the defendant as his half partnership interest. The other $925,000 would be paid to the plaintiff as administrator of the estate and thereafter distributed in equal shares to the plaintiff and the defendant. The net result would be that the plaintiff would personally receive $462,500 plus 25% of the other partnership assets. The plaintiff would also be entitled to an account in respect of partnership profits payable to Ira Parker or his estate.
The defendant has pleaded that Ira Parker had been the registered proprietor of the farmland until he transferred the legal titles to the defendant in 1999. The defendant concedes in his pleading that, notwithstanding the transfer of the legal titles, the real estate continued to be treated in the financial records of the partnership as a partnership asset. The defendant's pleading continues with the assertion that the transfer was undertaken with the intent that upon dissolution of the partnership Ira Parker's beneficial interest in the real estate would vest in the defendant. The defendant relies on conversations between himself and Ira Parker and the statement in the instruments of transfer that the consideration was "natural love and affection".
If there is jurisdiction to order security for costs in the present case, it can only arise under the general law. The Supreme Court Rules 2000, r 828(1)(g), expressly recognises the power to order security "under any law". There is no statutory law which can be called in aid by the defendant as the plaintiff is not a corporation.
The basic rule is that a natural person cannot be ordered to provide security for costs because of poverty. There are exceptions. One such exception is where the party is a "nominal" plaintiff. An executor, administrator or a trustee, even if suing solely for the benefit of others, is not a nominal plaintiff. This is explained by Ashley J in Perry v Jackson [1998] 4 VR 463. His honour said at 465:
"Before r 62.02(1)(b) of Ch I of the rules was introduced in 1986, the court had power to order that the security for costs be given, this deriving from its inherent power to regulate its own proceeding: Lines v Tana Pty Ltd [1987] VR 641 at 642. A considerable jurisprudence had developed as to the circumstances in which such an order should or might be made. In the case of the plaintiffs who are natural persons, 'The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity': Cowell v Taylor (1885) 31 Ch D 34 at 38 per Bowen LJ. The general rule was subject to exception in the case of so-called 'nominal' plaintiffs. The exception was explained by Baggallay LJ in Cowell as follows at 38: 'Suppose I, having a shadowy case, assign it over to a man of straw that he may sue for my benefit, then security for costs will be ordered.' Bowen LJ described the exception thus at 38:
There is also an exception introduced in order to prevent abuse, that if an insolvent sues as nominal plaintiff for the benefit of somebody else, he must give security. In that case the nominal plaintiff is a mere shadow. The two most familiar classes of cases of this kind are cases where a person has divested himself of his interest and handed it over to someone else that the transferee may sue for him, and cases where a person who has commenced a suit divests himself of his interest during the course of the suit in order that another person may carry it on for his benefit. Those are the common cases, I do not say that there may not be others. In those cases Courts of Common Law required security for costs to be given.
The key to the exception was the prevention of abuse. Executors, administrators, trustees having no interest in the subject matter of the trust, trustees in bankruptcy and at least some liquidators were not required to give security even if impecunious: Sykes v Sykes (1869) LR 4 CP 645; Rainbow v Kittoe [1916] 1 Ch 313; White v Butt [1909] 1 KB 50; Cowell; Mackie v Clough (1891) 17 VLR 201. Such persons, though suing for the benefit of others, were not mere nominal plaintiffs. They sued in what might be called a representative capacity. No abuse was involved."
In Melville v Craig Nowlan & Associates Pty Ltd (2002) NSWCA 32, 54 NSWLR 82 Heydon JA at 108 [99] referred to Pearson v Naydler [1977] 1 WLR 899 at 902, where Sir Robert Megarry V-C said:
"… The basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well-established. As Bowen LJ said in Cowell v Taylor (1885) 31 Ch D 34, 38, both at law and in equity 'The general rule is that poverty is no bar to a litigant …'. The power to require security for costs ought not to be used so as to bar even the poorest man from the courts."
His Honour went on at 109 [101] to explain:
"By 'basic rule' Sir Robert Megarry V-C meant, and by 'general rule' Bowen LJ meant, that the rule is a strict one, though it is subject to specific exceptions (eg, in relation to appeals, and nominal plaintiffs). They did not mean that generally insolvent plaintiffs will not be ordered to provide security, unless in the specific circumstances of a particular case a court thinks it just to make the order."
Heydon JA at 109 [101] observed that "it is possible that the 'rule' is less absolute than these formulations would suggest". Counsel for the defendant did not explore this possibility and so did not refer to any authority by which the absoluteness of the rule might be challenged. It follows that the defendant cannot obtain an order for security unless he can bring the case within a recognised exception to the basic rule that a natural person who sues will not be ordered to give security because of poverty.
The reason for the defendant's application for security for costs lies in the contents of an affidavit filed by the plaintiff and delivered to the defendant's solicitors in October 2012. The affidavit shows that the plaintiff's financial affairs were arranged so that he had very few assets in his own name. The plaintiff along with his wife and two children are discretionary beneficiaries under two family trusts which are effectively controlled by the plaintiff and his wife. These trusts, in 2012, held net assets worth about $1.54 million. Counsel for the defendant does not suggest that there has been any abuse of process arising out of the way the plaintiff's financial affairs had been structured. In his written submissions counsel said that this financial structure was in place "probably before these proceedings were even instituted or even contemplated … Of course, there is no suggestion that, in establishing the Family Trusts, there has been any lack of integrity …".
The way in which the plaintiff's financial affairs are arranged provides no exception to the basic rule that poverty is no bar.
Counsel for the defendant submitted that the plaintiff has a weak case. I do not need to go into an assessment of the weaknesses or strengths of the cases of the parties, nor do I think that it would be appropriate for me to do so especially with the commencement of the trial being so close at hand. Suffice to say, there was no suggestion that the claim as pleaded is irregular or fails to disclose a cause of action and there was no suggestion that the claim was other than bona fide with a reasonable prospect of success.
The fact, if it be the case, that the plaintiff's claim, although viable, is weak does not provide an exception to the rule that poverty is no bar.
If there was a discretion to require the plaintiff to give security, which there is not, I would not have ordered it. This is because the application is belated. The proceedings were commenced in 2006. The information upon which the application is based was in the hands of the defendant's solicitors in 2012. The trial of the actions is set down to commence on 30 August 2016. The application was not filed until 5 July 2016 and was heard on 27 July 2016. In my view it would be unfair and potentially oppressive to require the plaintiff to restructure his longstanding financial affairs in the short period between now and the due date for the commencement of the trial. The delay by the defendant would count strongly against the justice of the case resting with the imposition of a requirement that the plaintiff provide security.
The plaintiff is not a "nominal" plaintiff. He is within the jurisdiction. The proceedings involve no abuse of process. No basis upon which an order for security for costs might be made has been identified. Even if there was a discretion, because of the delay, I would not have exercised it in favour of the defendant.
The application is dismissed.
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