Citation : SOIA -v- BENNETT [No 5] [2012] WASC 289

Practice and procedure - Application for extension of time to file appellant's case - Turns on own facts

Practice and procedure - Application for security for costs - Relevant principles - Whether appellant able to meet adverse order for costs of appeal

Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171

Dobree v Hoffman (1996) 18 WAR 36

Mann v Dabelstein [2006] WASCA 176

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Soia v Bennett [No 5] [2012] WASC 289

1 NEWNES JA: There are two interim applications for determination in this appeal. One is an application by the appellants for an extension of time to file and serve the appellants' case. The other is an application by the respondent for security for costs.

2 The appeal arises out of proceedings by the appellants against the respondent in respect of an agreement for a joint business venture. The appellants alleged that in breach of the agreement the respondent failed to provide necessary funding for the venture, with the result that it failed. The appellants claimed against the respondent damages for breach of contract and also under the Fair Trading Act 1987 (WA), alleging a breach of s 10 of that Act.

3 On 16 August 2012, the appellants' claim was dismissed: Soia v Bennett [No 5] [2012] WASC 289. The appellants filed an appeal notice on 5 September 2012.

4 On 26 October 2012, I ordered that the time within which the appellants' case was to be filed and served be extended by five weeks from 10 October 2012, that is, to 14 November 2012. I said I would publish reasons for my decision. The following are my reasons.

5 The appellants were required to file and serve the appellants' case on or before 10 October 2012. On 10 October 2012, the appellants applied for an extension of time of a further six to eight weeks.

6 There are, in substance, two reasons proffered in support of an extension of time:

(1) the appellants have had to brief new counsel for the appeal, the appellants and their solicitor having fallen out with the appellants' trial counsel over fees for the trial; and

(2) due to personal circumstances, the appellants' solicitor has been able to devote only limited time to the preparation of the appellants' case.

7 The application is opposed by the respondent. He says, first, that the appeal is without merit. The decision of the primary judge turned on findings of fact and issues of credibility, and the appellants' case failed substantially on the basis of the evidence of the appellants' own witnesses. Secondly, the respondent says that the appellants have had ample time to engage new counsel, the dispute with their trial counsel having occurred some months before the primary judge delivered his decision. Thirdly, the appellants' solicitor has not explained why he has not been able to make more progress in completing the appellants' case. And fourthly, the respondent is prejudiced by the delay. The respondent says he should not continue to have this litigation hanging over him by reason of the inactivity of the appellants. He points out that the relevant events occurred in 1999 and 2000, the action was not commenced until 2003, and it took some eight years to get to trial.

8 I am not in a position to make any useful assessment of the merits of the appeal at this early stage and it is not something to which any significant weight can be attached on this application. All that can properly be said on the very limited material available is that the appeal is not obviously without merit. On the question of new counsel, contrary to the respondent's submission I do not consider it was incumbent upon the appellants to brief new counsel before judgment was delivered. It was, however, incumbent upon them to take steps to do so as soon as they contemplated an appeal. On the material before me, that appears to have been no later than the day following the delivery of judgment.

9 There are, on the other hand, grounds for the respondent's complaint that there is an inadequate explanation for the inability of the appellants' solicitor to make a greater contribution to the preparation of the appellants' case. There are also grounds for the respondent's complaint that the application for an extension of time was not filed until 10 October 2012. It must have been apparent to the appellants and their solicitor from the outset that the appellants' case would not be filed on time but there is no explanation for waiting until the last day before making the application. The proper course was to make the application for an extension as soon as it became apparent that further time would be required.

10 I also accept that litigation of this nature, where individuals are involved, imposes great burdens upon the parties which make it especially important that an appellant proceed with an appeal with reasonable diligence and expedition. However, while the appellants could have applied earlier for an extension of time, it does not appear that at this stage there has otherwise been an absence of reasonable diligence and expedition. The need to ensure the timely disposal of the appeal is, however, relevant to the time which should be allowed for the filing and service of the appellants' case.

11 On the face of it, the preparation of the appellants' case is a substantial task. The trial of the action was lengthy, occupying some 36 hearing days and, as might be expected, the judgment is lengthy, running to 112 pages. In the circumstances, as the appellants have had to instruct new counsel for the appeal it is appropriate that they be given some additional time to file and serve the appellants' case. I am, however, conscious that the appellants should not be permitted to dawdle and accordingly that the extension should be for no longer than is reasonably necessary to enable the necessary work to be done.

12 In my view, it is appropriate to allow the appellants a further five weeks from 10 October 2012. The total period for the filing and service of the appellants' case would then be 10 weeks. That is sufficient to enable it to be done if it is undertaken with reasonable expedition.

13 It was for those reasons I ordered that the time within which the appellants are to file and serve the appellants' case be extended to 14 November 2012.

14 The respondent seeks security for its costs of the appeal. The relevant principles are not controversial.

15 The discretion to order security is unfettered, although it must, of course, be exercised judicially: Mann v Dabelstein [2006] WASCA 176 [16]. In that connection, it must be borne in mind that the purpose of an order for security for costs is protective, so as to ensure that the primary purpose of an award of costs (that is, indemnification of the successful party) is achieved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67]. In exercising the discretion to make an order for security for costs, the court seeks to achieve a balance between ensuring that adequate and fair protection is provided to the respondent, and avoiding injustice to an impecunious appellant by unnecessarily shutting them out of the appeal.

16 The factors which are relevant on an application by a respondent for security for the costs of an appeal cannot be stated exhaustively but will ordinarily include:

(a) whether the appellant is likely to be able to satisfy an order for costs if the appeal is unsuccessful;

(b) the appellant's prospects of success on the appeal;

(c) the fact the appellant has already lost at first instance on the merits, that being a circumstance which favours the exercise of the discretion in favour of an order for security for costs;

(d) whether the appellant would be shut out of the appeal if security for costs were ordered; and

(e) whether there has been any delay in the respondent filing the application for security.

17 Where an order for security for costs is made, the amount of the security to be provided by an appellant must be related to the costs likely to be incurred by the respondent on the appeal, but the court does not endeavour to give a complete and certain indemnity to the respondent: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175. Generally, an impecunious appellant should not be ordered to provide greater security than is absolutely necessary.

18 In the present case, the respondent sought security in the sum of $50,000. That amount was based on a draft bill of costs attached to an affidavit of a solicitor acting on behalf of the respondent. In the affidavit, the solicitor expressed the opinion that the draft bill provided an accurate assessment of the costs the respondent will incur up to and including the first day of the hearing of the appeal.

19 I accept that the cost estimate is reasonable, apart from a sum of $3,410 which the draft bill provides for in the event that an application is brought by the respondent to strike out the appeal as having no reasonable prospect of success. The provision for a strike out application is speculative and I would reduce the estimate of the costs by that amount. I would round down the likely costs to $46,500.

20 The question is whether it is appropriate to order the appellants to provide security for costs. In his written submissions, the respondent advanced as his 'primary contention' that the appeal has no reasonable prospect of success. Again, I do not consider that to be a factor of significant weight. There are, as yet, no grounds of appeal and it is not appropriate on an application of this nature to attempt a detailed examination of the merits. As I have said, on the material currently available the appeal is not obviously devoid of any merit.

21 The only other substantive issue raised on the application was the appellants' ability to meet an order for costs. Shortly before the hearing of the application an affidavit of the first appellant was filed deposing to the assets of the second appellant. In that affidavit, the first appellant, who is the sole director of the second appellant, says that the second appellant is the registered proprietor of two commercial units in Morley which he estimates have a current total value of $1.1 million. That figure is based on a valuation report prepared by Egan Valuers in which the properties were valued at $1 million as at 23 December 2010. The first appellant says the properties are subject to a registered mortgage which secures a debt of $650,000.

22 The first appellant says that the second appellant also has motor vehicles valued in excess of $100,000, stock in trade valued in excess of $100,000, goods and chattels valued in excess of $50,000, and a GST tax refund due to it in excess of $25,000. Therefore there are, according to the first appellant, assets in the order of $700,000 available to meet the respondent's costs. The plain implication is that the second appellant has no substantial debts other than the mortgage. However, apart from the two units, the assets are very broadly described and valued, and I would not be inclined to attribute a great deal of weight to them.

23 The appellants did not contend that the first appellant has any significant assets.

24 There are, however, two outstanding matters which I should mention. The first is that liability for the costs of the trial remains unresolved. It has been argued before the primary judge and is awaiting judgment. I understand that among the issues raised by the appellants is a contention that as the respondent was represented by Bennett & Co, a practice in which the respondent has at the least a significant interest, he is not entitled to recover legal costs for the trial but only disbursements. That proposition is apparently based on the decision of the Full Court in Dobree v Hoffman (1996) 18 WAR 36, 52 - 53. (The same submission was made on this application in opposition to an order for security for costs but in light of the conclusion I have reached it is unnecessary to decide the point.)

25 If the appellants are found to be liable for the costs of the trial that may well have a substantial effect on their financial position, but as the issue is unresolved that is not something which can appropriately be taken into account on this application.

26 There is also a question in connection with the appellants' own legal costs of the trial. I have referred previously to a dispute between the appellants and their former counsel concerning fees for the trial. In his affidavit, the first appellant acknowledges that the dispute is the subject of proceedings in the County Court of Victoria in which the former counsel are claiming from the appellants an amount of $150,000. That dispute, too, apparently remains unresolved, an application for summary judgment by the former counsel having been refused.

27 Putting aside the unresolved issues as to trial costs and fees, as matters stand the second appellant has a surplus of assets over liabilities in the order of $350,000 in the two units in Morley alone, based on the 2010 valuation figure. It therefore appears that the second appellant currently has sufficient assets to meet an order for costs of the magnitude likely to be made against the appellants if the appeal fails. I should note in passing that counsel for the respondent accepted that any such order as to costs would be made against the appellants jointly and severally so nothing turns on the fact that the only available assets are held by the second appellant.

28 I am not, therefore, persuaded that as matters stand the appellants are likely to be unable to meet an order for costs if the appeal is unsuccessful.

29 Having regard to all of the circumstances, I would not make an order for security for costs at this stage. The appellants have, however, the two contingent liabilities to which I have referred and if they are found liable for, in particular, the costs of the trial, that may change their financial position very substantially. Nevertheless, I think the appropriate course is to dismiss the application, it being open to the respondent to make a further application should circumstances change.