Re Skase, C.C. v Abbott & Sun Newspapers P/L
[1992] FCA 534
•30 JULY 1992
Re: CHRISTOPHER CHARLES SKASE
Ex parte: CHRISTOPHER CHARLES SKASE
And: GREG ABBOTT and SUN NEWSPAPERS PTY. LTD.
No. Q B1253 of 1991
FED No. 534
Practice and procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
Cooper J.(1)
CATCHWORDS
Practice and procedure - application for security for costs - power of Court to award security for costs - discretionary nature - relevant considerations - one party ordinarily resident outside Australia - whether order for security for costs would frustrate litigation - whether likelihood of success a relevant consideration - status of an undischarged bankrupt not preclude the making of an order.
Federal Court Rules Section 56, Order 28 Rule 3, Order 26 Rule 3.
Federal Court of Australia Act 1976 Section 31 Bankruptcy Act
Victoria v. Australian Building Construction Employees' and Builders Labourers' Federation (1981-82) 152 CLR 25
O'Shea v. O'Shea and Parnell Ex parte Tuohy (1890) 15 PD 59.
Viner v. Australian Building Construction Employees' and Builders
Labourers' Federation (1981) 38 ALR 550
Gregory v. Phillip Morris Ltd. (1987) 74 ALR 300
Howard v. Cummins (1988) 27 IR 109
Bell Wholesale Co. Pty. Ltd. v. Gates Export Corporation (1984) 2 FCR 1
Chester Fein Property Developments Pty. Ltd. v. Candawn Investments Pty. Ltd. (1985) 9 FCR 419
Barton v. Minister for Foreign Affairs (1984) 2 FCR 463
Kent Heating Ltd. v. Cook on Gas Products Pty. Ltd. (1984) 59 ALR 277.
Aussi Protection Inc. v. Hy Way Sunvisors (Sales) Pty. Ltd. (Unreported, 23 December, 1987; Gummow J.)
Energy Drilling Inc. v. Petroz NL (1989) 11 ATPR 40-954
CBS Records Australia Ltd. v. Telemark Teleproducts Pty. Ltd. (1987) 72 ALR 270
Townsend Controls Pty. Ltd. v. Gilead (Unreported, 26 May, 1989; Von Doussa J.)
P.S. Chellaram and Co. v. China Ocean Shipping Co. (1991) 65 ALJR 642.
Connop v. Varena Pty. Ltd. (1984) 1 NSWLR 71
Appleglen v. Mainzeal (1988) 79 ALR 634
Equity Access Ltd. v. Westpac Banking Corporation (1989) 11 ATPR 40-072 Bryan E. Fencott Pty. Ltd. v. Eretta Pty. Ltd. (1987) 16 FCR 497
HEARING
BRIBSANE
#DATE 30:7:1992
Counsel for Applicant: No appearance
Solicitors for Applicant: No appearance
Counsel for First and Mr D. Boddice
Second Respondents:
Solicitors for First and O'Shea Corser and Wadley
Second Respondents:
ORDER
THE COURT ORDERS THAT:
1. The applicant within 28 days give security for payment to the first and second respondents or either of them of costs that may be awarded against the applicant in the proceeding in the sum of $8,000.00.
2. The said security to be in a form acceptable to the District Registrar at Brisbane.
3. The application seeking that the first and second respondents be dealt with for contempt of Court be stayed until such security has been provided.
4. The first and second respondents serve a copy of this order at the address for service endorsed on the application filed on 6 February, 1992 and I declare that such service shall be sufficient service for the purposes of the Federal Court Rules.
5. The first and second respondents' costs of and incidental to the notice of motion other than the costs of the adjournment on 16 April, 1992 be the first and second respondents' costs in the cause in the applicant's application.
I DIRECT that the first and second respondents give notice of the terms of this order to Messrs Baileys Shaw and Gillett, 17 Queen Square, London WCIN 3RH by fax to number 0011-44-71 8370071 and to the applicant at Calle, Samudaina, S/N Porto Andraitx, Majorca, Spain by pre-paid post, forthwith.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
Christopher Charles Skase is a bankrupt. On 6 February, 1992 Mr Skase applied for orders that the first respondent, Greg Abbott, and the second respondent, Sun Newspapers Pty. Ltd., be dealt with by the Court for contempt. The first respondent is alleged to be the author of an article appearing in the "Sunday Sun" newspaper dated 2 February, 1992 under the heading "Skase Fit to Travel Says Doc". At the time of publication of the article there was pending in this Court an application for the issue of a warrant for arrest of Mr Skase pursuant to section 264B(1) of the Bankruptcy Act 1966.
By his application for contempt the applicant alleges against the respondents that :-
(a) The article was intended to prejudice the fair determination by Drummond J. of the application for the issue of a warrant for arrest.
(b) The article was calculated and intended to bring the Court and Drummond J. into disrepute by creating the impression that the evidence adduced before the Court on the application was incomplete and inaccurate and that the Court and Drummond J. had thereby been misled and deceived.
(c) The article was calculated and intended to bring the Court and Drummond J. into disrepute by creating the impression that the judgment of Drummond J. when delivered might have been influenced by the article in the event that Drummond J. found against the applicant, or that the Court and Drummond J. had been misled and deceived by the applicant in the event that such judgment found for the applicant.
The application was filed on behalf of Mr Skase by Messrs Kenny and Loel, solicitors of Brisbane and the address for service endorsed on the application was that of his Brisbane solicitors.
On 31 March, 1992 the first and second respondents applied by Notice of Motion for security for costs of the application. The motion was first heard by me on 16 April, 1992. On that occasion Mr Londy, solicitor of Messrs Kenny and Loel, sought leave for that firm to withdraw as solicitors for the applicant. Leave was granted conditional upon the applicant filing a new address for service within ten days.
On 16 April, 1992 in an affidavit filed by leave, Mr Londy deposed that :-
(a) He received his instructions from Messrs Baileys Shaw and Gillett, Solicitors of London U.K.;
(b) On 3 April, 1992 he advised Messrs Baileys Shaw and Gillett by letter that Messrs Kenny and Loel could not continue to act on the applicant's behalf;
(c) On 7 April, 1992 a facsimile was sent to the London solicitors advising of the present application for security for costs;
(d) On 9 April, 1992 the applicant sent a facsimile to Messrs Kenny and Loel asking for a faxed final account;
(e) On 16 April, 1992 Messrs Kenny and Loel received a facsimile from Baileys Shaw and Gillett which included the following :- "It is Mr Skase's intention to pursue these proceedings to their conclusion and with that in mind he is seeking
alternative representation as quickly as possible. However it is not possible for representation to be secured in time for the hearing tomorrow and the intervention of the Easter holidays will delay the instructing and briefing of a new firm of Solicitors for any adjourned hearing. It would therefore be appreciated if you would be kind enough to convey to the honourable Court a request from Mr Skase, acting in person, that the hearing of the Defendant's Notice of Motion be adjourned for twenty-one days to enable him to instruct fresh Solicitors to appear on his behalf. Mr Skase proposes twenty-one days as opposed to fourteen because of the length of the Easter holiday that will occur during the period of an adjournment if it is so ordered".
The Notice of Motion was adjourned to 12 May, 1992 to enable the applicant to engage new solicitors and to be represented on the hearing of the notice of motion.
On the return of the motion on 12 May, 1992 the applicant was called but did not appear. Nor did any person or solicitor appear on his behalf.
Mr Londy appeared on behalf of Messrs Kenny and Loel when the notice of motion was called on for hearing. In an affidavit filed by leave Mr Londy deposed as follows :-
"3. On 16th April, 1992, I caused to be faxed to Messrs Baileys Shaw and Gillett, a letter advising the terms of the Order made by the Honourable Mr Justice Cooper on that date. The final paragraph of that letter contained the following sentence "We trust that you will promptly engage new Solicitors who will see to the filing of a Notice of Change of Address for Service".
4. On 1st May, 1992, I received from Messrs O'Shea Corser and Wadley, a facsimile letter observing that they had not received the address for service. On 5th May, 1992, I caused a copy of that letter to be faxed to Messrs Baileys Shaw and Gillett, under cover of a letter stating "Would you please let us know prior to Tuesday, 12th May, 1992, whether you propose to provide a new address for service".
5. In the evening of 5th May, 1992, Kenny and Loel received a facsimile letter from Messrs Baileys Shaw and Gillett, acknowledging Kenny and Loel's letter of 5th May, 1992, and identifying another firm of Solicitors will be acting.
6. I have heard nothing further (from) Messrs Baileys Shaw and Gillett on the issue of new Solicitors acting in this matter".
Being satisfied that the applicant was aware of the notice of motion, that it was listed for hearing on 12 May, 1992 and a reasonable opportunity having been given to him to engage solicitors and to appear and be heard on the notice of motion if he was so minded, the hearing proceeded in the absence of the applicant or any person representing his interests. The consequence of the course adopted by the applicant was that he did not oppose the application and no material was placed before the Court by him relevant to the application for security for costs.
The applicant submits that the Court has power to award security for costs under section 56 of the Federal Court Act or under Order 28 Rule 3 of the Federal Court Rules. However, Order 26 Rule 3 will have no operation if the application by the applicant filed in the Bankruptcy proceedings is a proceeding under the Bankruptcy Act 1966 (Order 1 Rule 11(1)).
The power of the Court to punish for contempt is provided in section 31(1) of the Federal Court of Australia Act 1976. The section provides :-
"Subject to any other Act, the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court and, where the contempt relates to the exercise of jurisdiction in a Division of the Court, the jurisdiction to punish that contempt shall be exercised in that Division of the Court".
Although the alleged contempt relates to the exercise of the Bankruptcy jurisdiction of the Court, any order made would be an order under section 31 of the Federal Court of Australia Act and not an order made under the Bankruptcy Act (Victoria v. Australian Building Construction Employees and Builders Labourers' Federation (1981-82) 152 CLR 25 at 42, 116-118, 140). The application for punishment for contempt of Court is a separate and distinct proceeding from the proceedings in respect of which the contempt is alleged to have been committed. Although entitled in the bankruptcy proceedings, the application does not become part of the bankruptcy proceedings and the respondents do not become parties to the bankruptcy proceedings (O'Shea v. O'Shea and Parnell Ex parte Tuohy (1890) 15 PD 59 at 62-63, 65; Viner v. Australian Building Construction Employees' and Builders Labourers' Federation (1981) 38 ALR 550 at 554-555; Gregory v. Phillip Morris Ltd. (1987) 74 ALR 300 at 308; Howard v. Cummins (1988) 27 IR 109).
The proceeding for contempt not being a proceeding under the Bankruptcy Act, the proceeding commenced by the applicant in the Court is one to which Order 28 Rule 3 applies.
Section 56 of the Federal Court of Australia Act provides :-
"56(1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him.
(2) The security shall be of such amount and given at such time and in such manner and form, as the Court or Judge directs.
(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.
(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.
(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security".
Order 28 Rule 3(1) of the Federal Court Rules provides :-
"Where, in any proceeding, it appears to the
Court on the application of a respondent :-
(a) that an applicant is ordinarily resident outside Australia;
(b) that an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so;
(c) subject to sub-rule (2), that the address of an applicant is not stated or is misstated in his originating process; or
(d) that an applicant has changed his address after the commencement of the proceeding with a view to avoiding the consequences of the proceeding,
the Court may order that applicant to give such security as the Court thinks fit for the costs of the respondent of and incidental to the proceeding".
Order 28 Rule 3 is not an exhaustive statement of the circumstances in which an order for security for costs can be made and does not limit the power of the Court under section 56 to make such an order (Bell Wholesale Co. Pty. Ltd. v. Gates Export Corporation (1984) 2 FCR 1 at 2-3; Chester Fein Property Developments Pty. Ltd. v. Candawn Investments Pty. Ltd. (1985) 9 FCR 419 at 421-422).
The respondents submit that on the material the Court would be satisfied that at the time the applicant commenced his proceedings and thereafter, the applicant was not ordinarily resident in Australia. I am satisfied that this is so.
The purpose of ordering security for costs against an applicant ordinarily residing out of Australia is to protect a successful respondent from the risks, delays and uncertainties of attempting to enforce judgment for costs in the foreign country where the applicant resides. This is achieved by creating a fund within Australia against which a successful respondent may enforce a judgment for costs (Barton v. Minister for Foreign Affairs (1984) 2 FCR 463 at 469; Kent Heating Ltd. v. Cook on Gas Products Pty. Ltd. (1984) 59 ALR 277 at 279; Aussi Protection Inc. v. Hy Way Sunvisors (Sales) Pty. Ltd. (Unreported 23 December, 1987; Gummow J.); Energy Drilling Inc. v. Petroz NL (1989) 11 ATPR 40-954 at 50,422). However, the mere fact that the applicant ordinarily resides outside Australia, so that the requirement of Order 28 Rule 3(1)(a) is satisfied, does not require that the discretion to make an order will be exercised in favour of a respondent. The Court retains a discretion not to make an order for security for costs if the interests of justice will not be best served in the particular case by the making of such an order (Barton at 468; CBS Records Australia Ltd. v. Telemark Teleproducts Pty. Ltd. (1987) 72 ALR 270 at 284-285; Aussie Protection at 6; Energy Drilling at 50,422; Townsend Controls Pty. Ltd. v. Gilead (Unreported 26 May, 1989; Von Doussa J. at 8).
The approach of the Court to the exercise of the discretion has most recently been considered by McHugh J. in P.S. Chellaram and Co. v. China Ocean Shipping Co. (1991) 65 ALJR 642 at 643 :-
"To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstances of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction".
Circumstances relevant to the exercise of the discretion are the connection between the applicant and Australia, the extent of the applicant's assets within and outside Australia and the availability of the applicant's assets outside Australia for the satisfaction of any judgment for costs obtained against the applicant in Australia (Connop v. Varena Pty. Ltd. (1984) 1 NSWLR 71 at 74; Barton at 468-470) and whether the making of an order could be used to stifle the proceedings.
The applicant has placed no material before the Court touching any of these matters. There is no evidence that the applicant has any substantial connection with Australia or that he has any substantial assets within Australia or outside Australia in Spain or elsewhere and that if there are assets, either in Australia or overseas, that the respondents could enforce any judgment for costs against those assets. The absence of evidence of assets against which a judgment for costs could be readily enforced is a significant factor in favour of the respondents in seeking provision of security (Aussie Protection at 8; Energy Drilling at 50,422; Townsend Controls at 8; P.S. Chellaram and Co. at 643).
The respondents' material discloses that the applicant was made bankrupt on 13 June, 1991 and exhibits a copy of an affidavit filed by the applicant in his bankruptcy verifying his statement of affairs. The applicant's statement of affairs discloses substantial debts and no significant assets. In the affidavit verifying the applicant gives his occupation as Property Consultant and his address as Majorca Spain, formerly of Hamilton Brisbane. There is therefore evidence that the applicant has no identifiable assets in Australia to which the respondents could have recourse to enforce any order for costs they may obtain.
The applicant's status as an undischarged bankrupt will not preclude the making of an order (see for example Barton). However, if the applicant is impecunious and his impecuniosity would mean that any order would stifle his ability to prosecute the proceedings, that would be a relevant consideration against the making of an order. On the material the applicant appears to have funds or access to funds to engage London solicitors to act on his behalf. The applicant has filed no material which would suggest that he is in his present circumstances in Spain impecunious or that the making of an order would stifle his prosecuting the application. The absence of such material is in itself relevant to the exercise of the discretion (Energy Drilling at 50,422; Townsend Controls at 8).
It was submitted by Counsel for the respondents that I should regard as a relevant consideration to the exercise of discretion the prospects of the applicant on the application for contempt. It was submitted that as Drummond J. was a judge of a superior court it was unlikely that he would be influenced by the newspaper articles in deciding the questions before him. Thus it was submitted that the writing and publication of the subject article would not constitute contempt of Court (see Victoria v. Australian Building Construction Employees' and Builders Labourers' Federation at 58, 101-102, 119, 135-136). The submission did not however address the second basis upon which the application is founded, namely that the article was calculated to bring the Court and Drummond J. into disrepute.
I agree with the views of Pincus J. in Appleglen v. Mainzeal (1988) 79 ALR 634 at 635 and Hill J. in Equity Access Ltd. v. Westpac Banking Corporation (1989) 11 ATPR 40-072 at 50,636, for the reasons they give, that ordinarily the likelihood or otherwise of success in the action ought not to be investigated on an application for security for costs. There may be exceptions to the ordinary rule and some of the decisions in this Court reflect this (see Bryan E. Fencott Pty. Ltd. v. Eretta Pty. Ltd. (1987) 16 FCR 497 at 513-514 and the cases there cited). In the circumstances I do not propose to express any view as to the merits of the applicant's application and to treat the matter as neutral to the exercise of my discretion.
The respondents further submit that the failure of the applicant to file a new address for service within the jurisdiction, his failure to engage solicitors in Australia to prosecute his application notwithstanding the communications from his London solicitors, and his failure to appear and oppose the making of an order for security for costs, demonstrate that the applicant is not bona fide in bringing his application for contempt. The conduct of the applicant raises in my mind a doubt as to his bona fides. However, having regard to the nature of the application and the public interest in punishing any proven contempt of court, I would not on the basis of a doubt as to the applicant's bona fides alone order security for costs.
There has been no delay on the part of the respondents in seeking security for costs and there are no other matters which in my view are relevant to the exercise of discretion.
In the final analysis, I am satisfied that the respondents have made out a case for security. There is every reason to suppose that if the respondents succeed in their defence, there will be no assets in Australia to satisfy a judgment for costs and there is nothing to suggest that there are assets overseas against which they may easily enforce the judgment. There is nothing on the material to suggest, and the applicant did not appear to assert the contrary, that the making of any order would stifle the prosecution of the application because the applicant could not comply with such an order due to impecuniosity. In taking this view, I am conscious that the applicant is bankrupt and that his assets in Australia are subject to administration by his trustees. However, the Court has no material before it as to the applicant's assets and income outside Australia and in the result he did not see fit to appear and oppose the application.
The respondents' solicitors estimate that in complying with the directions relating to the application and in defending it, they will incur legal costs in the order of $10,000.00. The material does not make clear whether that estimate is made on a party and party basis or a solicitor and own client basis. Nor is the sum broken down into categories to enable consideration of the reasonableness of the estimate.
To test the sum claimed I have made enquiry of the District Registrar as to his estimate of the reasonable party and party costs of the respondents' defence of the application for contempt based on recent taxations of bills of costs in the Court. The estimate was to include preparation of all interlocutory steps being preparation of affidavits by the respondents, consideration of any further material filed by the applicant and the giving of mutual discovery and inspection, attendance on three directions hearings, all necessary attendances and conferences and disbursements including fees for junior counsel and the costs of a one day hearing. The estimate of the District Registrar is $6,000.00 - $8,000.00 for solicitors costs and disbursements and $2,000.00 for counsel's fees.
In the circumstances I consider that security in the sum of $8,000.00 is sufficient to cover costs up to and including the first day of hearing. The form of the security shall be such as is acceptable to the District Registrar at Brisbane.
The respondents have sought an order that the security be provided within 14 days. Although service of a copy of the order on Messrs Kenny and Loel will be sufficient service of the order, the applicant having failed to file a notice of change of solicitors and a new address for service, I am by no means certain that the contents of the order will come to the attention of the applicant at an early date. I consider that a period of 28 days will provide ample time for the terms of the order to be communicated to the applicant's London solicitors and to the applicant at his address in Spain and for the applicant to put in place the necessary security.
The application should be stayed until security has been provided.
The respondents' costs of the application, other than the costs of the adjournment, should be the respondents' costs in the cause.
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