Bodycorp Repairers Pty Ltd and Murdaca v Australian Associated Motor Insurers Ltd & Ors [2017] VSCA 213

1 This application for security for costs is brought by the first, second, third and fourth respondents (for convenience, the 'respondents') to an application for leave to appeal from the judgment and orders of Judge Lewitan in the County Court on 29 May 2017. The applicants for leave to appeal are Bodycorp Repairers Pty Ltd ('Bodycorp') and its sole director, Antonio Murdaca. The respondents seek security for their costs of the application for leave to appeal against Bodycorp only. The security sought is $24,000 or such other amount that may be determined by the Court. The Supreme Court Rules provide that the Court of Appeal may order security on such terms as it thinks fit.[1]

2 The proceeding before her Honour was brought by Bodycorp and Murdaca against 10 named defendants, of whom the present respondents were the fourth, fifth, seventh and eighth defendants; the fifth, seventh and eighth defendants were employees of the fourth defendant, Australian Associated Motor Insurers Ltd ('AAMI').

3 Other defendants in the County Court proceeding were solicitors, Oakley Thompson & Co Pty Ltd, and two employees, being the third, ninth and tenth defendants respectively. Then, the sixth defendant was a partner of solicitors who had acted for AAMI.

4 That left as the first and second defendants in the proceeding, Michael Maisano and Rodney Attard, who had been the plaintiffs in a proceeding against Bodycorp and Murdaca in which, following a trial, Judge Hanlon gave judgment for the plaintiffs on 16 October 2002 and awarded damages of $79,083.42.[2]

5 An appeal by Bodycorp and Murdaca to the Court of Appeal was dismissed, save that the damages were reduced to $58,525.42.[3]

6 Years later, on 31 August 2016, Bodycorp and Murdaca filed a statement of claim in the County Court seeking, against the defendants, orders that the judgment and orders of Judge Hanlon be set aside, damages and costs. It is that proceeding to set aside that was before Judge Lewitan. More particularly, what was before her Honour for determination were applications by all defendants other than Maisano and Attard seeking summary dismissal of the proceeding pursuant to r 23.01 or r 23.02 of the County Court Civil Procedure Rules 2008, or alternatively, s 63 of the Civil Procedure Act 2010. While Maisano and Attard had been plaintiffs in the original proceeding and thus were properly named as defendants in the 2016 case, none of the other named defendants had been parties to the original case. The judge referred to them as 'the non-party defendants'.

7 The setting aside of the orders in the original proceeding was sought on the basis that Judge Hanlon's judgment and orders were procured by fraud, the fraud being constituted by false evidence, non-disclosure of material documents and a conspiracy between AAMI and Maisano, acting through their lawyers, to injure Bodycorp and Murdaca in their business with a view to enabling AAMI and Maisano to repudiate their respective agreements with Bodycorp.

8 In determining the application, Judge Lewitan referred to the statements of principle of Kirby P in Wentworth v Rogers (No 5)[4] relating to the setting aside of a judgment for fraud, and noted that the non-party defendants were not necessarily proper parties to the claim to set aside the orders in the original proceeding, the necessary and proper defendants to that claim being the original plaintiffs Maisano and Attard. For this reason alone, there was no real prospect of success against the non-party defendants.

9 Her Honour then considered the claim as it was put against each of the non-party defendants, and concluded that none of the claims had a real prospect of success. In this situation, her Honour gave judgment for each of the third to tenth defendants against the plaintiffs (Bodycorp and Murdaca), with costs.

10 On 22 June 2017, Bodycorp and Murdaca filed an application for leave to appeal from these orders. The application states that her Honour failed to properly interpret the law in respect of witness and advocate's immunity; failed to conclude (as she should have) that the undisclosed documents were material and, if disclosed to Judge Hanlon, would probably have affected the result; and erred in respect of privilege concerning certain documents. The order sought is that the orders below be set aside and the applications be remitted for rehearing. The written case in support elaborates upon 15 proposed grounds in some detail.

11 What is significant is that arising out of the breakdown of the commercial relationship between Bodycorp and AAMI, a raft of litigation has occurred, and is still running, in the course of which a number of orders have been made requiring Bodycorp to provide security, both at the trial and appeal level. Five times between 2004 and 2015, the opposite party or parties have successfully sought security; we were told that, on each occasion, Bodycorp was the sole plaintiff. Further, the evidence shows that on four occasions between 2015 and 2017, costs orders have been made against Bodycorp in favour of the AAMI parties, and that, despite demands, these orders remain unpaid.

12 The evidence, taken in conjunction with earlier judgments dealing with the security questions, clearly demonstrates the impecuniosity of Bodycorp such that, if unsuccessful in the present application for leave to appeal, or appeal, there is a high risk that Bodycorp would not meet an order for costs. So much was conceded. Further, Bodycorp submitted no evidence to counter that state of affairs.

13 Bodycorp's written outline also referred to the factors of:

• the prospects of success of the appeal;
• whether any impecuniosity was caused by conduct Bodycorp complains about; and
• whether considerations of the public interest militate against making an order.

14 It is not appropriate to venture into the prospects of success and counsel did not address the issue. The matter of the cause of the impecuniosity really goes to the underlying question in the case, and would involve causation; no analysis of that has been presented.

15 In relation to the public interest, it was said that questions arose as to advocate's and witness immunity. It was said that these questions were novel. Whether any such novelty is involved may be questioned; the relevant parts of her Honour's reasoning were based upon established authority. None of the proposed grounds would appear to raise a question of such public interest as to render it unjust to order security.

16 That deals with the written outline, but a further contention - which became the real point - arose in oral argument. That was this. No order is sought against Murdaca - a natural person - and there is no evidence that could enable an assessment of his means to pay a costs order. Hence, counsel submitted, it was not shown that he could not meet an adverse order for costs. In that situation, the Court should exercise its discretion against ordering security. For, even if Bodycorp could not satisfy an order for costs, Murdaca, who is a joint applicant on the leave to appeal, could do so. Therefore, the order for security was not needed.

17 This submission went to the factor of risk that a costs order would not be satisfied. In essence, the submission was that the onus on the issue was on the respondents and they had not discharged it.

18 Separately, it was submitted that the claims of Bodycorp and Murdaca were co-extensive, and that was additional ground for not ordering security; see Prynew Pty Ltd v Nemeth.[5] And, being co-extensive claims, Murdaca could continue with the application for leave even if Bodycorp was stayed from doing so, because it could not provide security ordered by the Court. While counsel stated that the claims were co-extensive - and the respondents' counsel did not debate the issue - we have not seen the pleaded claim in the original proceeding and could not thus determine whether the overlap is complete. The summary in Judge Lewitan's judgment is not sufficient for that purpose.

19 Counsel for Bodycorp and Murdaca also said, in a written submission provided after the hearing, that Murdaca 'agrees to personally guarantee the costs of the appeal'; however, no evidence was provided of his means. Counsel referred, in this regard, to Winnote Pty Ltd v Page[6] which concerned a proceeding brought by two plaintiffs whose claims were not co-extensive. The proceeding was dismissed at trial and the plaintiffs - one an impecunious company funded by a litigation funder and the other an individual, a Mr Roach, appealed; security for the appeal was sought against the company but not the individual. The applicant did not endeavour to show that the individual would be unable to meet the costs of the appeal if added to the costs awarded at trial. Mason P declined to order security on the basis that:

The continuing presence of Mr Roach (apparently a man of substantial means) shows that it is not called for, so long as it remains highly likely that costs would be awarded against both appellants if the appeal fails.[7]

If, for any reason, Mr Roach were to cease to be a party to this appeal, the situation would merit review ... Likewise, if compelling material emerged to cast doubt on his capacity to meet an adverse order for the costs of the appeal.[8]

21 It is axiomatic that the discretion to order security is exercised in the light of the facts and circumstances of the particular case. Past decisions are useful in indicating factors that might be relevant in that consideration. But, whatever the factors, it is the overall consideration of the particular facts and circumstances that will determine the matter. That was so under the former rule which required that special circumstances be shown. That is all the more so now that the rule merely provides that security 'may' be ordered and 'on such terms as [the Court of Appeal] thinks fit'.

22 Correctly, counsel accepted that the Court has a discretion to order security where there is a co-appellant, even where there are co-extensive claims, but, as mentioned, submitted that an order should not be made.

23 In our view, in the particular circumstances of this case, security should be ordered as sought.

24 The impecuniosity of Bodycorp is accepted, and indeed manifested by the melancholy history of orders, including unpaid orders for costs. Standing alone, it would self-evidently be appropriate to order Bodycorp to provide security. But that factor is to be considered along with all the factors advanced. As to this, it is instructive that in Pearson v Naydler,[9] Megarry V-C, in considering an application for security for costs prior to trial, stated that the power could be exercised against a company whether it sued solely or jointly, and that the presence of an individual as co-plaintiff did not preclude an order but rather was a factor in the exercise of the Court's discretion.[10] In Interwest Limited v Tricontinental Corporation Limited,[11] Ormiston J referred with approval to this passage and said:

In other words one cannot merely rely on the fact, as was suggested on behalf of the plaintiffs, that there are also plaintiffs joined who happen to be individuals who might be able to pay any costs ordered in favour of the defendants. That would lead to artificial joinder of individuals and would not give effect to the purpose of the section.[12]

25 As mentioned, there is an absence of evidence as to the financial position of Murdaca. It would thus be speculation to act on the basis that it is likely he would have the ability to meet an order for costs made against Bodycorp and/or himself if the application for leave to appeal, or appeal, fails. One does not know one way or the other. It is true that the respondents did not put on evidence as to Murdaca's financial position, the application for security being directed solely to Bodycorp. But that gap in evidence cannot be turned into a favourable reflection upon Murdaca's financial capacity to meet an order for costs. Nor can the late offer to personally guarantee the costs of the appeal, without any material, or any affidavit that deposed to it, or a signed personal undertaking, or other commitment that the Court could act upon to show that the guarantee offered is worth powder and shot, fill the gap. In Winnote v Page, where Mason P declined to order security, the co-plaintiff Roach was 'apparently a man of substantial means' and, said that if that position changed, the question of security would merit review.

1. Bodycorp provide security for the first, second, third and fourth respondents' costs of the application for leave to appeal in the sum of $24,000 by payment into Court of this sum to the Senior Master or in such other form as may be satisfactory to the Registrar.
2. Bodycorp's application for leave to appeal against the first, second, third and fourth respondents be stayed pending the provision of the security ordered herein, and dismissed if security is not provided.

27 The parties should be heard on the question of costs.

[1] Supreme Court (General Civil Procedure) Rules 2015 r 64.38(4).

[2] Maisano v Murdaca (Unreported, County Court of Victoria, Judge Hanlon, 16 October 2002).

[3] Murdaca v Maisono [2004] VSCA 123.

[4] (1986) 6 NSWLR 534, 538-9.

[5] [2010] NSWCA 94 [55] (Beazley JA).

[6] [2005] NSWCA 362; (2005) 64 NSWLR 244.

[9] [1977] 1 WLR 899.

[11] (1991) 5 ACSR 621.