Perre & Ors v Apand Pty Ltd

[1998] HCATrans 311

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A27 of 1998

B e t w e e n -

FRANK PERRE, CATERINA PERRE, PASQUALE PERRE, MARY PERRE, GUISEPPE DOMENICO PERRE, MARIA PERRE, JIM PERRE, FRANCES PERRE, WARRUGA FARMS PTY LTD, PERRE’S VINEYARDS PTY LTD, RANGARA PTY LTD, PASQUALE PERRE, GRACE PERRE, FRANCESCO PERRE and MARIA PERRE

Applicants

and

APAND PTY LTD

Respondent

Application for security for costs

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON TUESDAY, 8 SEPTEMBER 1998, AT 4.25 PM

Copyright in the High Court of Australia

MR M.A. FRAYNE:   If the Court pleases, I appear for the the applicant, respondent to the appeal, applicant to this application.  (instructed by Phillips Fox)

MR T.A. GRAY, QC:  May it please the Court, I appear with my learned friend, MR J.S. RODER, for the appellant, the respondent to this application.  (instructed by Townsends)

HER HONOUR:   Thank you, Mr Gray.  I apologise for your having been kept waiting.  Unfortunately, the earlier case did not end when it was thought it would.  Yes, Mr Frayne.

MR FRAYNE:   If the Court pleases, hopefully the Court has before it an application by summons dated 1 September 1998, and two supporting affidavits relied upon by the applicant, an affidavit of Andrew Ian Fairbank of 31 August 1998, with exhibits, and Peter John Norman, 1 September 1998, with exhibits.

HER HONOUR:   I believe so, but perhaps you had better deal with it more slowly than you might otherwise.

MR FRAYNE:   Yes, very good, if the Court pleases.  And also the Court, hopefully, will have an outline ‑ ‑ ‑

HER HONOUR:   Yes, I have the outline, and I can tell you the summons, and I have the affidavit of Andrew Ian Fairbank, but I have not yet located the other one.  Affidavit of Peter John Norman I have, as well.

MR FRAYNE:   Yes, of 1 September 1998.  Thank you, your Honour.  It is sought by the applicant to rely upon those affidavits and exhibits in support of the application.  I am unsure as to whether the respondent is seeking to rely upon any information and, if so, exactly what it is, so I will not pause at the moment, unless invited by your Honour to ascertain that.

HER HONOUR:   No, I think you should make your case, if you wish, yes.

MR FRAYNE:   Yes, your Honour.

HER HONOUR:   Now, I have read the affidavits but I could not say I am completely familiar with what I am to take from the exhibits.

MR FRAYNE:   Perhaps if I can take the Court to that information.  The application, as is clear from the summons, is an application for security for costs.  It is brought in the light of the fact that special leave to appeal has recently been granted.  I think it is 19 June although I stand to be corrected in relation to that date.

HER HONOUR:   August, was it not?

MR FRAYNE:   I think it is June, if the Court pleases.  My friend, Mr Gray, tells me 19 June.

HER HONOUR:   Yes, thank you.

MR FRAYNE:   Your Honour, the applicant acknowledges that in relation to the security for costs it is a matter of discretion for the Court but there are several matters which are of significance in the applicant’s contention which are relevant to the exercise of that discretion.  The first of those matters is that on the information known and available to the respondents to the appeal, the appellants do not have sufficient assets that will ensure that the respondents will be able to recover their costs if the appeal is unsuccessful.

HER HONOUR:   The costs of the appeal or the costs of all proceedings?  There is a difference, is there not?

MR FRAYNE:   Yes, there is, your Honour, and it is only in relation to the costs of the appeal that this application is brought.  Can I tell the Court that there is an affidavit estimating the amount of the costs of the appeal.  That is the affidavit of Peter John Norman and without taking the Court to the detail, the figure estimated is $54,396.  If I could invite the Court’s attention ‑ ‑ ‑

HER HONOUR:   That is the costs of the appeal in this Court?

MR FRAYNE:   Yes, if the Court pleases.

HER HONOUR:   Yes.

MR FRAYNE:   And that is referred to in particular in paragraphs 2 to 5 of that affidavit.

HER HONOUR:   I am sorry, which paragraph?

MR FRAYNE:   The relevant material commences at page 4, paragraph number 2, which is background to the appeal.  I do not pause to direct the Court’s attention in detail to that.  Paragraph 4 sets out certain assumptions upon the estimate of costs are based and the estimation is at paragraph 5, the bottom of page 4, and the detail at page 5.

HER HONOUR:   Yes.  Well, the assumptions are a bit generous, are they not?  A two-day hearing.

MR FRAYNE:   Well, your Honour, it is acknowledged that ‑ ‑ ‑

HER HONOUR:   Six days of preparation when counsel has been in the matter from the beginning.

MR FRAYNE:   Yes.  Your Honour, there is a substantial quantity of documentation in relation to the matter.  The index to the appeal books have yet to be settled, but the expectation of the respondent to the appeal is that the material will comprise 11 volumes of material ‑ ‑ ‑

HER HONOUR:   And that is on the basis that you can raise under a notice of contention those matters which you have referred to in that notice of contention?

MR FRAYNE:   Yes, that is so, if the Court pleases.

HER HONOUR:   Yes, well that notice of contention seems to me to raise factual matters that were decided against your client.

MR FRAYNE:   The matters were decided against Apand in the trial ‑ ‑ ‑

HER HONOUR:   And they are questions of fact?

MR FRAYNE:   Not solely questions of fact, if the Court pleases.  They are matters relating to whether negligence has been established.  That, in part, is a question of fact, in part the standard of care, and in part the issue of foreseeability.  I can descend into those matter if the Court needs to.  I am not sure that ‑ ‑ ‑

HER HONOUR:   Are you sure they can be raised under a notice of contention?

MR FRAYNE:   If that is the respondent’s contention?

HER HONOUR:   Yes.

MR FRAYNE:   The conduct of the trial and the appeal was not typical, and if I can, perhaps, give you a thumbnail sketch in relation to the matter?  The proceedings were commenced in the Federal Court with a number of applicants, in effect, in two camps.  The first camp was a camp known as the Sparnons, and the second camp was a camp which form the appellants to these proceedings, the Perres.

The interests of the two camps were separate in relation to liability and quantum, but there were substantial, similar matters of fact, and the trial in relation to the issue of liability, to a large degree, was a matter of common evidence.  Can I perhaps indicate that the background of the matter, is, in essence, that Apand were the suppliers of a potato seed called Saturna.

HER HONOUR:   In general terms, I am familiar with that.  My question is, is it clear that the matters can be raised under a notice of contention?

MR FRAYNE:   It is the respondent’s contention that it is clear.  Can I take the Court to the rule, if necessary, to assist the Court in relation to that.

HER HONOUR:   Yes, well, in essence, were these matters the subject of an appeal in the Full Court?  That is the question.  If they were not the subject of an appeal in the Full Court there may be other difficulties.

MR FRAYNE:   The matter was resolved, or went forward on the basis that there was a finding against Apand in relation to negligence in the court below.  There was a finding that there was no duty of care in relation to the Perres.  There was an appeal by Apand against the findings of negligence in the Sparnon matter.  There was an appeal by the Perres to the Full Court against the finding that there was no duty of care, and in relation to that matter Apand filed a notice of contention, and argument was had in the Perre appeal on the notice of contention.  The Full Court found that the trial judge was correct in relation to the issue of negligence.  They found that there was no duty of care in relation to the Perres.  The Full Court dismissed Apand’s claim against the Sparnons, and it dismissed the Perre appeal against Apand.  So, it is the respondent’s contention that we are entitled to raise, by way of a notice of contention, matters of negligence and foreseeability, and the like, as has been sought to be done in this case.

That, in some small part leads to the necessity for the 11 volumes which is a pruning of the material which was heard before the trial judge, but taking out those matters which related solely to the Sparnon component of the claim; primarily in relation to quantum.  So, it is the applicants’ position that a reasonable estimate of the costs of the appeal as deposed to by Mr  Norman.

The next matter of significance, if the Court pleases, is that, as I have already indicated, the appellants do not have sufficient assets to ensure that the respondents will be able to recover their costs if the appeal is unsuccessful.  Can I endeavour to summarise that information to the Court.  Some information was provided to the respondents to the appeal to the High Court in the course of argument and related matters in connection with the trial costs and a document was provided to the respondents which forms exhibit AIF4 to the affidavit of Mr Fairbank.  Can I take the Court to that?  That document purports to indicate assets and liabilities of the Perre group of applicants ‑ ‑ ‑ 

HER HONOUR:   No, you may have it marked as AIF4, but I am not too sure that I do.  Yes, it is marked on the back sheet.

MR FRAYNE:   Yes.  The document has a heading relating to Statement of Assets and Liabilities of the Perre group of applicants as at 12 December 1997.

HER HONOUR:   Yes, I have it.

MR FRAYNE:   There is a number of sheets, if I can take the Court to the second sheet which has a purported summary of the assets and liabilities.  The net assets of the group, about point 5 on the page, appears to be $1,443,000.  Then there is an entry relating to the “Joint and several contingent liabilities of the group”, which are set out in the sum of approximately $1,645,000 and at the end there is this entry, “Less Sparnon agreement - contribution to costs 9.43%”  “$146,741” and then an “Adjusted Net Balance” of $48,241.  In my submission, that is the starting point.

The reference to the “Less Sparnon agreement” is the Sparnons were the other party in the proceedings before the trial judge.  There was ultimately an order made by the trial judge against the Sparnons in the sum of $259,075.27, and that is referred to at exhibit AIF6.  Again, that is marked on the back sheet.

HER HONOUR:   Now, how does that effect the statement of assets and liabilities?

MR FRAYNE:   Well, it is the case that the Sparnons owe to Apand $259,000‑odd and that is sought to be recovered by Apand and it is sought to indicate that that is to be paid to Apand and will deplete the ability of the Sparnons, whatever it may be, to pay to the Perres the amount ‑ ‑ ‑ 

HER HONOUR:   It is very far from establishing that they will not pay it, though, is it not?

MR FRAYNE:   Yes, I acknowledge that, if the Court pleases.  I draw ‑ ‑ ‑

HER HONOUR:   Well, is there any reason why I should not proceed on the assumption that the adjusted net balance of assets is - is it $48,241?

MR FRAYNE:   That is my interpretation, if the Court pleases.

HER HONOUR:   Yes.

MR FRAYNE:   But there has been no adequate information as to the current position of the Perre group provided and therefore it is necessary to go to this rather tortuous exercise of ‑ ‑ ‑

HER HONOUR:   Well, no.  I will not operate on the basis that - if there is no evidence abut the Sparnon’s financial position I am not going to hypothesise about that.

MR FRAYNE:   If the Court pleases.  Can I take the Court to the next matter, and these matters are set out in my outline at page 2, so, a short summary method of doing this is by reference to page 2, paragraph 6 of the outline.

HER HONOUR:   Yes.

MR FRAYNE:   In the court below - I am about to address in relation to paragraph 6.3, if the Court pleases, at the bottom of page 2.  In the court below Justice von Doussa ordered the Perre group to pay to other parties, the Minister of Primary Industries in the State of South Australia, the sum of $625,000, plus interest, and the order which refers to that is at exhibit AIF5.  The order indicates an agreement in relation to a stay and as to interest and the interest referred to is the rate of 6 per cent.  I have endeavoured to have that interest calculated.  It is calculated to a date several days hence, namely, 13 September.  It is referred to in the affidavit of Mr Fairbank in paragraph 9 and the amount of interest accrued to date is $18,750.

There is, therefore, outstanding as at 13 September 1998 to unrelated parties, the Minister of Primary Industries and the State of South Australia, a total of $643,750, on my quick maths.  There is no appeal against that order and that is to be paid by the Perre applicants, unless there is some arrangement reached with the Minister for forgiveness of that, and there is no information to that effect.  So that, in the very least, wipes out the asset base of the Perre applicants.

The remaining matters which I refer to in the outline are matters in which the appellants to this appeal have been ordered to pay costs.  The first of those is in paragraph 6.5 of the outline.  The appellants have been ordered to pay Apand’s costs of the trial in the sum of $322,507.32.  I refer the Court to exhibit AIF6 in relation to that sum.  That sum, pursuant to the Rules of Court, attracts interest, the amount, by having been paid to date.  Paragraph 6.6 of the outline deals with the calculations to 13 September 1998 of $34,698 and the total of paragraph 6.5 and 6.6 is of the order of $357,000.

In addition, the appellants were ordered to pay Apand’s costs of the appeal.  The order is at exhibit AIF7.  No taxation of those costs has occurred.  The costs have been estimated by Peter Norman in his affidavit of 1 September at paragraph 10 and the estimate of the cost is given in paragraph 10 at between $60,000 to $70,000.

None of those sums have been paid in reduction of the order for costs and it is the respondent’s contention that if the appeal is unsuccessful they will not be in a position to pay the costs of the appeal to the respondent and therefore an order for security for costs is appropriate.            The other matters which are put in support are these:  at paragraph 8 of the outline the fact that the appellants have failed against the respondent at trial and on appeal before the Full Court, in my submission, those are matters to be borne in mind in the exercise of the discretion.

The last matter is that, in the applicant’s submission, this application has been brought at an early time.  The application has been brought after the appellants have obtained leave.  It has been brought after some correspondence between the parties, the applicant to these proceedings seeking to have the appellants provide by agreement security for costs.  That agreement has not been forthcoming, therefore this application.

It is submitted on behalf of the applicants that in all the circumstances it is appropriate for an order for security for costs to be made.  I do not want to take unnecessarily the Court’s time but I can take you through, if it is appropriate, the supporting correspondence in relation to the application because I understand that some criticism is to be made that the application was not brought promptly.

HER HONOUR:   You can deal with that in reply if it arises.

MR FRAYNE:   Thank you, if the Court pleases.  Perhaps I will reserve any other matters that might be needed to be put to any reply that may need to be put to the Court.  If the Court pleases.

HER HONOUR:   Yes, thank you, Mr Frayne.  Yes, Mr Gray.

MR GRAY:   May it please the Court, does your Honour have the appellants’ summary of argument?

HER HONOUR:   Dated 7 September, signed by yourself, two pages?

MR GRAY:   Yes, your Honour.

HER HONOUR:   Yes, I have that, thank you.

MR GRAY:   And there is an attachment.

HER HONOUR:   I do, indeed.

MR GRAY:   Thank you.  There are three affidavits that the appellants rely on in resisting the application, your Honour.  First, an affidavit of Frank Perre, sworn 7 September 1998.

HER HONOUR:   Yes, I have that.

MR GRAY:   With two annexures.

HER HONOUR:   Yes, thank you.

MR GRAY:   Second, an affidavit of a barrister, Mark Rice, sworn 7 September, again with two attachments.

HER HONOUR:   Yes, thank you.

MR GRAY:   And third, an affidavit for the solicitor, Mr Allen, sworn 8 September, attaching a form of affidavit of Mr Townsend, the principal solicitor in the matter, who is currently in Hong Kong.

HER HONOUR:   Yes, I have that, as well.  I have to say these documents arrived with me only at lunch‑time, and I have not studied them.

MR GRAY:   Thank you, your Honour.  The reason for the late arrival was that the appellants were working over the weekend to prepare the material.

HER HONOUR:   Yes; I am not criticising you.  I am just alerting you to my ignorance of their contents.

MR GRAY:   Thank you.  Your Honour, working from our outline, we accept that your Honour has an absolute discretion in the matter under Order 70 rule 7, and that is well made out by authority.  At point 2 we say that the appeal raises matters of public importance, and we illustrate that by the remarks on the granting of special leave.  The appellants were not called on orally on the special leave, and we attach the special leave transcript that, in fact, quoted the two salient remarks as an important matter of public importance, and it is a particularly good vehicle, because in regard to the claim for economic loss, it raises a number of distinct categories and will allow the Court to test out the matter that that is a principle against different categories in a fairly clear structure.

We understand that it is proposed to sit seven members of the Court on the appeal, and I understand from inquiries, my client has been pressing for a listing date.  We understand the matter is likely to be heard either in early February or early March of next year.  We understand the lists are full for this year.

The authorities have recognised that as the case involves a matter of public importance, there is an overriding interest in the matter proceeding, subject to exceptional circumstances.  The position is that the appellants are not able to provide the cash security sought.

As your Honour will notice from the balance sheet, it is unclear about their precise position in terms of overall asset worth, but they are not in the position to raise cash as sought; and if such an order were made, it would have a tendency to stifle the appellate process.  And, again, on the authorities, perhaps conveniently gathered by Justice Kirby in the Merribee Case, that is identified as a relevant factor. 

I turn to page 2 in the outline, your Honour.  On the appellants’ case, the respondent is responsible for the present state of the appellants’ finances, or should I say, lack of them.  That is made out, your Honour, in particular by Mr Perre’s affidavit and paragraphs 1 to 17 of that affidavit detail how that is so.  Now, your Honour, I do not propose to read that line by line to your Honour but, in particular, having set up the history of the Perre interests, and a series of family interests in the area describing what is called the “Warruga Venture”, it sets out quite clearly how the Perre interests set out to gain, in particular, the opportunities offered by the Western Australian export market and, in particular, it then traces the effect of the wilt and the consequent disentitlement of the Perres to access that market.  And in paragraph 15, the matter is summarised, in particular, after the outbreak of bacterial wilt at the Sparnon’s property - they were the property where the wilt developed - Warruga Farms were unable to export potatoes to Western Australia because of the restrictions that formed conditions of entry for potatoes under the particular Act, and the financial consequences of that on the Warruga Farms was devastating, as they were on the other appellants.

So effectively, because of the quarantine, because of the inability to sell their product into Western Australia, the effect was devastating, and that had the consequent effect on the profitability or financial worth of the Perre interests.  Coupled with that, of course, had been the cost of litigation, and again, if my clients ultimately succeed on the appeal, one can expect a major reversal of a number of those costs orders, and order for costs in favour of the appellants.  So we say, if the Court pleases, we make out very clearly in terms of paragraph 4 of our outline, that our present financial plight is, we say, due to the conduct of which we complained.

Your Honour, in the list of authorities we refer to the judgment of Justice Brennan in Lucas v Yorke which is particularly relevant on that topic, and if I could invite attention to that, it is 58 ALJR page 20, and the particular passage, your Honour, is at page 21.  On the right-hand column at the top:

However, the appellants’ impecuniosity has arisen, as the material filed by the respondent shows, from the losses sustained as the result of buying and carrying on the business.  That impecuniosity would be relieved by satisfaction of the judgment recovered by the appellants against the three judgment debtors -

Then, at the foot of the page, the last paragraph:

It is an important consideration that the making of an order for security for costs will effectively shut out an appeal designed to recover losses which have caused the appellants’ impecuniosity (see Farrer v Lacy.....).  That factor has additional weight if the question on which the appeal turns is an important question of law appropriate for consideration by this Court.

So, we say that is a relevant matter for your Honour to weigh in your Honour’s absolute discretion.  The next matter we address, your Honour, is the notice of contention.  Now, your Honour, we have advisement of friends that we say that is an inappropriate vehicle to agitate what are, essentially, factual matters for review, where both the trial judge and the Appeal Court found against Apand.  They, your Honour will see, were the subject of notice of appeal below and we have set out the two documents attached to the outline, and a comparison will show the similarity.

If your Honour goes to the notice of contention which appears immediately after the special leave argument, your Honour will see that the matters can be fairly described as evidentiary, almost in every respect.  Although there are complaints about conclusions drawn, what the Court would be invited by Apand to do is to dredge through extensive factual material with a view to reviewing factual findings of the courts below, and we might say, findings of Justice von Doussa upheld by the Court of Appeal.  We say, in that respect, your Honour, that two consequences follow, either that there will not be allowed to do that because they have not obtained leave to embark on that process or, alternatively, it will much reduce the time of the appeal.

HER HONOUR:   Well, they do not need leave ‑ ‑ ‑

MR GRAY:   And we say ‑ ‑ ‑

HER HONOUR:   Do they need leave?

MR GRAY:   Yes.  We say, if the Court pleases, they need leave because they are seeking to reverse findings that were the subject of an appeal that has been dismissed below.  The order in that regard is attached to Mr Fairbank’s affidavit.  It is marked on the back as exhibit AIF 13 and the order was that the appeal be dismissed.  That appeal we have attached for convenience

HER HONOUR:   That was whose appeal?

MR GRAY:   That was Apand’s appeal against the findings of breach of duty against Sparnon on which my client’s case then hung.  So we say that this Court, with respect, will not allow an appeal on those sorts of issues without a grant of leave.  So, either, if the matter does proceed either on ‑ ‑ ‑

HER HONOUR:   But was it a separate - were there separate appellate proceedings in the Full Court, though, or was it ‑ ‑ ‑

MR GRAY:   There were by Apand against Sparnon.  Sparnon did not appeal.  I am instructed - I did not appear below - but I am instructed that by agreement my client stood in the shoes of Sparnon for the purposes of arguing that appeal because it was seen to be a matter that Apand wished to pursue because it was argued that my client’s, in a sense, derivative claim could not possibly get up if the Sparnon claim failed.  That is the way I am instructed it was put below.  But, we say, if the Court pleases, either these matters will be agitated before the High Court in some form or other, in which case Apand is exposed to a substantial order for costs if they fail, or alternatively, it will not be allowed to be raised at all in which case the hearing will be substantially shortened.

What the court made plain, with respect, in earlier cases is that if the respondent to the appeal is exposed to an order for costs, even if successful, that is a relevant matter in refuting security.  It is a matter addressed by Justice Kirby as one of the factors in the Merribee Case and your Honour, in a rather different factual context, placed weight on that point in a case of Singer.  It is not in the list of authorities, but was an inherent claim that your Honour dealt with.

Before I move on, Mr Townsend’s affidavit, or that is the attachment to Mr Allen’s affidavit makes it plain that, in his estimate, the argument of those factual matters on the Apand appeal in the Federal Court occupied half the time of that hearing.  It is the attachment to Mr Allen’s proposed affidavit of Mr Townsend and it is paragraph 8.

HER HONOUR:   Yes.

MR GRAY:   So it is obviously a time consuming, expensive matter, and if my learned friends fail on that, and seeking to review a factual finding held by a Federal Full Court from a trial judge, then my client would be entitled to obviously what are the costs on that issue.

Moving to point 6, your Honour, we say the matter is well advanced.  It is some two and a half months since special leave was granted.  Now, your Honour, senior and junior counsel have been briefed, obligations to those counsel have been entered into and the preparation is well advanced.  My client has been pressing for an early hearing of the appeal and continue to do so.  Your Honour, that matter was addressed by the former Chief Justice Sir Anthony Mason in a case of Devenish 64 ALJR and if I can take a moment to identify the issues there.  At page 533, your Honour, in the left-hand column, the Chief Justice in the penultimate paragraph makes a point that, it is the second sentence:

The Court’s decision to grant special leave establishes that the appeal involves a matter of public importance.

Then over the page his Honour looks at a balance sheet, much in the same way as your Honour was taken to the balance sheet, and concludes that one cannot simply say that there will not at the end of the day be sufficient assets.  The matter is unclear.  But then he goes on to say in the first paragraph, left-hand column:

In any event -

so in fact assuming lack of funds -

even if that matter had been established, I would not, in the exercise of my discretion, make the order sought.  There are two significant factors telling against the exercise of a discretion in favour of the respondent to the appeal.

The first is delay -

And the delay there, your Honour, from the time the special leave that was operative was finally granted, was, in fact, something like two and a half months.  It was from, I think, 11 May to 15 August, was the delay.  And in the left-hand column in the last paragraph:

In these circumstances, it is obvious that the major steps preparatory to the hearing of the appeal have been taken, so that the appeal is ready for hearing and the bulk of the costs of the appeal would already have been incurred by the second appellant.  In the result, the application for security comes at the heel of the hunt.

And then, over in the next paragraph:

In this situation, the respondent was in a position to seek security as early as 11 May 1990 -

The respondent here was in a position to seek security as from 19 June, the date of the granting of special leave.

As a general rule, applications for security for costs should be made promptly and before significant expense is incurred by the appellant.

The second factor is that the case is one of public importance -

Your Honour, in this case, senior counsel, Mr David Bennett, was previously retained and briefed and his brief was returned on his appointment as Commonwealth Solicitor-General and the brief was then delivered to myself to lead the matter and that was done quite some time ago and I can assure the Court that the preparation is under way and significantly so.  Conferences have been held, tasks have been assigned and jobs are under way.

Now, there was, in fact, your Honour, an attempt to have the matter heard in the August list or the September list in Adelaide but because of the pressure of business the matter could not be listed.  Your Honour, in addition to that there is, what we would describe as a practice annotation and we have set it out in the outline of argument and it comes from the Butterworths edition of annotations on High Court practice and we have given the reference but that makes it clear, your Honour, that it is prudent for the respondent to an application to have an appropriate affidavit granting application for security already filed in time for the hearing of the application in the event the applicant is successful in obtaining the grant of special leave.

Here, that was not done and we say no satisfactory reason has been shown for it to be done or it could not well have been done.  Now, that particular practice annotation, your Honour, does find some support in the cases, in particular in a judgment of Sir Anthony Mason.  We say that inherent in his suggestion it must be a prompt application and we were.....with a two and a half month delay.

He says in the right-hand column at page 534 between paragraphs A and B:

In this situation, the respondent was in a position to seek security as early as 11 May 1990 when special leave was granted -

and then there is a comment by Justice Toohey in Webster v Lampard 67 ALJR 393 and the comment appears in the last paragraph at page 394 right-hand side. There was not a question of extensive delay there but his Honour says in the last sentence:

But, at this stage, it is not possible to ignore the proximity of the appeal and the work already done by the appellants.

Whilst your Honour has Webster v Lampard there, Justice Toohey does make some pertinent observations.  At page 394, left-hand column at the top, his Honour addresses the question to the respondent, the lack of means of the appellant:

In effect the respondent argued that impecuniosity of an appellant provides a prima facie justification for ordering security for costs, to be displaced only by some disqualifying conduct on the part of the respondent such as delay or because the respondent’s actions brought about the impecuniosity.  Such an approach would fetter unduly the discretion which the subrule undoubtedly reposes in a Justice and would place too great an obstacle in the path of worthy appellants.

So we say, your Honour, impecuniosity is but a factor.  It does not create any barrier but, in particular, it is met by the fact that that lack of means is occasioned by the respondent’s conduct, if the appellants’ case was made out; and, secondly, by delay by which factors exist in the current case.

Then over the page on the right‑hand column, at paragraph C, in the middle of the first paragraph, litigants should not be lightly:

shut out because of their financial position.  It has been the general approach of the courts that poverty should not bar litigants.  However, a discretion to order security for costs in cases where special leave has been granted does exist.  Such an order is more likely to be made against a foreign corporation, especially if the corporation does not possess assets within the jurisdiction.  But there may be other circumstances as well.

Now, if the Court pleases, we say that the delay in making this application, which is a delay from 19 June to 1 September, is most material.  We say the fact that the matter entered.....in correspondence does not advance the position as well.  My clients have not been, in effect, sleeping on the position at all.  They have been progressing it.  They have lodged the appeal pursuant to special leave.  They have briefed counsel.  They have had to brief new leading counsel because of Mr Bennett’s appointment, and the matter is in the process of being got ready and the Court is being pressed to write a date as soon as practicable.  There are some other incidental matters, if your Honour pleases, and I will be quite short about them.

Mr Rice’s affidavit sets up, your Honour, an agreement that there will be an application for security and it acknowledges that there appears to be a difference of opinion about that.

He sets out the history in great detail but I will not stay to read it out to your Honour.  He sets out in great detail the history of the negotiations but, in particular,  if your Honour pleases at page 6.  This is at the time when arguments of stay were being undertaken in the Federal Court and at paragraph 4.15, dealing with the matters in December 1997, in the second paragraph, Mr Rice deposes as follows - it is the middle of the second paragraph:

I advised him -

that is, Rice advised Fairbanks -

that I would only recommend this approach -

Rice is the solicitor acting for the Perres ‑ ‑ ‑

GAUDRON J:   I have not found that.  I have the affidavit of Mark Nicholas Rice, sworn 7 September?

MR GRAY:   Yes, your Honour.  It is page 6 of that affidavit that I was going to go to ‑ ‑ ‑

GAUDRON J:   Yes, thank you, and that is the second whole paragraph, is it?

MR GRAY:   It is, your Honour.

GAUDRON J:   Thank you.

MR GRAY:   Mr Fairbank is the solicitor for Apand, Mr Rice the barrister for the Perres.  What is being discussed, your Honour, is an attempt to agree a holding position.  It has been quite complicated and going for some time.  Mr Rice asked Mr Fairbank why his client, Apand, wanted to do it in two stages and.....give instructions:

I indicated to him that in my view if special leave was granted by the High Court then my clients would be likely to obtain a stay of the costs order in any event pending the appeal.  Mr Fairbank agreed but he said his client’s instructions were to deal with it as a two stage process.  I advised him -

that is, Rice advised Fairbank, that Rice:

would only recommend this approach in the event that his client agreed not to pursue an application for security for costs.

Fairbank said that:

He had no instructions to seek security for costs and would get instructions on the issue.

Then paragraph 4.16 on 21 December, a further discussion, when Fairbank advised that his client would give an assurance; that he had no intention of them making application for security for costs.  It is a bit difficult to get it set into a proposed order because of the timing of the hearing.  I asked him to confirm it in writing.  Then, a fax was sent, and Mr Rice did not receive it before attending court.  At 4.18 he attended court:

I advised Mr Perre of the nature of the proposed change to the consent order -

I told him, that is, Rice told Perre:

that the respondents would confirm in writing that there was no intention to apply for security for costs.  I telephoned Ms O’Toole -

she is a solicitor for the Perres -

and advised her that the proposed order and that security for costs would not be sought. 

Then at 4.19, we met at court; saw Mr Fairbank, the last sentence:

Mr Fairbank advised me that he had faxed a letter to my chambers confirming that his client had no intention of applying for security for costs.

That is Mr Rice’s position, and apparently that fax did not come.  Then, over the page on page 8 at the end of paragraph 6, the last sentence. 

I would not have given that advice if I believed that the issue of security for costs was still an open issue. 

What the Perres gave was, in effect, what could be described as an injunction not to deal with their assets - something akin to a Mareva injunction.

HER HONOUR:   That was an undertaking.  It gave an undertaking.

MR GRAY:   An undertaking ‑ ‑ ‑ 

HER HONOUR:   And you mentioned earlier today that you were prepared to give that same undertaking again, did you?

MR GRAY:   Yes, we are prepared to give that undertaking.

HER HONOUR:   Could I have the exact terms of that proposed undertaking?

MR GRAY:   Yes, your Honour can.  Just bear with me just one moment.  If your Honour could take up exhibit 8 to Mr Fairbank’s affidavit - AIF8 marked on the back.  Your Honour will have the order of Justice von Doussa which sets out the undertaking and, in particular, it is paragraphs 1, 2, 3, 4 and 5; 5 deals with pursuing the appeal expeditiously.  But, I am instructed to provide to this Court each of those undertakings on behalf of the appellants.

HER HONOUR:   Except it would be - the fifth one would be to prosecute the appeal.

MR GRAY:   Yes, it would be.  Your Honour is quite correct and they are  my instructions.  So, we say that although there is a difference between apparently Mr Rice and Mr Fairbank on there being an agreement about not prosecuting an order for security for costs, regrettably there is a factual dispute about that.  Mr Fairbank acknowledges that he had no instructions at that stage to be seeking an order for security.  He says he - apparently he did not bind his client not to. 

Now, your Honour, we say that bearing in mind the discretionary matters and bearing in mind, in particular, the public interest, my client’s impecuniosity being due to the, on our case, the respondent’s conduct, the significant aspect of the notice of contention and time it will take, the fact that there has been two and a half months delay despite the practice, annotations and comments of this Court, and my client’s incurring expense in that period that that justice of that overall is against ordering security when the Court in particular understands that my client has and maintains an undertaking in the terms that I have put to your Honour.  May it please the Court.

HER HONOUR:   Yes, thank you.  Yes, Mr Frayne.

MR FRAYNE:   Regrettably, your Honour, there are a number of things that I need to put to your Honour in response.  The first of the matters relates to the affidavit material sought to be relied upon by Mr Gray.  There were three affidavits which were relied upon.  Those affidavits were provided to the solicitors instructing me earlier today, so, we have had - I am sorry, the first two of those affidavits were provided to my instructing solicitors earlier today.

There is some indication from the Bar table on my left that it was yesterday.  I may need to seek some clarification if it means matters of significance, but the affidavit of Mr Allen was provided to me at about 10 or so minutes before we commenced, so I have not been able to get any instructions in relation to that aspect.  Can I indicate, your Honour, that ‑ ‑ ‑

HER HONOUR:   Do you need instructions?  It just says what seems to be fairly obvious on the facts on the ‑ ‑ ‑

MR FRAYNE:   It may be that it is not a matter of significance in relation to the matter.

HER HONOUR:   It would be surprising, were it not, if the matters raised in the notice of contention did not take at least as much time as the legal issue in respect to which the leave to appeal was granted.

MR FRAYNE:   I would not wish to be seen to quibble about that at the moment.  I cannot indicate the exact, precise position, but for the purpose of this argument, I would be content to assume that approximately half of the time of the appeal was related to the notice of contention.  In relation to the matters referred to in the affidavit of Mr Rice of 7 September, my instructing solicitor, Mr Fairbank, has prepared, in the short time available, a brief answering affidavit, and I understand that may be before the Court.  It is sworn on 8 September 1998.  It highlights the factual difference that my friend, Mr Gray, referred to, particularly in relation to paragraph 4.15.  I do not pause to dwell ‑ ‑ ‑

HER HONOUR:   I am not too sure that I have found that yet.  Was it annexed to your outline of submissions.

MR FRAYNE:   I do not believe so, if the Court pleases.

HER HONOUR:   Andrew Ian Fairbank, sworn 8 September 1998.  It is annexed to your submissions here with me.

MR FRAYNE:   Is it?  Yes, I apologise for that, your Honour. It really ‑ ‑ ‑

HER HONOUR:   There are a lot of loose papers here, but we have found it.

MR FRAYNE:   If the Court is to rely upon the affidavit of Mr Rice then the factual difference between the parties is highlighted, in part, by the affidavit of Mr Fairbank, and reference to the affidavit of Mr Rice, particularly the exhibit MNR2, which I need to take the Court to briefly.  Perhaps if I can just read it, rather than require the Court to ‑ ‑ ‑

HER HONOUR:   Well, no, I might have that.   MNR2 is the order by Justice von Doussa.

MR FRAYNE:   No, if the Court pleases, it is a facsimile letter from Phillips Fox to Mark Rice of 21 December 1997.

HER HONOUR:   Yes, I have that.  “I refer to our telephone conversation”?

MR FRAYNE:   Yes, and “confirm that my client has no current intention of instituting an application for security of costs in respect of the client’s application for special leave to appeal to the High Court.”  In my submission, that is significantly different from the matters which are suggested to be contained in the affidavit of Mr Rice.  There is obviously a matter of dispute between the solicitor, on the one hand, and Mr Rice on the other as to what was said and agreed.

Can I perhaps take the Court now, as quickly as I am able, to some matters in response to the submissions of Mr Gray.  It is put against the application that the matter was said by Justice McHugh to be a matter of public importance.  I do not quibble with the transcript.  He has made certain remarks and my friend has seized on some of them, whether in due course it is found to be a matter of public importance is for another date.

The next matter that was put against us was that the application will stifle the appeal.  I ask the Court to note that in the course of correspondence, the appellants were prepared to offer, without being specific, a security over land in the sum of $10,000.  I refer the Court to the exhibit AIF14 to the affidavit of Mr Fairbank.  That is a letter from the appellants’ solicitors to the respondent’s solicitors proposing what they suggested was a commercial resolution of the issue and proposing a disinterested party is prepared to provide a mortgage over unencumbered land to a security value of $10,000, and certain terms were put forward in relation to that.  No detail as to the land or the circumstances surrounding that were provided.

HER HONOUR:   Was the offer to continue the undertakings in this Court communicated to your client, or communicated to you, the offer made today to continue the undertakings?

MR FRAYNE:   I hesitate, to check the correspondence, before I answer that, if the Court pleases.  Mr Gray refers to the very letter that I was drawing the Court’s attention to, AIF14.  The passage to which he referred is at page 2.  I do not know whether I can assist the Court without your Honour having that letter in front of you.

HER HONOUR:   Yes, I have that.

MR FRAYNE:   At the bottom of that letter, about point 6 on the first page, there is a reference:

We are instructed to propose a commercial resolution -

and certain matters are put forward in paragraphs 1 to 4.  As I understand it, Mr Gray relies upon item 4 as being an indication of undertakings.

HER HONOUR:   Yes.

MR FRAYNE:   Your Honour, the matters that have been put against the applicants - my friend is also referring to the paragraph immediately thereunder.  Your Honour, the further matters I have put in answer to the application or the submissions of Mr Gray include the fact that the assertion has been made that an application for security for costs would stifle the appeal but the first point I made in relation to that was the offer of $10,000.  The second point I make in relation to that is that the appellants have been able to marshal senior and junior counsel to appear in relation to this application. 

The next matter that I put, if the Court pleases, is in relation to the topic that the appellants or the assertion that the appellants’ case is that the respondent is responsible for the present state of the appellants’ finances.  In my submission, that is materially wrong given the fact that I have taken the Court to the order made relating to $625,000 plus interest relating to the Minister and the State of South Australia.

The next matter that is put is that the matter is well advanced.  That was put against this application.  It is my submission that that must be seen in the context of this litigation in that the matter has not progressed to the stage of the Registrar settling the appeal books.  That is the next stage after the notice of appeal is served and a notice of cross-contention is filed.  Now, that stage has not yet been reached and it is my submission that to say that the matter is well advanced is overstating the position. 

In relation to the topic of delay it has been put against the applicant that there has been delay.  Can I take the Court to various correspondence.  I can perhaps either take the Court as quickly as I can to the exhibits or invite the Court in due course to consider the matters.

HER HONOUR:   You can take me through them.

MR FRAYNE:   Very good, if the Court pleases.  They are annexures to the affidavit of Mr Fairbank.  The first of them is a letter AIF9. 

HER HONOUR:   I have that.

MR FRAYNE:   That is a letter from the appellants’ solicitors to the respondent’s solicitors relating to a telephone conversation.  The issues raised include the topic of whether a notice of appeal was to be filed.  There were other issues referred to in the correspondence.  Further, following that was a letter of 26 June 1998 from Phillips Fox to Townsends, AIF10.

HER HONOUR:   Yes, I have that.

MR FRAYNE:   In which the conversations between the solicitors was referred to and the issue, amongst other things, of the filing of the notice of appeal was referred to.  That correspondence continued on 29 June 1998, AIF11, and culminated, in relation to this topic, with a letter purporting to be dated 25 June 1998, AIF12, but referring to a facsimile or a letter dated 29 June 1998 and therefore, presumably, incorrectly dated.  So there was ‑ ‑ ‑

HER HONOUR:   It was probably postdated.

MR FRAYNE:   Yes.  It presumably should have been dated 29 June 1998 or thereabouts because it purports to have had regard to information in a letter dated 29 June 1998.  Subsequent to that, correspondence in relation to the topic of security for costs is set out, commencing at exhibit AIF1, dated 23 July. 

The letter of 8 July 1998 there referred to in the first sentence enclosed the notice of appeal.  So, on 23 July 1998, the respondents were seeking, by letter of 23 July, the appellants to provide a security for costs in the amount of $50,000.  That is at page 2, the last three lines.  The appellants’ solicitors responded by a letter of 31 July 1998, AIF2, where a number of matters are raised but, in essence, the appellants declined to provide the security. 

The next letter was 5 August 1998, AIF3, where a further attempt was sought to have the appellant provide security for costs.  That correspondence was continued and exhibit AIF14, to which I have already taken the Court, of 17 August, resulted in a proposition of $10,000 secured by way of a mortgage, and a letter of 18 August, AIF15, asking the appellants to reconsider their position.  No agreement reached; application brought.  In my submission, there has been no undue delay.

Your Honour, one, hopefully, last matter:  in relation to the topic of cross-appeal notice of contention, Order 70 of the High Court Rules, subrule 6, deals with the topic of cross-appeal.  Order 70 subrule 6(5) reads in these terms:

It is not necessary to give notice of cross-appeal if a respondent contends that some matter of fact or law has been erroneously decided and does not seek a discharge or variation of a part of the judgment decree, order or sentence actually pronounced or made, but he shall file and serve, within the time limited by sub-rule (1), a

notice of such contention in the form numbered 67 in the First Schedule.

We say, your Honour, that given the orders in the Full Court, namely that the appellants did not establish a duty of care and the appeal was dismissed, we are entitled to proceed by way of a notice of contention because we are not seeking - - -

HER HONOUR:   I am not going to express an opinion on that at this stage.  That will be a matter ultimately for the Full Court if that is a question.

MR FRAYNE:   I was seeking to address the topic put by Mr Gray against the applicant.  If your Honour pleases, those are the matters that I put in opposition to the matters put by Mr Gray.  Unless there are any particular matters, those are my submissions in reply.

HER HONOUR:   I propose to reserve my decision in this matter until next week.  The decision will be handed down in Sydney.  There will be no need for anybody to attend and it will be available by fax in the Adelaide Registry at approximately the same time as it is handed down in Sydney.  Did you have something to say, Mr Gray?

MR GRAY:   There was just one very small factual matter that concerned me, your Honour.  My learned friend made reference several times to an order for costs in favour of the State Minister.  The exhibits showed that that order has been stayed.  That was the only matter I wanted to - - -

HER HONOUR:   Yes, thank you.  That having been said, I will reserve my decision.

AT 5.41 PM THE MATTER WAS ADJOURNED