Urban Activation Pty Ltd v Austral Pacific Investment (HK) Ltd - [2020] SADC 137

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
URBAN ACTIVATION PTY LTD v AUSTRAL PACIFIC INVESTMENT (HK) LTD
[2020] SADC 137
Judgment of Her Honour Judge Bochner
30 September 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - APPEAL OR REVIEW
Appeal from Master - Application for security for costs.
Held: appeal allowed.
Austral Pacific Investment (HK) Limited v Urban Activation Pty Ltd Decision No. 14 of 2020 (DCCIV-19-308) delivered 28 May 2020; House v The King (1936) 55 CLR 499; Adelaide (SA Pools and Spa) Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60 at [22]; ANZ & Ors v Oswal [2013] VSCA 156; Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2015] FCA 1164; Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360; Allison v Harmsworth [2018] SASC 27, considered.

URBAN ACTIVATION PTY LTD v AUSTRAL PACIFIC INVESTMENT (HK) LTD
[2020] SADC 137

Urban Activation Pty Ltd (“Urban Activation”) has appealed the decision of a District Court Master in which the Master dismissed an application for security for costs. For the reasons set out herein, the appeal is allowed.
Background
In March 2019, Austral Pacific Investments (HK) Ltd (“Austral Pacific”) (the applicant in the substantive action) issued proceedings against Urban Activation (the respondent in the substantive action), alleging breach of contract, or that it was owed moneys by virtue of a quantum meruit.[1] At [3] of the statement of claim, Austral Pacific pleads that it is a “foreign company” within the meaning of s 9 of the Corporations Act 2001 (Cth).
[1] DCCIV-19-308.
On 1 July 2019, Urban Activation filed an interlocutory application seeking an order for security for costs, in the sum of $175,000, pursuant to Rule 194 of the District Court Civil Rules 2006 (“the Rules”), or s 1335 of the Corporations Act 2001 (Cth), or both. In support of the application, Mr Elix, the solicitor for Urban Activation, deposed, in FDN 7, that:
·Austral Pacific is not a registered foreign company in Australia, nor has it applied for registration as such;
·It does not hold an Australian Business Number; and
·As a result, Austral Pacific does not trade or otherwise operate a business in Australia.[2]
[2] FDN 7 at [5] – [7].
Urban Activation concluded that if it were successful in the proceeding and obtained a costs order in its favour, there would be a real risk that it would be unable to enforce the order in Australia, and would be required to enforce it in a foreign jurisdiction which would entail a lengthy and costly process.
Urban Activation further deposed that Austral Pacific, through its solicitors, has not advised of any assets in Australia.
Orders were subsequently made for the filing of responding affidavit material by Austral Pacific and submissions by both parties. The application was listed for hearing on 7 August 2019. The hearing date was, however, vacated with the consent of the parties, as it appears that they had reached an in principle settlement. It appears that the settlement fell through, and after a number of further adjournments, the application for security for costs was heard on 29 April 2020.
The decision of the Master
The Master delivered her decision on 28 May 2020.[3] After examining the pleadings, the Master turned to the affidavit material filed by Urban Activation, and noted that the matters set out in [3] hereof were undisputed. She noted, however, that the searches relied on by Urban Activation were not exhibited to the affidavit, nor was there any evidence of any search to determine whether Austral Pacific held any assets in either Australia or Hong Kong (its place of registration). Further, no evidence was adduced as to the method of enforcing a judgment in Hong Kong, its difficulty and likely cost.
[3] Decision No 14 of 2020.
At [38] of her decision, the Master noted that FDN 7 was filed ten months prior to the argument, and was not supplemented by any material current at the date of the argument, or any other affidavit which confirmed that the contents of FDN 7 remained current. She noted that orders were made for the filing of further material by both parties on 19 March 2020; neither party had availed themselves of this opportunity.
The Master proceeded to examine the authorities dealing with security for costs, and the factors which should be considered when exercising the discretion. She concluded, at [45]:
[Urban Activation] bears the onus of proving that the threshold requirements have been met and indeed, persuading me that the court’s discretion to award security for costs should be exercised.
(citations omitted)
The Master then discussed the operation of Rule 194(1)(b). She noted that while the fact that Austral Pacific resided overseas and had no assets in the jurisdiction was a circumstance of particular weight, it was not determinative of the question of whether an order for security for costs should be made. She noted that there is no presumption in favour of an order for security where Austral Pacific resides outside of Australia.[4] She then examined a number of authorities which deal with applications for security for costs where the respondent to the application is a resident of another jurisdiction. She noted that no evidence was put before her by either party regarding enforcement procedures in Hong Kong; as a result, she was unable to determine whether the procedure for enforcement would be a straightforward one.[5] The Master further noted that Austral Pacific had not filed any affidavit material regarding its financial position or its assets. She noted that, while the absence of this information was not determinative, it was open to the court to draw an inference that Austral Pacific would be unable to meet a costs order if unsuccessful in the action.[6]
[4] Ibid at [48].
[5] Ibid at [59].
[6] Ibid at [63] – [64].
The Master concluded that Urban Activation, in its submissions, sought to combine the two threshold tests for security. It argued that because the company has no assets in Australia, was outside the jurisdiction, and beyond the reach of Urban Activations, this amounted to credible testimony that Austral Pacific would not be able to pay Urban Activation’s costs if Urban Activation was successful in the action.[7] The Master took the view that the asserted facts did not lead to the conclusion reached by Urban Activation.
[7] Ibid at [66].
The Master found that she was able to conclude that Austral Pacific did not have any assets in Australia, as a result of its failure to file any evidence of this fact.[8] She found, however, that this did not lead to a conclusion that Austral Pacific had no assets in another jurisdiction. Neither Austral Pacific nor Urban Activation provided any evidence of assets outside the jurisdiction. She then said:
The onus is on [Urban Activation] to prove pursuant to rule 194(1)(d) that no such assets exist, not that the assets are outside the “reach of [Urban Activation]” and it has not done so.
There is simply not enough evidence before me to draw any conclusions about [Austral Pacific’s] financial situation other than it does not have assets in Australia. I can draw no conclusions about its overall financial position, or whether it would or would not be able to pay [Urban Activation’s] costs if it were successful.
[Urban Activation] has not met the threshold test in rule 194(1)(d).[9]
[8] Ibid at [68].
[9] Ibid at [69] – [71].
At [73], the Master found that Urban Activation met the threshold test in Rule 194(1)(b). She found that the fact that Austral Pacific had no assets in Australia and that any judgement would need to be enforced in Hong Kong carried significant weight in the exercise of her discretion. She reiterated that she did not have sufficient information to determine the difficulty of enforcing a judgement in Hong Kong.[10]
[10] Ibid at [75].
The Master went on to find that:
Whilst it would assist the court to know of [Austral Pacific]’s financial position, I do not consider that [Urban Activation] has put enough before me such that [Austral Pacific’s] failure to provide the information can be weighed against it.[11]
[11] Ibid at [79].
The Master noted that there was no suggestion that the litigation would be stultified by an order for security or that any impecuniosity on the part of Austral Pacific was caused by the conduct of Urban Activation. She rejected any criticism as to the delay in bringing the application, noting that the argument was not dealt with for ten months after it was issued, because the parties were negotiating with a view to reaching a settlement.[12] She was, however, critical of Urban Activation for failing to put current material before the Court as to the position of Austral Pacific’s place of residence and financial position in Australia.[13] She was further critical of the basis on which the costs sought by Urban Activation were calculated. She noted that there was very little information before her to allow her to assess, with any adequacy, the strength of Urban Activation’s case.[14]
[12] Ibid at [80] – [81].
[13] Ibid at [82].
[14] Ibid at [84].
The Master concluded:
In the end, given the paucity of the evidence before me, I am driven to the conclusion that in the particular circumstances of this case, justice is best served by no order for security for costs being made. [Urban Activation] has simply not satisfied the onus of proof it bore in making its application.
Even if I were persuaded otherwise, I could not make an order on the quantum of any security, given the lack of evidence of the enforceability of the judgement of this court in Hong Kong and the age and lack of clarity of the estimate of costs sought.[15]
[15] Ibid at [91] – [92].
The grounds of appeal
At the commencement of the appeal, Urban Activation sought leave to amend its notice of appeal. This was not opposed by Austral Pacific. The amended grounds of appeal read as follows:
1. The Learned Master erred in the exercise of the discretion to order security of costs in that:
1.1she erred in law in that she found (Reasons [48], [69], [78] and [89]) that to obtain the order for security under r 194(1)(b):
1.1.1the appellant carried the evidentiary onus even after it proved that the respondent was a party ordinarily resident outside the jurisdiction; and
1.1.2(by reference) the respondent carried no evidentiary onus.
1.2she erred in fact in finding that the appellant had not complied with the order made on 19 March 2020 (R [39]).
1.3she failed to take relevant considerations into account, namely:
1.3.1the self-evident complexity of enforcing an order for costs made by the District Court of South Australia in a foreign jurisdiction, namely, Hong Kong;
1.3.2that there was little before her to adequately assess the strength of the appellant’s case (R [84]);
1.3.3that there was prima facie evidence in support of a positive defence pleaded by the appellant, namely that the respondent was not entitled to claim commission because it was an unregistered agent (R [74]).
1.4she took irrelevant considerations into account, namely in that she found (R [82]) that:
1.4.1the Appellant had failed to put further evidence, more current July 2019 as to the “residence” of the respondent and whether it had assets in this State when neither of those facts were in issue (R [72]); and
1.4.2the Appellant failure was to be weighed against it (R [79] and [82]) and
such that the discretion miscarried.
2. Further and in the alternative to Ground 1, the decision of the Learned Master was unreasonable or plainly unjust in that:
2.1she found that the respondent is a foreign corporation, not registered with ASIC in accordance with s 601CD of the Corporations Act 2001 (Cth) (R [73]-[74]);
2.2she found that the respondent has no assets within the jurisdiction (R [74]);
2.3she found that the respondent was incapable of lawfully trading within the jurisdiction (R [74]);
2.4there was no evidence before the Court that an order for security for costs would stultify the claim;
2.5there is no evidence of misconduct by the appellant;
2.6the respondent was the “proper plaintiff”; and
2.7there was prima facie evidence in support of a positive defence pleased by the appellant, namely that the respondent was not entitled to claim commission because it was an unregistered agent under the Land Agents Act 1994 (SA); but
there was no evidence filed by the respondent and no fact militating against the making of an order for security for costs (whatever might be said about the quantum of that security).
The appeal relates only to the decision based on Rule 194(1)(b) which reads:
(1) The Court may order a plaintiff to provide security for costs if—
…
(b) the plaintiff is ordinarily resident outside Australia; or
…
Urban Activation’s position
Urban Activation acknowledges that to be successful in the appeal, it needs to demonstrate that the Master has made an error of the kind described in House v The King.[16] Its position is that she did do so, by taking into consideration irrelevant matters, and failing to have regard to relevant considerations. Further, it submits that the Master’s reasoning and outcome were unreasonable and plainly unjust in the circumstances of this case.
[16] (1936) 55 CLR 499.
In respect of ground 1.1, Mr Robertson QC, on behalf of Urban Activation, submits that the Master made an error of law in that she confused the concept of onus, with the assessment of the available evidence. She also failed to appreciate that the exercise of the discretion operated in a different way under Rule 194(1)(b), compared to Rule 194(1)(d).
Under Rule 194(1)(b), the proof of the threshold, that Austral Pacific is ordinarily resident outside of Australia, is also significant in deciding whether to exercise the discretion; once the threshold has been established, it is for Austral Pacific to lead some evidence to weigh against that persuasive fact. The Master erred in that she found that, even in the absence of any evidence to counter Austral Pacific’s non-residence and lack of assets in the jurisdiction, she required further evidence to be led by Urban Activation. In effect, she required Urban Activation to adduce evidence to counter the evidence that Austral Pacific might have led, but did not.
In respect of ground 1.2, Mr Robertson submits that the Master erred in that she held against Urban Activation the fact that it did not file further evidence prior to the hearing, on the basis that she believed that an order had been made for it to do so. In fact, no such order had been made, thus leading the Master to make an error of fact.
As to ground 1.3, Mr Robertson submits that the Master failed to take into account relevant considerations, which weighed in favour of making the order. The first consideration is the fact of the difficulty in enforcing any order in Hong Kong. Mr Robertson says that it is self-evident that enforcing an order in Hong Kong will be more difficult and costly than enforcement in Australia. Further, there is no need to call evidence of the current political unrest in Hong Kong, and the COVID-19 pandemic, for the Court to take those factors into consideration when determining the ease or difficulty of enforcing an order in Hong Kong.
The second matter that Mr Robertson says that the Master failed to take into consideration is the strength of Urban Activation’s case, and the relative weakness of Austral Pacific’s case. The Master found that she could not assess the strength of Austral Pacific’s case, despite also finding that, because Austral Pacific was not registered with ASIC, it could not operate in Australia. Further, Urban Activation has pleaded that Austral Pacific was not able to claim compensation as it was not a registered land agent under the Land Agents Act 1994. Despite this, Austral Pacific adduced no evidence to support its contention that it was entitled to commission, nor any evidence of the agreement between the parties, pleaded by Austral Pacific and denied by Urban Activation. These factors clearly support Urban Activation’s denial of liability, and were not taken into consideration by the Master, when she found that she was unable to assess the strength of its case.
In respect of ground 1.4, Urban Activation submits that the Master took into consideration an irrelevant fact, that fact being the age of the evidence it relied on in relation to the place of residence of Austral Pacific, and its asset position. Given that no contrary evidence was adduced, the age of the evidence was not a relevant consideration in the exercise of the Master’s discretion.
Each of the factors relied on by Urban Activation, taken singly or together, is sufficient to justify the intervention of this Court and the re-exercise of the discretion.
In respect of ground 2, Urban Activation submits that, even in the absence of errors in the exercise of the Master’s discretion, the decision not to make an order for security for costs was unreasonable or plainly unjust. The evidence before the Master clearly supported the making of an order for security, albeit perhaps not of the amount sought by Urban Activation. The correct approach was for the Master to make her own assessment of the appropriate amount of such an order, taking a broad brush approach.
Austral Pacific’s position
Central to Austral Pacific’s argument, is the fact that, even after there is a positive finding that a party is ordinarily resident outside of Australia, there is no inflexible rule that an order for security for costs must be made. The decision remains a discretionary one, to be exercised as the justice of the case demands. On this basis, Mr Belperio, on behalf of Austral Pacific, noted that Urban Activation provided no detail or substantiation of the cost and difficulty of enforcing any judgement in Hong Kong. He submitted that the Master correctly noted that she retained a broad discretion with no presumption in favour of security simply because a party was an overseas resident. She made no error in finding that the paucity of evidence led her to find that no order for security for costs should be made. In respect of the question of enforcement of any judgement in Hong Kong, Mr Belperio submitted that it is self-evident that Hong Kong has reciprocal arrangements for the enforcement of judgements with Australia. This is a factor that should weigh against the order of security.
As to the error of law asserted by Urban Activation, that the Master erred in finding that it had been ordered to file further affidavit material, Austral Pacific’s position is that the Master’s findings did not depend on this. The Master’s position was that there was insufficient evidence for her to draw the conclusions sought by Austral Pacific on the basis of the affidavit material that was before her. Her position that Austral Pacific should have put more evidence before the court was based on, not just the age of the evidence at the time that the argument was heard, but also on the lack of evidence at the time that it was filed. He further submitted that while the civil unrest and the pandemic are well known facts, the impact that these are having or will have on the enforcement of judgements in Hong Kong is not a matter of which judicial notice can be taken.

As to the quantum of the orders sought, Mr Belperio submitted that the basis for the estimate relied on by Urban Activation was unexplained. No information was given as to how the various components of the total amount were reached, and no up-to-date information was provided as to what costs have now been incurred and what costs are still to be incurred. He further noted that a court will ordinarily only award security for costs up to the first day of trial, at which point the question will be further addressed.
In the circumstances, Austral Pacific maintains that no error on the part of the Master has been demonstrated and that therefore, the appeal should be dismissed.
Consideration
The basis on which an appeal of this type must be dealt with, was addressed by Doyle J in Adelaide (SA Pools and Spa) Manufacturing and Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd,[17] where he said:
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 R. 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.
(citations omitted)
[17] [2016] SASC 60 at [22].
Before the appeal can be allowed, therefore, I must be satisfied the Master made an error of fact or law, took into account irrelevant considerations or failed to take into account relevant ones.
The principles to be applied in determining whether an order should be made for security for costs where one of the parties is outside of the jurisdiction were simply stated by the Victorian Court of Appeal in ANZ & Ors v Oswal.[18] At [115], Priest JA said:
The principles that may be derived from these cases seem to me to be:
•    first, the purpose of ordering security against a plaintiff ordinarily resident out of Victoria — and with no assets within it — is so that a successful defendant will have a fund in Victoria against which it can readily enforce an order for costs;
•    secondly, to make or refuse an order for security is a discretionary judgment;
•    thirdly, since such a judgment is discretionary, the court must weigh all relevant circumstances;
•    fourthly, the weight of any one circumstance must depend not only on its own persuasiveness, but must be considered against the impact other circumstances might have against it;
•    fifthly, a circumstance of great weight, but not necessarily decisive, is that the plaintiff is resident out of Victoria and has no assets within it;
•    sixthly, the weight of that circumstance may be outweighed by the plaintiff being able to point to other countervailing circumstances; and
•    seventhly, the ultimate question must always be — how is justice best served in the particular circumstances of the case?
[18] [2013] VSCA 156.
It is important to note the features that are highlighted by Priest JA. Firstly, the fact that the party against whom the order is sought is resident out of the jurisdiction is a circumstance of great weight. Secondly, the weight to be given to any one circumstance is dependent, not only on its own persuasiveness, but also on other circumstances that may tell against it. Thirdly, the fact that the party may be resident outside of the jurisdiction, with no assets within it, may be outweighed by that party pointing to other relevant circumstances. Finally, the question will ultimately be determined by how justice will be best served. It is clear that while the initial burden rests with the party seeking the orders, the party against whom the orders are sought carries a burden to adduce evidence to counteract that of the moving party.
The relative roles of the two parties in an application for security for costs were addressed by Edelman J in Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd[19] where he said, at [25]:
The authorities and principles concerning the onus of proof in applications for security for costs are explained by Gleeson J in Austcorp Project No 20 Pty Ltd v LM Investment Management Ltd (in liq) [2014] FCA 1371 [25]–[28]. The onus of proof in a security for costs application rests, from first until last, upon Bosch Australia to persuade the court that the order for security should be made. However, there is an evidential burden upon ABD to adduce evidence concerning matters which establish reasons why security should not be granted in circumstances where it will be unable to pay the costs of Bosch Australia if Bosch Australia is successful in its defence.
[19] [2015] FCA 1164.
While this case was dealing with the relevant section of the Corporations Act 2001(Cth), the principles set out are equally applicable to the matter before me. Edelman J had more to say on the subject of the burden of proof in the matter of Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2),[20] where he said, at [12]:
The substantive onus of proof rests throughout upon the party seeking security. The threshold issue, in the terms of s 1335(1) of the Corporations Act, is that there is “credible testimony” demonstrating “reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence”. However, once this conclusion is reached, there is an evidentiary burden on the party resisting the order for security for costs to establish a reason why security should not be granted.
[20] [2016] FCA 360.
This case was, again, dealing with the relevant provisions of the Corporations Act 2001 (Cth); there is no reason, however, for not applying this approach to an application for security pursuant to the Rules. This approach was endorsed by Doyle J in Allison v Harmsworth,[21] where he said:
[21] [2018] SASC 27.
Historically there had been an inflexible rule requiring that a non-resident plaintiff provide security for the defendant’s costs. The rationale for ordering security was a concern to ensure that a non-resident plaintiff who sought to take advantage of the jurisdiction of a court, but did not have assets within that jurisdiction, was not able to escape liability for an adverse costs order in the event his or her claim was unsuccessful. The purpose of an order for security was to create a fund within the jurisdiction against which the defendant might enforce any costs liability in his or her favour, thereby providing a level of protection from the risks, uncertainties and delay of attempts to enforce that costs liability in the plaintiff’s country of residence.
However, the courts no longer adopt a rigid or inflexible approach. Consistent with the court’s approach to security for costs generally, and the terms of the court rules around Australia (to the effect that the Court may order security where a plaintiff is ordinarily resident outside of the jurisdiction), modern authority recognises that the decision whether to order security for costs in this circumstance remains a discretionary one.
It is true that the fact a plaintiff resides outside Australia and has no assets in Australia is a circumstance of significant weight in favour of an order for security. As McHugh J explained in PS Chellaram & Co Ltd v China Ocean Shipping Co:
To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.
While it is thus also true to say that a non-resident plaintiff without assets in the jurisdiction will usually be ordered to provide security, and perhaps that there is a usual or general rule to this effect, it is important to remember that the matter remains a discretionary one. Each case must be considered on its particular facts, with the weight and significance attached to a plaintiff’s non-residence within the jurisdiction being determined in light of all other considerations relevant in the particular case.
Bearing in mind the rationale for ordering security for costs against a non-resident plaintiff, the weight of this consideration will also turn to some extent upon the likely ease and convenience of enforcement procedures in the plaintiff’s country of residence.[22]
(footnotes omitted)
[22] Ibid at [24] – [28].
I will consider the submissions of the parties against the backdrop of these principles.
I am of the view that Urban Activation has made out its first ground of appeal, that the Master erred in law in finding that Urban Activation carried the evidentiary onus beyond establishing the threshold, and that Austral Pacific carried no evidentiary onus. Edelman J makes it very clear that each party has a role to play in establishing whether or not an order for security should be made, and that not all of the burden rests with the applicant for security. He makes it clear that, once the applicant for security has established that the threshold test has been met, then the respondent to the application carries an evidential burden to adduce evidence to offset the threshold.
There is no doubt that Urban Activation established the threshold in Rule 194(1)(b), that Austral Pacific is ordinarily resident outside of Australia. Indeed, Austral Pacific itself pleads that it is a “limited liability company formed in accordance with the Companies Ordinance (Hong Kong, cap 622, 214) and ‘foreign company’ within the meaning of s 9 of the Corporations Act 2001 (Cth)”.[23] Further, Austral Pacific has not produced any evidence to contradict the matters deposed to by Urban Activation in FDN 7.
[23] FDN 2 at [30].
The Master, in fact, found that there was “no dispute that [Austral Pacific] is a foreign company.”[24] She also found herself able to conclude that Austral Pacific did not have any assets in Australia.[25] She accepted that Urban Activation had met the threshold test in Rule 194(1)(b).[26] She then went on to say:
It is for the defendant to prove why the discretion should be exercised, not for the plaintiff to disprove it.
Whilst it would assist the court to know of the plaintiff’s financial position, I do not consider that the defendant has put enough before me such that the plaintiff’s failure to provide the information can be weighed against it.[27]
[24] Decision No 14 of 2020 at [67].
[25] Ibid at [68].
[26] Ibid at [73].
[27] Ibid at [78] – [79].
In my view, this reasoning demonstrates a clear error. It ignores the reminder of Edelman J that once the threshold has been reached, the party resisting the order for security carries an evidentiary burden to establish why security should not be ordered. Once Urban Activation had cleared the threshold of establishing that Austral Pacific was resident outside of Australia, and that it had no assets within Australia, in the absence of any evidence adduced by Austral Pacific, there was no reason not to exercise the discretion in favour of granting the order. It had, in fact, proved why the discretion should be exercised. If Austral Pacific’s case was that, while it had no assets in Australia, it had sufficient assets in another jurisdiction to meet any costs order made against it, it was incumbent on Austral Pacific to make out that case. Its silence on this question does not give rise to an inference that this evidence may be available, and place a further onus on Urban Activation to displace it.
I consider that the Master further made an error of fact in finding that Urban Activation had not complied with orders made on 19 March 2020, to file further affidavit material. In fact, the orders made on that date were for Austral Pacific to file affidavit material and for Urban Activation to file material in reply. Given that Austral Pacific filed no material, the order in relation to Urban Activation was never enlivened.
As to ground 1.3, that the Master failed to take relevant considerations into account, I am also of the view that this ground has been made out. At [75] of her reasons, the Master says that she has insufficient information to determine whether the process of enforcement of any judgment in Hong Kong would be simple or complicated. In my view, it is clear that enforcement overseas will always be more complicated, costly and time-consuming than enforcement within Australia. While reciprocal arrangements may be relevant in circumstances where the respondent to the application has adduced evidence to show that they have assets in the jurisdiction of enforcement, evidence of such arrangements, with attendant costs and timeframes for such enforcement, will carry far less weight where no evidence is available as to the availability of assets within the jurisdiction. In this case, Urban Activation is left with a situation where, regardless of the ease or difficulty of enforcement, it has no knowledge of any assets that might be available to it once that process has been commenced. This is because Austral Pacific did not provide any of this evidence. In my view the Master should have taken into consideration as a relevant fact the need to enforce any judgement outside of Australia and in a jurisdiction where it is unknown whether Austral Pacific has any assets.
I am also of the view that the Master erred in finding that there was little evidence before her which would allow her to assess the strength of Urban Activation’s case. She takes the position that Urban Activation’s defence is a blanket denial which simply denies the existence of any contract between the parties. In fact, the defence goes further than this.
Rather than a blanket denial, Urban Activation pleads specifically at [5] of its defence that it did not enter into a contract with Austral Pacific. That is, its positive case is that it did not enter into a contract. It further pleads that, in any event, Austral Pacific is not entitled to any commission or consideration, as it is not registered as an agent under the Land Agents Act 1994 (SA). At the very least, and in the absence of any evidence put forward by Austral Pacific, this should be treated as an arguable defence, particularly in light of the further evidence provided by Urban Activation in FDN 7 as to Austral Pacific’s registration status in Australia. I note, too, that Austral Pacific had the opportunity to file affidavit material in support of its contention that an agreement did exist between the parties and that it had the ability to do business giving rise to an entitlement to commission in Australia. It chose not to.
As to ground 1.4, I consider that the Master erred in criticising Urban Activation for failing to put “current” material before the court. The mere fact that affidavit material was filed some ten months previously does not mean that its contents is not current. If Austral Pacific’s position had not changed between the date of filing the application and the date that it was heard, then the material that was put before the Court at the time that the application was filed, remained current at the date of hearing. In my view, it was for Austral Pacific to put material before the Court if it formed the view that the contents of FDN 7 were not correct.
Finally, I am of the view that Urban Activation has made out its final ground of appeal. Given the findings made by the Master, and the failure of Austral Pacific to file any affidavit evidence to support its opposition to the application, I am of the view that the decision of the Master was unreasonable and plainly unjust. There was no dispute that Austral Pacific is a foreign corporation, is not registered with ASIC, and has no assets within the jurisdiction. There was no evidence before her to suggest that an order for security would stultify the litigation. There was no suggestion that there was any misconduct by Urban Activation. There was no suggestion that Austral Pacific was not the proper plaintiff. There was in fact no reason to contend against the making of an order for security for costs.
Consequently, the appeal must be allowed. I am of the view that an order for security for costs should be made. I note the concession made by Urban Activation that the amount of security sought by it at first instance was excessive; this concession was properly made. At the hearing before me, Urban Activation provided a further schedule of costs, based on the Uniform Civil Rules 2020 and the 2017 Guide to Counsel Fees. This revised schedule provides a conservative view of the costs likely to be incurred by Urban Activation to the first day of trial, in the sum of $27,560. It makes no allowance for any amendments to the pleadings, mediation, continuing discovery, disbursements other than counsel fees, or any of the other exigencies of litigation. In my view, the amount set out in the revised schedule should be treated as a starting point. I am of the view it is appropriate to order Austral Pacific to pay into court the sum of $50,000 by way of security for costs as more realistically, while still conservatively, estimating the likely costs to be incurred in taking this matter to the first day of trial. In reaching this figure, I have not taken into consideration the amounts sought by Urban Activation in respect of this application and appeal.
For completeness, I note that Austral Pacific made a number of objections in respect of the revised schedule, particularly on the basis that it was significantly less than the amount originally sought and that there was therefore no explanation as to how that amount had been reached. Austral Pacific was given leave to file a schedule in response. It did not do so.
I allow the appeal. I will make orders that Austral Pacific is to pay the sum of $50,000 into the Suitors Fund by way of security for costs and that this action will be stayed until such time as Austral Pacific provides the said security.
I will hear the parties on the question of the time within which the security for costs is to be paid, and on the question of costs.