Bird v Ford

Judgment 1TOBIAS AJA: On 28 March 2013, Schmidt J entered judgment with costs in favour of the defendant, the present applicant, the principal of a firm of solicitors, in relation to proceedings instituted against him by the present respondent, Vrede Jane Bird (Ms Bird), and her husband, Gordon Philip Bird (Mr Bird), claiming negligence in relation to advice provided by the applicant relating to the expulsion of their son from his school in March 2007. On 28 June 2013, Ms Bird filed a notice of appeal against her Honour's orders in which she asserted ten appeal grounds. 2Subsequent to the filing of the notice of appeal, the applicant's solicitor wrote to the solicitor for Ms Bird seeking security for his costs of the appeal. Ms Bird's solicitors responded to that request by indicating that they had been instructed that Ms Bird would resist any application for security. Accordingly, she declined to provide, as requested, a detailed outline of her current financial position including her assets and liabilities. There was also some correspondence between the solicitors for the parties relating to the quantum of costs the subject of the order made by Schmidt J that Mr and Mrs Bird pay the applicant's costs of the proceedings as agreed or assessed. Unfortunately the parties have been unable to agree on that amount. 3Given the indication by Ms Bird that she was not prepared to agree to the provision of security for his costs of the appeal, on 16 August 2013 the applicant filed a notice of motion in which he sought a number of orders. The first was that Mr Bird be joined as a respondent to the proceedings. I mention that fact because Mr Bird was not a party to the notice of appeal and had apparently indicated that he was not interested in joining in the appeal. I made that order pursuant to Uniform Civil Procedure Rules r 51.4(3) upon the basis that Mr Bird was a person who could be affected by the outcome of the appeal. Whether he ultimately takes any part in the appeal or files a submitting appearance only time will tell. 4The second order sought was under UCPR r 51.50 that Ms Bird provide security for the costs of the appeal. Rule 51.50(1) provides that the Court may order that security be provided in respect of appeals but only in special circumstances. The applicant submitted that there were special circumstances in the present case which would justify the making of an order that Ms Bird provide security in an amount of approximately $24,000, if necessary in two equal tranches, one to be paid now and the other to be paid on the filing of the appeal books including the orange book. 5In response to the filing of the notice of motion, Ms Bird swore an affidavit on 4 September 2013, which was apparently served upon the applicant's solicitors on or about 6 September 2013 even though it was not filed in the Court until 18 September. In that affidavit she sets out her financial position. In summary, it appears that she has no income apart from receiving an Austudy allowance from Centrelink in the amount of $257 per week as she is a full-time student at the University of Western Sydney, Macarthur Campus. So far as her assets are concerned, she is the owner with her husband as joint tenants of a property situated at 15 Braeside Crescent, Glen Alpine (the Glen Alpine property) which she estimates has a current value of $750,000. The home on that property is of a substantial size, having an area of some 700 square metres, and comprises seven bedrooms, a large study, four bathrooms, five toilets, formal and informal living areas, an in-ground pool and a four car garage. 6In her affidavit, Ms Bird deposed that the amount of the current mortgage secured on the Glen Alpine property in favour of the Commonwealth Bank of Australia was $63,768.20, which has now been reduced, presumably as a consequence of Mr Bird making a payment to the bank, to $62,210.56. Ms Bird also maintains a bank account with the Commonwealth Bank, the current balance of which is $10,380.47. She has superannuation in a minimal amount. She has a number of liabilities to which she refers in paras 11 to 14 of her affidavit. She owes just under $49,000 in relation to four credit cards with various financial institutions; she owes outstanding school fees of $15,000 and outstanding legal fees to Brydens Legal Services of $6,000. She is also the subject of a costs judgment in favour of the applicant in the amount of $58,940.22 together with interest, but she is entitled to a set-off in relation to those costs in or about the sum of $36,000. 7According to my mathematics, her total debt position is that she owes approximately $93,000, not counting the costs which she was ordered to pay by Schmidt J in the subject proceedings and which the applicant appears to have assessed at approximately $150,000. However, I note that the present application relates only to the provision of security for the costs of the appeal and the question is whether or not she should provide security for those costs and those costs alone. 8The one matter that she did not mention in her affidavit but about which she gave oral evidence today was that some weeks ago she instituted proceedings in the Family Court as a consequence of having been separated from her husband for some period. The fact that she separated from her husband could be inferred from her affidavit, which states her address as 1 Clontarf Avenue, Harrington Park rather than at the Glen Alpine property. It is submitted on behalf of the applicant that the institution of the Family Court proceedings is a complicating factor because as a result of those proceedings that property, which is obviously her main asset, will ultimately be the subject of an order of that Court. However, there is no evidence as to the assets and liabilities, as well as the income, of her husband; nor is there any evidence as to the circumstances which the Family Court will take into account when making orders under the relevant provisions of the Family Law Act 1975 relating to any just and reasonable division of property between Ms Bird and her husband. 9I therefore propose to proceed on the basis that Ms Bird has available to her for present purposes her one-half share in the net equity of the Glen Alpine property which, leaving aside the costs the subject of the order of Schmidt J, would be approximately $260,000 in round figures. It follows from the foregoing that it could not be said, and it is not submitted, that Ms Bird is impecunious. 10The relevant principles to be applied in a matter such as the present were conveniently summarised by Ward JA in Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434, especially at [13] to [17]. At [15] her Honour set out the factors generally to be taken into account on an application for security for costs, which had been listed by Beazley J, when a judge of the Federal Court, in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197-198. In my view none of the matters there listed apply to the present case. However, I do note that Beazley J is recorded as having stated that one does not approach an application for security for costs with any predisposition in favour of an award of security. 11At [16] of Ballard Ward JA summarised the principles referred to by Basten JA in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18]. Relevantly to the present case, his Honour identified the following principles: (1) no order for security should be made in the absence of "special circumstances"; (2) consideration of what may constitute special circumstances should be not be fettered by some general rule of practice; (3) impecuniosity, without more, will usually be insufficient; (4) an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; (5) where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made. 12At [17] Ward JA referred to the notes to r 51.50 in Ritchie's Uniform Civil Procedure (NSW) and, in particular, to the statement that special circumstances have been found to exist where the appeal is manifestly groundless or where there is a risk that the appeal will involve unnecessary costs. In Ballard the hearing occupied 93 days and her Honour considered that the likely cost to be incurred by the respondent to the appeal would be in excess of $700,000. At [27] her Honour considered that having regard to the objective prospect of the appeal succeeding and the enormous cost that had been incurred to date and would be incurred on the appeal, the case before her squarely fell within the notion of "special circumstances". Her Honour also noted (at [28]) that the scope of the appeal that Mr Ballard intended to bring was such that there must be a very real risk that costs would be unnecessarily incurred by the respondent to the appeal in the sense that if the appeal were confined to more narrow grounds, that cost would be minimised. 13Mr Craddock for the applicant relied also upon the decision of Handley JA in Marks-Isaacs v Fowler & Ors [2005] NSWCA 37 to support the proposition that special circumstances exist where a respondent to an application for security for costs is not frank with the Court as to the extent of their assets and liabilities. However, in my view the facts of that case are quite distinguishable from the facts of the present case. 14In that case the respondent to the application for security did not swear an affidavit but relied upon an affidavit of his solicitor which provided only minimal information. Furthermore, as his Honour noted at [24], the respondent had chosen not to put a deal of relevant information before the Court notwithstanding that the facts relating to his financial position were peculiarly within his knowledge and he bore an evidentiary onus of establishing that any order for security for costs would stultify his appeal, although the ultimate onus of establishing special circumstances rested on the applicants for security. At [25] his Honour observed that the respondent had not disclosed his full financial position, even on information and belief. That is not this case. 15The respondent, Ms Bird, has in my view fully disclosed her financial position. The only exception to that, if it be an exception, was her failure to indicate that she had instituted Family Court proceedings, although there is nothing to indicate that she considered that having done so would have made any difference to her ability, given the nature of her assets and in particular the Glen Alpine property, to meet what would be regarded as a relatively modest amount of costs to be incurred by the applicant in the event that the appeal is unsuccessful. Accordingly, in my view, each of those cases is quite different from the present. I do not obtain any assistance from them apart from the relevant statements of principle. 16The other aspect relied upon by the applicant is the suggestion that in her Notice of Appeal Ms Bird had raised every point that had been found against her by the primary judge. In fact it appears that that is not quite so as a case was unsuccessfully run below alleging false and misleading conduct on the part of the applicant which is not pursued on appeal. It was nevertheless submitted that the ten grounds of appeal seemed to cover at least a substantial portion of the issues that were run before her Honour so as to involve the incurring of unnecessary costs. I do not agree, given that in the affidavit of the applicant's solicitor sworn 16 August 2013, he has only allowed for a one day appeal and for counsel's fees of between $15,750 and $18,750 with respect to both preparing for the appeal and attending on the hearing. It was not suggested that the hearing would take longer than one day, although, of course, issues should only be the subject of appeal if they have some reasonable prospect of success. 17Importantly, the applicant has not submitted that the appeal is hopeless or unreasonable or groundless. If it fell within that description then that would amount to "special circumstances". That point was made in Ballard in the passage from [17] of Ward JA's reasons where her Honour held that special circumstances would exist if the appeal was manifestly groundless and by Basten JA in Preston where his Honour stated that such circumstances would exist where the appeal is shown to be hopeless, unreasonable or of an harassing nature. None of those epithets were used by the applicant's counsel in the present case, no doubt upon the basis that it would be inappropriate to make such a submission. 18In all the circumstances, in my view the applicant has not discharged the onus of establishing that there are special circumstances that would justify the grant of security. However, I note two things. The first is that I would be concerned if the debt to the Commonwealth Bank secured over the Glen Alpine property was increased by Ms Bird or her husband so as to reduce the value of her equity in that property. Any increase in that debt or, for that matter, any increase in the current indebtedness of Mr and Mrs Bird which is secured on that property would require the consent of both of them. I record that Ms Bird by her counsel has given an undertaking to the Court that she will not consent to any increase in any indebtedness that is secured upon the Glen Alpine property other than the current debt to the Commonwealth Bank. 19The second matter is that within three months of the filing of the notice of appeal, namely by the 28th of this month, it is necessary for Ms Bird to file her written submissions. I note that that has not yet occurred but I can only assume it will occur within time; it should. When those submissions are available to the applicant then he can no doubt consider their merit and their extent. If they contain arguments that are perceived to be groundless or hopeless then it would always be open to the applicants to make a further application for security and I reserve to them that opportunity if it becomes necessary. 20Accordingly, for the foregoing reasons, I dismiss the applicant's notice of motion filed on 16 August 2013 other than para 1 thereof. [Discussion as to costs] 21I order that the applicant is to pay Ms Bird's costs of the notice of motion as and from 8 September 2013.