Topez v Adnyamathanha Traditional Lands Association (Aboriginal Corp) RNTBC - [2018] SADC 20

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
TOPEZ v ADNYAMATHANHA TRADITIONAL LANDS ASSOCIATION (ABORIGINAL CORP) RNTBC & ORS
[2018] SADC 20
Judgment of His Honour Judge Dart
9 March 2018
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS
The appellant commenced proceedings against the respondents in defamation - the appellant is a bankrupt - respondents made application for security for costs - Master granted the order for security for costs - review of the Master's exercise of discretion.
Held, dismissing the appeal:
1. No error in the exercise of the Master's discretion has been established.
Bankruptcy Act 1966 (Cth) s 116(2)(g), referred to.
Adelaide (SA Pools & Spa) Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60, applied.
Adnyamathanha Traditional Lands Association & Ors v Topez (formerly Nanschild) [2016] SADC 69; Finch v The Heat Group Pty Ltd (No 5) [2016] FCA 191; Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1985) 1 NSWLR 114; Topez v Coulthard [2017] SAMC 1; Trility Pty Ltd v Ancon Drilling Pty Ltd [2013] VSC 77, considered.

TOPEZ v ADNYAMATHANHA TRADITIONAL LANDS ASSOCIATION (ABORIGINAL CORP) RNTBC & ORS
[2018] SADC 20
JUDGE DART:

These reasons are in relation to an appeal from a decision of a District Court Master who ordered that the appellant (plaintiff) provide security for the costs of the respondents (defendants) in the amount of $75,000.
For the reasons that follow, the appeal is dismissed.
Background
The underlying dispute between the appellant and the respondents relates to her claim to be of Adnyamathanha heritage. After the commencement of the proceedings, the appellant was made bankrupt by reason of an order made in the Federal Circuit Court of Australia on 19 December 2016.
The effect of the sequestration order was that the appellant’s causes of action vested in her bankruptcy trustee. There are exceptions to vesting in the Bankruptcy Act.[1] One of the exceptions is defamation. These proceedings originally included a broad range of claims. By the Second Statement of Claim[2] (“SSOC") the action is now simply one in defamation in respect of publications made between March 2014 and October 2016.
[1] Bankruptcy Act 1966 (Cth), s 116(2)(g).
[2] Filed 9 March 2017, FDN17.
The bankruptcy occurred as a consequence of previous litigation between the parties. The respondents were the plaintiffs in earlier proceedings in this Court, suing the appellant for defamation. The matter resolved prior to trial and the parties entered into a deed of settlement.[3]
[3] Adnyamathanha Traditional Lands Association & Ors v Topez(formerly Nanschild) [2016] SADC 69.
The terms of the deed of settlement included a letter of apology from the appellant and a consent by her to judgment in the sum of $200,000 inclusive of interest and costs. The deed provided that the consent judgment would not be enforced, provided the appellant paid the sum of $15,000 in staggered payments over a period of two years. In the result, the appellant did not make any of the payments and, pursuant to the terms of the settlement, the full amount of the judgment became due. Its enforcement led to the bankruptcy.
Separately, the appellant pursued a defamation claim against one of the respondents to this appeal. That claim was dismissed in the Magistrate's Court in early 2017.[4] The Master accepted that the publications dealt with by the Magistrate were not the same publications in issue in these proceedings. There were also related proceedings commenced by the appellant in the Supreme Court of Queensland. That court permanently stayed the proceedings.
[4] Topez v Coulthard [2017] SAMC 1.
In the first half of 2017 the applicant pursued a review of the sequestration order made on 19 December 2016. The application for review was dismissed by Judge Brown of the Federal Circuit Court on 5 May 2017.
It can be seen that the parties have, unfortunately, a lengthy history of litigation; particularly defamation proceedings. All appear to turn on the issue of whether or not the appellant is an Adnyamathanha woman.
The application before the Master seeking security for costs invoked the jurisdiction provided by Rule 194, which provides as follows:
194—Security for costs
(1)The Court may order a plaintiff to provide security for costs if—
(a)the action is brought in a representative capacity and the plaintiff is insolvent or would have insufficient resources to meet an order for costs if the action were to prove to be unsuccessful; or
(b)the plaintiff is ordinarily resident outside Australia; or
(c)there are reasonable grounds to suspect that the action may have been brought for an ulterior purpose; or
(d)the order is authorised by statute; or
(e)the order is necessary in the interests of justice.
The application was advanced on the basis that the interest of justice required the making of an order for security. The Master considered the usual criteria in respect of security for costs.
A factor that seemed to be prominent in the Master’s reasoning was set out in paragraph 63 of his judgment, where he said:[5]
The non-payment of a prior judgment and of existing costs orders seems to me to be a significant factor in favour of the defendants’ application that it is necessary in the interests of justice that an order for security for costs be made. The submissions for the defendant (FDN 37) emphasise that the bankruptcy of the plaintiff is in fact the result of earlier litigation in this court (paragraph 2.5 of the submissions). The plaintiff’s refusal to pay $15,000 in satisfaction of the terms of the compromise resulted in a judgment for $200,000 plus $5,000 for costs in those proceedings.
[5] Reasons for decision (No. 3) of District Court Master Keith, 12 July 2017 (No 21 of 2017).
Nature of the appeal
The appeal proceeds pursuant to District Court Rule 286, which provides as follows:
286—Hearing of appeal
(1)An appeal is to be by way of rehearing (unless the law under which the appeal is brought provides to the contrary).
(2)Subject to any limitation on its powers arising apart from these Rules, the Court may determine an appeal as the justice of the case requires despite the failure of parties to the appeal to raise relevant grounds of appeal, or to state grounds of appeal appropriately, in the notice of appeal.
(3)Subject to any limitation on its powers arising apart from these Rules, the Court may—
(a)draw inferences of fact from evidence taken at the original hearing and, in its discretion, hear further evidence on a question of fact;
(b)amend or set aside the judgment subject to the appeal and give any judgment that the justice of the case requires;
(c)remit the case or part of the case for rehearing or reconsideration;
(d)make orders for the costs of the appeal.
As can be seen, the appeal is by way of a re-hearing and a re-consideration of evidence before the Court on the original hearing. It is an appeal from the exercise of a judicial discretion on an interlocutory application.
The approach to appeals from discretionary decisions was considered by Doyle J in Adelaide (SA Pools & Spa) Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd where his Honour said:[6]
Before addressing the appellants’ submissions in relation to these issues, it is relevant to observe that the decision of the Master was a discretionary one, such that the appeal is subject to the principles in House v The King. Accordingly, the appellant must establish that the Master acted on a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts or did not take into account some material consideration. Alternatively, the appellant must establish that the result embodied in the orders made is, upon the facts, unreasonable or plainly unjust, such that it can be inferred that there has been a failure to properly exercise the relevant discretion despite the precise nature or source of the error not being identifiable.
[6] [2016] SASC 60.
Thus, it is for the appellant to show a failure in the exercise of the Master’s discretion if she is to succeed on the appeal.
Grounds of Appeal
The grounds of appeal are expressed quite widely. They are:
The Master erred:
3.1.    in law in:
3.1.1. admitting paragraphs 22 and 23 of the Third Affidavit of Mr McCabe (FDN22);
3.1.2. attaching weight to the fact that the plaintiff had not offered to pay earlier costs orders (R [65]-[66]) when she is, and has been an undischarged bankrupt from 19 December 2016 and failed to give weight to the fact of her bankruptcy upon the obligation to meet previous financial orders;
3.1.3. attaching undue weight to the plaintiff’s previous orders to pay costs (R [63]-[66]);
3.1.4. finding that the defendants are not to be held responsible for all the delay since the issue of the application (FDN 5) and, in particular, that they are not to be held responsible for the forensic decision not to prosecute FDN 5 after it was issued and until 29 June 2017 (R [90]-[92];
3.1.5. that he misapplied Finch v Heat Group Pty Ltd (No. 5) [2016] FCA 191 (R [69];
3.1.6. that he misapplied Christou v Stanton Partners Pty Ltd [2011] WASCA 176 and Trility Pty Ltd v Ancon Drilling Pty Ltd [2013] VSC 577 (R [95]-[98]).
3.2.    in mixed fact and law in finding that:
3.2.1. the defendants will effectively be put to the costs of establishing a defence of justification or otherwise challenging the plaintiff’s claims for damages for defamation on grounds that have previously been the subject of court proceedings (R [76]); and
3.2.2. the defendants are facing a further action in which the plaintiff seeks to vindicate her reputation that has effectively been dealt with in other proceedings;
when:
(1)the publications the subject of this action, are not publications for which previous proceedings have been taken and no ruling of a court has been given and does not raise res judicata issue estoppel judicata or issue estoppel (R [73]);
(2)the pleaded claim is not a retrial of the same cause of action or involve a retrial of precisely the same issues (R [76]);
(3)the imputations arising from the publications in the second statement of claim and the imputations arising from the publications the subject of the decision of Magistrate Adair in the Adelaide Magistrates Court are different imputations [79].
3.2.3. the defendants’ actions cannot (and impliedly, should not) be categorised as tactical and used to oppress the plaintiff (R [93]-[94]).
3.3.    in fact in finding that there was no lengthy delay (R [92]).
the exercise of his discretion and his discretion miscarried because because [sic] of the errors identified in paragraphs 3.1 – 3.3 above.
In the result, the appeal proceeded on three principal issues. The first was how the Master should have dealt with the impecuniosity of the appellant. It can be accepted that impecuniosity of itself has not generally been regarded as a sufficient reason to make an order for security for costs. Notwithstanding that, the reason courts direct plaintiffs to provide security for costs is to avoid the risk that a successful defendant will be significantly out of pocket because of an inability to recover costs awarded by the court. A plaintiff’s impecuniosity heightens that risk and creates a requirement to consider whether security for costs should be ordered. The issue the Court now considers is the “interests of justice”. Older authorities deal with special reasons, which was a different, and more difficult, test for a defendant to satisfy.
The first complaint of the appellant is that the Master attached undue weight to the appellant’s non-payment of previous judgments and costs orders. It is said that the Master did not distinguish between the respective defendants when attaching such weight, given that the previous costs orders were not in favour of all of the defendants.
Secondly, it is said that the Master failed to have adequate regard to the consequences of the appellant’s bankruptcy. The appellant submitted, because the previous costs orders and judgments are provable debts, the appellant will be released from any obligation to make payment of those debts upon her discharge from bankruptcy. Thus, it is said there will be no outstanding costs orders in respect of earlier proceedings.
The appellant submits that the Master misapplied the authority of Finch v The Heat Group Pty Ltd (No 5).[7]In that case Jessup J said:[8]
My conclusion that the respondents need an order for security to protect them from the prospect that, if they succeed, their costs will remain unpaid depends not on the proven impecuniosity of the applicant but on her record of intransigence in the payment of costs ordered against her on previous occasions. At the same time, I do not find that an order for security, in a sum which reflects the usual conservative approach taken by the court in such matters, would stultify the applicant’s litigation.
[7] [2016] FCA 191.
[8] Finch v The Heat Group Pty Ltd (No 5) [2016] FCA 191 at [112].
I am not satisfied that the Master misapplied the authority or gave undue weight to the factual background. It was appropriate for the Master to have regard to the fact that previous costs orders and judgments had not been paid. It is merely evidence of a history of non-payment. It points to a heightened risk for the respondents in these proceedings. The fact that the effect of bankruptcy means that, upon discharge, the amounts would no longer be owing by the appellant to the respondents is a legal nicety. It does not displace the fact that the relevant respondents will likely not receive payment of the judgment amount or costs. In my view the Master did not fall in to error in having regard to that fact, or in his application of the Finch judgment.
The second issue on appeal was the question of delay. Delay is a relevant consideration on an application for security for costs. Delay will not necessarily be fatal.[9] The reason why delay is relevant is because a plaintiff, in getting proceedings up, will incur expense which may be irrecoverable in the event that a security for costs order is made and not able to be satisfied. It is not fair to a plaintiff to allow that to occur.
[9] Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1985) 1 NSWLR 114.
The facts of this matter are somewhat different to the usual case. The application was made early in the proceedings. It was an omnibus application which sought orders staying or dismissing the proceedings, as well as orders for security for costs. The security for costs aspect was not prosecuted for nearly six months. The appellant was aware of the application.
During the relevant period the plaintiff was a bankrupt. A number of the claims which the appellant sought to prosecute were no longer vested in her. Separately, there was her challenge to the making of the sequestration order. The fate and form of these proceedings was unclear and did not become clear until May 2017. The other parts of the application to strike out, dismiss or stay the proceedings were prosecuted first. That, however, would appear to be a logical approach to adopt. If the proceedings were struck out or stayed, there would have been no need for the Court to consider whether to order security for costs.
The appellant says that the respondents undertook a deliberate forensic decision to delay prosecution of the application. That allegation is not made out. I am not satisfied that the Master erred in his consideration of the issue of delay. The Master carefully recited the issues for the delay between the filing of the application and its hearing. His Honour considered that the delay was in part caused by the appellant.[10]
[10] Reasons for decision (No. 3) of District Court Master Keith, 12 July 2017 (No 21 of 2017), at [92].
In respect of delay it is also said the Master misapplied the decision of Trility Pty Ltd v Ancon Drilling Pty Ltd.[11] In my opinion, he did not do so. The principal point of Trility is that it is not appropriate to keep the threat of an application for security for costs hanging over a plaintiff. The facts in that case were significantly different to the present situation, in that the defendants waited several years before bringing an application. Unsurprisingly, the Court found that was inappropriate.
[11] [2013] VSC 77.
The third issue advanced was that the Master erred in concluding that the respondents would be put to the cost to establish a defence of justification on the grounds it had previously been subject to court proceedings dealt with in other proceedings. This was said to be an error because it was accepted that the relevant publications were publications in respect of which there has been no previous court ruling. However, in my opinion that is not a fair characterisation of what the Master said. The Master’s position was as follows: [12]
I emphasise that it is not the submission for the defendants and I do not consider that the current District Court proceedings represent a retrial of the same cause of action or involve a retrial of precisely the same issue. In my view, it is relevant to the consideration of whether an order for security for costs is necessary in the interests of justice that the fundamental issue between the parties has been ventilated in other proceedings. It is not a ground for an estoppel against the plaintiff from conducting the proceedings, however it is, in my view, a ground for a finding that it is necessary in the interests of justice to provide some protection to the defendants against the costs of the proceedings. In my view, this follows because the defendants will effectively be put to the costs of establishing a defence of justification or otherwise challenging the plaintiff’s claim for damages for defamation on grounds that have previously been the subject of court proceedings. I do not need to refer to the pleaded defence to reach this conclusion. The Court can infer that the response to the claim will necessarily involve a dispute as to the heritage of the plaintiff.
[12] Reasons for decision (No. 3) of District Court Master Keith, 12 July 2017 (No 21 of 2017), at [76].
The Master was simply pointing out that the issue of the appellant’s heritage had been litigated between the parties previously. He regarded the fact that it was again to be traversed as a relevant consideration.
The Master’s comments need to be viewed against the unfortunate history of litigation between the parties. I regard the consideration as appropriate. However, if I am wrong about that, in my opinion a consideration of the other relevant factors leads to the inevitable conclusion that security for costs should be awarded. Thus, if I had to exercise the discretion afresh, that is the decision I would make.
The appeal is dismissed. I will hear the parties on the appropriate orders to make.