Betz v Parker & Ors [2005] NSWSC 660 | Case summary

JUDGMENT 1 HIS HONOUR: This is an application pursuant to Pt 53 r 2 of the Supreme Court Rules. That rule is expressed as follows: " Cases for security (1) Where, in any proceedings, it appears to the Court on the application of a defendant: (a) that a plaintiff is ordinarily resident outside the State, (b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so, (c) subject to subrule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process, (d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings, or (e) that there is reason to believe that a plaintiff being a body corporate will be unable to pay the costs of the defendant if ordered to do so, the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings and that the proceedings be stayed until the security is given. (2) The Court shall not order a plaintiff to give security by reason only of subrule (1) (c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive." 2 The application is brought upon the basis that the plaintiff is ordinarily resident outside New South Wales. 3 The defendants, who bring this application, were at material times allegedly the members of a firm of solicitors and the plaintiff engaged their services. According to the statement of claim, the defendants agreed to act for the plaintiff in relation to an immigration/visa application, and in particular for the purposes of obtaining a "Temporary Business-Long Stay Class Visa". It is alleged that the solicitor who had the conduct of the matter acted negligently. The plaintiff was granted a bridging visa whilst the long term visa application was being considered but whilst the bridging visa was current he left Australia, whereupon that bridging visa automatically ceased. It is alleged that the defendants were negligent in the failure to advise the plaintiff of the visa position thereafter and in the circumstances that led to the plaintiff's detention for three days in Villawood from 21 March 2001. The plaintiff was required to leave Australia on 24 March 2001. 4 The above outline I have expressed in summary form from the statement of claim. It is the plaintiff's contention that in consequence of the defendant's negligence the plaintiff lost the chance of obtaining a long term business visa and that this had serious financial consequences for him. The alleged losses are set out in para 25 of the statement of claim. They are expressed to be in the vicinity of $1 million. 5 On this application the defendants rely upon the affidavit of Baron Alder sworn on 1 July 2005. In resisting the application, the plaintiff relies upon the affidavit of Bruce Patane sworn 28 June 2005. The additional evidence took the form of recent correspondence between the solicitors for the parties. 6 The statement of claim did not disclose the plaintiff's address. It gave an address for service care of his solicitors. At a directions hearing on 9 February 2005, the solicitor attending on behalf of the plaintiff was asked to provide the plaintiff's address and was informed that he was thought to live in New Zealand. On the following day Mr Alder was informed that the address would be supplied within seven days. On 11 February 2005 the plaintiff's solicitor informed the defendants' solicitor that the plaintiff's current residential address was in Walfischgasse, Vienna. 7 That information prompted Mr Alder to write to the plaintiff's solicitors on 11 February 2005 alerting them to an intended application to seek security for costs. 8 Then, on 18 March 2005, the plaintiff's solicitors wrote that the plaintiff's permanent residential address was in New Zealand and that the address in Vienna was only temporary for business purposes. 9 On 22 March 2005 Mr Alder wrote seeking to be informed as to the plaintiff's permanent residential address in New Zealand. This prompted a response on 31 March 2005 in which the permanent residential address in New Zealand was disclosed. 10 On 13 April 2005 the defendants' solicitors provided details of the basis upon which security for costs in the sum of $80,000 was being sought. 11 In his affidavit, Mr Patane deposed (at para 3.10) that the plaintiff mistakenly informed him that his permanent residential address was the address in Vienna. In that same affidavit Mr Patane deposed (at para 3.12 and 3.13) that the plaintiff is a citizen of the United States of America and that he had a specified business address in that country. 12 The plaintiff's income tax return submitted in the United States for the tax year 2004 revealed that in the calendar year commencing on 1 January 2004 the plaintiff resided at 63 Remuera Road, Auckland, that being consistent with the address given to the defendants' solicitor on 31 March 2005. This address is confirmed in the affidavit of Mr Patane. Mr Patane also deposed (at paras 3.8 and 3.9) that the plaintiff only has a short term visa and is required to travel outside New Zealand every ninety days to renew that visa. It is claimed that he has been unable to obtain a long term residential visa in New Zealand because he had been required to leave Australia. 13 Where does the plaintiff go when he leaves New Zealand? This was revealed in the recent correspondence to which I referred earlier. It appears from the letter of the plaintiff's solicitors dated 30 June 2005 that the plaintiff is required to leave New Zealand every ninety days and when he does so "he normally travels to the Pacific Islands, with the exception of travel to the United States or Europe for business purposes". The precise island or islands in the Pacific have not been identified. 14 So it is that the evidence discloses that the plaintiff is a citizen of the United States and that he has a temporary visa to stay in New Zealand but that visa requires him to leave that country every ninety days. 15 Plainly the plaintiff does not reside in Australia and has no right to do so. Because he is ordinarily resident outside Australia, the discretion to order security under Pt 53 r 2(1)(a) is enlivened. Should that discretion be exercised in favour of the applicants on this notice of motion? 16 Mr Perram submitted that it should be. Indeed, he submitted that the circumstance that the plaintiff was not resident in Australia is a circumstance which would ordinarily require an order for security, and in support of that submission referred to the decision in PS Chellaram Co. Ltd v China Ocean Shipping Co. (1991) 102 ALR 321. In that case, McHugh J made an order for security for costs. It is not suggested that the case is on all fours with the present case but Mr Perram relied upon the statement of principle appearing at 323 where his Honour said: "…for over two hundred 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." 17 That a plaintiff is ordinarily resident outside New South Wales is not the only matter to be considered on an application under Pt 53 r 2, and the rule confers a wide discretion, the exercise of which must be governed by all the circumstances of the particular case. 18 It is submitted by Mr Shoebridge that a weighty circumstance in this particular case is that on the plaintiff's case it is the defendants' negligence which has deprived him of the opportunity of residence within Australia. But for the defendants' negligence which bases his claim for damages against them, he may well have obtained the temporary business-long stay class visa which he engaged the defendants' services to obtain for him. Moreover, it is submitted an order for security for costs would stifle the litigation upon which the plaintiff has embarked. 19 Evidence as to the plaintiff's financial position is to be found in Mr Patane's affidavit and the annexures to it. In paras 3.14 and 3.15 Mr Patane referred to personal assets of the plaintiff which remain in Sydney following his brief visit here. Those assets include electronic equipment, furniture, clothes and sporting equipment, and an estimated value of $AUD30,000 has been placed upon those assets. However, in a schedule, being Annexure B to that affidavit, the plaintiff's personal assets in Australia and New Zealand are stated to have an aggregate value of only $25,000. Other assets are said to consist of cash and "cash equivalent" of $35,600, a super account valued at over $120,000, and a long term receivable note of $150,000. Against that the plaintiff is stated to have current total liabilities of $57,770. 20 Then, in the recent letter from the plaintiff's solicitors of 30 June 2005, it is stated that there is currently less than $US2000 in a bank account in San Antonia, Texas. That account does not seem to be mentioned in the statement of assets to which I have above referred, but it is mentioned in the plaintiff's tax return, also annexed to Mr Patane's affidavit. The balance at the time of completion of that return was $774. The tax return also discloses that the plaintiff had an account in 2004 in the Cayman Islands. In the letter of 30 June 2005 the explanation was given that that account was established to service rental and maintenance income expenses of a house which the plaintiff owned in the Cayman Islands. It is said that that property was severely damaged by a hurricane in 2004 but, presumably, it has some residential value whether or not the property was insured. 21 I consider that the evidence reveals that the plaintiff has the ability to provide security for costs. Mr Shoebridge submitted that even if that be so it would be unjust to call upon the plaintiff to provide his funds for security instead of permitting him to develop his business as he is endeavouring to do when such development would call upon the use of available funds. It was further submitted that the plaintiff has an obligation to mitigate his loss in the claim brought against the defendants and this requires that he use his best endeavours to offset against the business losses he will claim what he is capable of earning elsewhere. 22 It is to be noted that in the year 2004 the plaintiff disclosed business earnings of $US82,154. 23 In his affidavit Mr Patane deposes (at para 3.20 and 3.21) that over the past two years in endeavouring to establish a web-based European football news services, the plaintiff has invested a large proportion of his disposable income in software development, market research and other expenses. Further, Mr Patane deposes that $AUD20,000 will be required for relevant licences for the 2004/2005 season. It is not, however, contended that provision for security for costs would prevent the plaintiff from carrying on his business or that it would totally prevent expansion of the present business. 24 Mr Shoebridge submitted that the Court should find that the plaintiff is resident in New Zealand and this being so there are reciprocal arrangements for the enforcement of Australian judgments: see the Foreign Judgments Act (Cth) 1991 and the regulations thereunder. Hence, he submitted that even if it was considered appropriate to order security, any order should be limited to the extra costs of registering a judgment in New Zealand. Reference was made to Barton v Minister for Foreign Affairs 54 ALR 586 where Morling J considered that an appropriate order for security for costs was an order for the approximate cost of registering a judgment in England, that being the relevant place of ordinary residence: see also Connop v Varena (1984) 1 NSWLR 71. 25 In the present case, I am not satisfied that the plaintiff's ordinary place of residence is in New Zealand or that a judgment for costs if obtained by the defendants could effectively be enforced there. 26 Having taken time to reflect upon this matter, it seems to me that justice requires that there be an order made requiring the plaintiff to provide security for the costs of the defendants. 27 It was not contended in the event that it was appropriate to make an order for more than the costs of registering a judgment that the sum of $80,000 was excessive. However, that sum was contemplated to include the costs associated with final hearing over a period of three days. I do not consider it either necessary or appropriate to require the provision of security covering anticipated costs up to and including the time of the hearing. I propose only to make provision up to the time that the matter is ready for call up for the purpose of the allocation of a hearing date. On this approach, I intend to order the provision of $40,000 security. If need be, an application for further security may be brought when the matter is ready for the allocation of a hearing date.

Betz v Parker & Ors

At a glance

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Before

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Judgment (17 paragraphs)

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Cases Cited (2)

Cited By (1)