Westwill Pty Ltd v Byrt - [2009] SADC 95

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
WESTWILL PTY LTD & ORS v BYRT & ORS
[2009] SADC 95
Judgment of His Honour Judge Chivell
28 August 2009
PROCEDURE - COSTS - SECURITY FOR COSTS
Appeal from decision of Master dismissing action for want of prosecution - failure to comply with order to provide security for costs - whether original order should have been set aside or varied - whether fresh evidence produced - whether special circumstances existed. Appeal dismissed.
Rules of Court 1987; Corporations Law (SA) Act 1990, referred to.
Westwill Pty Ltd v Heath (1989) 52 SASR 461; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; Wilshire-Smith v Leighton Hill Pty Ltd (No 2) unreported No. S 5176; Harpur v Ariadne Australia Ltd (1984) 2 Qd 523; Tiger AFC (Mayne) v AFL (2000) FCA 1650; Drumdurno v Braham (1982) 42 ALR 563; Dictating Machine Centre Pty Ltd v Combe (1981) 26 SASR 316; Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, considered.

WESTWILL PTY LTD & ORS v BYRT & ORS
[2009] SADC 95
Introduction

This is an appeal from the decision of Master Rice of this Court on 13 March 2009 in which he dismissed the within action for want of prosecution.
Strictly speaking, the appeal was out of time, but Mr Wellington, counsel for the defendants, did not oppose an extension of time being granted in view of Mr Jones’s recent health problems. Accordingly, to the extent necessary, I extend the time for bringing this appeal.
Background
This action was commenced in 2002. It involves a claim of professional negligence against the defendants, a firm of solicitors.
For the most part, the plaintiffs have not been legally represented. There has been a vast amount of interlocutory disputation in the action, as the bulky file demonstrates. For the purposes of this appeal, however, it is only necessary to record that:
·on 8 June 2007, the learned Master ordered that the plaintiffs provide security for the defendants’ costs up to the end of the first day of trial in the sum of $50,000;
·an appeal from that order was dismissed by Judge Smith of this Court on 22 August 2007;
·leave to appeal from Judge Smith’s decision was refused by Doyle CJ on 18 July 2008;
·the plaintiffs sought to appeal to the Full Supreme Court, but the appeal was eventually struck out by Kourakis J on 24 October 2008 (in chambers);
·the defendants applied on 28 October 2008 (FDN83) for dismissal of the action for want of prosecution because the plaintiffs have never complied with the order for security for costs. The plaintiffs’ representative, Mr Jones, informed the Master at the hearing of the application that the orders could not, and would not, be complied with. At the hearing of this appeal he told me the same thing;
·on 11 March 2009, two days before the hearing of that application, the plaintiffs filed an application which in the words of the Master, “in effect asks me to reconsider my order for security for costs ... on the basis of ‘fresh evidence’ which (Mr Jones) asserts has been deliberately withheld from the plaintiff(s) by the defendants” (Reasons, [3]);
·the learned Master entertained this application despite the various appeals undertaken by the plaintiffs, presumably on the basis that Rule 100.04 of the 1987 Rules of Court anticipates application for the variation of an order for security for costs “at any time” (see the notes to the rule in Lunn, Civil Procedure in South Australia, at 100.04.1 at p10,675). Whether such a reconsideration of the original order falls within the concept of “variation” may be debatable. On any view, the Master treated the application in a manner very favourably to the appellants;
·the Master found that none of the evidence was “fresh”, let alone withheld by the defendants - indeed, much of it had been disclosed by the defendants in the discovery process;
·further, the Master, after hearing Mr Jones at length, found that all of the issues raised were in essence an attempt to go behind the judgment of Duggan J in Westwill Pty Ltd v Heath (1989) 52 SASR 461. In that case, the plaintiffs appealed, but the appeal was subsequently withdrawn. I will discuss this case in a little more detail shortly;
·the Master correctly applied the principles surrounding finality in litigation, quoting from the judgment of the High Court in D’Orta‑Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [34]. The quotation included the following:
Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding ... The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system.
·further, the Master observed that the plaintiffs, after a long and exhaustive interlocutory process, had, with the assistance of a legal practitioner, obtained leave to file and serve an Amended Statement of Claim. Unfortunately, they no longer have that assistance. That amended claim was much narrower than had previously been the case. The “new” material sought to broaden out the scope of the issues again, a path to which the Court had previously denied them access;
·the learned Master then dealt with the documents Mr Jones wished to discuss in detail. In summary, he found that they were inadmissible ([27]) and irrelevant ([31]);
·finally, the learned Master concluded:
The bottom line is this: the material in support of the application of the plaintiff, FDN 86, is not sufficient to cause me to reconsider the issue of the security for costs at all. The allegations have been presented previously. The assertions that the documents have been intentionally withheld by the defendants is simply not made out at all. ([38]).
·the learned Master refused to reconsider the order for security for costs.
·He then considered the application to dismiss the action. He noted Mr Jones’s intimation that security could be provided. He noted that the plaintiffs had had ample time to arrange security but had not, apparently, even attempted to comply. After referring to the comments of Lander J in Wilshire‑Smith v Leighton Hill P/L (No 2), unreported, No S5176, delivered 14 July 1995 (see Lunn, ibid, at p10,675), he dismissed the action for want of prosecution, and ordered the plaintiffs to pay the defendants’ costs of the action.
The hearing of the appeal
Mr Wellington conceded that I ought to approach the appeal on the wider basis, namely to hear Mr Jones’s arguments about the evidence he said should have led the learned Master to reconsider the order for security for costs.
What should be kept steadily in mind, however, is the justification for the making of the original order for security for costs. In his reasons, dated 8 June 2007, the learned Master reminded himself of the comments of Connolly J in Harpur v Ariadne Australia Ltd (1984) 2 Qd R 523 at 532:
The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play. If however he is already available for whatever he is worth, the object of the legislation is seen to be satisfied.
It is not disputed that the corporate plaintiffs are without assets and are effectively insolvent, and Mr Jones is impecunious. The Master outlined in detail the history of the action. The interlocutory proceedings have been complex and voluminous. The defendants have already incurred significant legal costs. Rule 100.01 of the 1987 Rules (“87R100.01(e)”) sets out the circumstances in which an order for security for costs may be made. The relevant parts of the Rule for the purposes of this appeal are:
100.01       The Court may order security for costs to be furnished:
(a)    Plaintiff insolvent and nominal – where the plaintiff is a mere nominal plaintiff and is in a condition of poverty or insolvency;
(b)    …
(c)    …
(d)    …
(e)    Special circumstances – where for special circumstances the justice of the case requires.
There is no suggestion that either of the plaintiffs are merely nominal for the purposes of 87R 100.01(a). It is possible that an order for security for costs against the corporate plaintiff might have been justified by s 1335(1) of the Corporations Law (SA). However, that would not have applied to Mr Jones, and it has long been held that impecuniosity, of itself, should not justify such an order against a natural person (see the cases quoted in Lunn (supra) at [87R 100.01.20] on p 10,653).
As to the existence of special circumstances for the purpose of 87R100.01(e), the learned Master set out at length the nature of the plaintiffs’ claims, which arise out of the legal work performed by the defendants for the plaintiffs in Westwill Pty Ltd v Heath, to which I have already referred.
The defendants were unsuccessful in that case. The trial judge, Duggan J, accepted the evidence of the defendant Mr Heath and rejected the evidence of Mr Jones. There was a finding that Westwill and Mr Jones had acted unconscionably towards Mr Heath, who was then elderly and suffering from a terminal illness. The action against Mr Heath was dismissed with costs. Those costs were not paid either by Westwill or Mr Jones. The learned Master observed that Mr Heath was “financially ruined” as a result of the case (p13).
The learned Master identified the following factors when considering whether “special circumstances” exist:
·the delay of between 13 and 16 years in prosecuting this claim;
·the delay of more than four years before an acceptable Statement of Claim was presented, and the 29 hearings already taken up;
·Mr Jones’s incapacity to comprehend the issues involved, and to conduct such litigation himself; and
·Mr Jones’s seeming inability to obtain and keep legal representation.
As to the exercise of his discretion, the learned Master referred to Tiger AFC (Mayne) v AFL (2000) FCA 1650, Drumdurno v Braham (1982) 42 ALR 563, and Dictating Machine Centre Pty Ltd v Combe (1981) 26 SASR 316. He took into account the following factors:
·any delay in bringing the application for security for costs was brought by the plaintiffs’ failure to prosecute the action in an orderly way;
·it is difficult to gauge the merits of the plaintiffs’ claim, but the gravamen of the plaintiffs’ complaints about the defendants’ handling of the case, namely that they failed to obtain appropriate valuation evidence before the trial before Duggan J, misses the point that Duggan J’s decision turned upon a finding of unconscionable conduct, not upon a valuation of the land in question. He said, “I cannot conclude that the defendant has a strong case”;
·the costs already incurred were substantial, and the plaintiffs had not paid the costs of the Westwill v Heath litigation;
·the plaintiffs’ impecuniosity was not through the actions of the defendants;
·the defendants were not acting oppressively in bringing the application;
·he accepted that there was a good chance that an order for security for costs would result in a stay in proceedings; and
·there was no‑one else offering support, financial or otherwise, to the plaintiffs.
The learned Master concluded that special circumstances existed, and that it was appropriate to exercise his discretion to make the orders. As I have already observed, the plaintiffs have exhausted their rights of appeal in relation to those conclusions.
Mr Jones sought to argue a number of further points before me in relation to the Westwill v Heath action, including:
·the defendants did not call an engineer;
·another neighbour, “Kriegs”, also supported the development he was proposing;
·he was impecunious because of a “massive fraud” which was being pursued in the Magistrates Court; and
·Master Rice’s decision was based on the wrong evidence, because there is other evidence about the value of the land.
What Mr Jones is either unable or unwilling to recognise is that none of these issues address the reasons why the plaintiffs lost the Westwill v Heath case, namely unconscionable conduct, and none of them address the reasons why Master Rice made the security for costs order, namely the plaintiffs impecuniosity, the extraordinary amount of time and wasted legal work taken to bring the action to its present unsatisfactory stage, Mr Jones’s incapacity to further conduct the action to conclusion appropriately, and the other factors relevant to the exercise of the discretion.
None of the matters raised by Mr Jones change those factors at all.
Indeed, everything that Mr Jones said at the hearing merely reinforces, in my mind, the appropriateness of the Master’s order for security for costs in the context of this litigation.
There is certainly nothing before me which calls for any interference with the exercise of the learned Master’s discretion, quite the contrary.
The order for dismissal of the action in my view was entirely proper. There is a limit to the extent to which the respondents and the court system generally should be taxed in order to accommodate the appellants’ efforts to progress this litigation (see Aon Risk Services Australia Limited v Australian National University [2009] HCS 27). In my opinion, the Master was correct to conclude that the limits have been exceeded in this case.
Accordingly, I dismiss the appeal.