Singer v Berghouse

[1993] HCATrans 199

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.,.

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S58 of 1993

B e t w e e n -

BERNICE SINGER

Appellant/Respondent

and

MAXWELL BERGHOUSE

Respondent/Applicant

Application for security for

costs

GAUDRON J

(In Chambers)

Singer 1 7/7/93

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 7 JULY 1993, AT 11.21 AM

Copyright in the High Court of Australia

MISS E.A. COHEN:  May it please the Court, I appear for the

applicant in the notice of	motion and the
respondent on the appeal.	(instructed by Maxwell
Berghouse)

HER HONOUR:	That in effect is the executor, is it not?
MISS COHEN:	Yes.
MR M.M. HILBERY:	May it please Your Honour, I appear for

the appellant. (instructed by T. Freilich)

Your Honour, there is an affidavit to be filed

in opposition to the affidavit in support of the

application. Might I hand that up.	A copy has
been served on my friend's solicitors.

HER HONOUR:	You have no objection to this course?
MISS COHEN:	No objection to the affidavit being filed,

Your Honour.

HER HONOUR:	Yes, Miss Cohen?
MISS COHEN:	Your Honour, the applicant moves on the summons

dated 25 June and the affidavit of

Maxwell Berghouse sworn 25 June in support of that

summons. It is a simple application for security

for costs of the appeal on the classic ground that

the appellant is resident outside the Commonwealth

of Australia; she is resident in New York and all

her assets are in New York.	The appellant does not
deny that.	The appellant is seeking $12,500

security for the costs of this appeal. That is

really the - - -

HER HONOUR:  Is there any evidence as to the reasonableness of that amount?

MISS COHEN:  It is contained in the affidavit of

Maxwell Berghouse sworn 25 June, which I understand

has been filed in the Court.

HER HONOUR:  I must say some of us have clearly made wrong

career choices.

MISS COHEN:  Your Honour, my instructing solicitor has

deposed in his affidavit that costs on the

application for leave to appeal have already been

incurred in the sum of $7500. There is no claim in

relation to those costs in relation to the appeal.

HER HONOUR:  There must be, must there not? You are asking

for $12,500 in any event. But perhaps I should not

let my eyebrows rise so noticeably at the way

things happen in practice. That aspect is a

Singer 2 MISS COHEN 7/7/93

detail. The real point you have got to face is the nature of the case itself in circumstances in which there has been a grant of special leave. It is not

a case

MISS COHEN:  It is a case, Your Honour, where the appellant

has failed in the Supreme Court; the appellant has

failed once again in the Court of Appeal - - -

HER HONOUR:  And has been granted special leave to appeal to

this Court.

MISS COHEN:	Yes, Your Honour.
HER HONOUR:	Which would not have been granted if she had

succeeded. It is a double-edged sword.

MISS COHEN:  Your Honour, as a matter of convenience the

appellant, it appears from Mr Freilich's affidavit,

would not suffer by reason of the security being

given. It appears from her solicitor's own

evidence on annexure A that this lady has $140,076

in savings bank accounts in the United States,

$239,834 in other investments in the United States,

and I would assume that these would be American

dollars. There is no reason why her security could

not be placed in an interest-bearing account in

this country. In the event that the respondent

successfully opposed the appeal, I would submit

that it would be normal for there to be an order

for costs against that appellant.

HER HONOUR:  But that really is a question that does not

have an obvious answer, does it? One could not
assume that even if unsuccessful, there would be an

order for costs against the appellant. As I say, you have got to take account of the nature of the case, the nature of the case having three aspects of some importance: one, that it is a case in

which the appellant claims some moral entitlement

in her favour, to put it fairly neutrally.

Secondly, it is one which satisfies the

requirements for the grant of special leave, that

is to say, either it raises some matter of

principle of general importance or there is a

question of the administration of justice in the

particular case. Thirdly, it is a case of a kind

in which, even on failure, there would be some

possibility. It would not be unreasonable in cases

such as this for costs to be ordered out of the

estate in any event.

MISS COHEN:  Your Honour, in the court below, in the Court

of Appeal, there was a costs order.

Singer 3 MISS COHEN 7/7/93

HER HONOUR: That is the subject of a grant of special

leave, of course.

MISS COHEN:  Yes, I am aware of that, Your Honour. In this

particular case, I say to Your Honour that	it is a
classic case where security would normally	be
granted.

HER HONOUR: But, Miss Cohen, that is not right. It

satisfies one of the classic preconditions before

security will be ordered; that is to say, it

satisfies one of the well-known requirements in

that the appellant is outside the jurisdiction.	So
it would be perfectly proper to order security for costs, but there is a discretion. It does not
follow that because the precondition is satisfied,
the discretion will be exercised that way.

MISS COHEN:	What I am saying to Your Honour is that in this particular case on the evidence that is before
Your Honour, on the balance of convenience there is
no evidence that it would inconvenience this
appellant.

HER HONOUR: There is no evidence it would inconvenience the

estate either, really.

MISS COHEN:  Your Honour, if there was a costs order, it

would be an order that would have to be enforced

outside the jurisdiction. Whether or not a court

in New York would enforce that order would depend

on the nature of the order, but it would cause the

estate further difficulty and further cost if those

costs were not paid voluntarily. Up to date there

is at present $6000 being held as security for the

costs of the Court of Appeal, I think in the

appellant's solicitor's trust account.

On the balance of convenience, it would not

hurt this woman to put some of her funds in an

interest-bearing account in this country if her

funds are sitting in interest-bearing accounts in

another country. She would suffer no great damage

compared to the damage that the estate might suffer

if it had an award of costs in its favour and had

difficulty enforcing those costs. That is really

all I can say, Your Honour.

HER HONOUR:  You do not want to say anything about the

nature of the case as such?

MISS COHEN:  The case as such, Your Honour, is an

application, as Your Honour is aware, by an

appellant who was married to the deceased for about

a year prior to his death. It is a case where the

parties prior to their marriage entered into an

agreement that they would each leave their

Singer 4 MISS COHEN 7/7/93

respective estates to their own children and not to

each other unless they acquired assets during the

marriage. It is a case where, whilst that type of

agreement is not necessarily enforceable in this

country, it is an agreement that was made in

New York.

The evidence on the face of the appellant's

case is that the appellant did not need and does has nearly $400,000 in cash in different
not need any maintenance for her normal lifestyle.

investments in bank accounts over and above her

home, and that is nearly $US400,000, not Australian

dollars. Her income for the first five months of

this year was just under $20,000. She is a woman

of means. Annexure A to Mr Freilich's affidavit

filed by the appellant shows these figures, not

necessarily in a form that would normally be let

into evidence, but in any event they are the

figures that have always been before the court and

they do show - - -

HER HONOUR:  They do show dwindling total assets, do they

not?

MISS COHEN:  They seem to show a drop in value of the

personal residence, but the actual money side of

things seems to be growing. The difference appears

to be some diminution in the value of the personal

residence. The address of the personal residence

appears to be the same as the address has always
been throughout the hearing. The income appears to

be increasing. That is all I can say about the

matter, Your Honour.

HER HONOUR:	Thank you. Yes, Mr Hilbery.
MR HILBERY: Your Honour, at least my friend has faced the

contradiction that is involved in saying that they

need security for costs in case an order is made
against the appellant and the basis of their

opposition to the appeal, which is to say the

adequacy of her means. Those seem to be in flat

contradiction to each other. The strength of what my friend is putting, I think, Your Honour, has to

be faced, because I see from the reported decisions

on the question of applications to this Court for

security that a considerable body of literature is

beginning to grow up on this subject and it

potentially of course could arise with regard to

any appeal to the Court.

Therefore, I think, Your Honour, I should, without going into wearisome detail, attempt to deal with some of the issues that I think are

involved in this application. It is true,

Singer 7/7/93

Your Honour, that Mrs Singer is a resident in

New York.	It is equally clear that she has a fixed
asset in New York.	It was where she was living

when the proceedings commenced, and indeed I see it

is in paragraph 1 of the first affidavit that was

filed in the proceedings some years ago. It is

referred to in the affidavit in support of this

application. It is quite clear that so far as any

judgment of this Court by way of a certificate of

costs could be enforced in America, that it

certainly could be enforced against her and there

would be assets to meet it.

The position, as I understand it, Your Honour,

is that if it came to the absolute final brutal

sanctions, the respondents, if successful and if

armed with the certificate, would sue on a judgment

of a court under the general principles of private

international law in a New York court. Those

principles, as I understand it, are exactly the

same in New York, substantially on this point at

least, as they are within Australia itself.

That would suggest, with respect, Your Honour,

that the likelihood of any of the usual defences

that could be raised in this jurisdiction to

attempt to enforce a judgment in it could not

possibly be raised in America. In the first place,

the subject of the certificate of costs order would

been heard in it, there would be no question about the adequacy of an opportunity to argue any

have in fact invoked the jurisdiction of this

question of costs that arose. She would have fully

participated and submitted to the jurisdiction.

Under those circumstances, as I see it,

Your Honour, what we have in this case, and maybe

in many cases which come before this Court in which

there is a foreign individual natural person, we

have a person who may not be within the countries

of reciprocal enforcement of judgments, and the

United States is not one of them.	Of course, there
is that long list - - -

HER HONOUR: It is not?

MR HILBERY:  It is not, Your Honour. As intransigently with

respect to all other international conventions, the

United States have certainly not got into this one.

The proceedings for enforcement, Your Honour, would

have to be, if it came to that final issue, by way

of an action on the judgment in a New York court.

I accept that problem, Your Honour, but as far as

the practice of the Court in recent years is

concerned, the foreign litigants who have been

ordered to give security have, in both of the

Singer 6 7/7/93

reported cases that I wish to draw Your Honour's

attention to, been companies. Both of them have

been demonstrated to be in, at least one might say,

a parlous state.

One of them Your Honour was concerned with -

Dillon - in which a good deal of evidence was

apparently put on affidavit as regards the

precarious and doubtful-futured position of the

company which was making the appeal to the Court.

In Dillon, (1991) 102 ALR 482, as Your Honour will

recall, it was quite clear that a great number of

applications were likely to be involved. security for any past proceedings was outside the

terms of the order, that security for any verdict

or damages was outside the order, and Your Honour
made a ruling that the security that should be
given was in relation to the prospect of costs of

the appeal itself.

In 1991 Justice McHugh had faced a similar

problem in relation to a case called Chellaram,

(1991) 102 ALR 321. That was again a case,

Your Honour, in which the company was not just in a

parlous condition. It was incorporated in Hong

Kong; it had no assets in the jurisdiction. It had a paid-up capital of $2 and it had a deficiency of

clearly on the evidence before him - of over

shareholders' funds - this is actually in quite

$22 million of Hong Kong money. One of the

shareholders offered to give a personal undertaking

to the extent of 8250 and the Court held that under

the circumstances, if he was prepared to give that

undertaking, it was very likely that he was

prepared to put his money where his affirmation

lay, and ordered security accordingly.

There is no precedent, Your Honour, for an

individual foreign person as such being ordered to
give security.	The history of the matter seems to

be that on the institution of the Court in 1903,

there appeared a provision in the Judiciary Act

that appellants from a Full Court decision of a

State court were obliged to give security for the

appeal to the extent of 50 pounds. Your Honour

will find references to that in King v Commercial

Bank, (1920) 28 CLR 289, when Mr Justice Rich had

to consider an application under the then rules for

a reduction of the statutory amount.

That is where the classic passage that has

become quoted in some of these cases originates as

regards the unfettered nature of the discretion.

His Honour, amongst other matters, said at page 292:

Singer 7 7/7/93

I reserved my decision to ascertain if

there were any settled practice in this Court

on this point.

This was the question of the fitness of reducing the security.

I find there is none. Under sec 35 of the

High Court Procedure Act security for costs in

the case of appeals such as this is

prescribed, and the amount of security is

fixed at 50 pounds subject to an application

under sec 36 to increase or reduce this

amount.

He then referred to his unfettered discretion to consider the appropriate matters in that case.

Obviously that requirement has been dropped,

Your Honour. The present form of the rules simply

states that there is an unfettered discretion to

order costs, and that is what has been acted on in

recent cases.

HER HONOUR:  Which particular rule is it?

MR HILBERY: Order 70 rule 7, Your Honour.

HER HONOUR:  I have them here.

MR HILBERY: Heading, Security For Costs. This order and

this rule, Your Honour, I do not think have been

altered in the last 20 years. Ever since the High

Court Rules were repromulgated, it has stood in

this form:

The Court or a Justice may, at any time on the

application of a respondent to an appeal,

order that the appellant give security, within

a time to be limited by the order and in such amount as the Court or a Justice may fix, for	the prosecution of the appeal without delay	and for the payment of such costs as may be
awarded by the Court to the respondent.

There is a discretion as to how the security is to

be given. As I say, Your Honour, there have been a

number of decisions on the matter but the question

of a foreign resident has not arisen as regards a

natural person.

The latest statement on the subject is that of

Justice Toohey this year in March. It is the case

of Webster v La.mpard, 112 ALR 174. It was an

application, Your Honour, which was based on

impecuniosity of the appellant. I might add,

Your Honour, that Justice Toohey refused to make

the order sought. What I would say, with respect,

Singer 8 7/7/93

Your Honour, with regard to the impecuniosity of an

appellant - and that question has arisen in a

number of cases; they are all referred to by

Justice Toohey. They start with cases such as

Lucas v Yorke and they go on through other

matters - is that as far as a person who is abroad

and whose assets may be difficult to get at, they

are certainly in no worse position than an

impecunious appellant.

HER HONOUR:  But an impecunious appellant in the

circumstances of this case would be looking at an

almost certain result, so it is a double-edged

sword in the circumstances of this case.

MR HILBERY:  Yes, Your Honour, but the position is that an

impecunious appellant will hardly be excluded and

that is a matter to be considered but, as

Your Honour has put earlier to my friend, it is

certainly not decisive in the case of impecuniosity

and it is only a factor to be considered in

relation to the matter of a person whose assets are

in a foreign country.

The tendency, Your Honour, in all the cases

that have been decided in recent years has been to

adopt as a general rule that an appeal does not

raise any presumption that security should be

given. It seems to be that quite clearly the

decisions have gone the other way. There have to

be very compelling reasons for the need for

security to be ordered. If Your Honour feels that

those conditions have been met, there is the

question of the amount and perhaps also the

question of time. The appellant has assets, as

Your Honour observes, but I have no doubt that she would need some time within which to comply with an

order for security.

As regards the amount of the security,

Your Honour, I can only say that the 50 pounds when it was ordered, if that was thought to be a general estimate, when that was part of the statute, I

would imagine that the purchasing power of

50 pounds was something in the order of $5000 now

in view of the wage levels that have occurred

since.

But apart from that, Your Honour, I should

perhaps draw Your Honour's attention to the only

decision that I could find in this Court on the
question of whether it would be normal or

appropriate to be represented by senior and junior

counsel. That was the case of Stanley v Phillips,

115 CLR. There was a great deal of discussion

about the criteria to be involved. It seems to

have been the general impression from that case

Singer 9 7/7/93

that only if there were peculiar difficulties or a

matter of great importance, did one necessarily

expect an appellant or a respondent to be

represented by two counsel.

I think, with respect, Your Honour, I would

have to concede that if I am to rely on the basis

that leave has been granted by this Court and the

Court has seen that this case raises matters of

sufficient importance to be worth arguing, then

certainly I would be in some difficulty in saying

that it - - -

HER HONOUR:  That really is the nub of it. Does that, in a

case such as this, have some significance that it

might not have in other cases? When I say that, I

am saying the claim is one for provision out of the

estate.

MR HILBERY: Yes, Your Honour.

HER HONOUR:  In the context of a grant of special leave,

does that plus the grant carry some weight as to

what should happen with respect to security for

costs?

MR HILBERY:  Your Honour, I would wish to meet that in my

final submission, and I come to it.

HER HONOUR:  Is there any authority in that area, either in

relation to the old Testator's Family Maintenance

provisions or the new provisions?

MR HILBERY:  I have some authority to refer Your Honour to.

There has been no correlation about family

provision cases· and the grant of special leave

because there has not been a special leave -

HER HONOUR:  No, but is there anything about Family

Provision Act cases or cases of that kind in any

event? Is there then as well anything about the grant of special leave?

MR HILBERY:  I do not think so. With respect, Your Honour,

I would have to draw Your Honour's attention to the

fact that under the definitions of "eligible
persons", the appellant is, as the widow, a person

in section 6(a). With regard to people who are in

section 6(c) and (d), the Act requires under

section 9 that you cannot make an order unless

there are factors which warrant the making of the

application.

The result of that has been some controversy

about how one raised that question, but it is now

clear that that argument proceeds in the course of

and only when the whole of the evidence in the case

Singer 10 7/7/93

is presented. What you also get in the Family

Provision Act itself is that section 33(1) gives the court jurisdiction to order costs out of the estate or notional estate. Section 33(2) says with

regard to persons in (c) or (d) - that is by way of
negative distinction of those in (a)· and (b) in

which we are - - -

HER HONOUR: That is what I was really asking. Is there

something in favour of a widow, either in substance

or in practice?	You say there there is in
substance.

MR HILBERY: There is substance in that, Your Honour.

HER HONOUR:  What about in practice?

MR HILBERY: In practice, Your Honour, I do not think that

there is a case of a widow being refused an

application, apart from this case, but there is a

precedent, and the only precedent in all the

decisions of the High Court under the Testator's

Family Maintenance Act - that is all there ever

have been. There have been no decisions under the

Family Provision Act.

HER HONOUR: There has been a special leave application

hitherto, but that is all, I think.

MR HILBERY:  I see, Your Honour. In regard to the Court's

practice in relation to the TFM laws, there was

only one widow who was refused her application and ordered to pay costs. That is the case of Boyce v

Humphreys, (1974) 48 ALJR 229. Mrs Boyce was in

this position, Your Honour: an $80,000 estate,

which I would imagine now would be something in the

order of $800,000, was left to her for life; the

income for life was left to her. There were two

children who opposed her application, and her application to the Supreme Court was that she be	given a capital sum. There was evidence that there
were assets of-the estate available to _her which she had not used and it was held that she had been
adequately provided for, having regard to the task before the testator to make provision for her.
In that case, Your Honoµr, and in that case only has this Court ordered costs against an
applicant widow. I could find no other case and I
attempted to find every one of them that had been decided in the Court and reported either in the
ALJRs or the CLRs. In almost every case, the costs
have been ordered out of the estate.

HER HONOUR:	Even unsuccessful widows?
MR HILBERY:	Yes - well - - -

Singer 11 7/7/93

HER HONOUR:  There have not been unsuccessful widows except

for Mrs Boyce.

MR HILBERY: There have not been unsuccessful widows,

Your Honour; she was it, I think. In virtually all

cases the orders have been made out of the estate

following the usual equity practice about disputed

funds. This case of course has about it the

peculiar aspect, Your Honour, that there was

evidence - I do not wish to go into the substance

of the merits of it too far - of the deceased's own

will. The deceased's own will had made provision

to give her a life estate in any property that was

acquired during their lifetimes. This is even

after he had executed the ante-nuptial agreement

and, indeed, obviously insisted on their being

executed.

It so came about, Your Honour, that although

there was strong evidence of an intensive search

for somewhere to live in which he would have in

fact purchased in the names of himself or both

parties, they had not found anything when he died.

So that one of the peculiarities of the case is that quite clearly the testator himself obviously

believed that he had some obligation,

notwithstanding the ante-nuptial agreement, to make

some provision. It just happened that he failed to

do so.

Under those circumstances, Your Honour, I

cannot, with great respect, feel that the Court is going to say that the appeal is so contumelious, I might almost say, that costs should be visited

against the appellant, particularly when one sees
the contrast with the case in which that was

actually done, in Boyce v Humphreys.

HER HONOUR:  Yes, Miss Cohen.

MISS COHEN:  Your Honour, the costs of a family provision

application:  I know of no case where an

unsuccessful applicant has been awarded their costs

out of the estate. I know of many cases where

unsuccessful applicants have not been ordered to

pay the costs of the estate, and this case itself

was a case where the applicant was unsuccessful at
first instance and she was not ordered to pay costs

of the estate of the application.

I cannot point Your Honour to any authority on

the point other than the authority that is before

Your Honour, but I know of no case where the estate

has been ordered to pay the costs of an

unsuccessful applicant out of the estate.	Of
course, in each case the usual order - - -

Singer 12 MISS COHEN 7/7/93

HER HONOUR:  But what we must look for here is the

probability of the appellant being ordered to pay
the estate's costs. For you to make good your

application, that is the basis from which we must

proceed.

MISS COHEN:  In the normal course of events, an unsuccessful

appellant would be ordered to pay the costs of the

respondent. I know of no different situation that

relates to appeals from family provision

applications. I know of no case where the Appeal

Court has failed to order costs against an

unsuccessful appellant. The Court of Appeal in this case ordered the costs of the appeal to be paid by the appellant in these proceedings.

All I can say, Your Honour, is the interests

of justice are best served by the order being made

and that in a situation where the estate would be

faced with having to enforce a judgment in a

country where there is no reciprocity, I am not
saying that the law does not allow that judgment to
be enforced but the costs of enforcing it in
another country may make it not worthwhile

enforcing.

I do believe that it would be enforceable in

that country but not in the simple way that one

could normally enforce judgments, say, in the

United Kingdom or in a British Commonwealth

country. The interests of justice in this case, I

would submit, require the order to be made. There

are no specific rules that cover the situation.

The rules give Your Honour a discretion in the case. Order 71 rule 6 specifically refers to:

A plaintiff ordinarily resident outside the

Commonwealth may be ordered to give security

for costs notwithstanding that he may be

temporarily resident within the Commonwealth.

That is not really relevant to this except to show

that it is normal for a person resident outside the

Commonwealth to have to give some security for

costs of an appeal, for obvious reasons, that those

costs are very difficult to enforce. That is all

that I can say.

HER HONOUR:  Thank you, Miss Cohen. I will consider this

matter. I will list it for decision on Monday at

9.30. There will not be any need for counsel to

attend because, should I in any event decide that
there would be an order, I would leave the terms of

it to be further considered, at least in terms of

time. I do not think the amount is greatly in

dispute, is it, really?

Singer 13 MISS COHEN 7/7/93

MR HILBERY:  Would it be of any assistance to Your Honour if

I sent to your associate a list of the decisions

that have been given in recent years on security?

HER HONOUR:  Yes, that would be helpful. But in any event,

9.30 on Monday and, as I said, I do not	think there
will be any need for counsel to attend.	I will not
do anything the details of which cannot	be further
discussed.

AT 12.09 PM THE MATTER WAS ADJOURNED

UNTIL MONDAY, 12 JULY 1993

Singer 14 7/7/93