Thorp v Hudson [No 4]
[2022] WASCA 88
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: THORP -v- HUDSON [No 4] [2022] WASCA 88
CORAM: MURPHY JA
MITCHELL JA
VAUGHAN JA
HEARD: 24 JUNE 2022
DELIVERED : 25 JULY 2022
FILE NO/S: CACV 90 of 2020
BETWEEN: DOUGLAS HENRY ALBERT THORP
Appellant
AND
PAUL DOUGLAS HUDSON
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
File Number : CIV 1515 of 2019
Catchwords:
Appeal - Interlocutory orders - Whether master erred in dismissing appellant's application for security for costs - Whether master erred in failing to order that respondent answer interrogatories - Whether master erred in failing to order a suspension order in respect of costs order made against the appellant
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 15
Result:
Application for extension of time refused
Application for leave to appeal dismissed
Appeal dismissed
Representation:
Counsel:
| Appellant | : | In person |
| Respondent | : | No appearance |
Solicitors:
| Appellant | : | In person |
| Respondent | : | No appearance |
Case(s) referred to in decision(s):
House v The King [1936] HCA 40; (1936) 55 CLR 449
Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132
National Australia Bank Ltd v Thorp [2019] WASC 394
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
JUDGMENT OF THE COURT:
Overview
This is an application for leave to appeal, requiring an extension of time, against three interlocutory orders made by Sanderson M on 18 June 2020.[1] The orders dismissed an application by the appellant, Mr Thorp, against the respondent, Mr Hudson,[2] for:
1.security for costs in respect of Mr Hudson's counterclaim;
2.an order that Mr Hudson answer interrogatories administered (without leave) by a notice dated 20 May 2020;[3] and
3.a suspension order under s 15 of the Civil Judgments Enforcement Act 2004 (WA) in respect of a costs order made against Mr Thorp in favour of Mr Hudson on 10 December 2019.
[1] BAB 1 - 2.
[2] See Mr Thorp's chamber summons dated 3 June 2020 BAB 20 - 21.
[3] BAB 16 - 19.
This appeal was heard at the same time as appeal CACV/5/2020. Appeal CACV/5/2020 also involves Mr Thorp and Mr Hudson. Both appeals concern action CIV/1515/2019; and the suspension order was sought as to a costs order that is the subject of appeal CACV/5/2020. These reasons should be read together with the reasons disposing of appeal CACV/5/2020 which are to be published at the same time as these reasons.
For the reasons that follow the application for leave to appeal is without merit. In the circumstances the extension of time should be refused and the application for leave to appeal should be dismissed. As a result the appeal will be dismissed.
The proceedings before the master
Mr Thorp and Mr Hudson are apparently uncle and nephew.
The master has described the proceedings below as having a tortured history.[4] Relevantly:
1.Mr Thorp and Mr Hudson were registered proprietors as tenants in common of a property in Alexandra Road, East Fremantle (Property).
2.The Property was tenanted (apparently to the mother/grandmother and step-father/step-grandfather of Mr Thorp and Mr Hudson respectively).
3.The Property was mortgaged to National Australia Bank Ltd (Bank).
4.The Bank sold the Property following a possession order after default under the mortgage.
5.The proceedings below were commenced by the Bank, by originating summons, to remove certain encumbrances lodged in respect of Mr Thorp's interest in the Property.
6.Eventually, following arrangements with certain of the encumbrancers and otherwise by order of the court, a surplus of $345,581.11 on settlement of the sale of the Property was paid into court.
[4] National Australia Bank Ltd v Thorp [2019] WASC 394 [1].
The master determined that one-half of the surplus was the sole property of Mr Hudson.[5] On 10 December 2019 the master made a declaration accordingly. At the same time the master made orders that Mr Hudson's share of the surplus be paid out of court to Mr Hudson. Mr Thorp was also ordered to pay Mr Hudson's costs of the proceedings up to and including 5 November 2019 together with various associated costs. In an affidavit sworn on 3 June 2020 Mr Thorp said that the costs had been estimated at $10,382.90.[6] In fact the costs were taxed and allowed in an amount of $13,445.33.[7] The declaration and its associated orders are the subject of appeal CACV/5/2020 - although the subsequent refusal to suspend the enforcement of the costs order is one of the matters complained of in this appeal.
[5] National Australia Bank Ltd v Thorp [19].
[6] Affidavit of D H A Thorp sworn 3 June 2020 par 25 Combined GAB 60.
[7] Certificate of taxation of McDonald R made 11 August 2020.
Mr Thorp and Mr Hudson have used the proceedings to ventilate issues between themselves concerning the Property.
On 20 February 2020, purportedly pursuant to O 19 r 8 of the Rules of the Supreme Court 1971 (WA) (RSC), Mr Thorp issued a statement of claim claiming relief against Mr Hudson (SOC).[8] Mr Thorp claimed that:
1.Mr Hudson was to manage the Property including the rental arrangements (SOC pars 8, 11 - 12).
2.Mr Hudson failed to collect and review rents and outgoings as payable from time to time and failed to pay the money due under the mortgage (SOC par 14) which failure was 'in contumelious disregard' of Mr Hudson's duties and Mr Thorp's rights (SOC par 18).
3.The Bank obtained judgment against Mr Thorp and Mr Hudson under the mortgage as a result of the mortgage being in default (SOC pars 15 - 17).
[8] BAB 3 - 6.
Mr Thorp seeks damages and interest.
Mr Hudson filed a defence and counterclaim dated 6 May 2020 (DAC).[9] Among other things, Mr Hudson admits that he has not collected rent and has not made payment under the mortgage or in respect of rates and taxes, but denies that he had obligations to take such steps; Mr Hudson says that Mr Thorp also did not collect the rent and did not make the necessary payments (DAC par 11). Mr Hudson denies that the allegations pleaded by Mr Thorp provide a basis for relief (DAC par 12). Mr Hudson also pleads a limitation defence (DAC par 13).
[9] BAB 7 - 15.
By counterclaim, Mr Hudson pleads that from about 1998 he has paid a disproportionate share of borrowing repayments, rates and taxes and other expenditures (including repairs and maintenance) in respect of the Property (DAC par 16). Mr Hudson says that he and Mr Thorp were each obliged to meet one-half of the expenditures (DAC par 20, 22). Mr Hudson seeks reimbursement to the extent of one-half of the amount by which Mr Hudson's expenditure exceeded Mr Thorp's expenditure (DAC pars 21, 22).
Mr Thorp applied by chamber summons dated 3 June 2020 for orders that included orders of the type described in [1] above.[10]
[10] BAB 20 - 21.
The master refused the application for those orders on 18 June 2020,[11] giving brief oral reasons for doing so.[12] In substance the master concluded:
1.He was not satisfied that Mr Hudson should be ordered to provide security for costs on the counterclaim. This was for two reasons:
(a)First, the issues raised by Mr Thorp and Mr Hudson, in the master's view, essentially mirrored each other.
(b)Second, the master was not satisfied that the fact that Mr Hudson was 'trapped ' (due, it may be inferred, to the COVID-19 pandemic) was a sufficient reason under O 25 RSC to order security for costs.
2.In the context of the proceedings an order for interrogatories was not warranted.
3.There was no basis on which the master could make the suspension order in respect of enforcement of the costs order; the circumstances did not warrant such an order.
[11] BAB 1 - 2.
[12] ts 7 - 8 (18 June 2020).
Grounds of appeal and extension of time
The application for leave to appeal has been referred to the hearing of the appeal.[13]
[13] Order of Murphy JA made 18 September 2020 WAB 7.
The appellant's case did not develop why the interests of justice required that there be leave to appeal.
The proposed grounds of appeal are that:
1.As to each order, the master erred in law by failing to provide reasons for disallowing the application.
2.As to the dismissal of the application for security for costs, the master erred in law in disallowing the application in that:
(a)Mr Hudson declined to provide security for costs;
(b)Mr Hudson failed to demonstrate an ability to meet a prospective judgment; and
(c)Mr Thorp's case had substance.
3.As to the dismissal of the application for an order to answer the interrogatories, the proposed interrogatories undoubtedly assisted in pursuing the case on behalf of Mr Thorp and there was no finding that the interrogatories were inappropriate or not relevant.
4.As to the dismissal of the suspension order, the master made an unspecified error of law in dismissing the application in the circumstances.
Mr Thorp's application for an extension of time in which to appeal has also been referred to the appeal hearing.[14]
[14] Order of Mitchell JA made 18 August 2020 par 5 WAB 4.
Any application for leave to appeal should have been filed and served by 2 July 2020. Mr Thorp did not file his appeal notice until 4 August 2020, ie over a month late. In support of the extension Mr Thorp said no more than that he was not aware of the expiry of the time for commencing an appeal until on or about 6 July 2020. At the time Mr Thorp was represented by a solicitor.[15]
[15] Affidavit of D H A Thorp sworn 27 July 2020 pars 3, 4 WAB 3.
Leave to appeal
The principles that apply on an application for leave to appeal in respect of an interlocutory order are well established. For present purposes it is sufficient to repeat what was said in this court in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd:
Where leave to appeal is necessary, leave may be granted whenever the interests of justice require it. The principles on which this court considers whether to grant leave to appeal are well-established:
1.The requirement for leave is no mere technicality or procedural nicety; it serves an important function in the administration of justice by discouraging unnecessary interlocutory appeals.
2.Appellate courts exercise particular caution (sometime referred to a 'special restraint') in reviewing interlocutory decisions on matters of practice and procedure.
3.There is a particular need to refrain from interfering with interlocutory procedural decisions made by judges managing cases in the Commercial and Managed Cases List.
4.Ordinarily, while not being rigid or exhaustive criteria, the considerations to be taken into account by this court upon an exercise of the discretion to grant or refuse leave to appeal are:
(a)first, whether the decision was wrong or, at the least, attended with sufficient doubt to warrant its being reconsidered; and
(b)second, whether substantial injustice would result if the decision is left unreversed, supposing the decision to be wrong. However, the requirement to show substantial injustice is no more than a guideline for the exercise of what is a broad discretion.
The two considerations bear on each other. The degree of doubt that is sufficient in one case may be different from that required in another. It will be affected by the extent of the risk of substantial injustice if leave were refused, supposing the decision to be wrong.
5.The requirement of 'substantial injustice' is not satisfied by interference with procedural rights or procedural disadvantage; it looks to whether substantive rights are adversely affected.
6.Where substantive rights are not effectively determined, an appellate court should be reluctant to interfere.
These considerations provide general guidance only. Thus, while the question of leave is normally considered within the rubric of these organising principles, there will be cases raising special considerations. The touchstone remains the interests of justice. The nature and risk of the injustice said to result from the order appealed from will generally be a material consideration. There is a far greater risk of injustice where an interlocutory decision determines a substantive right. In such a case leave will be granted more readily. By contrast, as is mentioned in the authorities establishing the principles set out at [117] above, a 'tight rein' must be kept on appeals involving interlocutory decisions on matters of practice and procedure.[16] (original emphasis)
[16] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117] - [118].
The interests of justice do not warrant leave to appeal in the present case. Leave to appeal should be refused for the following three reasons.
First, for the reasons we develop at [25] - [38] below, Mr Thorp has not established that the master's decision to refuse the various orders is wrong in the sense of being infected by discretionary error. Nor is the master's decision attended by sufficient doubt to warrant reconsideration.
Second, this is not a case where substantial injustice will result if the master's decision is left unreversed even assuming that the master was wrong to refuse the orders as sought. Mr Thorp's substantive rights are not adversely affected by the dismissal of the application for the various orders. Refusal of the order for interrogatories is quintessentially concerned with a procedural matter. There is no reason to consider that Mr Thorp's conduct of the proceedings will be unduly hampered or impaired by the absence of answers to the proposed interrogatories. There is no 'right' to security for costs. Further, even assuming that Mr Thorp succeeds in defending Mr Hudson's counterclaim and is awarded costs, Mr Thorp will only be disadvantaged by the master's order if Mr Hudson does not meet his costs liability. Whether this will happen is, on the limited evidence before the court, more a matter of speculation than real likelihood. In any event any failure to pay will be partially ameliorated so far as Mr Thorp has the $13,445.33 costs liability to Mr Hudson. To the extent that Mr Thorp is exposed to enforcement action in relation to his costs liability he has not suggested that this will adversely affect any existing substantive rights.
Third, each of the orders as refused by the master concerned matters of practice or procedure. Moreover, as to the orders refusing security for costs and answers to interrogatories, they were orders made by Sanderson M in the context of the master exercising ongoing case management oversight of the proceedings between Mr Thorp and Mr Hudson. There is a particular need for this court to refrain from appellate interference in relation to such orders. Otherwise, by the inevitable fragmentation suffered by litigation at first instance pending an unmeritorious interlocutory appeal, this court will increase costs and the time for determination of disputes in a manner that is incompatible with the goal and objects in O 1 rr 4A and 4B of the RSC.
Mr Thorp's application for leave to appeal should be refused.
The merits of the proposed grounds of appeal
Ground 1 is misconceived. It is not the case that the master failed to give any reasons for refusing Mr Thorp's application for security for costs, answers to interrogatories and a suspension order. The application was first before the master on 11 June 2020. The master then adjourned the application to 18 June 2020. On 18 June 2020 the master informed the parties that he had taken the opportunity to consider the matter further and then proceeded to give brief oral reasons dealing with the orders sought in Mr Thorp's chamber summons.[17]
[17] ts 7 - 8.
The master's oral reasons, although brief, were legally adequate given the nature of the application and the relatively simple issues that arose for determination. The master's reasons disclosed the intellectual process that led to his decision, doing so with sufficient certainty to inform Mr Thorp why the orders had been refused and to enable an appellate court to determine whether the decision involved appellable error. In the context of the application, and the evidentiary materials that arose, the master's reasons, while not lengthy, engaged with the central issue on each order sought and explained why Mr Thorp's application failed.
Grounds 2 - 4 (as described in [16] above) do not identify any discretionary error that could ground a successful appeal against a decision of the kind made by the master.
Mr Thorp's appeal is brought against the master's refusal to make various discretionary orders. Accordingly, in terms of appellate intervention, the principles in House v The King[18] apply. It is not enough that this court would have taken a different course if it had been in the position of the master. Mr Thorp must establish discretionary error. For example, it might be shown that the master acted on a wrong principle, had regard to extraneous or irrelevant matters, mistook the facts or did not take into account a material consideration. Alternatively, if on the facts the master's refusal of a particular order is unreasonable or plainly unjust, the court may infer that there has been a failure to exercise the discretion properly.
[18] House v The King [1936] HCA 40; (1936) 55 CLR 449, 504 - 505.
With the exception of ground 1 (ie the asserted failure to provide any reasons for refusing the orders) the proposed grounds of appeal do not seek to establish discretionary error in accordance with the principles in House v The King. No such discretionary error is identified. Rather, the grounds when read with Mr Thorp's written submissions seek to reargue the application for the various orders. Mr Thorp effectively contends that the master was in error as on the facts the master should have made the orders for security for costs, answers to interrogatories and suspension of enforcement of the costs order as were sought in the chamber summons dated 3 June 2020.
In contending, by his proposed grounds of appeal and supporting submissions, that the merits of the application were such that the master should have ordered security for costs, answers to interrogatories and suspension of enforcement of the costs order, Mr Thorp does not submit that this was the only disposition which was reasonably open on the evidence. Mr Thorp only contends that the merits are such that his application should have been acceded to; he does not contend that the refusal of the orders was unreasonable or plainly unjust. In any event, for the following reasons, it was well open to the master to refuse to make the orders sought by Mr Thorp.
As to the application for security for costs, it may be accepted that Mr Hudson was ordinarily resident outside of Western Australia. That enlivens the jurisdiction to order security for costs. However, it is not of itself a sufficient ground for making an order. Whether or not an order will be made depends on the circumstances of the case.[19] There was a paucity of evidence as to Mr Hudson's ability to meet an adverse costs order in the event that the counterclaim was unsuccessful. Mr Thorp primarily relied on Mr Hudson having not positively demonstrated an ability to meet a prospective judgment despite a request that he do so.[20] That contention ignores the fact that Mr Thorp bore the relevant onus in establishing that the circumstances warranted an order for security for costs. Importantly, as was integral to the master's conclusion, there was considerable overlap between Mr Thorp's action and Mr Hudson's counterclaim. This was not a case where Mr Hudson counterclaimed in respect of a claim not arising out of the claim made against him.[21] It is relevant to the exercise of the discretion as to security for costs that a counterclaim arises out of the same facts as the action. Given the broad and unfettered nature of the discretion to order security for costs, the overlap between the action and the counterclaim provided ample justification for the master's refusal to order security.
[19] Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 [58].
[20] Affidavit of D H A Thorp sworn 3 June 2020 pars 2, 6 Combined GAB 57.
[21] Compare O 25 r 4 RSC.
The application for an order to compel Mr Hudson to answer interrogatories was ambitious. The interrogatories were administered without leave in breach of O 27 r 1(1) RSC. That alone was reason for the master to refuse the order sought by Mr Thorp. In addition, many of the proposed interrogatories raised matters which could have been adequately dealt with by a request for further and better particulars of Mr Hudson's defence and counterclaim.[22] Otherwise the relevance of some of the interrogatories is questionable at best.[23]
[22] See Mr Thorp's interrogatories for Mr Hudson dated 20 May 2020 pars 1, 3 - 8 BAB 17 - 19.
[23] See Mr Thorp's interrogatories for Mr Hudson dated 20 May 2020 pars 2 - 3 BAB 17 - 18.
However, the master refused the order for answers to interrogatories based on case management principles. It was well open to the master to do so. It is not obvious that ordering Mr Hudson to answer the interrogatories prepared on behalf of Mr Thorp would produce any savings in time or costs. To the contrary, for what is a relatively simple case as to the management of a residential property, it was well open to the master to conclude - as he did - that the interrogatories in respect of which Mr Thorp sought answers were disproportionate to the matters in issue.
The application for a suspension order required Mr Thorp to establish 'special circumstances' that justified the making of such an order.[24] The circumstances relied on were those specified in Mr Thorp's affidavit sworn 3 June 2020.[25] In substance Mr Thorp said that:
1.He did not have any available assets excepting his claim against Mr Hudson and a claim against the solicitors for the Bank for a refund of fees.
2.His income was a fortnightly pension of $829 which he supplemented with part time work for which he received $120 a fortnight.
3.The reason for his present lack of assets and income was substantially Mr Hudson's failure to collect rent in relation to the Property and the consequent mortgagee sale.
[24] Civil Judgments Enforcement Act s 15(3).
[25] Affidavit of D H A Thorp sworn 3 June 2020 pars 25 - 30 Combined GAB 60.
It is noteworthy that Mr Thorp did not provide a full and frank account of his fortnightly expenditures such that it could be concluded that he was without means to meet the costs order on an instalment basis. Moreover, Mr Thorp's attribution of his financial predicament to Mr Hudson was no more than assertion. It was not a matter on which weight could be placed in assessing whether Mr Thorp had established the requisite special circumstances to justify a suspension order.
Importantly, there was no suggestion that enforcement of the costs order against Mr Thorp would stultify Mr Thorp's action against Mr Hudson. That omission was material. Mr Thorp was represented by a solicitor in the proceedings. It was not suggested that Mr Thorp's ability to continue to fund his legal representation and thereby pursue the proceedings would be put in jeopardy by enforcement of the costs order proceeding in the usual way. Nor did Mr Thorp contend that he would suffer any other kind of material prejudice if the costs order was enforced in the usual way.
In the circumstances it was open to the master to conclude - as the master evidently did - that Mr Thorp had not established special circumstances that justified a suspension order in relation to enforcement of the costs order.
Grounds 2 - 4 are without merit.
Conclusion and orders
The application for an extension of time should be refused given the lack of merit in Mr Thorp's application for leave to appeal. The application for leave to appeal should be dismissed. As a result the appeal will be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MH
Research Associate To The Honourable Justice Vaughan
25 JULY 2022
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