Ruby Loans Pty Ltd v De Francesca
[2016] SADC 99
•17 August 2016
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
RUBY LOANS PTY LTD & ANOR v DE FRANCESCA
[2016] SADC 99
Judgment of His Honour Judge Cuthbertson
17 August 2016
PROCEDURE - COSTS - SECURITY FOR COSTS
The respondent seeks an order for security for her costs of the appellants' appeal - whether the appellant will be able to pay costs if unsuccessful - consideration of factors leading to the making of an order for security for costs.
Held: application allowed - appellants to provide security for costs.
District Court Civil Rules 2006 DCR 228 & 295; Corporations Act 2001 (Cth) s 1335, referred to.
Testel Australia Pty Ltd v K R G Electrics Pty Ltd [2013] SASC 91; Dagenham Nominees Pty Ltd v Shanks [2011] SASC 163, considered.
RUBY LOANS PTY LTD & ANOR v DE FRANCESCA
[2016] SADC 99
The respondent to an appeal against the decision of the Master of the District Court, giving her permission to enter default judgment, seeks an order for security of costs for the appeal by the sixth and seventh defendants, now appellants.
In the action in the District Court the Master, relying on rule 228(1) of the District Court Civil Rules 2006, gave permission to the respondent to enter default judgment against the appellants based on the commission of procedural irregularities seriously prejudicing the proper and expeditious conduct of the action by them.
Judgment was duly entered in the sum of $315,486.16 inclusive of pre-judgment interest of $35,000.
The appellants have lodged an appeal against the decision of the Master which is listed for hearing in the District Court on 24 August 2016.
The grounds of appeal are as follows,
1. Orders complained of
That the plaintiff has permission to enter default judgment against the sixth and seventh defendants jointly and severally in the sum of $280,486.16 plus interest to the date of the judgment in the sum of $35,000 together with party and party costs (Subject to the following paragraph) including the costs of and incidental to the application FDN 129.
The plaintiff is to have the costs of and incidental to the application of the sixth and seventh defendants FDN 125 on an indemnity basis.
2. Orders Sought
1. That the appeal be allowed.
2. That the orders of 12 May 2016 are set aside.
3. That the matter be remitted to the Master with an amended timetable for the filing of any further defence and relisting the matter for trial.
As to Ground 1, I observe that the ground asserts that there was only one procedural default relied upon by the Master, namely a failure to put forward proposed amendments to the defence by 5 April 2016.
It is clear from the reasons of the District Court Master that in fact he relied on a number of other procedural irregularities. (See paragraphs 7 – 18 of his reasons)
As to Ground 2, which asserts that judgment should not have been awarded for a particular sum but rather that the Master should have set the matter down for an assessment of damages, I observe that rule 228(2) provides that judgment may be entered “for the relief claimed”.
Blue J in Testel Australia Pty Ltd v K R G Electrics Pty Ltd [2013] SASC 91 allows for the possibility that the judgment may be for the amount claimed without an assessment of damages taking place.
Notwithstanding my observations, my preliminary assessment is that there is at least an arguable case that the Master’s discretion miscarried so that the result of the appeal is not a foregone conclusion.
The respondent seeks an order for security for costs because she is of the view that the parties against whom the judgment is obtained are impecunious and that she will not receive the judgment sum and she will be required to incur further costs on the appeal that she will not be able to retrieve.
An affidavit filed by the seventh defendant, FDB 142, now appellant, gives credence to the respondent’s fears. It is material that the respondent is entitled to rely on to establish the proposition that the appellants are for all practical purposes impecunious. (See also reasons of Master, paras [5], [19] & [35])
Also the matters put by counsel for the appellants to the Master would justify a finding of impecuniosity of the appellants.
A concession that a loan could be obtained for the amount of the proposed security of $10,000 does not bring that finding of impecuniosity into doubt. It does demonstrate, however, that an order for security would not stultify the appeal. When an application was made by counsel for the respondent to cross examine the second appellant it was conceded that the appellants would be able to borrow sufficient money to fund the proposed security.
The District Court has power to order security for the costs of an appeal. (See DCR 295(f))
The rule has been amended to delete the requirement for “in special circumstances”.
Although I have not been referred to any cases discussing the amendment and whether omission of the phrase “in special circumstances” has any consequences, it seems to me that the deletion of the reference to special circumstances must surely mean that there is no longer a requirement to find circumstances out of the ordinary or special before making the order.
In relation to the corporate appellant s 1335(1) of the Corporation Act 2001 (Cth) gives at least the same wide discretion.
(1) [Where corporation unable to pay costs] Where a corporation is a plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
In Dagenham Nominees Pty Ltd v Shanks [2011] SASC 163 Blue J concludes that “plaintiff” includes an appellant on an appeal.
In my view security for costs should be ordered as otherwise the respondent is unlikely to obtain reimbursement for the costs of defending the appeal
A further basis for an order for security for costs is that the conduct of the litigation by the respondents thus far is indicative of procedural irregularities as found by the Master causing delays. The conduct of the action has been replete with delays and there is a real risk that the appeal is a further tactic to delay payment of the funds owed to the respondent.
Accordingly I order that the appeal from the decision of the Master be stayed unless the appellants do jointly and severally pay the sum of $10,000 to the suitor’s fund of the District Court by Monday 22 August 2016 at 11.00 am.
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