Bodycorp Repairers Pty Ltd v Maisano [2017] VSCA 39

Court of Appeal (Vic)|2017-03-03|Before: Mr J, Elliott J, Riordan J, Beach JA

PRACTICE AND PROCEDURE - Costs - Security for costs - Application for security for costs - Applicant for leave to appeal impecunious - Unpaid costs orders - Whether security would stifle a reasonably arguable claim - Grounds for ordering security - Application granted - Security for costs ordered.

1 On 26 May 2016, Bodycorp Repairers Pty Ltd ('Bodycorp') commenced a proceeding in the Trial Division ('the 2016 proceeding'), seeking an order setting aside, for fraud,[1] the judgment of Elliott J given on 4 September 2013 in proceeding S CI 2005 09071 ('the original proceeding') and related relief.

2 By a summons filed 23 August 2016, Oakley Thompson & Co Pty Ltd and Jeremy Broadbent (collectively 'the Oakley Thompson parties') sought summary dismissal of the claims made against them in the 2016 proceeding. By a summons filed on the same day, AAMI and Barry Martin (collectively 'the AAMI parties') also sought the summary dismissal of the claims made against them.

3 The applications for summary dismissal were heard by Riordan J on 7 and 10 October 2016. On 28 October 2016, Riordan J granted the summary judgment applications and made an order dismissing the 2016 proceeding.[2]

4 On 23 November 2016, Bodycorp filed an application for leave to appeal from Riordan J's order.

5 On 22 December 2016, the Oakley Thompson parties filed an application for an order that Bodycorp give security for the Oakley Thompson parties' costs of the application for leave to appeal pursuant to s 1335 of the Corporations Act 2001 (Cth) and/or r 64.38(2) of the Supreme Court (General Civil Procedure) Rules 2015 in the amount of $32,000, or an amount to be determined by the Court.

6 On 6 January 2017, the AAMI parties filed a similar application for security for costs. In their application, the AAMI parties, like the Oakley Thompson parties, seek security in the amount of $32,000, or an amount to be determined by the Court.

7 On 7 February 2017, Bodycorp filed a notice of opposition to the security for costs applications. The notice of opposition stated that Bodycorp opposed the applications for security for costs for the following reasons:

The trial judgment is fundamentally flawed as it contains errors of law and thus security for costs should not be ordered.
The trial judgment fails to deal with the issues of the malpractice of legal practitioners and thus there is a matter of public importance that should be determined on appeal.
The comments of the trial judge in determining costs on 25 November 2016 demonstrate an error in approach that should be corrected on appeal.

8 This is the hearing of the applications for security for costs brought by the Oakley Thompson parties and the AAMI parties.

9 The background to the 2016 proceeding can be found in decisions of this Court given on 13 April 2015[3] and 28 April 2015.[4] The original proceeding was commenced in the Federal Court of Australia in December 2002. It concerned claims by Bodycorp for breach of contract and the alleged inducing of breaches of contract. The facts underlying the original proceeding occurred in the 1990s.

10 In October 2005, the original proceeding was transferred to the Supreme Court of Victoria. The trial of the original proceeding was conducted before Elliott J in May 2013. On 4 September 2013, Elliott J gave reasons for judgment rejecting Bodycorp's claims. On 18 October 2013, his Honour made orders dismissing the original proceeding.

11 Bodycorp appealed the dismissal of the original proceeding to the Court of Appeal. On 28 April 2015, the Court of Appeal dismissed Bodycorp's appeal.[5]

12 Following the dismissal of its appeal, Bodycorp sought special leave to appeal to the High Court. Bodycorp's special leave application was dismissed on 5 April 2016.[6] As we have said, Bodycorp filed its writ in the 2016 proceeding on 26 May 2016, seven weeks after the High Court dismissed its special leave application.

13 The Oakley Thompson parties and the AAMI parties filed, and relied upon, affidavits, sworn by their solicitors, in support of their applications. The affidavit evidence disclosed that Bodycorp has a total paid-up share capital of $100, and has not lodged an annual return since the 2001 financial year. Moreover, relevant searches reveal that Bodycorp is not a registered proprietor of any real property in Victoria.

14 The affidavit evidence also discloses that Bodycorp has had a number of costs orders made against it which remain outstanding. For example, Bodycorp was ordered to pay costs fixed in the sum of $18,400 on 13 April 2015.[7]

15 The affidavit evidence also reveals that Bodycorp has previously had a number of security for costs orders made against it. On 12 January 2004 the Federal Court ordered Bodycorp to provide security in the sum of $60,000 in respect of the AAMI parties' costs. On 23 March 2007, Bodycorp was ordered to provide $10,000 as security for costs. On 24 April 2013, Bodycorp was ordered to provide security for costs in the amount of $34,500. On 6 November 2013, Bodycorp was ordered to provide security for costs in the amount of $30,000. On 18 February 2016, Tate and Osborn JJA ordered Bodycorp to provide security for costs in the sum of $40,000.[8] On 12 May 2016, Daly AsJ ordered Bodycorp to provide security for costs in the sum of $20,000. On 1 August 2016, McLeish JA ordered Bodycorp to provide security for costs in the sum of $20,000.[9] While the existence of these previous orders is not determinative of the current applications, the previous orders provide relevant context and show that such orders for security that have been made have not prevented Bodycorp from prosecuting its claims.

16 In the application brought by the Oakley Thompson parties, the solicitor for the Oakley Thompson parties (Cameron Oxley) has deposed that he estimates that the Oakley Thompson parties' costs, in relation to the current application for leave to appeal, are likely to be approximately $32,000. The basis of his estimate, and the precise calculation ($32,094), are each set out in Mr Oxley's affidavit.

17 In the application brought by the AAMI parties, the estimate of the AAMI parties' costs is set out in a letter exhibited to the affidavit sworn by their solicitor (Alexi Costa). In the letter exhibited to Ms Costa's affidavit, it is asserted that the AAMI parties' costs of defending Bodycorp's application for leave to appeal 'will be, conservatively, between $40,000 and $50,000'. It is then asserted that, of this sum, recoverable costs will be approximately $26,800 to $33,500.

18 While Bodycorp's solicitor (Niren Raj) filed an affidavit in opposition to the security for costs applications, that affidavit merely exhibited the transcript of the hearing before Riordan J on 25 November 2016. Bodycorp did not file any affidavit disputing the matters deposed to in the affidavits filed by the Oakley Thompson parties and the AAMI parties.

Contentions of the Oakley Thompson parties and the AAMI parties

19 The Oakley Thompson parties and the AAMI parties point to the protracted history of this proceeding, the existence of previous security for costs orders made against Bodycorp, Bodycorp's impecuniosity and Bodycorp's failure to pay specified costs orders. They contend that when one examines all of these matters the proper conclusion is that an order for security for costs should be made in favour of each of them.

20 Bodycorp's application for leave to appeal contains 11 grounds. Bodycorp has filed its written case in which it provides argument in support of each of its grounds. Bodycorp says that, in addition to the current proposed grounds of appeal, Bodycorp intends to apply to add additional grounds concerning comments made by Riordan J, on 25 November 2016, after the order, that is the subject of Bodycorp's application for leave to appeal, was made.

21 In its submissions in opposition to the making of security for costs orders, Bodycorp asserted that Riordan J had misstated the law, and then 'applied his misstated view of the law'. Moreover, it was submitted that his Honour denied Bodycorp natural justice and did not deal with the application before him on its merits. Additionally, Bodycorp relied upon the transcript of 25 November 2016 to show what was said to be errors in the judge's approach to the summary judgment applications that he had earlier decided.

The decision of the trial judge is fundamentally flawed on its face and that there is an issue of public importance involved, which is the duty of the Supreme Court to supervise its legal practitioners and to consider and rule upon allegations of malpractice, particularly when Oakley Thompson & Co and its employee (the second and eighth respondents), were parties before the Court, and the failure to consider and rule upon the allegations of malpractice resulted in the case being summarily dismissed against them.

23 The principles governing security for costs applications in this Court are well known and do not need to be summarised again.[10] It is sufficient to say that the factors relevant to the exercise of the Court's discretion whether to grant security for costs include:

(b) the degree of risk that a costs order might not be satisfied;

(c) whether the making of an order would be oppressive by stifling a reasonably arguable claim;

(d) whether any impecuniosity of the applicant for leave to appeal arises out of the conduct about which complaint is made;

(e) whether there are any aspects of public interest militating against the making of an order; and

(f) whether there are any particular discretionary matters relevant to the application.

24 Bodycorp resists orders for security for costs being made against it, fundamentally on the basis that it says it has good prospects of success in overturning the order made at first instance. While we have heard argument from Bodycorp in relation to its prospects of success, it is not appropriate at this stage to go into a detailed analysis of the merits of the application for leave to appeal. It is sufficient for us to say that if there is some arguable point upon which Bodycorp might succeed, we are not persuaded that it is of such sufficient merit or strength to permit Bodycorp's application for leave to appeal to go forward in the absence of any security for costs. Moreover, we are not persuaded that ordering security for costs against Bodycorp is likely to stifle a reasonably arguable claim.

25 That said, we are not persuaded to order security for costs in two amounts of $32,000. It seems to us that to do so would involve an unacceptable duplication of costs between parties whose arguments will in large part overlap and who could even be represented jointly for much (if not all) of the argument in this Court.[11]

26 In the circumstances, we think it appropriate to order that security for costs in the sum of $12,500 be provided in respect of the Oakley Thompson parties' costs, and to order security for the same amount in respect of the AAMI parties' costs.

1. Bodycorp provide security for the Oakley Thompson parties' costs of the application for leave to appeal, in the sum of $12,500 by payment into court of this sum to the Senior Master or in any other form satisfactory to the Senior Master.

2. Bodycorp provide security for the AAMI parties' costs of the application for leave to appeal, in the sum of $12,500 by payment into court to the Senior Master of this sum or in any other form satisfactory to the Senior Master.

3. Subject to order 4, the application for leave to appeal be stayed pending the provision of the security referred to in orders 1 and 2.

4. If the security ordered under order 1 and under order 2 is not provided by 4:00 pm 31 March 2017, the application for leave to appeal will stand dismissed with costs including reserved costs.

5. Bodycorp pay 50% of the Oakley Thompson parties' costs of and incidental to their application for security for costs and 50% of the AAMI parties' costs of and incidental to their application for security for costs.

[1] The statement of claim in the present proceeding makes allegations of 'fraudulent evidence' and asserts that there was a 'collusive agreement between the defendants and/or their legal advisors to manipulate the evidence that was provided at the trial' of the original proceeding.

[2] Bodycorp Repairers Pty Ltd v Maisano (No 11) [2016] VSC 645 ('Reasons').

[3] Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd [2015] VSCA 59.

[4] Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd [2015] VSCA 73. For additional background details, see Bodycorp Repairers Pty Ltd v Maisano [2007] VSC 373; Bodycorp Repairers Pty Ltd v Maisano (No 2) [2013] VSC 235; Bodycorp Repairers v Maisano (No 3) [2013] VSC 244; Bodycorp Repairers Pty Ltd (No 4) [2013] VSC 247; Bodycorp Repairers Pty Ltd v Maisano (No 5) [2013] VSC 264; Bodycorp Repairers Pty Ltd v Maisano (No 6) [2013] VSC 265; Bodycorp Repairers Pty Ltd (No 7) [2013] VSC 345; Bodycorp Repairers Pty Ltd (No 8) [2013] VSC 472; Bodycorp Repairers Pty Ltd v Maisano (No 9) [2013] VSC 567; Bodycorp Repairers Pty Ltd v Maisano (No 10) [2016] VSC 599; Bodycorp Repairers Pty Ltd v AAMI Ltd [2015] VSCA 85; Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2016] VSCA 19; Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (No 2) [2016] VSCA 183; Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (No 3) [2016] VSCA 185; Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2017] VSCA 22; and Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (No 2) [2017] VSCA 23.

[6] Bodycorp Repairers v AAMI [2016] HCASL 24.

[7] See also costs orders made on 6 October 2016 in the total sum of $14,000.

[8] Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2016] VSCA 19.

[9] Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (No 3) [2016] VSCA 185.

[10] See Re Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1989) 16 IPR 431; Maher v Commonwealth Bank of Australia [2008] VSCA 122 [80]; Ribbera v Eagle Fuels Pty Ltd [2014] VSCA 173 [30]; Trkulja v Dobrigevic [2015] VSCA 281 [43]; Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2016] VSCA 19; Giza v Waybecca Pty Ltd [2016] VSCA 184 [13].

[11] Cf the approach taken by solicitors and counsel for the four accused in the recent hearing in this Court in the matter of The Queen v Galloway & Ors.

Supreme Court (General Civil Procedure) Rules 2015

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