Sims v Suda Ltd [No 2]

[2015] WASCA 180

SIMS -v- SUDA LTD [No 2] [2015] WASCA 180

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2015] WASCA 180
Court:	THE COURT OF APPEAL (WA)
Case No:	CACV:145/2014	Heard:	17 JUNE 2015
Coram:	McLURE P NEWNES JA	Delivered:	7/09/15
No of pages:	8	Judgment Part:	1 of 1
Result:	Security for costs ordered
Category:	B
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Parties:	DOUGLAS ARTHUR SIMS SUDA LTD
Catchwords:	Practice and procedure Application for security of costs of appeal Relevant principles Inability of appellant to meet costs order to be inferred
Legislation:	Supreme Court (Court of Appeal) Rules 2005 (WA), r 44(1)
Case References:	Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171 Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1 Mann v Dabelstein [2006] WASCA 176 Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 Sims v Suda Ltd [2014] WADC 161

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : SIMS -v- SUDA LTD [No 2] [2015] WASCA 180 CORAM : McLURE P

NEWNES JA

HEARD : 17 JUNE 2015 DELIVERED : 7 SEPTEMBER 2015 FILE NO/S : CACV 145 of 2014 BETWEEN : DOUGLAS ARTHUR SIMS

Appellant

AND

SUDA LTD
Respondent

ON APPEAL FROM:

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Coram : DAVIS DCJ

Citation : SIMS -v- SUDA LTD [2014] WADC 161

File No : CIV 3938 of 2012

Catchwords:

Practice and procedure - Application for security of costs of appeal - Relevant principles - Inability of appellant to meet costs order to be inferred

Legislation:

Supreme Court (Court of Appeal) Rules 2005 (WA), r 44(1)

Result:

Security for costs ordered

Category: B

Representation:

Counsel:

Appellant : In person
Respondent : Mr N C Ebbs

Solicitors:

Appellant : In person
Respondent : Bennett + Co

Case(s) referred to in judgment(s):

Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171
Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1
Mann v Dabelstein [2006] WASCA 176
Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241
Sims v Suda Ltd [2014] WADC 161



1 JUDGMENT OF THE COURT: This is an application by the respondent for an order that the appellant provide security for the respondent's costs of the appeal. The appeal arises out of an action brought by the appellant in the District Court claiming damages for the alleged breach by the respondent of an indemnity clause in the appellant's contract of employment. The action was dismissed by Davis DCJ and the appellant has appealed against her Honour's decision.

Background

2 The appellant was a director of the respondent and was employed as its 'International Business Director' from 1 October 2007 to 9 June 2009, pursuant to a written employment agreement. The employment agreement contained a provision by which, in substance, the respondent agreed to indemnify the appellant in respect of any legal proceedings arising from or in any way connected with the appellant being an officer of the respondent or his employment by the respondent, or any act or omission of the appellant directly or indirectly connected therewith.

3 In 2011, the chairman of directors of the respondent, Mr Peter Jooste QC, commenced proceedings in the Federal Court against the appellant alleging that certain statements the appellant had made about Mr Jooste in an email sent to Mr Jooste and others on 10 June 2010 breached the Racial Discrimination Act 1975 (Cth). The claim was defended by the appellant and ultimately settled.

4 The appellant subsequently brought proceedings against the respondent in the District Court claiming that, pursuant to the terms of the indemnity in the employment agreement, the respondent was liable to indemnify him for his costs of defending the Federal Court proceedings.

5 The appellant advanced two substantive propositions in support of that claim. First, he argued that the indemnity applied because at the time of the Federal Court proceedings he was a director or employee of two subsidiaries of the respondent. That was rejected. The primary judge found that the indemnity did not extend to the appellant in that capacity and, in any event, at the time of the email he was neither an employee nor a director of the two subsidiaries.

6 Secondly, the appellant argued that the email was 'connected' with his time as an employee and director of the respondent because the email related to the business of the respondent, and in particular to a meeting held in Berlin in May 2010 to resolve issues between the respondent and a German company, HC Berlin Pharma AG (Berlin Pharma), which was the licensee from the respondent of certain intellectual property rights, and also to resolve issues between the respondent and the appellant. That was also rejected by the primary judge, who found that the meeting was not to resolve issues between the respondent and the appellant but only issues between the respondent and Berlin Pharma, and, moreover, that the appellant had attended the meeting as a representative of Berlin Pharma, not of the respondent.

7 Her Honour found that when the appellant wrote the email he was not doing so on behalf of the respondent or any of its subsidiaries, and that the statements in question in the email had nothing to do with the business of the respondent or its subsidiaries and were no part of the appellant's duties as an officer or employee of the respondent or its subsidiaries.

8 The primary judge concluded that the indemnity did not apply to the appellant's costs of the Federal Court proceedings and dismissed the appellant's claim: Sims v Suda Ltd [2014] WADC 161.

9 The appellant has appealed from that decision. The appeal notice was filed on 26 November 2014 and the appellant's case on 1 April 2015. It appears from the grounds of appeal that the appellant challenges each of the material findings of the primary judge.

The application for security for costs

10 The present application was filed by the respondent on 2 June 2015, supported by an affidavit of Ms Rachel Ross, a solicitor employed by the respondent's solicitors. The respondent seeks the sum of $20,000 by way of security for its costs.

11 In her affidavit in support of the application, Ms Ross refers to a number of costs orders made against the appellant in earlier proceedings which, despite demand for payment and the issue of enforcement proceedings, were paid only after very substantial delay. Ms Ross says that taxed costs of $212,133.52 in CIV 2168 of 2011 remained unpaid for 344 days; taxed costs of $3,579.85 in CACV 11 of 2014 remained unpaid for 239 days; and taxed costs of $30,091.34 in CIV 1535 of 2012 remained unpaid for 162 days. The respondent caused property sale and seizure orders to be registered on the certificate of title to the home of the appellant and his wife. The appellant and his wife sold the property on 1 May 2015 and the above costs were paid from the proceeds of sale.

12 In addition, Ms Ross says there are other costs orders made against the appellant where the costs are still to be taxed. They are:

1. orders in District Court action CIV 3938 of 2012 following the dismissal of the appellant's claim in that action, some of those orders being for indemnity costs. Ms Ross says that the respondent's solicitor/client costs in that action total some $154,000, plus disbursements of $4,000;

2. an order for indemnity costs in the Federal Court in proceedings WAD 255 of 2014, in respect of which the respondent has filed a bill of costs for taxation in the sum of $32,101.99;

3. an order for costs in this appeal on the respondent's application to strike out the appeal, for which a bill of costs has not yet been prepared but which it is estimated will be in the order of $10,000.

13 Ms Ross also says she has been informed that proceedings by the appellant in the Supreme Court in CIV 1991 of 2011 against a third party for defamation were dismissed and the appellant ordered to pay indemnity costs. The successful party has since filed a bill of costs claiming costs in excess of $350,000. (We note in passing that the appellant has appealed from the decision dismissing his claim for defamation.)

14 In the affidavit, Ms Ross says that a search of the records of Landgate on 2 June 2015 revealed that there was no land in Western Australia registered in the appellant's name.

15 It appears from Ms Ross' affidavit that the question of security for the respondent's costs of the appeal was first raised by the respondent's solicitors by a letter dated 6 May 2015, in which they asked the appellant for details of any assets in which he held an interest. In a further letter, dated 18 May 2015, the respondent's solicitors said that an application for security for costs would be made unless a response was received by 22 May 2015. There is no evidence of any response by the appellant.

16 The appellant did not file an affidavit in opposition to the applicationand his written submissions were very brief. He submitted that the application should be dismissed because he had been granted an irrevocable indemnity against any legal costs arising from, connected to or accrued from his employment by the respondent, including breach of that indemnity. He was therefore 'immune' from a demand for security for costs. The indemnity referred to by the appellant is apparently the indemnity contained in the employment agreement.

The relevant principles

17 The principles to be applied are well-established. Under r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA), the court has a very wide discretion to make an order for security for the costs of an appeal: Mann v Dabelstein [2006] WASCA 176 [16].

18 The factors which are relevant on such an application cannot be stated exhaustively but will ordinarily include:

(a) whether the appellant is likely to be able to satisfy an order for costs if the appeal is unsuccessful;

(b) the appellant's prospects of success on the appeal;

(c) the fact the appellant has already lost at first instance on the merits, that being a circumstance which favours the exercise of the discretion in favour of an order for security for costs;

(d) whether the appellant would be shut out of the appeal if security for costs were ordered; and

(e) whether there has been any delay in the respondent filing the application for security for costs.

19 Where an order for security for costs is made, the amount of the security to be provided by an appellant must be related to the costs likely to be incurred by the respondent on the appeal, but the court does not endeavour to give a complete and certain indemnity to the respondent: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175. If the appellant is impecunious, the security ordered should not be greater than is absolutely necessary: Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1, 3 - 4; Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 [9].

The disposition of the application

20 On the evidence, we are satisfied that the appellant is unlikely to be able to meet an order for costs if the appeal is unsuccessful. There are several factors which lead us to that conclusion. First, the appellant owns no land in Western Australia. Second, he has substantial unsatisfied debts from other litigation in which he has been involved. Third, other costs orders were satisfied only after long delay and upon the sale of the appellant's home, on the title to which sale and seizure orders had been lodged. Fourth, the appellant has put nothing before the court to indicate his financial capacity to meet a costs order. While there is no obligation on an appellant to do so, where there is evidence to suggest that an appellant would be unable to meet a costs order if the appeal were to be unsuccessful and the appellant fails to provide evidence to the contrary, the court will more readily draw the inference that the appellant does not have that capacity. We would draw that inference.

21 In relation to the appellant's prospects of success on the appeal, any assessment on an application of this sort must necessarily be of a preliminary kind. In the present case, while the appeal may not be unarguable, the appellant does not appear to have strong prospects of success.

22 While, as already indicated, it seems that the appellant does not have significant assets, it could not be concluded that the appellant would be shut out of the appeal if security for costs were ordered. Whether the appellant would be able to find the necessary funds if ordered to provide security is a matter peculiarly within his own knowledge. He has not suggested that he would be unable to do so.

23 Finally, we do not consider there has been any material delay by the respondent in applying for security for costs. While the appeal notice was filed on 26 November 2014, the appellant's case was not filed until 1 April 2015. The respondent first raised the question of security for costs by a letter dated 6 May 2015 and, having failed to receive any response to a follow up letter of 18 May 2015, the present application was filed on 2 June 2015. We should add that the appellant does not suggest there has been any undue delay.

24 The sole basis of the appellant's opposition to the application is, in effect, that under the employment agreement he is entitled to be indemnified by the respondent for his legal costs of the appeal. That obviously assumes that he will be successful on the appeal. As we have previously indicated, that is by no means evident on the material before us. It is not a basis upon which an order for security should be refused.

25 In our view, the respondent is entitled to an order for security for its costs of the appeal. It is necessary to turn then to the appropriate amount of the security.

26 The appellant seeks an amount of $20,000. In a draft bill of costs attached to Ms Ross' affidavit, the respondent's costs of the appeal are estimated to be in the sum of $42,119.00 plus disbursements. It is unnecessary to canvass the various items making up the draft bill, although it must be said that some of the individual items seem doubtful and, as the matter currently stands, total costs of that amount would appear to be excessive. The issues are not complex and the evidence is relatively limited. The hearing of the appeal should not take more than half a day.

27 Based on the material currently available, we consider that an appropriate amount by way of security is $15,000.

Conclusion

28 We would make orders to the following effect:

1. on or before a date to be fixed, the appellant is to provide security for the respondent's costs of the appeal in the sum of $15,000 by payment of that sum into court;

2. if the appellant fails to pay the sum of $15,000 into court within the time specified, the appeal do stand dismissed and the appellant is to pay the respondent's costs of the appeal, including any reserved costs, to be taxed; and

3. the costs of this application be costs in the appeal.