Upton v Merit Lining Systems Pty Ltd - [2000] WADC 182

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: UPTON -v- MERIT LINING SYSTEMS PTY LTD & ANOR [2000] WADC 182

CORAM: WISBEY DCJ

HEARD: 17 APRIL 2000

DELIVERED : 19 JULY 2000

FILE NO/S: CIV 3452 of 1999

BETWEEN: ROBERT UPTON
Plaintiff
AND
MERIT LINING SYSTEMS PTY LTD
First Defendant
BUNBURY WATER BOARD
Second Defendant

Catchwords:

Practice and procedure - Application by defendants for security for costs pursuant to O 25 Rules of the Supreme Court - Plaintiff resident outside Australia - No assets in Australia - Defendants insured in respect of plaintiff's claim

Legislation:

Occupational Safety and Health Act 1984

Rules of the Supreme Court

Result:

Security ordered in the sum of $10,000

Representation:

Counsel:

Plaintiff:     Mr R Cywici
First Defendant             :     Mr Ablong
Second Defendant         :     Mr Robson

Solicitors:

Plaintiff:     Leonard Cohen
First Defendant             :     Phillips Fox
Second Defendant         :     Slee Anderson Pidgeon

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

Brundza v Robbie & Co (1953) 88 CLR 171
Drumdurno Pty Ltd v Braham (1992) 64 FLR 227
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Kato Works Co Ltd v Benz & Ors [1999] WASCA
Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd (1992) 57 SASR 180

Case(s) also cited:

Bryant E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 1 FCR 311
Crozat v Brogden [1894] 2 QB 30
Equity Access Limited v Westpac Banking Corporation & Ors (1989) ATPR
40-972
Farrer v Lacy, Hartlan & Co (1885) 28 Ch D 482
Re Percy & Kelly, Nickel, Cobalt and Chrome Iron Mining Company (1876) 2 Ch D 531
Rourke v The White Moss Colliery Company (1876) 1 CPD 556
Tenth Anemot Pty Ltd v Colonial Mutual General Insurance Co Ltd [1993] 2 VR 48

WISBEY DCJ: By notices filed 10 December 1999 each defendant appeals from the orders of the Registrar in chambers on 6 December 1999 dismissing its application for security for costs and ordering that it pay forthwith the plaintiff's costs of the application to be taxed. There are various particulars of alleged error on the part of the Registrar in each notice of appeal; and whilst clearly it is necessary to address such matters when considering the arguments advanced by each defendant, it is to be remembered that the appeal is a hearing de novo. Hazart Pty Ltd v Rademaker (1993) 11 WAR 26.
The plaintiff, a geomembrane installation technician in the employ of FLI International, a company incorporated and carrying on business in the United Kingdom, came to Western Australia from Ireland in mid 1995. He had been sent by his employer to supervise contract work being undertaken by the first defendant for the second defendant on a reservoir in Bunbury. It is alleged in the statement of claim that on 23 June 1995 the plaintiff sustained injuries whilst using a ladder to climb out of a manhole at the reservoir. The plaintiff alleges that the first defendant was negligent in failing to put in place a safe system of work, and more particularly in failing to provide appropriate instruction and facility for him to access the reservoir where the work was being performed. Additionally the plaintiff alleges that the first defendant was in breach of its obligations under the Occupational Safety and Health Act 1984. The allegations made against the second defendant relate to the danger constituted by a ladder providing access to the reservoir. The plaintiff pleads that as a result of the accident he sustained extensive orthopaedic injuries to the right lower limb resulting in significant residual disability, past economic loss, and loss of earning capacity.
By summons filed 23 September 1999 the second defendant applied for security in the sum of $29,400 and supported the application with an affidavit of Ian David Watson sworn 22 September 1999 in which Mr Watson deposed to the fact that the plaintiff was ordinarily a resident of the Republic of Ireland; that the second defendant's public liability insurer SGIO had declined to provide indemnity in respect of the claim; and that the second defendant was the occupier of the reservoir where the accident occurred, the first defendant having contracted with the second defendant to supply and install a water proof liner for the reservoir. He suggested that the plaintiff was in law an employee of the first defendant. Mr Watson observed that the second defendant denied the allegations of negligence against it; provided a factual basis for the denial; and estimated that the trial of the action would last approximately four days and that the second defendant's costs would be of the order of $29,400.
The plaintiff's solicitors filed an affidavit of Michael William Sutherland opposing the application for security and deposing to the fact that the plaintiff and his wife were the registered proprietors of a residential property in Waterford, Ireland, conservatively valued at ₤90,000 and apparently encumbered in the sum of ₤7,250. The plaintiff also filed an affidavit confirming his financial circumstances.
On 19 November 1999 the first defendant filed a summons seeking security, supported by an affidavit of Catherine Anne Elphick sworn 1 December 1999 in which the estimate of the first defendant's costs was in the same amount as that nominated by the second defendant.
In a further affidavit sworn 11 April 2000 Ms Elphick deposed that:
(a)The plaintiff was a permanent resident of Waterford in the Republic of Ireland.
(b)The Republic of Ireland was not a country to which reciprocity had been extended under the Foreign Judgments (Reciprocal Enforcement) Amendment Act 1986.
(c)In all the circumstances it would be difficult enforcing an Australian judgment in the Republic of Ireland.
(d)The plaintiff's financial circumstances were such that he could reasonably provide security for costs.
(e)The plaintiff's claim against each defendant was at best speculative.
Both appeals came on for hearing on 17 April 2000 and after full argument I reserved my decision. Subsequently, by letter dated 26 April 2000, the solicitors for the second defendant advised that SGIO Insurance Ltd had agreed to extend indemnity to each defendant in respect of the plaintiff's claim. As a consequence both defendants now have the same representation.
The foregoing is the basis upon which it is necessary to consider the applications for security.
The starting point is a consideration of O 25 of the Rules of the Supreme Court which provides that the court may order security for costs be given by a plaintiff, but not merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him. Rule 2 provides that without limiting the generality of r 1, the court may order security for costs where (inter alia) the plaintiff is ordinarily a resident out of the jurisdiction. Rule 3 provides that the granting of security is discretionary, and that in determining whether an order should be made the court shall take into consideration:
(a) The prima facie merits of the claim.
(b)What property within the jurisdiction may be available to satisfy any order for costs against the plaintiff.
(c)Whether the normal processes of the court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff.
In Brundza v Robbie & Co (1953) 88 CLR 171 Fullagar J at 175 said:
"The fact that the appellant is out of the jurisdiction (there being no suggestion that he has assets within the jurisdiction) affords, of course, a clear prima facie ground for ordering that further security for the costs of the appeal be given."
His Honour emphasised that the granting of security is a matter of discretion, involving the weighing of various considerations one against the other.
In Kato Works Co Ltd v Benz & Ors [1999] WASCA 165 the Chief Justice, dealing with an application for security for costs in an appeal, noted that the fact that the appellant was not domiciled within the jurisdiction was a special circumstance, and that residence outside the jurisdiction would generally be a ground for ordering security. He stated that the situation was such that there had to be some exceptional circumstances why that recognised special circumstance should not be applied so as to result in an order being made for security.
In Seaman on Civil Procedure at para 25.2.1 it is noted that it is not an inflexible rule that if the plaintiff is ordinarily resident out of the jurisdiction, he will be ordered to give security, although it is the usual order. The text goes on to state that if the defendant will have no difficulty enforcing a judgment for costs in the foreign jurisdiction where the plaintiff's assets are to be found, it may sometimes be appropriate to limit security to the additional expenses of enforcing the costs order outside the jurisdiction.
In Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd (1992) 57 SASR 180 the Full Court of the Supreme Court of South Australia considered inter alia the relevance of insurance indemnity to a security for costs application. The Chief Justice, with whom the other members of the Court agreed, stated that there was no reason to treat an action against a defendant insured against liability, differently from one in which the defendant had no such insurance. However in weighing the factors affecting the provision of security for costs, the ability of the defendant to absorb the costs, if the defendant was unable to recover them from the plaintiff, was a relevant consideration, and insurance cover was only relevant to an assessment of that factor.
The Chief Justice further stated:
"In considering security for costs the court ought to try to do justices as between the parties. The court should protect a defendant against the loss which may result from inability to recover costs by reason of the impecuniosity of the plaintiff but should not go further than is reasonably necessary for that purpose. The provision of security for costs, which it may never be liable to pay, may place an unreasonable burden upon a plaintiff or those for whose benefit the plaintiff is suing."
In Drumdurno Pty Ltd v Braham (1992) 64 FLR 227 Sweeney J at 229 said:
"In exercising its discretion the court needs to weigh up the competing interests of the parties having regard to all of the facts and circumstances of the particular case."
In BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857, Anderson J said:
"However it remains true the court has an unfettered discretion whether to make an order for security for costs and in what amount.
…
The exercise of the discretion in this case required the Master, on the facts established before him, to make the decision as to security which he considered just, having regard to the competing interests and situations of the respective parties, after taking into account and giving appropriate weight to all relevant considerations and excluding all irrelevant considerations."
In exercising the discretion as to whether to make an order for security in favour of the defendants (now jointly represented) the court needs to weigh up the competing interests of the parties having regard to all of the applicable facts and circumstances. In particular it is required to address those factors identified in O 25 r 3 and it is to be noted that the factors specifically referred to in subpara (b) and (c) tend to favour an order. It is necessary however, to have regard to the fact that there is the potential for an order in a significant amount to frustrate the plaintiff's claim, having regard to his financial situation. Further, the circumstances giving rise to the cause of action in tort, namely that the accident arose out of what could be generally described as a work incident. It is a matter of coincidence that the plaintiff was an overseas resident. Had he been a West Australian in the employ of the first defendant, impecunious or otherwise, there would be no question of security. Although prima facie the plaintiff faces difficulties on liability, it cannot be said that the litigation is of a vexatious nature, or that the plaintiff is taking advantage of external residence to frustrate the rights of the defendants. If the matter proceeds to trial it will be necessary for the plaintiff to travel to Perth for the trial, and that will be a measure of his bone fide's. On the papers before me I am not persuaded that the defendants will not be in a position to recover the fruits of any costs order made in their favour. The fact that each defendant is indemnified in respect of the plaintiff's claim, is also a relevant consideration.
In the result, and weighing up the competing interests of the parties having regard to all the facts and circumstances of the case, I am of the view that the proper order in all the circumstances is that there should be a limited order for security in the sum of $10,000.
I therefore direct that the action be stayed until the plaintiff provides security by bond, cash deposit, charge, or other manner approved by the court. In that respect there will be liberty to apply.