| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : WEST -v- WOOD [2002] WADC 245 CORAM : DEANE DCJ HEARD : 4 NOVEMBER 2002 DELIVERED : 26 NOVEMBER 2002 FILE NO/S : CIV 2912 of 2001 BETWEEN : GEOFFREY KENNETH BENJAMIN WEST Appellant/Defendant
AND
STEVEN JAMES WOOD
Respondent/Plaintiff
Catchwords: Practice and procedure - Appeal against decision of Deputy Registrar refusing to set aside default judgment previously allowed - Whether leave to appeal should be conditional upon the appellant paying into Court an amount by way of security - Turns on own facts
Legislation: Nil
Result: Leave to appeal conditional upon the appellant paying a sum of money into Court
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Representation:
Counsel:
Appellant/Defendant : Mr M J Walton
Respondent/Plaintiff : Mr T B Lyons
Solicitors:
Appellant/Defendant : Marks & Sands
Respondent/Plaintiff : Gibson Lyons
Case(s) referred to in judgment(s):
Cheshire Holdings Pty Ltd v Peter Fermanis, unreported; SCt of WA; Library No BC8800937; 5 October 1988
Graywinter Properties Pty Ltd & Ors v Rodway [1998] VSC 177
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Lloyds Banking Co v Ogle (1876) 1 Ex D 262
M V Yorke Motors (a firm) v Edwards [1982] 1 WLR 444
Case(s) also cited:
Nil
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1 DEANE DCJ: In relation to this matter an earlier appeal has been allowed. As a result a default judgment against the appellant for the sum of $200,000 entered by the respondent on 5 February 2002 was set aside. The matter was then adjourned to enable counsel to make further submissions as to the final form of the orders to be made by the Court, particularly in relation to the issue of whether or not leave to appeal should be unconditional or conditional upon the appellant paying into Court the sum of $200,000. The matter came on for further hearing relevant to these issues but it was not concluded at that time. Over objection of counsel for the respondent, which objection was understandable and not surprising in the circumstances, counsel for the appellant was granted leave to file further material in support of their submissions. This material comprises an affidavit sworn by the appellant on 7 November 2002 with respect to the provision of particulars regarding his personal assets and liabilities. Reference is made in that affidavit to the contents of a number of documents annexed to it. Counsel for the respondent thereafter filed submissions in reply.
2 To understand the submissions of the parties fully, it is necessary to refer in some detail to the contents of the appellant's affidavit. Mr West deposes that currently he works as a harvester in rural Western Australia and payment for that work he anticipates will be made between January and March 2003. Earnings from this type of work depend upon seasonal changes and the availability of work. For the period November 2002 to March 2003 the appellant estimates his income to be between $30,000 and $55,000, this being his only major source of income. In addition he says he receives $300 a week from his company Nitrous Formula Products Pty Ltd in his capacity as an employee, although he is also a director of the company. No further information is provided by the appellant as to that company or its assets, if any. No detail is given as to what precisely the appellant does to earn the $300 per week. 3 The appellant has a family trust, the Geoff West Family Trust, whose trustee is Bonway Pty Ltd and it trades as Geoff West Contracting which in turn carries out the harvesting work in which the appellant is engaged from time to time. Annexure "GKBW1" is said to be a schedule of the appellant's assets and liabilities. It is sufficient for the purpose of these reasons to note that the appellant's stated assets amount to $773,000 whilst his stated liabilities amount to the sum of $650,600. Although the appellant's family residence in Kalamunda has not been valued recently, he deposes that he believes its value to be between $350,000 and $375,000. He pays interest only on a mortgage of $275,000 and owns the residence as joint tenant with his wife. Security for the loan consists of
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the residence itself and the property. Also as a joint tenant with his wife the appellant owns a property in Carmel which he claims was purchased for the sum of $237,000 and over which there is a mortgage of $167,000. He claims, however, that due to fire damage caused to the property early this year its value has been reduced to somewhere between $170,000 and $180,000. Further, the appellant and his wife are trustees of the Century Park Trust and they as joint tenants own a vacant property in Kewdale valued at $45,000. Although the property was without encumbrances the appellant states that Bankwest have requested the title deeds to the land on the basis of further security for the appellant's bank overdraft facility with Bankwest which is currently in debit of $115,000. This overdraft, as I understand the appellant's affidavit, is secured over his main residence and property. Finally, in relation to land ownership the appellant in partnership with others has a one-half interest in a block of land situated at Wagin which he claims is valued at $6,000. 4 Other assets referred to in the appellant's affidavit include harvesting machinery and tools owned by Bonway Pty Ltd valued in total at somewhere in the region of $85,000 to $90,000. Although the appellant holds 50 per cent of the shares in Fuel Tech Pty Ltd he claims that company has no assets. As at late September this year the appellant had a Bankwest Visa Card debit balance of $2,146.11 and as at early October 2002 an ANZ Visa Card debit balance of $4,027.52. 5 Essentially the appellant's position is that he is genuine in his intention to defend the respondent's claim against him and is aware that this will involve significant financial outlay on his part. In view of this he claims that he has no further monies nor would he be able to provide any significant further monies or payment into Court. He does not depose, however, to what, if any, attempts he has made to raise funds from any third party. As a result an order for $200,000 or indeed any significant amount of money to be paid into Court conditional upon the appellant being granted leave to pursue this action would in his submission severely prejudice his position and may well have the end result of effectively preventing him putting forward his defence despite having been successful on his appeal. Finally, the appellant submits that unconditional leave to defend would result in no prejudice to the respondent. 6 The respondent submits that the circumstances of this case and its background are such that, notwithstanding the leave granted to the appellant, it should be conditional upon the appellant paying into Court the sum of $200,000. The alternative argument of the respondent is that if the Court is not minded to make such an order then there should be an
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order that at least a substantial proportion of that amount should be paid into Court by the appellant. 7 In the course of argument counsel for the respondent referred to Cheshire Holdings Pty Ltd v Peter Fermanis, unreported; SCt of WA; Library No BC8800937; 5 October 1988. At p 3 of that judgment the Court explained why it was that the appellant in the circumstances was entitled to have leave to defend but went on to consider the question of whether or not the Master was in error in exercising his discretion to impose a condition by way of payment into Court of the full amount of the claim. Reference was made to the White Book 1988 Vol 1, p 146; "The condition of payment into Court, or giving security, is nowadays more often imposed than formerly, and not only where the defendant consents but where there is a good ground in the evidence for believing that the defence set-up is a sham defence or that the Master 'is prepared very nearly to give judgment for the plaintiff'." 8 It was noted that the case under consideration fell into the latter category. In their judgment in Cheshire the Court also referred to Lloyds Banking Co v Ogle (1876) 1 Ex D 262 where it was observed that conditional leave may be granted where there is something suspicious in the defendant's mode of presenting his case, or the Court is left with a real doubt about the defendant's good faith. Counsel for the respondent accepts the proposition that this Court having found that if the appellant's version of events were to be believed then he has a real prospect of success follows in any case where such a decision is made by a court. Counsel argued, however, that such a finding was not totally determinative of whether or not leave should be conditional as other considerations also operated. In this regard counsel referred to a number of general principles and directed specific criticisms at the contents of the appellant's affidavit as to his financial circumstances. 9 It is not in issue, as far as I understand the submissions in this matter, that the Court may order that an amount be paid into Court to ensure that a defence that appears weak on its merits is at least being put forward in good faith and further that the Court has a discretion to order less than the full amount of the claim to be secured; Hazart Pty Ltd v Rademaker (1993) 11 WAR 26 at 32. Where a court is satisfied that the defence is dubious or lacks substance, the defendant will bear the onus of satisfying the Court that a financial condition ought not be imposed or should be of limited ambit; Graywinter Properties Pty Ltd & Ors v Rodway [1998]
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VSC 177. I have previously noted that in the circumstances of this case and on the information available to the Court, it is simply not possible or appropriate to make any firm or definitive findings regarding the credibility of the parties. Findings as to credibility will on present indications play a very significant role in deciding the merits of this case. Nonetheless without making any such findings or particular comments, there are some matters or areas that appear to have been inadequately explained to date by the appellant. Put in the most neutral of terms there would appear to be a degree of curiousness about certain things which the appellant alleges occurred after the hearing before the Deputy Registrar. These however, are matters which in fairness ought be the subject of further investigation at a hearing if they are to be properly resolved. Similarly there are inconsistencies in the contents of a number of affidavits that the appellant has sworn in the past, which were referred to in my earlier judgment, but once more given that an explanation has been proffered for why such inconsistencies exist, such matters are in my view more properly investigated at a hearing, if that is ultimately to occur. 10 In considering the quantum of security for costs the Court is also concerned with whether or not in this case the appellant has made full and frank disclosure by way of placing sufficient and proper material as to his financial and other circumstances before the Court. In this regard reliance cannot merely be placed on the fact that a person is legally aided or would encounter financial difficulties in providing security. It must be a matter of impossibility of fulfilment supported by evidence rather than financial inconvenience or even hardship; M V Yorke Motors (a firm) v Edwards [1982] 1 WLR 444. 11 Counsel for the respondent points to a number of matters referred to in the appellant's affidavit and submits that overall the contents of that document do not meet the test of full and frank disclosure by the appellant as to his financial circumstances. The criticisms directed to the contents of the affidavit are comparatively numerous. Despite the appellant citing only one major source of income from his harvesting work, counsel for the respondent refers to "GKBW4" being the bank statement for the Geoff West contracting overdraft which shows a payment on 27 September 2002 of $3,750, the origins of which are not explained and would certainly not appear to relate to income from the appellant's harvesting work. Further it is submitted that the affidavit is deficient in that the appellant has failed to annex to it both individual tax returns and returns of the family trust and/or its financial statements to verify his assertions in relation to Bonway Pty Ltd as trustee for the Geoff West Family Trust trading as Geoff West Contracting.
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12 In relation to the $300 per week which Nitrous Formula Products Pty Ltd pays the appellant counsel for the respondent points out that if such earnings were consistent over a year this would be an additional $15,000 per annum which the appellant receives. I accept the submission that this could not be described as a minor source of income.
13 Although the appellant has not obtained a recent valuation in relation to his usual residence, the figure he suggests in his affidavit would appear to be between $50,000 and $25,000 less than he paid for the property when he purchased it in May 1997 according to a DOLA search. In relation to the property in Carmel, which the appellant owns with his wife, no information is given as to whether he has an insurance claim pending in relation to the fire which recently damaged that property. It is curious that only a few months ago on 18 July this year the appellant and his wife as trustees for Century Park Trust, purchased a property in Kewdale for $66,000 according to a DOLA search document, but the appellant deposes it is now worth only $45,000. There is no material to explain what would appear to be a decrease in the value of the property of approximately $15,000 over a matter of four months. Further, little or no information is contained in the appellant's affidavit as to whether any activity of a commercial nature or otherwise is carried on at the vacant block of land he owns in partnership at Wagin. It is particularly curious and of some concern that a DOLA search shows that property was purchased five years ago in November 1997 for $53,000 and yet the appellant deposes that it is now worth $47,000 less than the purchase price. He provides no explanation for such a dramatic decrease in the value of the land. No documentation which independently values any of these properties is annexed to the appellant's affidavit. 14 Whilst I do not take the view that the appellant has filed a misleading affidavit, it is nonetheless a document which I consider to be inadequate in certain respects and further it is lacking in information which in my view would present a complete picture of the appellant's financial circumstances to the Court. There is no doubt that the appellant is a person who has a number of assets, some of which are of considerable value, but equally I accept that he has some liabilities, including a not insubstantial bank overdraft. Having carefully considered all of the material put before the Court relevant to this aspect of the matter, I do not consider that it would be fair or appropriate to order the appellant to pay the full sum of $200,000 into Court in order to permit him the opportunity to present a defence to the claim. On the other hand, I am certainly not satisfied that the appellant's circumstances are such that he could not pay a portion of that amount of money into Court which particularly given the
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history of this matter to date, I consider to be appropriate and fair. The sum I have fixed upon that the appellant should pay into Court by way of security is $50,000.
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