Richani v Martins Plaza Shopping Centre Pty Ltd - [2022] SASCA 80

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
RICHANI v MARTINS PLAZA SHOPPING CENTRE PTY LTD
[2022] SASCA 80
Judgment of the Honourable Justice Bleby (ex tempore)
28 July 2022
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
Application for security for costs.
The appellant is appealing against a decision of a single judge of this Court, granting the respondent’s application for summary judgement on the appellant’s claim.
This is an application for security for costs by the respondent. The respondent seeks an order that the appellant is to provide security for costs in the sum of $20,000, and that the appeal be stayed until the appellant provides that security.
Held, per Bleby JA: granting the application for security for costs:
1.The risk of impecuniosity of the appellant and the relatively low prospects of success on the appeal speak in favour of making an order for security for costs.
2.The appellant is to provide security for costs by payment of $15,000 into Court as security for costs.

3. The appeal is stayed until security in that sum is provided by the appellant.
4.In the event security is not paid within 21 days, the respondent has liberty to apply for summary dismissal of the appeal.

Limitation of Actions Act 1936 (SA) s 32(1); Uniform Civil Rules 2020 (SA) r 215.1, 215.3, 115.1(1)(e), referred to.
Draoui v Lee & Ors [2020] SASC 155; Viscariello v Livesey [2013] SASC 198; Watson v Anderson (1976) 13 SASR 329; Nanosecond Corporation v Glen Carron Pty Ltd [2019] SASC 124; Melunu Pty Ltd v Claron Constructions Pty Ltd [2004] NSWSC 1064, considered.

RICHANI v MARTINS PLAZA SHOPPING CENTRE PTY LTD
[2022] SASCA 80
Court of Appeal - Civil

BLEBY JA: This is an application for security for costs. The respondent, which is the Trustee of the Martins Plaza Trust (a unit trust), has applied for an order that the appellant is to provide security for costs in the sum of $20,000 and that the appeal be stayed until the appellant provides that security. The appeal is against a decision granting the respondent’s application for summary judgment on the appellant’s claim.
In 1999, the appellant and two other people were the original directors of the respondent. The respondent purchased land at Parafield Gardens to develop a shopping centre. This development was the appellant’s conception. He drove the project.
The project attracted some 15 or 16 further investors. Each obtained a share in the respondent and each was allocated units in the unit trust. Investors obtained 50,000 units each at the price of $1 per unit. The appellant and his wife received 100,000 units for no consideration, in recognition of the appellant’s efforts in driving the project. The appellant and his wife held their units as trustees of the Richani Family Trust.
The development project was successful. Trading at the shopping centre commenced in early 2001. On about 1 July 2001, the appellant and his wife sold 50,000 of their units to one of the other directors and received consideration of $75,000 for those units.
The appellant’s case on the claim is that he, in his capacity as trustee of the Richani Family Trust, remains the holder of the other 50,000 units originally issued to him and his wife. The claim identifies that the respondent has produced a document entitled ‘Agreement Martin’s Plaza Trust Redemption of Units’ (‘Redemption Agreement’) that was purportedly executed by the appellant and the respondent on 25 February 2002 and 6 March 2002 respectively. The effect of that agreement on its terms is that the respondent purported to redeem the 50,000 units held by the appellant for the sum of $55,000.
The appellant’s case is that he never agreed to redeem those units in the trust, that the execution clause bearing the signatures of him and his wife, while apparently genuine, was not affixed to the Redemption Agreement when it was signed and that he was unaware of the existence of the Redemption Agreement until 2021.
The appellant pleads, in the alternative, that if the Redemption Agreement is a legally binding document, it was subject to a number of conditions and that some, if not all of them, were not satisfied. He claims that in purporting to cancel his units in the trust register of the trust, notifying ASIC that he had ceased to be a director of the respondent in January 2003, and in notifying ASIC that he had ceased to be a shareholder of the respondent in March 2004, the respondent has breached its fiduciary duties to the appellant and has acted contrary to the terms of the Martins Plaza Trust Deed (‘Trust Deed’).
In consequence, the appellant seeks a declaration that he remains the holder of 50,000 units in the Martin’s Plaza Trust and seeks various associated orders, including an account of profits.
On the respondent’s application for summary judgment, the primary judge made a number of observations. The Redemption Agreement was before the Court. On its face, it was executed by the appellant and his wife in their capacities as trustees of the Richani Family Trust on 25 February 2002. It was then executed on behalf of the respondent on 6 March 2002. The judge observed that the appellant’s claim that he was completely unaware of the existence of the Redemption Agreement until the last year or so seemed ‘unlikely to be correct’.
Next, the judge observed that each of the special conditions attached to the redemption agreement appeared to be satisfied. There was in evidence a letter dated 5 April 2002, purportedly signed by the appellant and addressed to the directors of the respondent, notifying his immediate resignation as a director of the respondent. There was an ASIC form signed by the appellant on the same day, notifying ASIC of his resignation as a director of the respondent. The respondent also produced a document purportedly signed by the appellant, transferring the appellant’s share in the respondent to another director for one dollar. Also in evidence was a refinancing document from 2003, relating to facilities provided by the CBA. The respondent relied on this to show that the appellant had been released as a guarantor.
The respondent was not able to produce banking records showing the payment of the $55,000 to the appellant and his wife. It did produce financial statements for the year ending 30 June 2002, that record the redemption transaction.
Otherwise, the primary judge observed that while the appellant claims to still be a director of the respondent, he admits that he has not attended a directors’ meeting since the purported redemption of the units. He has not received any notice of shareholder or directors’ meetings in the last 20 years and did not make any enquiries as to why that would be so.
The primary judge concluded:
The claim advanced by the [appellant] is fantastic. It simply cannot be accepted. The weight of the evidentiary material cannot be ignored. The respondent is entitled to summary judgment.
The appeal
The notice of appeal raises four grounds. The first ground complains that the judge erred in finding that the terms of the Redemption Agreement had been performed and sets out a number of factual propositions as to why that had not occurred.
Ground 2 complains that the judge erred in failing to address the weight of the evidentiary material that supports the appellant’s case. This material includes the appellant’s retention of the original unit certificates, his denials and the absence of any evidence that the redemption agreement had been assessed for stamp duty. By an affidavit dated 21 October 2021, the appellant gave evidence of a conversation with the accountant for the respondent where the accountant said that they did not need his signature to have the units redeemed. He further points to the absence of minutes of any meeting of unitholders where their consent was apparently agreed to unanimously, unanimous consent being required by the Trust Deed.
Ground 3 complains that the judge erred by addressing an extraneous or irrelevant matter, being the question of the appellant’s prospects of obtaining an extension of time. The judge considered that it was not necessary to rule on the question of whether to grant an extension of time but commented that on the material presently before the Court, the prospects of obtaining an extension of time appeared to be poor.
The judge commented, in the course of that consideration, that the claim was ‘basically a contract claim’. This was on the basis that while it involved units in a unit trust, it centred on whether or not the Redemption Agreement was valid and enforceable, and whether it had been performed. The appellant claims that to the contrary the claim is for breach of trust and/or breach of fiduciary duty. The ground goes on to complain that no limitation of time would apply if, as alleged by the appellant, the respondent was found to have committed a fraudulent breach of trust, given the terms of s 32(1) of the Limitation of Actions Act 1936 (SA).
Finally, by Ground 4, the Notice of Appeal claims that the judge erred in concluding that the appellant’s claim was ‘fantastic’ and therefore unlikely to succeed without considering evidence, including documentary evidence, that supported his claim.
Security for costs
The application for security for costs is brought pursuant to Uniform Civil Rules 2020 (SA) (‘UCR’) rr 215.1, 215.3 and 115.1(1)(e).
It is now well established that it is not necessary for a party seeking security to demonstrate the existence of special circumstances before the discretion is engaged. The Court is required to exercise the discretion judicially, having regard to established principles.[1]
[1] Draoui v Le & Ors [2020] SASC 155 at [29].
The respondent’s application is supported by an affidavit of Steven Michael Hagivassilis, the solicitor for the respondent. Mr Hagivassilis deposes to concerns that the appellant will be unable to pay costs in the event of an adverse costs order against him. The searches performed by his firm indicate that the appellant does not own any real property. The property comprising the appellant’s residential address is held solely in the name of the appellant’s wife. It appears that the appellant’s wife had been a trustee of the Richani Family Trust until 1 April 2021, which was shortly before the claim was commenced in the appellant’s name only.
Next, the affidavit sets out details of corporate entities of which the appellant has been a director and which have either been deregistered or the subject of creditor enforcement action.
The next matter raised is that the appellant commenced the action as a self‑represented litigant before retaining a law firm, but retained that firm for only three weeks. The respondent has expressed a concern that this short period of time is indicative of an inability to pay his own legal costs.
Finally, the appellant is a former bankrupt from between 8 August 1990 and 9 August 1993, when he was statutorily discharged.
The respondent’s solicitors wrote to the appellant on 3 June 2022, outlining their concerns about the appellant’s inability to pay costs of the appeal in the event that he was unsuccessful. They requested documents and information about his and the trust’s financial circumstances, or a payment of security into the Supreme Court Suitors’ Fund to the credit of the appeal. On 5 June 2022, the appellant responded, refusing to provide any information or to pay security.
The affidavit of Mr Hagivassilis sets out the estimated costs of the appeal, which includes the retention of Senior Counsel. It estimates those costs as coming to slightly in excess of $20,000.
The appellant’s response to the application
The appellant has filed an affidavit dated 27 July 2022 in response to the application, and written submissions. By his affidavit, he reiterates his denials that he signed the Redemption Agreement, resigned as a director of the respondent or received $55,000 in consideration for his remaining units in the trust. He points to the items of evidence to which I have already referred, in particular his retention of the original unit certificates. In his submissions, he points to four matters the subject of evidence that he led before the judge, in complaining that the judge did not refer to them in his reasons, being:
·his retention of the original unit certificates, despite an express requirement that consideration payable for any redemption being conditional on these being delivered up;
·his evidence of a conversation with the accountant for the respondent, Mr Battistella, when Mr Battistella said words to the effect that they did not need his signature in order to effect the redemption;
·the failure of the respondent to provide any minutes of a meeting recording the unanimous consent of the unitholders to the redemption, as required by the Trust Deed; and
·the failure of the Redemption Agreement to be stamped. This is to be contrasted with a Deed of Assignment of Lease, which records the appellant assigning his lease of the chicken shop which he operated following completion of the shopping centre, to another person. That document is stamped. However, on behalf of the respondent it records the signature of a ‘sole director’, whereas at the date of signature, the respondent had three directors. Further, the stamp is dated 7 February 2002, whereas the Deed is dated 2 December 2002. The appellant submits that this all constitutes evidence showing a propensity by the respondent not to comply with formalities regarding legal documents.
This is not the occasion to traverse the merits of these matters in detail. Rather, the appellant’s contention is that the judge did not appear to have regard to these evidential matters when granting summary judgment.
Impecuniosity
The respondent has a reasonable basis for its apprehension that the appellant is impecunious. The most relevant considerations to this end are searches that indicate that the appellant does not own any real property and that his home is owned by his wife, who was removed as a trustee shortly before the commencement of the action. The appellant admits these matters. He asserts that his wife’s decision to retire from the trust is unrelated to the proceedings. Whether or not that is so, it has had the effect of removing the family home from the assets of the proper applicant.
He only engaged solicitors in this action for a matter of weeks. He has frankly acknowledged that his solicitors assisted him in seeking access to trust records, and that beyond that, he was unable to afford legal representation.
The appellant has a history, over the last 20 years, of involvement in corporate entities which have failed. Neither that, nor the fact that the appellant is a former bankrupt, having been discharged almost 30 years ago, is a matter to which I would accord any great weight.
Of greater concern is the appellant’s refusal to provide the information as to his financial status when requested. That is a matter capable of supporting more strongly the inference that the appellant is impecunious.[2] When that refusal is combined with the removal of the appellant’s wife as trustee just prior to the commencement of the proceedings, and his admission that he is unable to afford legal representation, the risk of impecuniosity is, in my view, considerable.
[2] Viscariello v Livesey [2013] SASC 198 at [49].
That risk then lies against the background that this is an appeal. The appellant’s claim has been the subject of judicial determination, albeit one of summary judgment. It is appropriate to give greater weight to the risk of impecuniosity of the appellant is those circumstances. While it is true that the appellant has not had a trial on the merits of his claim, he has had a trial on whether his claim is reasonably arguable.
Prospects of Success
The primary judge approached the application for summary judgment on the following basis:[3]
The test to be applied is no reasonable basis. That is different to bound to fail. The question is still one of whether there is a sufficient foundation in the claim that is advanced to make it appropriate to allow it to proceed to trial.
(Emphases in original)
[3] The judge’s reasons on respondent’s application for summary judgment, 20 April 2022 at [18].
The judge adopted the approach suggested by Bray CJ in Watson v Anderson where his Honour said:[4]
Does all this mean that the court is concluded by the terms of the defendant’s affidavit if that deposes to something which would be a good defence in law, even if it is patiently incredible? I do not think that is so, though I repeat that I accept that there must be no trial on the affidavits.
[4] (1976) 13 SASR 329 at 335, cited in the judge’s reasons on respondent’s application for summary judgment, 20 April 2022 at [19].
A necessary implication of the terms of the claim is that the Redemption Agreement, which was before the primary judge, and which appears to be signed by the appellant and his wife, was a forgery. That is not strictly pleaded, although, it is difficult to otherwise escape the implication. The judge proceeded on the basis that, on its face, it appears to have been executed by the appellant and his wife in their capacity as trustees of the Richani Family Trust, and then executed on behalf of the respondent.
The judge did not canvas expressly the evidential matters to which the appellant now points. However, without prejudging the merits of the arguments to be made with respect to these items of evidence, it is not clear to me how evidence of documentary laxity while the appellant was still a director himself, might assist the appellant’s case. These matters are raised in the face of a considerable documentary record. Further, the appellant has not explained his nonactivity for almost 20 years since the purported Redemption Agreement, other than to say that he expected it would take some years for the trust to produce returns for the investors. The prospects of success on Grounds 1, 2 and 4 are, I think, low.
As to Ground 3, the judge expressly indicated that he was not asked to rule on the extension of time issue and simply observed that the prospects of obtaining an extension of time appeared to be poor. In circumstances where this does not appear to have affected his decision on the application for summary judgment, it is difficult to see that Ground 3 adds much by way of prospects of success.
The claim as advanced therefore turns on allegations by the appellant considerable and comprehensive fraud against him. The appellant does not complain that the primary judge misapplied the test in considering the application for summary judgment, as set out above.
The respondent also raises the prospect of the appellant being unable to obtain an extension of time, with any contract claim being barred after six years. The extension of time question may not be quite as simple as that, given that the appellant in large part, seems to be seeking relief on a claim of fraud even if the claim is not expressly pleaded as such. I give that consideration little weight in all of the circumstances.
Nevertheless, in the face of the affidavit evidence and the documents adduced by the respondent, and the lack of explanation by the appellant, the prospects of success on the appeal appear to be low.
Other considerations
The appellant, in his affidavit of 27 July 2022, says that he does not have the financial means to meet an order for the amount sought by the respondent, and that an order for security for costs will therefore bring his appeal to an end. The prospect that an order for security would stifle the appeal is a relevant consideration.[5] However, this assertion is just that. The appellant has not given evidence explaining his financial situation, other than that he does not own real property and is of limited means. He has not identified in evidence any steps he has taken to ascertain the availability of funds for the provision of security and at the very least, has not explained his assertion of ‘limited financial means’. I take into account here that those who ultimately stand to benefit from the litigation would be the beneficiaries of the Richani Family Trust.
[5] Nanosecond Corporation v Glen Carron Pty Ltd [2019] SASC 124 at [60].

Otherwise, the appellant attributes his limited means to the respondent failing to recognise his position as a unitholder of the Martins Plaza Trust, and claiming he has redeemed his units, but not having paid for them. That is not a strong submission, as it does not account for the last 20 years of his life.[6]
[6] See Melunu Pty Ltd v Claron Constructions Pty Ltd [2004] NSWSC 1064 at [31].
The appeal does not appear to raise any issue of general legal importance. I take into account the fact that the appellant does not reside outside the State, however, in circumstances where I have found that he is effectively impecunious, I give that factor little weight.
Conclusion
Taking everything into account, I consider that the risk of impecuniosity of the appellant and the relatively low prospects of success on the appeal speak in favour of making an order for security for costs. The respondent initially sought security in the amount of $12,000 in correspondence with the appellant. The affidavit of Mr Hagivassilis quantifies the respondent’s estimate at just over $20,000. As I have noted, that includes fees for Senior Counsel but does not include the costs of preparing the application itself, which the solicitor estimated would cost in the order of $5,000.
Having regard to the terms of the Notice of Appeal, its nature as an appeal against summary judgment of limited scope and the original estimate by the respondent’s solicitors, I consider that it would be reasonable to order security in the amount of $15,000.
I propose to make the following orders:
1.The appellant is to provide security for costs by payment of $15,000 into court as security for costs, pursuant to UCR 215.1, 215.3 and 115.1(1)(e).
2.The appeal is stayed until security in that sum is provided by the appellant.
3.In the event security is not paid within 21 days, the respondent has liberty to apply for summary dismissal of the appeal.