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[2021] QCA 198
General information, not legal advice.
Court of Appeal (Qld)
2021-09-17
Fraser and Bond JJA and Wilson J
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd [2021] QCA 198
PARTIES: ADEVA HOME SOLUTIONS PTY LTD / ACN 165 010 962 / (appellant) / v / QUEENSLAND MOTORWAYS MANAGEMENT PTY LTD / ACN 010 630 921 / (respondent)
FILE NO/S: Appeal No 13643 of 2020 SC No 8932 of 2020
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane – [2020] QSC 361 (Applegarth J)
DELIVERED ON: 17 September 2021
DELIVERED AT: Brisbane
HEARING DATE: 19 May 2021
JUDGES: Fraser and Bond JJA and Wilson J
ORDER: Appeal dismissed with costs.
CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – AMOUNT AND NATURE OF SECURITY – where the respondent applied to the primary judge for security for costs in a representative proceeding – where the parties agreed that security for costs should be ordered – where the parties were in dispute as to the form of security to be ordered – where the appellant proposed that security be provided by way of a deed of indemnity from an after-the-event insurer based in England – where the primary judge decided in favour of the respondent and ordered that security be provided by way of payment into Court or unconditional bank guarantee – where the appellant complied with the order and paid the relevant security sum into Court – whether the exercise of discretion by the primary judge was affected by specific error – whether the order worked a substantial injustice because payment in the manner ordered might adversely affect the group members’ share in any recovery that may be obtained from the proceeding / Civil Proceedings Act (Qld), s 103ZA / Corporations Act 2001 (Cth), s 1335 / Uniform Civil Procedure Rules 1999 (Qld), r 5, r 670, r 671, r 672, r 673 / Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39, cited / Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114, approved / Commissioner of Taxation v Vasiliades (2016) 344 ALR 558; [2016] FCAFC 170, cited / DIF III Global Co-Investment Fund, LP v BBLP LLC [2016] VSC 401, cited / Equititrust Limited v Tucker [2020] QSC 269, cited / House v The King (1936) 55 CLR 499; [1936] HCA 40, followed / In re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318; [1946] NSWStRp 24, followed / Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48, cited / Perera v GetSwift Ltd (2018) 263 FCR 1; [2018] FCA 732, not followed / PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 65 ALJR 642; [1991] HCA 36, cited / Robertson v State of Queensland [2021] QCA 92, cited / Robson v Robson [2010] QCA 330, cited / Santos Limited v Fluor Australia Pty Ltd [2020] QCA 254, cited / Specialised Explosives Blasting & Training Pty Ltd v Huddy’s Plant Hire Pty Ltd [2010] 2 Qd R 85; [2009] QCA 254, cited / Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293, followed / Yara v Oswal (2013) 41 VR 245; [2013] VSCA 156, applied
COUNSEL: I R Pike SC, with D Krochmalik, for the appellant P L O'Shea QC, with E J Goodwin, for the respondent
SOLICITORS: Hilton Bradley Lawyers for the appellant King & Wood Mallesons for the respondent
FRASER JA: I agree that the appeal should be dismissed with costs for the reasons given by Bond JA.
BOND JA: Adeva Home Solutions Pty Ltd (the appellant) is the plaintiff in a proceeding in the trial division against Queensland Motorways Management Pty Ltd (the respondent) in which it contends that:(a)the respondent was the company responsible for the collection of unpaid tolls from toll road users who had failed to pay tolls as required;(b)the applicable statutory scheme contemplated that the respondent could seek payment from defaulting toll road users of the amount of the relevant unpaid toll plus an additional amount for certain administrative charges;(c)in the ordinary course of collecting unpaid tolls the respondent sought (and received) payment of the amounts of the unpaid tolls plus additional amounts for administrative charges;(d)the quantum of administrative charges sought by the respondent and received by it exceeded the amounts permitted under the statutory scheme; and(e)the respondent is liable to make restitution of overpayments received because they should be regarded as payments made by mistake, or alternatively the respondent is liable for damages for breach of statutory duty.
The appellant brings the claim in the trial division in its own right, as a representative party under Part 13A of the Civil Proceedings Act 2011 (Qld) and on behalf of “group members”; the group essentially being defined as the group of defaulting toll road users who have paid the allegedly excessive administrative charges. The total amount claimed is not yet quantified. The appellant’s pleading asserts that the appellant has paid $47.62 for the administrative charges levied to it and paid by it but does not identify how much of that figure comprised the excessive component. Whether the total claim becomes substantial will depend on the number of persons who fall within the group definition of defaulting road toll users and the extent to which it is alleged that excessive administrative charges have been levied to them and paid by them.
The prosecution of the proceeding is the subject of a litigation funding agreement which records that the funder has formed “The Queensland Toll Roads Scheme” under which persons having claims of the nature just described and agreeing to join the scheme might recover damages or other compensation as regards those claims and for the mutual benefit of themselves and the funder. Amongst other things, the agreement provides that, while the funder is a party to the scheme, it will fund the litigation, including by meeting security for costs orders and “in its discretion” may arrange for the costs order to be met by after-the-event insurance or a deed of indemnity whereby either an insurer or the funder indemnifies the defendant in respect of costs.
By an interlocutory application filed on 23 October 2020, the respondent sought security for its costs of and incidental to the proceeding up to and including a case management hearing which had been scheduled for 18 December 2020. The obvious contemplation was that the amount sought would be a first tranche of security, and payment of other tranches would become necessary as the litigation progressed.
Principles governing an appeal from an exercise of judicial discretion in an interlocutory decision on a question of practice and procedure
The determination of appeals from an exercise of judicial discretion call for a particular exercise of appellate restraint. Thus, in order to persuade an appellate court to overturn an exercise of a discretionary judgment by a judicial officer, an appellant must demonstrate the kind of error identified in House v The King (1936) 55 CLR 499 at 504–505, namely:(a)acting upon a wrong principle;(b)allowing extraneous or irrelevant matters to guide or affect the exercise of the discretion;(c)mistaking the facts;(d)failing to take account some material consideration; or(e)reaching a result which, upon the facts is so unreasonable or plainly unjust that the appellate court may infer error, even if the Court cannot identify it precisely.1
The determination of appeals from an exercise of judicial discretion in an interlocutory decision concerning questions of practice and procedure call for an even greater exercise of appellate restraint. Authority at the highest level,2 approves the observations of Sir Frederick Jordan in In re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 at 322-323 (footnotes omitted):
"… it is only in the most exceptional circumstances that a Court of Appeal could regard itself as justified in interfering with the exercise of a discretion by a judge of first instance–only where he has misapplied the law, or his order is likely to lead to a miscarriage of justice: Evans v Bartlam. In this connection, however, I am of opinion that, as was pointed out by this Court in In re Ryan, there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal. But an appeal from an exercise of a so-called discretion which is determinative of legal rights stands in a somewhat different position. In this class of case, too, a Court of Appeal submits itself to self-imposed restraints, but restraints which, though strict, are somewhat less stringent than those adopted in matters of practice or procedure."
In appeals from an exercise of judicial discretion in an interlocutory decision concerning questions of practice and procedure, although there is no absolute rule and each case must be considered in light of its own particular circumstances, generally an appellate court will not interfere unless, in addition to error of principle, the appellant demonstrates that the order will work a substantial injustice to one of the parties: see Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48 at [14] per Williams JA (with whom Davies JA and Mullins J agreed) and Santos Limited v Fluor Australia Pty Ltd [2020] QCA 254 at [29].
The present appeal is an appeal from an exercise of judicial discretion in an interlocutory decision concerning questions of practice and procedure and calls for an exercise of appellate restraint in accordance with the above principles: Specialised Explosives Blasting & Training Pty Ltd v Huddy’s Plant Hire Pty Ltd [2010] 2 Qd R 85 at 99-100 [56] to [57] per Muir JA (with whom Holmes JA and Philippides J agreed); Robson v Robson [2010] QCA 330 at [19] per Muir JA (with whom Chesterman JA and Philippides J agreed); and Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114 at [23] to [24] per Margaret Wilson AJA (with whom McMurdo P and Applegarth J agreed).
Principles governing the choice of the form by which security for costs should be provided
By its application for security for costs, the respondent invoked the jurisdiction to make such orders conferred on the Court by:(a)r 670(1) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) (which empowers the Court to “order the plaintiff to give the security the court considers appropriate for the defendant’s costs of and incidental to the proceeding”);(b)s 1335 of the Corporations Act 2001 (Cth) (which empowers the Court, where a corporation is a plaintiff and there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in its defence, to “require sufficient security to be given for those costs”);(c)s 103ZA of the Civil Proceedings Act (which empowers the Court in a representative proceeding to “make any order the court considers appropriate or necessary to ensure justice is done in the proceeding”); and further or alternatively(d)the inherent jurisdiction of the Court (the Court having an inherent power to regulate its own practice and procedure so as to procure proper and effective administration of justice and to prevent abuse of its own process, and that power being regarded as extending to the power to order security for costs).3
The parties did not suggest, either below or in this Court, that the principles informing the exercise of the power to make a security for costs order varied depending on the source of the power. Accordingly, for present purposes, it suffices to focus on the power conferred under the UCPR.
The following observations may be made about the scope and purpose of the power so conferred, in particular so far as it relates to the exercise of discretion in relation to the form of any security which is ordered.
First, as mentioned, UCPR r 670(1) empowers the Court to “order the plaintiff to give the security the court considers appropriate for the defendant’s costs of and incidental to the proceeding.” Those words make evident that the purpose of the power is to afford a defendant “appropriate” protection against the risk of non-recovery of its costs, in the event it is ultimately successful. Historically, appropriate protection has been regarded as ensuring the availability of a fund within the jurisdiction against which a costs judgment could be enforced by a successful defendant. This was recognised in Commissioner of Taxation v Vasiliades [2016] FCAFC 170 in terms which, though made in relation to the power conferred on the Federal Court by s 56 of the Federal Court Act 1976 (Cth), are equally applicable to UCPR r 670. There, Kenny and Edelman JJ observed at [72]:4
“The purpose to be served by making an order for security for costs is to ensure that a successful respondent to a claim will have a fund available within the jurisdiction of the Court against which the respondent, if successful in defence, can enforce a judgment for costs in the respondent's favour. This purpose is, of course, relevant to an exercise of discretion. The factors that the courts have over time recognised as relevant to an exercise of discretion are relevant because they bear on the purpose for which an order for security for costs is made. Thus, if an applicant in a proceeding is ordinarily resident outside the jurisdiction, an award of security for costs means that a respondent ‘does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement’: Energy Drilling Inc v Petroz NL (1989) ATPR 40-954 at 50,422 (Gummow J). See also: Logue v Hansen Technologies Ltd 125 FCR 590 at [18] (Weinberg J); GAIN Capital UK Limited v Citigroup Inc [2015] FCA 1009 at [18] (Yates J); and Oswal [2015] FCA 1143 at [57] (Nicholas J).”
“(a) the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or
(b) the plaintiff is suing for the benefit of another person, rather than for the plaintiff’s own benefit, and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or
(c) the address of the plaintiff is not stated or is misstated in the originating process, unless there is reason to believe this was done without intention to deceive; or
(d) the plaintiff has changed address since the start of the proceeding and there is reason to believe this was done to avoid the consequences of the proceeding; or
(e) the plaintiff is ordinarily resident outside Australia; or
(f) the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient property of a fixed and permanent nature available for enforcement to pay the defendant’s costs if ordered to pay them; or
(g) an Act authorises the making of the order; or
(h) the justice of the case requires the making of the order.”
“(a) the means of those standing behind the proceeding;
(b) the prospects of success or merits of the proceeding;
(c) the genuineness of the proceeding;
(d) for rule 671(a)—the impecuniosity of a corporation;
(e) whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;
(f) whether the plaintiff is effectively in the position of a defendant;
(g) whether an order for security for costs would be oppressive;
(h) whether an order for security for costs would stifle the proceeding;
(i) whether the proceeding involves a matter of public importance;
(j) whether there has been an admission or payment into court;
(k) whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
(l) whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
(m) the costs of the proceeding.”
Fourth, the application of UCPR r 670(1) is also expressly made subject to the rules generally. It follows from r 5 that r 670(1) should be applied with the objective of avoiding undue delay, expense and technicality and facilitating the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
Fifth, the rules provide no express guidance about how security for costs should be required to be provided, if a Court has determined that security should be provided. The Court is empowered by UCPR r 673 to order that security be given “in the form, at the time, and on any conditions the court directs.” In my view, however, the appropriate starting point for analysis can be found in what has been identified as the protective purpose of the rule at [18] above. An exercise of power should, generally, be directed towards the fulfilment of the purposes for which the power was conferred. In this regard, I agree with the observations made by Tate and Kyrou JJA in Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 at [59] and would adopt but slightly modify their Honours’ remarks. Ordinarily, a Court would prefer to require security for costs in a form that enables funds to be accessed within the jurisdiction with a minimum of risk, including risk of cost and delay. A form of security for costs which does not provide a fund which could be accessed without the cooperation of the opposing party or a person who is connected to that party — and which might require the commencement of proceedings to enforce it — would have the potential to undermine the purpose of the rules as stated in UCPR r 5, because it would carry with it the risk of satellite proceedings and additional delay and costs.
Sixth, it would, however, be wrong to conclude that an order in a form which did not provide a fund within the jurisdiction which would be accessible with a minimum of risk, including risk of cost and delay, could never be regarded as appropriate security. What is required is the exercise of a discretionary judgment, conducted with an appreciation of the protective purpose for which the power to order security has been conferred and the goals specified in r 5, and having regard to all of the circumstances of the particular proceeding, including the factors mentioned in UCPR r 672. In a particular case, there might well be evidence of countervailing considerations which could suggest that the provision of security for costs in the form of a right enforceable in a foreign jurisdiction is appropriate. Evidence might demonstrate, for example, that an order in any other form would be oppressive, or would stifle the proceeding. There may be other considerations which are sufficient to justify ordering the provision of security in such a form. Hard and fast rules cannot be laid down. As McHugh J observed in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 65 ALJR 642 at 643:
“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.”
Finally, it follows from the foregoing, that the principles which should inform the exercise of the discretion in relation to the form of security for costs may be summarised in this way (cf Yara v Oswal (2013) 41 VR 245 at 268–269 [115]):(a)first, the purpose of the power to order security for costs is to ensure that a successful defendant will have a fund available within the jurisdiction against which it can readily enforce an order for costs;(b)second, like all powers conferred by the UCPR, the exercise of power should also be applied in accordance with UCPR r 5;(c)third, the exercise of power requires the formation of a discretionary judgment, which in turn requires the Court to weigh all relevant circumstances (as to which see UCPR r 672) in the manner referred to in PS Chellaram & Co Ltd v China Ocean Shipping Co;(d)fourth, consistently with the protective purpose of the power, a Court would ordinarily prefer to require security for costs in a form that enables funds to be accessed within the jurisdiction with a minimum of risk, including risk of cost and delay;(e)fifth, there may be countervailing considerations in a particular case which make it appropriate to require security to be provided in a different way (which could include by the provision of a right exercisable in a foreign jurisdiction, or by the provision of a form of security which carries with it some degree of risk of cost and delay); and(f)sixth, the form of the order should be that which best serves the interests of justice in the circumstances of the particular case in which the discretion is to be exercised.
The appellant sought to summarise the applicable general principles in a different way.
It did so in these terms:
“12. The fundamental question is whether the form of security ordered is adequate to protect the party seeking it: Blue Oil Energy Pty Ltd v Tan [2014] NSWCA 81 at [22].
‘(1) the Plaintiff is entitled to propose security in a form least disadvantageous to it;
(2) the Plaintiff bears a “practical onus” of establishing that the proposed security is adequate and does not impose an "unacceptable disadvantage" on the Defendant;
(3) in order to be adequate the proposed security must satisfy the protective object of a security for costs order, namely, to provide a fund or asset against which a successful Defendant can readily enforce an order for costs against the Plaintiff; and
(4) based on these and any other relevant considerations, the Court will determine which justice is best served in the particular circumstances of the case.’
Moreover, in representative proceedings, security should be provided in a way that is the least disadvantageous to group members who will likely bear the ultimate cost of the provision of security: Perera v GetSwift Ltd (2018) 263 FCR 1; [2018] FCA 732 at [196]. …
Importantly, though, the question for the Court is not one of relative adequacy of the forms of security: Yara v Oswal (2013) 41 VR 245; [2013] VSCA 156 at [115]; DIF Ill Global at [63]; Re Tiaro Coal Limited (in liq) [2018] NSWSC 746 (Tiaro Coal) at [12]. As Gleeson JA (sitting at first instance) observed in Tiaro Coal at [22]:
‘It would be an error to approach the issue of the form of security by undertaking a comparison exercise of the relative attributes of the security offered by the plaintiff and the “conventional” or “familiar” forms of security by cash deposit or bank guarantee, with a view to determining which form of security was superior and which was inferior.’”
I disagree with the way in which the appellant has framed its summary. It attempts to reduce an exercise of discretion which should be approached in the way I have explained, into a set of hard and fast rules.
It is appropriate, nevertheless, to make some observations concerning the appellant’s summary of principle.
First, of course, literally, a plaintiff can propose a form of security in whatever way it chooses. But the question is whether any regard should be had to the fact that a plaintiff expresses a preference. In my view, a plaintiff has no free-standing “right” or “entitlement” to provide security in a form least disadvantageous to it. Nor, for the reasons I explained in Equititrust Limited v Tucker [2020] QSC 269 at [53], does authority support the existence of such a free-standing right or entitlement. To recognise such a proposition might be to suggest that the defendant has a correlative “duty” or “obligation” to accept such security, or even to invite the application of the law’s reluctance to infringe upon rights unless clearly and unambiguously constrained so to do. In any event, talking about an “entitlement” of the plaintiff is to approach the exercise of the discretion from the wrong direction. In my view, the discretion is to be approached in the manner I have identified at [18] to [24] above. Of course, that is not to say that the disadvantage which might accrue to a plaintiff consequent upon being required to provide a particular form of security is irrelevant to a proper exercise of discretion. UCPR r 672 permits an examination of the means of those standing behind a proceeding. Having regard to what the evidence revealed of those means, it might well be that the disadvantage accruing to a plaintiff if a particular form of security is ordered might be such as to amount to a countervailing consideration sufficient to warrant ordering security in a form other than the form which would ordinarily be required (in the sense to which I have referred at [22] to [23] above). For example, the disadvantage might be such as to justify an argument that it would be oppressive to require a plaintiff to provide security in a one form (but not in another), or that requiring security in a particular form might result in stifling the litigation. Or access to justice considerations might arise (although it may be that such considerations are sufficiently taken into account by the instruction in UCPR r 672 to consider the issues of the means of those standing behind the proceeding, oppression and stifling when they are raised by the evidence).
Second, it is true that in Perera v GetSwift Ltd, Lee J did write at 54 [196]: “In the context of class actions, I would add that security should be provided in a way that is the least disadvantageous to group members who will, albeit often indirectly, likely bear the ultimate cost of the provision of security.” But that proposition should not be accepted as correct, as expressed. It is not justified by the only reason given for it, because in most ordinary litigation the plaintiff will bear the ultimate cost of the provision of security and will do so directly. Nor is any justification to be found for the proposition in the UCPR or the . There is no justification in principle to confer a special rule for representative proceedings, as a matter of assumption. But again, that is not to say that it would be irrelevant to a proper exercise of discretion if evidence demonstrated a particular disadvantage which might accrue to group members in a class action or a representative proceeding consequent upon being required to provide a particular form of security. Similar considerations apply as referred to in the preceding paragraph. Evidence justifying such a conclusion in a particular case would be required.
The appellant’s case on appeal
The appellant did not contend that the primary judge’s discretion miscarried because the outcome was so unreasonable or plainly unjust that this Court should infer error.
Rather, by its written submissions, the appellant distilled its case into the contention that the primary judge made three specific errors, namely:(a)making a comparison of different forms of security and considering their impact on the appellant and the funder;(b)failing to take into account that the terms of the funding agreement meant that group members would be relatively disadvantaged by paying security in the form of payment into Court; and(c)failing to conclude that the proposed deed of indemnity was adequate security.
The contention regarding the second alleged error raised essentially the same issue as the contention that the order made might cause substantial injustice. I will deal with the alleged errors in the sequence they were advanced.
The alleged first error
The existence of this error turned on the way in which the appellant sought to rely on the propositions of law, quoted at [26] above.
The appellant first contended:
“The primary judge misapplied the applicable principles by adopting that course in comparing the AmTrust Deed of Indemnity with alternative forms of security (see, for example, the Reasons at [2]: Record Book at p. 12, where his Honour referred to security in the form of money paid into Court or an irrevocable bank guarantee as the ‘usual way’ of providing security). The authorities dictate that a plaintiff is entitled to propose the form of security least disadvantageous to it so long as that security is adequate to protect the defendant. The test is not to be clouded with reference to the historical manner in which security for costs has typically been given.
As set out further below, the course adopted by primary judge led to a further and apparently more consequential error – his Honour incorrectly embarked on a detailed consideration of what was said to be the absence of evidence as to the relative prejudice that would be suffered by the action's litigation funder (Funder) (and, it might be thought, the Group Members) in providing security for costs in the form of payment into Court rather than in the form of an indemnity from AmTrust.”
The appellant went on to suggest that the primary judge made two inter-related errors. First, considering the differences between the securities proposed by the respondent and those proposed by the appellant. Second, considering what the evidence revealed as to the impact of the securities proposed on the appellant. In this regard, the appellant contended that “[t]he focus must be on the adequacy of the security from the perspective of the defendant, not on the extent of the burden imposed on the plaintiff from the possibly differing forms of security that may be provided.”
It will be apparent from what I have already written that much of the appellant’s argument is founded on an approach to the exercise of the discretion which I reject.
Ordering security by requiring the provision of a quickly and cheaply accessible fund within the jurisdiction is in fact the “usual way” of ordering security. I do not regard my accepting and applying the observations made by Kenny and Edelman JJ in Commissioner of Taxation v Vasiliades (quoted at [18] above) to amount to clouding the applicable test. I have explained why it would be consistent with the protective purpose of the power and with its history for a proper exercise of discretion to proceed from an explicit recognition that a proposal under consideration would require a departure from the ordinary course of requiring the provision of a fund within the jurisdiction, and, accordingly, to consider whether there were countervailing considerations which warranted taking that course in the particular case.
The primary judge did not in terms approach the exercise of discretion in the manner I have described. But his approach did not differ from it in substance. He identified that the course proposed by the appellant departed from the usual way and posited that the ultimate factual question was whether the disadvantages flowing from that course (namely the delay in accessing security; the risk of not being able to recover; and of requiring satellite litigation in order to do so) were acceptable in all the circumstances.6 The enquiry into what was acceptable involved a consideration of what it was that the appellant relied on to demonstrate that they were acceptable and a conclusion that it was hard to see that the appellant had discharged its onus.7
Moreover, when what is at issue is a decision between two competing forms of security, it is impossible to imagine how a principled exercise of discretion could ignore the differences between the competing forms. Of course, it would be an error to reduce the discretionary analysis to some form of simplistic “which form is better” question, but the analysis conducted by the primary judge could not be regarded as having simplified the question before him in such a way. I agree with the respondent’s submission that:
“Rule 5(2) expressly requires the court to apply the rules (which include rules 670 to 673) with the objective of avoiding undue delay, expense and technicality. In applying this rule, the court should be able, where necessary, to compare the merits of the competing forms of security through the lens of delay, expense and technicality. The application of rule 5(2) in this way is supported by Trailer Trash.”
Further, it is wrong to suggest that it is necessarily irrelevant to consider the extent of the burden imposed on the plaintiff by the competing forms of security that may be under consideration. UCPR r 672 expressly makes it relevant to consider the means of those standing behind a proceeding and also whether an order for security for costs would be oppressive or stifle the proceeding. Where a defendant pursues a security for costs order, the evidence in a particular case may require a consideration of the nature and consequences of the burden imposed on the plaintiff (and anyone else standing behind the proceeding) by making an order for security, having regard to what the evidence reveals as to their means. Both considerations also apply when the question at issue is not whether security should be ordered but in what form it should be ordered. The reasons of the primary judge made it clear that he was alive to the possibility that ordering security in a particular form might have access to justice implications, and it is evident that the primary judge considered that issue and concluded that the evidence did not establish such concerns.8 There was no error in his having regard to such matters.
The alleged first error is not established.
The alleged second error
The appellant had suggested to the primary judge, by making brief reference to some clauses of the funding agreement in the course of oral argument, that the terms of the litigation funding agreement made it more expensive for the appellant and group members if security was provided other than in the manner proposed by the appellant.
The primary judge dealt with the question of cost of providing security without reference to the existence of those particular clauses. His Honour expressed his conclusion in this way:9
“That the form of security proposed by the plaintiff involves delay and additional costs for the defendant in accessing funds to pay its costs compared to the security sought by it (payment into Court or an unconditional bank guarantee from an Australian bank) cannot be denied.
Such delay and additional costs (the latter being ameliorated by an amount of security paid into this Court in respect of enforcement costs) may be justified in all the circumstances, particularly if the defendant’s preferred form of security is unavailable or too expensive. If it was not available to the plaintiff, an order for security in the form preferred by the defendant would have the potential to stultify a viable proceeding and deny access to justice. If it is available, but only at a price which is significantly higher than the alternative, it may unnecessarily increase the costs of litigation. However, where that form of security is not said by the plaintiff (or its funder) to be unavailable or far more expensive, it is not apparent what the real disadvantage to the plaintiff is or its extent.
The plaintiff has not said what the cost to it or its funder would be to obtain an unconditional bank guarantee from an Australian bank in the agreed amount of $210,000. It has not said what it expects to pay AmTrust to have it execute a deed of indemnity in the defendant’s favour to secure a costs order in the same amount. Disclosure of these amounts, or even estimates of those costs, may assist a plaintiff to discharge the practical onus of establishing that its proposed security does not impose an ‘unacceptable disadvantage’ on the defendant. It may permit a court to conclude that the disadvantage to the defendant in obtaining an inferior form of security is not unacceptable in all the circumstances.”
The second alleged error was said to be the primary judge’s failure to take into account evidence of the additional cost to the group members of security in the form of payment into Court. The appellant contended that “[t]his also involved a House v The King error insofar as his Honour failed to take into account (let alone give substantial weight to) a relevant consideration.”
In its argument on appeal, the only evidence relied on to justify the conclusion that there was an additional cost which should have been taken into account by the primary judge was the fact and terms of the funding agreement; a redacted form of that agreement having been placed in evidence before the primary judge. Although on appeal the appellant presented a more detailed examination of the terms of the agreement than was placed before the primary judge, the point was essentially the same. And, as I have mentioned, the appellant relied on essentially the same argument to justify the conclusion that the order made by the primary judge would, unless overturned, work a substantial injustice on the appellant.
It is true that the argument was advanced to the primary judge (albeit briefly) and that the primary judge did not address the argument in his reasons. But, as Henry J (with whom Fraser and McMurdo JA agreed) recently observed in this Court in Robertson v State of Queensland [2021] QCA 92 at [150], “[m]erely demonstrating an argument by a losing party was not addressed in the reasons for judgment will not ground error, it being the relative significance of the argument to the resolution of the determinative issues in the case which matters.”10
In my view, and for the following reasons, the appellant’s argument did not have any relative significance to the resolution of the determinative issues in the present case.
The relevant terms of the funding agreement were these:(a)Recital A recorded that the claimant (identified as the appellant by item 2 of a schedule to the executed terms sheet) believed that it had a valid claim (briefly summarised in item 3 of the schedule) and intended to retain lawyers to prosecute the claim.(b)Recital B was in these terms (emphasis added):
“Believing that other persons may have claims that are the same or similar to the Claim, the Funder has formed / intends to form a scheme bearing the name in item 1 of the Schedule (“Scheme”) under which persons having such claims and agreeing to join the Scheme (“Members”), with the benefit of funding and other assistance from the Funder and using the services of the Lawyers, might recover damages or other compensation as regards those claims and for the mutual benefit of the Members and the Funder.”
(c)The Scheme in item 1 of the schedule was named as “The Queensland Toll Roads Scheme”.
(d)Recital C and cl 1 of the executed terms sheet provided for the claimant to become a member of the scheme on the terms of “the Contract”.
(e)Clause 2 provided that the Contract was comprised of the terms sheet (which included the schedule to which reference has been made) and an annexed “Rules of the Scheme”.
(f)Rule 22 of the Rules of the Scheme relevantly provided (emphasis and footnotes added):
“22. Role of the Funder: While party to the Scheme, the Funder:
22.1 Will pay the Action Costs and any Adverse Costs, subject to and in accordance with the terms of these rules and the separate contract between the Lawyers, the Funder and the Representative;
22.2 If an Action requires, will meet any order for security for Adverse Costs and in its discretion may arrange for the order to be met by ATE Insurance11 or a Deed of Indemnity12;”
(g)Rule 57.1 of the Rules of the Scheme provided:
“In consideration of the Funder agreeing to enter into this Member Agreement and performing its obligations, subject to any Court order otherwise, the Member agrees that the Funder is entitled to receive payment of an amount equal to the Funder's Interest.”
(h)“Funder’s Interest” was payable out of the “Recovery”, a term defined in rule 2.24 of the Rules of the Scheme. For present purposes, it is sufficient to note that the term “Recovery” was essentially a reference to any amount received by a Claimant or to which it became entitled by way of judgment or settlement in the proceeding.
(i)“Funder’s Interest” was defined in item 4 of the schedule as the greater of “The Funder’s Commission” or “The Recovery Premium”. The item went on to provide:
“…13 the Funder's Commission is defined and calculated as the percentage of the Recovery set by the below table; and the Recovery Premium is defined and calculated as the aggregate Outstanding Funding as at the date of distribution of the Recovery, multiplied by the multiple set by the below table:”
Date of Recovery (inclusive) Multiple Percentage
1 July 2020 to 31 December 2020 1.5 [redacted]
1 January 2021 to 30 June 2021 1.75 [redacted]
1 July 2021 to 31 December 2021 2.25 [redacted]
1 January 2022 to 30 June 2022 2.5 [redacted]
After 1 July 2022 3.0 [redacted]
(j)Rule 2.23 of the Rules of the Scheme defined "Outstanding Funding" to include "[a]ny security for Adverse Costs provided or due to be provided by the Funder in an Action and/or an Appeal (other than by way of ATE Insurance or a Deed of Indemnity)".
An examination of the terms of the funding agreement permits the following conclusions to be made.
First, to use the language of UCPR r 672, those standing behind this proceeding comprise, on the one hand, the appellant (and ultimately anyone else falling within the group definition who joins the scheme), and, on the other, the funder.
Second, the funding agreement records the terms of a scheme by which those two interests (namely the members and the funder) have agreed to pursue litigation so as to recover damages or other compensation for the mutual benefit of both: see Recital B.
Third, whether the scheme operates to their mutual benefit or just the benefit of the funder, or to the benefit of neither of them, will depend on whether, and if so, to what extent the members make a recovery by way of judgment or settlement and what it might cost to do so.
Fourth, the parties have recorded in their agreement the way in which they will apportion any recovery which might be made. For reasons which were unexplained in the evidence, they chose to do so in a way which on some scenarios would increase the funder’s share of any recovery if security for costs was required in any way other than by after-the-event insurance or deed of indemnity (as defined). As to this:(a)If security is provided in any other way than by after-the-event insurance or deed of indemnity (as defined), the funder’s share of the fruits of any judgment or settlement sum might be proportionately increased (and the group members’ share proportionately reduced).(b)The extent to which that might occur would depend on timing considerations affecting the application of the multiple referred to in item 4 of the schedule.(c)But whether that might occur at all could also depend on other considerations. As the defendants submitted, there were four scenarios in which ordering security other than by after-the-event insurance or deed of indemnity would not affect the amount of the appellant's potential recovery at all, namely:if the appellant failed at trial or summarily, and no payment was made by the respondent to the appellant at all;if the proceeding settled on a "walk away" basis, and no payment was made by the respondent to the appellant at all;if the amount of the Recovery was consumed by the funder's Action Costs and nothing was paid to the appellant (although that may be a matter of assumption rather than certainty as a relevant clause in the Rules of the Scheme – rule 57.2 – was completely redacted);if the percentage of the Recovery payable to the Funder as the "Funder's Commission" under item 4 exceeded the "Recovery Premium", then the amount payable to the funder would be calculated without reference to the Outstanding Funding variable.
Fifth, there was no evidence which would permit a conclusion to be drawn about the likelihood of the various possible scenarios and, accordingly, no evidence which would justify the conclusion that making the order would inevitably come at a cost to the group members. It might only come at a cost to the funder, and no cost at all to the group members. Accordingly, the argument that making the order would lead to increased costs to the group members cannot be accepted.
The alleged third error
The appellant also suggested that the primary judge erred in failing to conclude that the proposed deed of indemnity was adequate security. The appellant seeks to have this Court form the view that the primary judge over-estimated the extent of the risk of cost and delay concerned in the appellant’s proposal. It seeks to persuade this Court to review the evidence itself and to form the views that:(a)the risk of indemnity not being satisfied by the insurer in England were no greater than with respect to an unconditional bank guarantee from an Australian financial institution;(b)the amount it proposed to pay into court covered the costs which would be involved in registering any judgment in England; and(c)enforcement of judgments of Australian courts in the United Kingdom should be regarded as easy and straightforward.
The primary judge evaluated the evidence before him and concluded, first, that under the appellant’s proposal, the respondent would not have access to a fund or asset in Australia against which it could enforce an order for costs. That conclusion was plainly right.
The primary judge went on to observe that, instead under the appellant’s proposal, the respondent would face the costs and delay associated with making demand against a foreign-based insurer, commencing proceedings on the deed if its demand was not met, obtaining judgment in Australia, registering that judgment in England and then possibly taking enforcement action in England. That conclusion was also plainly right. Indeed, the fact that the appellant offered to pay an amount into Court reflecting an estimate of the costs of registering a foreign judgment in England, must be seen as an acknowledgment that it could not be demonstrated that the risks to which the primary judge referred were non-existent or de minimis.
The primary judge acknowledged that the financial costs concerned could be offset by an amount paid into Court within the jurisdiction which took account of the expected costs. That conclusion too was plainly right. There was a contest in the evidence before the primary judge as to whether the appropriate amount was $30,000 (as the appellant contended) or very considerably more and subject to many risks (as the respondent’s evidence suggested). The primary judge found it unnecessary to make a decision as to what figure might be appropriate.
The primary judge was not persuaded that he should conclude that the proposed deed of indemnity was adequate security. But he arrived at that conclusion because of a combination of his identification of the existence of risk of cost and delay involved in the appellant’s proposal, his express acknowledgment of the uncertainties involved in an Australian judge making an accurate evaluation of the extent of that risk, and the fact that he was not persuaded that the appellant had discharged its onus of showing why the interests of justice were served by requiring the respondent to accept a security which involved imposing such disadvantages on the respondent.
The order which should be made
The appeal should be dismissed with costs.
WILSON J: I agree with the reasons of Bond JA and the order his Honour proposes.
Ure v Robertson [2017] 2 Qd R 566 at 579 [48] per Bond J, with whom Gotterson and Morrison JJA agreed. ↩
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177. ↩
See, for example, Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447-8 per Holland J. ↩
Dowsett J (although dissenting in the result) made similar observations (at [7] to [8]). ↩
It is not necessary to consider this area of legal principle, but, by way of example, see Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114 at [18] and [45]. ↩
Reasons at [41], [66] and [67]. ↩
Reasons at [64] and [66] to [74]. ↩
See reasons at [20] to [25] and [54] to [56]. ↩
See reasons at [54] to [56]. ↩
His Honour’s observations were also cited with approval in Greer v Greer [2021] QCA 143 at [112], per Bond JA with whom Sofronoff P and Wilson J agreed. ↩
ATE Insurance was a term defined as “an after-the-event insurance policy in relation to the Action, the Action Costs and/or the Adverse Costs, which in the Funder's absolute discretion is on terms satisfactory to the Funder”.
Adeva Home Solutions Pty Ltd
Queensland Motorways Management Pty Ltd [2021] QCA 198
(1981) 148 CLR 170
(2016) 344 ALR 558
(1936) 55 CLR 499
(2018) 263 FCR 1
(1991) 65 ALJR 642
(2013) 41 VR 245
The respondent and the appellant reached agreement that security for costs should be provided and that the appropriate amount for the first tranche of security was $210,000. The principal issue in contest at the hearing was whether security should be provided by way of irrevocable bank guarantee or money paid into Court (as the respondent contended) or in the form of a deed of indemnity from an after-the-event insurer based in England (as the appellant contended). The evidence demonstrated that the proposed insurer (AmTrust Europe Limited) was a major insurer which had a good credit rating, but which had no assets in Australia. Subsidiary issues were also argued in the event that the course favoured by the appellant was chosen, namely whether and to what extent the proposed form of deed should be amended, and the amount of money which should be paid into Court in Australia to secure costs which might be incurred by the respondent in the event it had to enforce the deed in England.
By a judgment published on 2 December 2020, the primary judge decided in favour of the respondent and ordered that security be provided within 14 days “by way of payment into Court or unconditional bank guarantee from an Australian bank.” The appellant complied with the order and paid the relevant security sum into Court.
On appeal, the appellant contends that the order made by the primary judge should be set aside and replaced with orders which require the release to the appellant of the monies paid into Court and the provision of replacement security by a deed of indemnity from the proposed insurer based in England, albeit with certain amendments to respond to criticisms of the terms of the deed.
To justify that outcome, the appellant sought to persuade this Court that the exercise of discretion by the primary judge was affected by specific error and, further, that the order worked a substantial injustice because payment in the manner ordered would adversely affect the group members’ share in any recovery that may be obtained from the proceeding.
For the reasons which follow, I am not persuaded that this Court should intervene in the primary judge’s exercise of discretion. The appeal should be dismissed with costs.
Finally, the observations made by Gleeson JA in Tiaro Coal at [22] quoted by the appellant may be accepted. That is because, as was recognised in DIF III at [65] (which his Honour had cited as authority for the observation quoted), such an approach would invariably lead to ordering security in the form of payment into Court on each occasion security was ordered, because that is by far the superior form of security. But that the question before the Court is not properly so characterised does not mean that, in a case such as the present, the exercise of the discretion should not proceed from an explicit recognition that the proposal under consideration is that the Court should require a departure from the ordinary course of requiring the provision of a fund within the jurisdiction, and, accordingly, an inquiry into whether there were countervailing considerations which warranted taking that course in the particular case.
Sixth, as I have already mentioned, UCPR r 672 permits an examination of the means of those standing behind a proceeding. Having regard to what the evidence revealed of those means, it might well be in a particular case that the disadvantage accruing to a plaintiff of ordering security in a particular form might sound against ordering security in that form. But in the present case and on the present evidence:(a)The funder was one of the persons standing behind the litigation, and there was no evidence that it lacked the means to meet security in any of the forms under consideration. It was common ground that the funder had in fact complied with the order made by the primary judge by paying monies into Court.(b)Further, as the primary judge found, there was no evidence addressing the actual relative costs of the different forms of security either to the group members or to the funder.(c)There was no evidence which would support an argument that for some reason it should be regarded to be oppressive to the appellant or other putative group members to order security in the usual way. Nor was such an argument put.(d)There was no evidence that making such an order would tend to stifle the litigation. The appellant explicitly declined any reliance on such an argument.
The result is that there is no reason to regard the terms of the funding agreement as demonstrating a countervailing consideration weighing in favour of the appellant’s proposed form of security. Nor is there any reason to conclude that the order of the primary judge will work a substantial injustice.
The second alleged error is not established. The appellant has not vindicated its argument that the order of the primary judge will work a substantial injustice.
I should observe that difficult questions might have arisen if, contrary to the foregoing conclusion, the proper construction of the funding agreement had been that the inevitable consequence of ordering security in the usual way would be to disadvantage group members to the advantage of the funder, thereby apparently vindicating the proposition that the order would lead to increased costs to the group members. When that outcome would, ex hypothesi, occur as a result of a voluntary agreement to alter the analysis of cost which would otherwise apply, would it still be appropriate to regard it as a cost to the group members? Or as having an influence on the present discretion? Or would that be inappropriate without evidence of the actual relative costs of security, and the reasons why the group members chose to enter into a bargain, such as might justify an argument that it would be oppressive to make an order which would disadvantage group members to the advantage of the funder? It is unnecessary to explore such questions in this case.
This is a paradigmatic case where to interfere with the primary judge’s evaluative judgment in such matters would be to act contrary to the principles concerning appellate reticence in appeals from an exercise of judicial discretion in an interlocutory decision concerning questions of practice and procedure. I decline to do so.
I do observe, however, that the real problem for the appellant before the primary judge was not that the primary judge made an erroneous over-estimation of the risk of cost and delay which was associated with the appellant’s proposed form of security. Rather, it was that:(a)he assessed that there was inevitably some risk of cost and delay and that risk was uncertain of assessment in many respects;(b)he formed the view that he would not be prepared to require the respondent to accept that risk without good reason; and(c)he was not persuaded that good reason had been demonstrated.
In my view, in reaching each of those conclusions, the primary judge was correct. Whilst one can reasonably debate the proper assessment of the extent of the risk, it is plain that the risk of cost and delay must be regarded as greater than would apply if the order sought by the respondent below was made. Money in court carries no risk, and unconditional bank guarantees from Australian banks have a long history of being regarded by Australian courts as good as cash. For reasons identified at [22] and [23] above, a Court would not ordinarily require security which accepted the risks inherent in the appellant’s proposal unless there was some countervailing consideration establishing a good reason to do so. Upon analysis in this case, the only reason proposed by the appellant is that those standing behind the proceeding prefer that course. I would not regard that to be a sufficient reason.
Deed of Indemnity was a term defined as “a deed whereby an insurer or the Funder indemnifies a Defendant in respect of part or all of its costs of the Action on terms satisfactory to the Funder in its absolute discretion”. ↩
There were other provisions increasing the Funder’s Commission if any Recovery arose after commencement of an appeal, which are unnecessary to record. ↩