Singh v Singh and ORS and; Singh v Singh and ORS and; Singh v Official Trustee in Bankruptcy and Anor
[2014] FCCA 50
•24 January 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SINGH v SINGH & ORS and SINGH v SINGH & ORS and SINGH v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOR | [2014] FCCA 50 |
| Catchwords: PRACTICE AND PROCEDURE – Contempt proceedings – security for costs – principles to be applied in an application for security for costs – application granted – matter adjourned for hearing of contempt matter. |
| Legislation: Federal Circuit Court of Australia Act 1999, s.80 |
| Krautz & Krautz [2013] FMCAfam 203 Re Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd; John Cooke; Bemboka Nominees Pty Ltd; Nardo Pty Ltd and Hikkadwa Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 Merribee Pastoral v ANZ Banking Group [1998] HCA 41; 193 CLR 502; 155 ALR 1; 72 ALJR 1055 Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98; (1986) 66 ALR 577; (1986) 60 ALJR 608 Ronowska v Kus (No 2) [2012] NSWSC 817 Alginates (Australia) Pty Ltd v Thomson and Carroll Pty Ltd [1970] VicRp 74; [1970] VR 570 Re Bell Wholesale Company Pty Limited v Gates Export Corporation [1984] FCA 34; 52 ALR 176 Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at para.46, 85-101. Phoenix Middle East Company WLL v Exhibition Studios Pty Ltd [2011] FMCA 842 Irrewarra Estate Pty Ltd v A & S Arnott Pty Ltd & Anor [2011] FMCA 188 |
| Applicant: | SARDUL SINGH |
| First Respondent: | MAN MAHAN SINGH |
| Second Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Third Respondent: | EAPON CARLOSE |
| Fourth Respondent: | ATTORNEY GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
| File Number: | PEG 168 of 2006 |
| Applicant: | SARDUL SINGH |
| First Respondent: | MAN MAHAN SINGH |
| Second Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Third Respondent: | ATTORNEY GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
| File Number: | PEG 211 of 2007 |
| Applicant: | SARDUL SINGH |
| First Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Second Respondent: | ATTORNEY GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
| File Number: | PEG 239 of 2011 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 26 April 2013 |
| Date of Last Submission: | 26 April 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 24 January 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bratley |
| Solicitors for the Applicant: | Butcher Paull & Calder |
| Counsel for the Respondent (MAN MAHAN SINGH): | Mr Sandhu |
| Solicitors for the Respondent (MAN MAHAN SINGH): | S. S. Sandhu |
| Counsel for the Respondent (OFFICIAL TRUSTEE IN BANKRUPTCY): | No appearance by or on behalf of the Official Trustee in Bankruptcy |
| Counsel for the Respondent (EAPON CARLOSE) | Mr Eapon Carlose appearing in person |
| Solicitors for the Respondent (EAPON CARLOSE): | Carles Solicitors |
| Counsel for the Respondent (ATTORNEY GENERAL FOR THE COMMONWEALTH OF AUSTRALIA): | The Attorney General being excused from appearing. |
| Solicitors for the Respondent (ATTORNEY GENERAL FOR THE COMMONWEALTH OF AUSTRALIA): | Australian Government Solicitors |
ORDERS
The Second Respondent, Mr Man Mahan Singh, provide security for costs of and incidental to the proceeding in respect of Mr Sardul Singh and Mr Eapon Carlose in the sum of $29,960 (being $14,980 with respect to the proceedings against Mr Sardul Singh and $14,980 with respect to the proceedings against Mr Eapon Carlose) in the form of a bank guarantee from an Australian trading bank (or in such other form as is acceptable to the Registrar) to be lodged with the Registrar and a copy of which is to be served on the solicitors for Mr Sardul Singh and Mr Eapon Carlose.
Each of the bank guarantees (or the security in such other form as is acceptable to the Registrar) required by Order 1 herein be lodged with the Registrar within 90 days of the date of these orders.
The proceedings against Mr Sardul Singh and Mr Eapon Carlose be stayed until the relevant security for costs has been provided in accordance with this Order.
Mr Sardul Singh and Mr Eapon Carlose each be at liberty to apply, on seven days notice, to vary the amount of security for costs required to be provided in accordance with this Order.
In the event that security for costs is not provided in accordance with Orders 1 and 2 herein, the applications filed by Mr Man Mahan Singh be dismissed.
Upon the Registrar confirming Orders 1 and 2 herein have been complied with, the matter be adjourned to a date to be fixed in 2014 for the hearing of the contempt application.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
PEG 168 of 2006
| SARDUL SINGH |
Applicant
And
| MAN MAHAN SINGH |
First Respondent
| OFFICIAL TRUSTEE IN BANKRUPTCY |
Second Respondent
| EAPON CARLOSE |
Third Respondent
| ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
Fourth Respondent
PEG 211 of 2007
| SARDUL SINGH |
Applicant
And
| MAN MAHAN SINGH |
First Respondent
| OFFICIAL TRUSTEE IN BANKRUPTCY |
Second Respondent
| ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
Third Respondent
PEG 239 of 2011
| SARDUL SINGH |
Applicant
And
| OFFICIAL TRUSTEE IN BANKRUPTCY |
First Respondent
| ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA |
Second Respondent
REASONS FOR JUDGMENT
Security for costs
The matter came before me pursuant to the interlocutory application filed 25 January 2013, of Mr Sardul Singh and Mr Carlose, which seeks the following orders:
1. Within 7 days from the date hereof, time being of the essence, the 2nd Respondent pay security for the costs of Sardul Singh and Eapon Carlose in relation to the [contempt matter] in the sum of $21,000 or such other sum as the Court considers appropriate, such security to be provided by way of bank guarantee in a form acceptable to the Registrar of the Federal Magistrates Court.
2. In default of provision of security as aforesaid, the [contempt matter] be wholly dismissed.
3. The [contempt matter] be otherwise wholly dismissed on the grounds
a. of delay, waiver, acquiescence, unclean hands and absence of standing on the part of Man Mahan Singh and,
b. that the [contempt matter] is frivolous and vexatious, discloses no reasonable cause of action and is an abuse of process of the court and offends the principle of finality.
4. The [contempt matter] as against Eapon Carlose be otherwise dismissed on the grounds that he is not, and has not been made, a party to these proceedings.
5. The Interim Application for security for costs be listed for hearing on a date prior to the hearing of the remaining orders sought herein by Sardul Singh and Eapon Carlose.
6. The hearing of the remaining orders sought herein be listed for hearing on a date prior to the hearing of the [contempt matter].
7. Man Mahan Singh forthwith pay the costs of the Interim Application to be agreed, fixed by the Court or taxed.
The documents
In the hearing before me, the Applicant and Mr Carlose relied on the following document in support of the application for security for costs:
a.Submissions of Eapon Carlose filed 22 April 2013.
Although they did not say so, I take it that the Applicant and Mr Carlose also intend to rely on:
a.the affidavit of Mr Carlose filed 3 April 2013; and
b.the affidavit of the Applicant filed 8 April 2013.
The documents relied on by the Second Respondent (Applicant in the contempt matter) with respect to the Respondents’ application for security for costs are:
a.Submissions of the Second Respondent filed 24 April (addressing Mr Carlose’s affidavit);
b.Submissions of the Second Respondent, also filed 24 April.
Background
The judgment of Judge Lucev sets out the background of the matter as follows:
[1] In each of the three Applications in a Case before the Court, the second respondent, Mr Man Mahan Singh, alleges contempt and seeks to have the applicant, Mr Sardul Singh, and Mr Eapon Carlose, who appeared for the applicant in the substantive applications in this Court, charged with contempt. The contempt is said to variously arise from a breach of orders of this Court and a breach of undertakings given to this Court, as currently constituted, in each of the three substantive applications. It is unnecessary, for present purposes, to refer specifically to the relevant orders.
[2] Mr Sardul Singh and Mr Carlose are said to have committed contempt. Mr Carlose is said to have committed contempt himself or to have aided and abetted Mr Sardul Singh to do so. The issue arises as to whether the Court, as presently constituted, ought to hear the contempt applications.
The joinder of the Attorney-General
Having determined that the allegations of contempt should be heard by another Judge, Judge Lucev also referred to me the question of whether the Attorney-General for the Commonwealth of Australia ought to be added to the proceedings. In the Orders of 18 March 2013, the Second Respondent, Mr Man Mahan Singh, was ordered to file an amended application joining the Attorney-General to the proceedings.
In submissions filed 24 April 2013, the Attorney-General declined to participate in the proceedings (at para.9 of their submissions) and submitted to any Order of the Court, save as to costs.
The contempt allegations
The Amended Application in a Case, filed by Mr Man Mahan Singh, sets out the orders sought, which also set out the substance of the contempt allegations, as follows:
1. The applicant, Sardul Singh is in contempt of this Court for breaching orders of this Court dated 7 September 2007, and, his solicitor and counsel, Eapon Carlose, aided and abetted in such contempt and is himself in contempt.
2. The applicant, Sardul Singh is in contempt of this Court for breaching his written undertakings to this Court dated 31 July 2006 and, his solicitor and counsel, Eapon Carlose, aided and abetted in such contempt and is himself in contempt.
3. The applicant, Sardul Singh and his solicitor, Eapon Carlose, be punished respectively for breaching the orders of this Court dated 7 September 2007 and procuring those breaches, by committal to prison or fine or both.
4. The applicant, Sardul Singh and his solicitor, Eapon Carlose, be punished respectively for breaching Sardul Singh’s written undertakings to this Court dated 31 July 2006 and procuring those breaches, by committal to prison or fine or both.
5. The applicant, Sardul Singh and his solicitor, Eapon Carlose, jointly and severally pay the second respondent’s costs of this application.
6. That such further or other orders may be made as the Court thinks appropriate.
The Second Respondent, Mr Man Mahan Singh, filed his original application in a case on 20 November 2012. At the same time, he filed a supporting affidavit which set out the basis for his allegations of contempt. A brief summary is as follows:
a.On 14 February 2006, Mr Man Mahan Singh declared himself bankrupt.
b.On 22 March 2006, Mr Sardul Singh brought an action in the Supreme Court of Western Australia to recover property in Malaysian which allegedly belonged to Mr Man Mahan Singh’s bankrupt Estate.
c.On 15 February 2009, Mr Man Mahan Singh was discharged from bankruptcy.
d.On 22 March 2010, Mr Sardul Singh, through his lawyer Mr Eapon Carlose, obtained a default judgment against Mr Man Mahan Singh.
e.On 17 November 2011, Mr Man Mahan Singh’s solicitor wrote to Mr Sardul Singh, via his solicitor Mr Eapon Carlose, to remind him of the requirements of the Orders of Judge Lucev made on 7 September 2007 and the 2006 undertaking (filed in this Court on 5 December 2006).
The terms of the Order of 7 September 2007 are as follows:
(1) That under s.58(3)(b) of the Bankruptcy Act the applicant have leave:
(a) nunc pro tunc, to commence, and take such steps as have already been taken in proceeding CIV 126412006 in the Supreme Court of Western Australia ("Supreme Court proceedings");
(b) to take any fresh steps in the Supreme Court proceedings, on the following conditions:
(i) that the applicant will seek an amendment of the Statement of Claim filed in the Supreme Court proceedings so as to delete the claim for an order that the net proceeds of sale be applied in satisfaction or partial satisfaction of amounts due and owing from Man Mahan Singh to Sardul Singh;
(ii) that the applicant will not take any further steps in the Supreme Court proceedings without giving 7 days notice to the Official Trustee in Bankruptcy;
(iii) that the applicant will not oppose the Official Trustee in Bankruptcy being joined in the Supreme Court proceedings at any time;
(iv) that the applicant will hold the property the subject of the Supreme Court proceedings or any monies received in the Supreme Court proceedings for the Official Trustee in Bankruptcy on behalf of the bankrupt estate of Man Mahan Singh;
(v) that the applicant will notify the Official Trustee in Bankruptcy of any settlement proposed to be entered into in respect of the Supreme Court proceedings and not enter into any settlement unless consented to by the Official Trustee in Bankruptcy; and
(vi) that the applicant will pay the costs, if any, of any involvement of the Official Trustee in Bankruptcy in the Supreme Court proceedings.
(2) That the second respondent pay the applicant's costs, if not agreed, to be taxed under the Federal Court Rules, 0.62.
The terms of the 2006 undertaking made by Mr Sardul Singh are as follows:
APPLICANT’S UNDERTAKING
The Applicant hereby undertakes that, upon leave being granted herein to continue proceedings in CIV 1264 of 2006 in the Supreme Court ("the ACTION") against the Second Respondent, the Applicant
1. will seek an amendment of the Statement of Claim filed in the ACTION so as to delete the claim for an order that the net proceeds of sale be applied in satisfaction or partial satisfaction of amounts due and owing from the Second Respondent to the Applicant,
2. will not take any further steps in the ACTION without giving 7 days notice to the First Respondent,
3. will not oppose the First Respondent being joined in the ACTION at any time,
4. will hold the property the subject of the ACTION or any monies received in the ACTION for the First Respondent on behalf of the bankrupt estate of the Second Respondent and
5. will notify the First Respondent of any settlement "proposed to be entered into in respect of the ACTION and not enter into any settlement unless consented to by the First Respondent.
The 2007 Orders are simply a repetition of the 2006 undertaking. The result of the two combined is that, from the commencement of the undertaking, the Applicant was bound to undertake the following actions if he wished to continue with the Supreme Court proceedings:
a.Amend the statement of claim to ‘delete’ his claim that the net proceeds of the sale of the property be applied against the debt;
b.Provide 7 days notice to the Trustee in Bankruptcy before taking any further steps;
c.Not oppose the Trustee in Bankruptcy being joined to the proceedings;
d.Hold any property/monies received as a result of the Supreme Court proceedings for the Trustee in Bankruptcy.
e.Notify the Trustee in Bankruptcy of any proposed settlement and not entered into any settlement without the consent of the Trustee in Bankruptcy.
The Applicant appears to have failed to comply with the requirement to notify the Trustee and the requirement to hold any property or monies for the Trustee.
In paragraphs 3 to 5 of his affidavit dated 8 April 2013 the Applicant sets out the substance of his defence:
3. At all material times, I gave Mr Carlose instructions to commence and continue the appeal in CACV 147/11. I left it entirely to Mr Carlose, at his discretion, to deal with the legal and procedural aspects of the appeal and the steps needed to be taken to progress the action to finality.
4. However, I can honestly, sincerely and categorically say that I did not wilfully, intentionally or knowingly breach the order made or undertaking given herein on 6 September 2011. At no time when the various steps were taken to proceed with the appeal, or soon thereafter, was I aware, or made aware, that there was anything improper in what was done by me or on my behalf. Neither did I wilfully, intentionally or knowingly act in defiance or in contempt of the orders of this court.
5. I did not, at any time, intend or seek to gain any monetary benefit solely for myself to the prejudice or detriment of the first respondent or the other unsecured creditors. In fact, I believe that [the] bankrupt was not insolvent when he declared himself a bankrupt in February 2006 or at any time thereafter.
In paras.5 to 11 of his affidavit dated 8 April 2013 Mr Eapon Carlose, the then-solicitor for the Applicant, says:
5. The requirement to give prior notice was confined to the steps taken in the action in CIV 1009/05 up to judgment obtained in the action and did not extend to steps taken in the above appeal from the judgment. This was my view and was also the view of the [Official Trustee] for whose benefit the requirement was imposed. Annexed hereto and marked ‘A’ is a copy of a letter dated 23 January 2011 from the [Official Trustee] to Satwant Kaur, the bankrupt’s wife, by email. At all material times, the bankrupt and his wife shared the same email address.
6. Except for giving me factual instructions to commence the appeal, [the Applicant] entrusted to me, solely and wholly, the tasks and responsibilities for taking each and every procedural step to commence the appeal and each and every step thereafter and complying with each and every requirement, legal, procedural or otherwise, preceding each step. I can categorically state that the scope of the authority conferred on me by [the Applicant] in pursuit of the appeal was limited to taking steps that were legally and procedurally permissible.
Counsel for the applicant in the contempt proceedings made the following submissions concerning the practical impact of the contempt (see: Trans. p22-24):
HIS HONOUR: Yes. Now, tell me, what was the effect of these contempts that you say occurred, in terms of the impact upon your client’s rights or expectations?
MR SANDHU: There was an expectation that there would be an obedience and conformity with the orders of this court. My client has no personal grievance. These applications are brought in the interests of the administration of justice, in the public interest, for the purpose of this court to take account of the behaviour that has taken place and to allow the court to decide whether these parties ought to be punished. My client has nothing to gain financially from this but there is, as your Honour will see, towards the end of those submissions, I have set out a table of inadvertence and a table of omissions with full knowledge. Listed there, mathematically are the failures to carry out what they undertook to do and they’re tabulated in respect of every case. 49 steps in the PEG 168, 34 steps in 211, one in 239. Omissions with full knowledge, one step in the Court of Appeal, PEG211. Failure to inform the Supreme Court matter was raised by the defendant in August 2011. PEG239, four steps in the Court of Appeal. [emphasis added]
Counsel later said, in an exchange with the Bench (see: Trans. p25-26):
HIS HONOUR: In this case, you say that there’s no personal grievance or financial matters that have affected your client as a result of this conduct.
MR SANDHU: No.
HIS HONOUR: So even though this may have been contemptuous conduct, the result of it all has not been to cause any damage to your client?
MR SANDHU: No. I had caused damage to – it has brought the system of justice into disrepute by setting up a conflict of decisions between the Supreme Court and this Federal Magistrates Court and that disrepute has travelled abroad to the courts of Malaysia, where one court has entered judgment and another court has made – has imposed a requirement that you may not take such a judgment. And are we going to not do anything about it? The answer must be that the courts must, as a matter of public interest, prevent parties from behaving in this manner. There have been flagrant disregards of the court’s orders.
When asked about the role of the Attorney-General, the following exchange occurred:
HIS HONOUR: Well then, they [the impacts upon the justice system] would largely be considerations for the Attorney-General, wouldn’t they? He’s the elected representative of the people.
MR SANDHU: They would but he appears not to be interested in taking those up.
HIS HONOUR: Well ‑ ‑ ‑
MR SANDHU: And I can’t prevent that.
HIS HONOUR: ‑ ‑ ‑ he has perhaps made a policy decision.
MR SANDHU: Yes.
HIS HONOUR: About how serious he thinks the circumstances are, in all of the circumstances of the case, and that the Attorney has determined that he will not pursue it.
MR SANDHU: I can’t prevent that, your Honour.
The Law
The power to order security for costs is contained in s.80 of Federal Circuit Court of Australia Act 1999, as follows:
80 Security for costs
(1) This section does not apply to family law or child support proceedings.
Note: See section 117 of the Family Law Act 1975 in relation to family law or child support proceedings.
(2) The Federal Circuit Court of Australia or a Judge may order an applicant in a proceeding in the Federal Circuit Court of Australia to give security for the payment of costs that may be awarded against him or her.
(3) The security is to be of such amount, and given at such time and in such manner and form, as the Federal Circuit Court of Australia or Judge directs.
(4) The Federal Circuit Court of Australia or a Judge may:
(a) reduce or increase the amount of security ordered to be given; and
(b) vary the time at which, or manner or form in which, the security is to be given.
(5) If security, or further security, is not given in accordance with an order under this section, the Federal Circuit Court of Australia or a Judge may order that the proceeding be:
(a) dismissed; or
(b) stayed until security or further security is given in accordance with the first‑mentioned order.
(6) 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 giving of security.
The Federal Circuit Court Rules 2001 (Cth) has the following provisions with respect to security for costs:
21.01 Security for costs
(1) On application by a respondent, the Court may order the applicant to give the security that the Court considers appropriate for the respondent’s costs of the proceeding.
(2) For this rule:
respondent includes an applicant if a cross‑claim is made or the response to the application seeks orders in relation to matters not covered by the applicant.
(3) An application must be made in accordance with the approved form and supported by an affidavit setting out the facts relied on.
Note: For the power of the Court to order an applicant in a proceeding to give security for the payment of costs and for other matters relating to security for costs: see section 80 of the Act in relation to proceedings other than family law or child support proceedings and section 117 of the Family Law Act for family law and child support proceedings.
An order for security for costs is an order which requires the Court to exercise its discretion, see: Alginates (Australia) Pty Ltd v Thomson and Carroll Pty Ltd [1970] VicRp 74; [1970] VR 570, per Smith J who stated:
…though the convenience of having conditions or rules formulated for the exercise of a judicial discretion is obvious, it has often been pointed out that when a general discretion is conferred upon a court its exercise cannot be fettered by such formulations…
However, it is useful to refer the cases with respect to factors that have been considered in the exercise of the discretion. In Re Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd; John Cooke; Bemboka Nominees Pty Ltd; Nardo Pty Ltd and Hikkadwa Pty Ltd [1987] FCA 102; (1987) 16 FCR 497, French J (as he then was), considered the principles to be applied with respect to the question of security for costs, summarising a number of different judicial views as follows:
58. Declining an application for a rule to show cause why a plaintiff should not give security for costs, Alderson B. in Ross v. Jacques [1841] EngR 530; (1841) 8 M & W 135 at 136 said:-
"...the plaintiff is within the jurisdiction of the
Court, and her poverty is no reason why she should give
security for costs. The case of a plaintiff suing in
forma pauperis is an instance of that."See also Cowell v. Taylor (1885) 31 Ch D,34, Le Mesurier v. Fergusson (1903) 20 TLR 32 (C.A.); Re Emery (1923) P 184 at 189, Sir Lindsay Parkinson & Co. Ltd. v. Triplan Ltd. (1973) 2 All ER 273 at 276; Pearce v. Naydler (1977) 1 WLR 899 at 902.
59. It is an important exception to that principle that an impecunious plaintiff who is only a nominal plaintiff, that is to say, who sues for the benefit of another, may be required to give security. - Cowell v. Taylor (supra), Mackie v. Clough (1891) 17 VLR 20, Lloyd v. Hathern Station Brick Co. Ltd. (1901) 85 LT 158, Re Emery (1923) P 184, 189, Semler v. Murphy (1968) Ch 183, Co-Operative Farmers and Graziers District Meat Supply Ltd. v. Smart [1977] VicRp 47; (1977) VR 386 at 387.
60. It is an exception expressly recognised in 0.28 r.3(1)(b).
His Honour then turned to consider the Australia authorities, saying:
71. The substantial weight of authority in Australia has rejected any suggestion that a defendant is entitled to an order for security as of right where the impecuniosity of the company has been established. (For an early view to the contrary see Labor Daily Ltd. v. Keller (1939) 56 WN (NSW) 113).
72. There have however, been conflicting judicial opinions expressed on whether the discretion that does exist should be exercised with a pre-disposition in favour of the making of an order.
…
129. The effect of the authorities is, in my opinion, that the probability or certainty that an order for security for costs will frustrate the plaintiff's claim will not automatically lead to such order being withheld. It is however a factor relevant to the granting of an order and will weigh against it where there is no party standing behind the company who is in a position to provide the necessary security.
His Honour identified the following factors as being relevant to the exercise of the discretion:
a.Whether the Order will frustrate the
plaintiff's claim;b.Merits of the plaintiff's claim;
c.The cause of the plaintiff's impecuniosity;
d.Delay.
The New South Wales Judicial Commission’s Civil Trials Court Bench Book (prepared by Judge P Johnstone of the District Court) goes further, setting out a useful summary at para [2-5930].
I turn now to the consideration of the various factors that appear relevant here.
The impecuniosity of the plaintiff.
The applicant in the contempt proceedings, Mr Man Mahan Singh, did not provide any evidence with respect to his financial circumstances. In submissions the following exchange occurred:
HIS HONOUR: Is there an affidavit of your client deposing to his financial circumstances or what impact an order for security would have on him?
MR SANDHU: No, your Honour, there isn’t but it would have the effect of completely shutting down his ability to bring this before the court.
Mr Carlose provided written submissions bearing on this ground:
4. The bankrupt has to-date refused to pay a single cent towards the judgment debt outstanding since Oct 2004 and, instead, fraudulently disposed of virtually all, if not all, his properties/assets to put them beyond the reach of the applicant. The bankrupt is unemployed…
In the absence of any evidence, I find it unlikely that Mr Man Mahan Singh will be unable to pay the costs of Mr Carlose and Mr Sardul Singh if he is unsuccessful in the contempt application, on the basis that he is a former bankrupt, has provided no evidence of his capacity to pay and makes submissions that he is impecunious.
The merits of the claim
In Re Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd; John Cooke; Bemboka Nominees Pty Ltd; Nardo Pty Ltd and Hikkadwa Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 French J referred to the merits of the claim, saying:
135. It is consistent with authority and the existence of a broadly based discretion that the bona fides and merits of the claim be taken into account where there is material from which some assessment can be made.
136. Where there is a claim prima facie regular and disclosing a cause of action, I see no reason why the Court would, in the absence of evidence, proceed on the basis that the claim was other than bona fide with a reasonable prospect of success.
The merit of the claim is apparent on the face of it, particularly where the allegation of contempt is met by the respondent, Mr Carlose, admitting before the Court to the conduct that is the foundation of the contempt he is charged with.
The role of Mr Sardul Singh in the contempt
On the question of security for costs, it has been argued before me, both on affidavit and in oral submissions, that Mr Sardul Singh ‘left it entirely to Mr Carlose, at his discretion, to deal with the legal and procedural aspects of the appeal and the steps needed to be taken to progress the action to finality’ (per para.3 of his affidavit dated 8 April 2013).
Mr Carlose agrees those submissions, as set out at para.15 herein.
The potential stultification of the claim
The question is whether a security for costs order would have the effect of ‘stultifying’ or stopping Mr Man Mahan Singh from bringing his contempt application against Mr Sardul Singh.
In this regard, he relies on para.89 of Ronowska v Kus (No 2) [2012] NSWSC 817:
[89] … And the following statement by Megarry VC in EMI Records Ltd v Ian Wallace Ltd [1983] Ch 59 at 76; [1982] 2 All ER 980 at 991 is salutary:
"In [contempt] cases, nothing should be done to deter a person from bringing a contempt to the notice of the court; and the risk of having to bear any of the costs will often be a real deterrent: see Morgan v. Carmarthen Corporation [1957] Ch 455, particularly at p 474."
Ronowska’s case is not directly on point as it considered whether costs were a deterrent not in relation to an application for security for costs but with respect to an application for indemnity costs.
I am satisfied, considering paras.27 to 29 above, that Mr Man Mahan Singh is unlikely to have the financial resources to meet the costs of an order for security for costs. The effect of that would be, on his case, to prevent him proceeding with the contempt application. However, it must be remembered that no claim for personal redress or damages would be stultified as Mr Man Mahan Singh alleges no personal loss or damage.
Importantly, the Federal Court in Re Bell Wholesale Company Pty Limited v Gates Export Corporation [1984] FCA 34; 52 ALR 176 stated:
In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts.
The prospects of success of the claim
On the limited evidence before me, both oral and written, it seems quite clear that there is a case to be put that Mr Sardul Singh, via his former lawyer Mr Carlose, breached the Orders and Undertaking and therefore there is a prima facie contempt of Court.
Mr Carlose does not deny that the Undertaking and Orders were complied with. He goes further in his affidavit sworn 3 April 2013, saying:
16. At the outset and as a starting point, I wish to draw the court’s attention to the following,
(a) I do not deny that there has been a failure to comply with the said order and undertaking and will concede that my conduct has not been beyond reproach but say and maintain that I never any time knowingly or intentionally or contumaciously
(i) breached the said order or undertaking or
(ii) acted in contempt of the order or undertaking or integrity and authority of this Honourable Court and
(iii) aided or abetted Sardul as alleged in the alternative…
Whilst mistake could be a defence, recklessness is not a defence. Even staggering incompetence by a solicitor must lead to, at least, a prima facie case on the basis of recklessness.
As for Mr Sardul Singh, the unfortunate client of Mr Carlose, there is nothing to suggest that he did anything but rely on a solicitor (with a Western Australian practicing certificate) to conduct the matter.
The lack of funds of Mr Man Mahan Singh does not appear to have been ‘caused’ by the alleged contempt, see: Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at para.46, 85-101.
Nominal or representative plaintiffs
Given that Mr Man Mahan Singh alleges no personal loss, and is impecunious, he must be considered to be in the position of a nominal or representative plaintiff. That is, he brings the case that would otherwise need to be a prosecution by the Attorney-General as the first law officer of Australia, in circumstances where the Attorney-General does not seek to pursue the action.
Foreign plaintiffs
This factor is not applicable in this particular matter.
Delay
Delay in bringing contempt proceedings
The original Application in a Case, with respect to the contempt allegations, was filed on 20 November 2012. The events and/or actions which give rise to the contempt allegedly occurred between 2007 and the current proceedings. The last such event or action appears to have occurred on 24 January 2012, as set out in Mr Man Mahan Singh’s Statement of Charge filed 20 November 2012, as follows:
21) Sardul Singh in an affidavit dated 24 January 2012 filed in the Malaysian High Court Originating Summons No: 24-151-07/2011 stated in paragraph 5 that he instructed his Malaysian solicitors to take action to effect the transfer of Property No. 2 into Sardul Singh’s name pursuant to the Irrevocable Attorney dated 29 July that he had obtained in CIV 1264/06. This was contrary to order 1(b)(iv) of the 2007 Orders and undertaking (4) of Sardul Singh’s 2006 Undertaking an in excess of his Powers under the Power of Attorney dated 29 July 2010.
Although the Application in a Case was filed only 11 months after the last alleged breach, the breaches have apparently continued over a 4-5 year period. Why Mr Man Mahan Singh waited so long to take action is a question that has not been answered to my satisfaction, and it is a relevant consideration.
Delay in bringing the interim application for security for costs
The original Application in a Case was filed on 20 November 2012. The interlocutory application seeking security for costs was filed on 25 January 2013.
The Orders of Federal Magistrate Lucev (as his Honour then was) made 12 December 2012 required the interlocutory application to be filed no later than 25 January 2013. This Order was complied with.
Public interest
The applicant in the contempt proceedings, Mr Man Mahan Singh, relies heavily on the argument that the cause of action is in the public interest, submitting that:
5. … It raises such public interest legal issues as:
a. Whether a solicitor and his client can ignore express orders and undertaking given by the client with impunity?
b. Whether a solicitor acting within the broad discretion granted to him is personally liable in contempt for not complying with court orders and the terms of his client’s undertaking?
c. Whether a solicitor acting within the broad discretion granted to him is personally liable in contempt where he has acted either wilfully, intentionally, contumaciously, carelessly, negligently or in the dereliction of his duty and the acts are not casual, accidental or unintentional?
d. Whether the proof of breach of orders and undertaking requires any specific mental element?
e. Whether an honest belief, whether formed reasonably or carelessly, that the contemplated act was not unlawful in the sense of constituting a contempt of court, is no defence to proceedings for contempt?
f. Whether a solicitor acting as an agent of his client within the broad discretion granted to him by his client makes the client vicariously liable for his acts?
g. Whether a solicitor acting as an agent of his client is liable in contempt for aiding and abetting his client to disobey or disregard the orders of court and the express undertaking given by his client?
h. Whether a solicitor’s explanation that he had to attend to other matters that were urgent and that it was an inadvertent oversight would excuse the contempt on his part and on the part of his client?
i. Whether if such disobedience goes unpunished, our system of dispute settlement will fall into disrepute and public confidence in the legal system will be diminished?
Counsel for Mr Man Mahan Singh also relied on two cases: Merribee Pastoral v ANZ Banking Group [1998] HCA 41; 193 CLR 502; 155 ALR 1; 72 ALJR 1055 and Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98; (1986) 66 ALR 577; (1986) 60 ALJR 608.
Merribee Pastoral v ANZ Banking Group [1998] HCA 41; 193 CLR 502; 155 ALR 1; 72 ALJR 1055 does not provide any guidance as to how to weigh the public interest.
In Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98; (1986) 66 ALR 577; (1986) 60 ALJR 608, Gibbs C.J., Mason, Wilson and Deane JJ. said:
17. … the underlying rationale of every exercise of the contempt power, namely that it is necessary to uphold and protect the effective administration of justice. Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court's orders will be enforced. As the authors of Borrie and Lowe's Law of Contempt (1983) 2nd ed. say, at p.3:
"If a court lacked the means to enforce its orders,
if its orders could be disobeyed with impunity, not
only would individual litigants suffer, the whole
administration of justice would be brought into
disrepute."See also Canada Metal Co. Ltd v. Canadian Broadcasting Corporation (No. 2) (1975) 48 DLR(3d) 641, at p 669. There is, accordingly, a public interest in the exercise of the contempt power in cases of disobedience to an order, though Lord Diplock suggested in Attorney-General v. Times Newspapers Ltd [1974] AC 273, at p 308, that:
"... no sufficient public interest is served by
punishing the offender if the only person for whose
benefit the order was made chooses not to insist on
its enforcement."The comments of Lord Diplock in Attorney-General v Times Newspapers Ltd [1974] AC 233; [1974] AC 273; [1973] 3 All ER 54; [1973] 3 WLR 298 are very relevant here as there is no evidence of any loss to the litigants, nor the Trustee in bankruptcy, nor any creditor.
Other considerations
Prior Relationship between the parties
In Westralian Gold Mines Ltd v Westralian Minerals & Drilling Pty Ltd (In Liq) (1986) 4 ACLC 167, Wallace, Brinsden and Pidgeon JJ. held that the existence of a prior relationship between the plaintiff and the defendant was relevant to the exercise of the discretion.
In this case the Applicant, Mr Sardul Singh, and the Second Respondent, Mr Man Mahan Singh, are cousins. Mr Carlose is the lawyer of the Applicant. The proceedings between the Applicant and the Second Respondent commenced in this Court on 29 June 2006 when the Applicant filed bankruptcy proceedings against the Second Respondent. The parties have also had significant proceedings in the Western Australian state courts and overseas in Malaysia, where it appears some of the assets of the Second Respondent may be found. In essence this is the last of a long series of cases between two cousins.
Conclusion
In the unusual circumstances of this case I am persuaded that the Second Respondent, Mr Man Mahan Singh, should provide security for the costs of Mr Sardul Singh and Mr Eapon Carlose.
Quantum
In Phoenix Middle East Company WLL v Exhibition Studios Pty Ltd [2011] FMCA 842, Jarrett FM (as his Honour then was) referred to the decision of Cameron FM (as his Honour then was) in the decision of Irrewarra Estate Pty Ltd v A & S Arnott Pty Ltd & Anor [2011] FMCA 188, saying:
10. In the decision of Irrewarra Estate Proprietary Limited v A & S Arnott Proprietary Limited & Anor[2011] FMCA 188, Cameron FM said at paragraph 60:
“Defining an amount which might be secured presents the Court with the choice of its own scale found in schedule 1 of the rules, or the Federal Court scale as the basis of the calculation. As observed earlier in these reasons, it is too early to make that choice. However, rule 21.10 provides that this Court’s scale is to apply unless the Court orders otherwise. As a result, absent any basis at this point to Order that costs be assessed on a different basis, it must be taken that this Court’s scale should apply when determining the quantum of costs to be secured.”
11. Just as in Irrewarra Estate, it is at the moment too early to speculate whether costs – if the Respondent is to secure an order for costs – should be calculated on a party and party basis or on a solicitor and client basis, and whether those costs should be assessed according to Schedule 1 of the Federal Magistrates Courts Rules 2001 or the Federal Court scale.
12. There is no evidence addressed to the issue as to whether it is likely that costs will be awarded, if at all, on the Federal Court scale or the Federal Magistrates Courts scale, which is hardly surprising given the early stage of the litigation. In those circumstances, just as Cameron FM did in Irrewarra Estate, it seems to me appropriate to make an order for security for costs by fixing the quantum according to the scale set by the Federal Magistrates Courts Rules 2001. There seems on the evidence before me, no reason to depart from the prima facie position established by FMCR 21.10.
As in the above cases, no evidence has been put before me as to why the Federal Circuit Court costs scale would not apply to the hearing of the contempt matter. Accordingly, it seems appropriate that I apply the Federal Circuit Court scale, as set out in Schedule 1 of the Federal Circuit Court Rules 2001, to determine the quantum of any security.
I consider that this matter will take no longer than 2 days to hear. I calculate the trial costs as follows:
Description
For Mr Sardul Singh
For Mr Carlose
Item 7 - Preparation for final hearing – 2 day matter
$8,998.00
$8,998.00
Item 13 - Daily hearing fee
$3,988.00
$3,988.00
Item 12 - Advocacy loading
$1,994.00
$1,994.00
TOTAL
$14,980.00
$14,980.00
I make orders accordingly and list the matter for hearing of the contempt application on a date to be fixed in 2014, upon security for costs being paid.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 24 January 2014
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