BETWEEN : CAROL FARRELL by her next friend RONALD CHARLES WAUGH

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : FARRELL -v- ROYAL KING'S PARK TENNIS CLUB (INC) [2006] WASC 51

Security for costs - Respondent's application for security for costs of the appeal - Where appellant appeals by her next friend - Office of next friend - Liability of a next friend for costs and security for costs - Whether s 37(1) of the Supreme Court Act 1935 (WA) abrogated general rule of practice in relation to the liability of a next friend for costs - Whether general rule of practice inconsistent with O 66 r 6 or O 70 r 2 of the Rules of the Supreme Court 1971 (WA) - Relevant considerations on an application by a respondent for security for the costs of an appeal

Rules of the Supreme Court 1971 (WA), O 25 r 1, O 63 r 10(5) (repealed), O 66 r 6, O 70 r 2, O 70 r 3, O 70 r 5, O 70 r 6

Supreme Court Act 1935 (WA), s 37(1)

Supreme Court (Court of Appeal) Rules 2005 (WA), r 3(1), r 5(1), r 44(1)

Supreme Court of Judicature Act 1873 (UK) (36 & 37 Vict. c. 66), s 47

Supreme Court of Judicature Act 1890 (UK) (53 & 54 Vict. c. 44), s 5

Supreme Court of Judicature (Consolidation) Act 1925 (UK) (15 & 16 Geo. 5 c. 49), s 50(1)

1 BUSS JA: This is an application by the respondent for an order that the appellant provide security for the costs of the appeal.

2 On 4 April 2006, the appellant filed an appeal notice against the judgment of Johnson J in Farrell v Royal King's Park Tennis Club (Inc) [2006] WASC 51. After a trial, her Honour dismissed the appellant's action against the respondent. The appellant was ordered to pay the respondent's costs of the action, including any reserved costs, to be taxed.

[[3] - [8] deleted pursuant to cl 12, Sch 1 of the Guardianship and Administration Act 1990 (WA)]

The application dated 14 May 2007 made by the appellant and Mr Waugh in the appeal

9 By an application dated 14 May 2007, the appellant and Mr Waugh applied, relevantly, for:

"• an order appointing [Mr Waugh] as next friend of the Appellant in this appeal; and/or

• [Deleted pursuant to cl 12, Sch 1 of the Guardianship and Administration Act 1990 (WA).]

10 On 22 May 2007, Pullin JA heard the application ex parte. His Honour ordered, relevantly, that the title of the appeal be amended so that the appellant be shown as "Carol Farrell by her next friend Ronald Charles Waugh", and that the application otherwise be dismissed.

11 [Deleted pursuant to cl 12, Sch 1 of the Guardianship and Administration Act 1990 (WA).]

The respondent's application dated 13 June 2007 in the appeal for security for costs

12 On 13 June 2007, the respondent filed its application for security for costs. The respondent relies on an affidavit dated 8 June 2007 of Carly Sluiter, a solicitor employed by Talbot Olivier, who are the respondent's solicitors. The appellant relies on an affidavit dated 11 May 2007 of Mr Waugh, sworn in support of his earlier application to recognise his appointment as next friend.

13 In her affidavit, Ms Sluiter deposes, relevantly and in substance, that:

(a) Mr Waugh is ordinarily resident in the Australian Capital Territory;

(b) on 30 March 2006, Mr Waugh became bankrupt and his bankruptcy remains undischarged;

(c) no substantial costs have yet been incurred in preparing the respondent's answer in the appeal;

(d) the appellant's case comprised 46 pages of submissions, 19 pages of annexures and a list of authorities with 107 cases;

(e) the estimated cost of preparing the respondent's answer is $11,110;

(f) the estimated cost of settling the appeal book indexes is $1,012, getting up the appeal is $1,815, counsel's fee on the hearing is $5,500, and attending on any reserved decision is $363; and

(g) the costs of the five day trial before Johnson J have not yet been taxed or paid.

The respondent seeks security in the sum of $20,000.

14 By r 44(1) of the Court of Appeal Rules, read with par (f) of the definition of "interim order" in r 3(1) of those Rules, a respondent to an appeal may apply for an interim order that an appellant provide security for the respondent's costs of the appeal. A single Judge has jurisdiction to determine the application. The former O 63 r 10(5) of the Rules of the Supreme Court empowered the Full Court, in special circumstances, to order that such security be given for the costs of an appeal as may be just. Under the Court of Appeal Rules, the discretion to order security is unfettered. See Mann v Dabelstein [2006] WASCA 176 at [16]; Joseph v Joseph [2007] WASCA 27 at [6].

15 In NSW Insurance Ministerial Corporation v Abualfoul [1999] FCA 433; (1999) 94 FCR 247, Sackville J summarised the history of the office of next friend. His Honour said, at 253 - 254 [27] - [29]:

"Under the general law, because of an infant's inability to bind himself or herself, or to incur liability for costs, the infant was incapable of bringing an action without the assistance of some other person responsible to the court for the proper conduct of the suit: Daniell's Chancery Practice (7th ed, 1932), p 116. This person was known as the next friend (or 'prochein amy' in the earlier cases), apparently because he or she was usually a near relative of the plaintiff. If an action was instituted by an infant without a next friend, the defendant could apply to have the action dismissed: p 116. The limitation on the capacity of infants did not extend to matters of substantive entitlement or liability, since at common law an infant could sue and be sued: Haines v Leves (1987) 8 NSWLR 442 at 449 (CA) per Street CJ. The limitation on capacity was procedural.

One reason for requiring an infant plaintiff to sue by a next friend was so that there would be a person answerable to the defendant for the costs of the litigation, although the defendant could waive this benefit: Daniell's Chancery Practice, p 116; Ex parte Davis (1901) 1 SR (NSW) 187 at 189. The next friend was liable for all costs incurred in the actions brought by the infant, until the infant attained his or her majority: Blight v Tredgett [1851] EngR 903; (1851) 5 De G & SM 74; 64 ER 1024; Simpson on the Law of Infants (3rd ed, 1909), p 391. The next friend could be attached for the non-payment of the costs of an action in which the defendant obtained a verdict: Radford v Cavanagh (1899) 15 WN (NSW) 226a. However, the next friend was ordinarily entitled to recover the costs from the infant's estate (if there was one), provided he or she acted bona fide: Pritchard v Roberts (1873) LR 17 Eq 222.

The next friend was regarded as an officer of the court appointed to safeguard the interests of the infant: Rhodes v Swithenbank (1889) 22 QBD 577 at 579 per Bowen LJ; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 113-114 per Williams J; Ex parte Davis. The conduct of the proceedings was in the hands of the next friend: Rhodes v Swithenbank at 578 per Lord Esher MR. The next friend was not, however, a party to the action: Pink v J A Sharwood & Co Ltd [1913] 2 Ch 286 at 289 per Eve J. The next friend derived his or her authority from the court, not the infant, and could be removed if, for example, he or she acted improperly or had an interest adverse to that of the infant: Stephenson v Geiss [1998] 1 Qd R 542 at 557 per Lee J; Simpson on the Law of Infants, pp 384-385."

The liability of a next friend for the costs of the other side and the making of a security for costs order against a next friend

16 In Dissidomino by her next friend Dissidomino v Butcher Paull & Calder (A firm) [2005] WASCA 210, Wheeler JA (with whom Roberts-Smith JA and Miller AJA agreed) approved the observations of Sackville J in NSW Insurance in relation to the office of next friend. Her Honour added, at [20]:

"The most significant features of that summary for present purposes are that the next friend is liable for all costs incurred in actions brought by the infant, although ordinarily entitled to recover those costs from the infant's estate, and that the next friend is not, however, a party to the infant's action."

I agree, with respect, with that statement. It applies to any person under a disability, including a person in respect of whom a guardian has been appointed with the functions mentioned in s 45(2)(g) and (h) of the Guardianship and Administration Act: see [5] above. Wheeler JA's statement is not confined to an infant.

17 Accordingly, it is well-established that if an action brought by a plaintiff under a disability is dismissed, and the defendant is awarded costs, the next friend of the plaintiff is personally liable to the defendant for the costs. See, in addition to NSW Insurance and the cases cited by Sackville J, Re Brocklebank; Ex parte Brocklebank (1877) 6 Ch D 358 at 360 - 361; Flannagan v Flannagan (1880) 6 VLR 77; Rhodes v Swithenbank (1889) 22 QBD 577 at 578 - 579. Also, it is well-established that if the next friend has acted properly, he or she is entitled to an indemnity from the plaintiff or out of any fund to which the plaintiff is beneficially entitled. See, in addition to NSW Insurance and the case cited by Sackville J, Murray v Kirkpatrick (1940) 57 WN (NSW) 162 at 163. And generally see Williams, Civil Procedure Victoria, Vol 1 at [15.02.50]; Quick on Costs at [4.4440]. Those principles also apply where a person under a disability, whose action has been dismissed, appeals.

18 Although impecuniosity is not a ground for ordering the next friend of a plaintiff under a disability to provide security for costs at first instance, impecuniosity may be a ground for ordering security where the person under a disability appeals against the dismissal of his or her action. See Swain v Follows (1887) 18 QBD 585 at 587 - 588; Hall v Snowdon, Hubbard & Co [1899] 1 QB 593 at 594 - 595; Wilcox v Wallis Crown Cork and Syphon Co (Lim) (1914) 58 Sol Jo 381 at 382. Generally see The Supreme Court Practice 1999, Vol 1, at [23/3/16].

Section 37(1) of the Supreme Court Act 1935 (WA)

19 Section 37(1) of the Supreme Court Act 1935 (WA) provides:

"Subject to the provisions of this Act and to the Rules of Court and to the express provisions of the Magistrates Court (Civil Proceedings) Act 2004, or any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid."

Section 37(1) has not been amended, in any respect which is material for present purposes, since the enactment of the Supreme Court Act.

20 The appellant submitted, in substance, that in Western Australia the principle that the next friend is liable for all costs incurred in an action brought by a person under a disability, or in an appeal against the dismissal of the action, has been abrogated by s 37(1). It was submitted that under s 37(1) this Court or a Judge has broad powers in respect of costs, and that the provision codifies those powers to the exclusion of the principle developed and applied before the enactment of the Supreme Court Act.

21 Further, the appellant submitted that, subject to the other provisions of the Supreme Court Act, to the Rules of Court and to the express provisions of the Magistrates Court (Civil Proceedings) Act 2004 (WA) and any other Act, s 37(1) empowers this Court or a Judge to order any person (including a person under a disability) to pay costs, and any estate or fund (including an estate or fund to which a person under a disability is beneficially entitled) to bear costs. The appellant relied on O 66 r 6 and O 70 r 2(4) of the Rules of the Supreme Court in support of those submissions.

22 Section 37(1) is not a novel enactment. Similar provisions can be traced at least to the Supreme Court of Judicature Act 1890 (UK) (53 & 54 Vict. c. 44), s 5 of which provided:

"Subject to the Supreme Court of Judicature Acts, and the rules of court made thereunder, and to the express provisions of any Statute, whether passed before or after the commencement of this Act, the costs of and incident to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid."

I note, however, that, unlike s 37(1), s 5 did not expressly refer to the payment of costs out of an "estate, fund, or property". Also compare O LXV r 1 of the Rules of the Supreme Court 1883 (UK); s 47 of the Supreme Court of Judicature Act 1873 (UK) (36 & 37 Vict. c. 66); s 50(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (UK) (15 & 16 Geo. 5 c. 49).

23 Before the Supreme Court of Judicature Act 1873, the rule as to costs differed between courts of equity and the common law courts. In equity, costs were in the discretion of the Judge. At common law, subject to complicated statutory exceptions, costs followed the event. See Garnett v Bradley (1878) 3 App Cas 944 at 958; Halsbury's Laws of England (4th ed reissue, vol 10, 2002) at [16] fn 5.

24 Section 37(1) confers on this Court or a Judge a broad discretionary power in relation to awarding costs in any proceeding. The power is expressly made subject, relevantly, to other provisions of the Supreme Court Act and the Rules of Court. In my opinion, the enactment of s 37(1) did not abrogate the general rule of practice referred to in NSW Insurance and Dissidomino, namely, that where a person under a disability sues by a next friend and his or her action or appeal is dismissed with costs, the next friend is liable to the defendant or the respondent, as the case may be, for those costs. Also, s 37(1) did not preclude the Supreme Court from continuing to apply that general rule. It has been applied in England after the enactment of s 5 of the Supreme Court of Judicature Act 1890, which, as I have mentioned, is in materially similar terms to s 37(1). See, for example, Catt v Wood [1908] 2 KB 458 at 473; Steeden v Walden [1910] 2 Ch 393 at 396, 398 - 400. The general rule of practice in relation to costs where a person under a disability sues by a next friend is not inconsistent with other provisions of the Supreme Court Act, the Rules of the Supreme Court or the Court of Appeal Rules.

"(1) Where the Court appoints a solicitor to be guardian ad litem of a person under disability, in any cause or matter, the Court may direct that the costs to be incurred in the performance of the duties of such office shall be borne and paid either by the parties, or by some one or more of the parties, to the cause or matter, or out of any fund in court in which the person under disability is interested, and may give directions for the repayment or allowance of such costs as the justice and circumstances of the case may require."

26 In Australia and New Zealand Banking Group Ltd v Dzienciol (by his guardian ad litem Dzienciol) [2001] WASC 305 (S), McLure J (as her Honour then was) said, in relation to O 66 r 6 and costs orders concerning a guardian ad litem, at [13] - [17]:

"A next friend and guardian ad litem have features in common. A person with a disability cannot sue or be sued without a next friend or guardian ad litem respectively. In the case of a defendant with a disability where no guardian ad litem has been appointed, all steps in the action including a judgment will be taken to be irregular and set aside: Surrey Insurance Co Ltd v Nagy [1968] SASR 437 at 439; Gore-Booth v Gore-Booth [1953] 2 All ER 1000 at 1005.

Accordingly, the Rules entitle a plaintiff to apply to the court for an order appointing a guardian ad litem: O 70 r 5. O 66 r 6 of the SCR makes specific provision in relation to the costs of a solicitor appointed by a court as a guardian ad litem or a solicitor who acts without a court order. The court is given a discretion to direct that the costs incurred in the performance of the duties of the office of guardian ad litem by a court appointed solicitor shall be borne and paid by either of the parties, or by one or more of the parties or out of any fund in court. The court's discretion in relation to a solicitor who acts without an order of the court is in more general terms.

It seems there are at least two material differences between the position of a plaintiff/next friend and defendant/guardian ad litem combination. A plaintiff has a choice as to whether or not to bring or continue proceedings with that choice the responsibility of the next friend. Further, a factor in determining whether to take proceedings is usually (albeit not perhaps in this case) the financial capacity of the proposed defendants to pay any judgment and costs awarded against them. On the other hand, a defendant has no real control over his or her involvement in the proceedings.

Further, and most importantly, it is against a defendant's interest for a next friend to be appointed (thereby enabling suit) whereas it is very much in the interests of a plaintiff for a guardian ad litem to be appointed. Indeed, in the event a guardian ad litem does not (from the plaintiff's perspective) volunteer to assume the office, a plaintiff may need to secure the services of an independent person who will no doubt seek protection in relation to costs.

In these circumstances I see no reason why a guardian ad litem who is in substance and effect defending a claim should be made personally liable for costs orders in favour of a plaintiff unless the guardian has acted unreasonably, whether in the conduct of the defence or otherwise."

27 Order 66 r 6 confers on the Court a discretion to direct that costs incurred by a solicitor appointed by the Court to be a guardian ad litem (as distinct from a next friend) shall be borne and paid by the parties or out of any fund in court. Order 66 r 6 applies only where a solicitor has been appointed guardian ad litem. It does not apply in relation to a next friend. The relevant distinguishing features between a guardian ad litem and a next friend, in the context of that rule, were explained by McLure J in Australia and New Zealand Banking Group.

"(1) Subject to paragraph (4) a person under disability may not bring, or make a claim in, any proceedings except by his next friend and may not defend, make a counterclaim or intervene in any proceedings, or appear in any proceedings under a judgment or order, notice of which has been served on him, except by his guardian ad litem.

(2) Subject to the provisions of these Rules, anything which in the ordinary conduct of any proceedings is required or authorised by a provision of these Rules to be done by a party to the proceedings shall or may, if the party is a person under disability, be done by his next friend or guardian ad litem.

(3) A next friend or guardian ad litem of a person under disability must act by a solicitor.

(4) A Judge may by order permit an infant to sue or defend or take part in any proceedings to which the order relates, without a next friend or guardian ad litem on being satisfied that in the circumstances of the case it is proper to do so."

29 The appellant submitted, in relation to O 70 r 2(4), that "it is difficult to see why such an unfettered power should exist if the law, properly understood, had the effect of preventing the Court from ordering any infant, or any infant's estate, to pay costs. Rather, if that were the law, then it would be appropriate for O 70 r 2(4) to exist only if the power it creates were subject to a requirement that someone provide security for costs before any order made under that Rule were to come into effect".

30 I note that par (4) of O 70 r 2 applies only to an "infant" whereas pars (1), (2) and (3) of the rule apply to a "person under disability". In other words, by O 70 r 2(4), a Judge may, by order, permit an infant, but not a person under any other disability, to sue or defend or take part in any proceedings to which the order relates, without a next friend or a guardian ad litem, on being satisfied that, in the circumstances of the case, it is proper to do so. The requirement that an infant must sue or defend by a next friend or guardian ad litem is entirely procedural and applies only to civil proceedings. This limitation on the capacity of infants does not extend to matters of substantive entitlement or substantive liability. At common law, an infant can sue and be sued: Haines v Leves (1987) 8 NSWLR 442 at 449; State Rail Authority of New South Wales v Hammond (1988) 15 NSWLR 395 at 400 - 401; NSW Insurance at 253 - 254 [27]. Myers v Nominal Defendant [1966] 1 NSWR 659 at 666 - 667 gives examples of types of proceedings in which applicants might be infants but where next friends are not in practice appointed. Also see X v Minister for Immigration and Multicultural Affairs [1999] FCA 995; (1999) 92 FCR 524 at 542 - 543 [57] - [61].

31 The general rule of practice in relation to costs, where a person under a disability sues by a next friend, is not immutable. By s 37(1), the Court retains a discretion. For example, it may be appropriate, in a particular case, to order that the costs of a successful defendant or respondent be paid out of a fund to which the unsuccessful plaintiff or appellant is beneficially entitled, instead of ordering the next friend to pay those costs. But ordinarily, unless the Court is satisfied that the general rule should not be applied, where a person under a disability sues by a next friend and his or her action or appeal is dismissed with costs, the next friend will be ordered to pay the costs of the defendant or respondent. If the next friend has acted properly in relation to the proceedings, he or she will be entitled to an indemnity from the plaintiff or appellant. The general rule is justified by the considerations referred to in NSW Insurance. It is of particular significance that the next friend has the conduct of the proceedings. The next friend will have decided, based on legal advice (see O 70 r 2(3) which provides, relevantly, that a next friend of a person under disability must act by a solicitor), to commence and prosecute (or, where the next friend is appointed after commencement, to maintain) the proceedings.

Relevant considerations on an application by a respondent for security for the costs of an appeal

32 The factors which are relevant on an application by a respondent for security for the costs of an appeal include:

(a) The appellant's prospects of success on the appeal.

(b) The appellant's financial position. As a general rule, a court will not order security against an individual appellant solely on the ground of impecuniosity. Compare O 25 r 1 of the Rules of the Supreme Court; Fletcher v Commissioner of Taxation (1992) 37 FCR 288 at 290, 293.

(c) The bankruptcy of an individual appellant is sufficient to enliven the discretion to order security, but, as a general rule, a Court will not order security in that circumstance if the appellant is not a nominal appellant (that is, if the appellant is suing solely for his or her own benefit) and is unable to provide the security requested of him or her. Compare Coyne v West Australian Newspapers Ltd (No 1) (1996) 15 WAR 51 per Steytler J (as his Honour then was) at 71; Bride v The Australian Bank Ltd [1999] WASCA 88 per Miller J (with whom Wallwork J agreed) at [11], [17]; Shenton v Commonwealth of Australia [2005] WASCA 96 per Pullin JA (with whom Wheeler JA agreed) at [21].

(d) A respondent to an appeal who applies for security is in a stronger position than a defendant at first instance, to the extent that the respondent has a judgment in his or her favour, which is presumed to be correct until displaced. See Kennedy v McGeechan [1978] 1 NSWLR 314 at 315; Fletcher at 292; Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 at [9].

(e) An impecunious appellant should not be ordered to provide greater security than is absolutely necessary. See Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1 at 3 - 4; Natcraft at [9].

(f) Any delay in the respondent filing the application for security.

The present case: the merits of the respondent's application for security for the costs of the appeal

33 In the present case, I accept, for the purposes of this application, that the appellant has a reasonably arguable case on the appeal. I am not satisfied, however, based on my perusal of the papers and after hearing the submissions of counsel, that she has better prospects.

34 I consider that security should be ordered. My reasons are as follows. First, the general rule of practice is that, although a next friend is not a party, the next friend controls the plaintiff's or appellant's conduct of the proceedings, and is personally liable for the costs of a successful defendant or respondent. Secondly, Mr Waugh is an undischarged bankrupt. Thirdly, Mr Waugh is not a party who is suing for his own benefit. Fourthly, there is no evidence that the appeal will be frustrated if security is ordered. In particular, there is no evidence that if security is ordered it could not be procured from any source or fund. The appellant has an evidentiary onus in relation to this point which has not been satisfied. Fifthly, there is no evidence to support a submission that, in the present case, it would be appropriate not to apply the general rule in the event that the appeal is dismissed. In particular, there is no evidence as to the appellant's financial circumstances or her beneficial entitlement to any fund. The appellant has an evidentiary onus on this issue in circumstances where her next friend is an undischarged bankrupt and is not a party who is suing for his own benefit. Sixthly, it is not suggested that any inability to provide security has been caused by the respondent's conduct. Seventhly, the respondent has not been guilty of any material delay in making its application.

35 It is not the practice to require a plaintiff or appellant who is ordinarily resident out of Western Australia, but within the Commonwealth of Australia, to provide security for costs by reason of his or her residence out of this State. I have therefore not taken into account, in deciding to order security, the fact that Mr Waugh resides in the Australian Capital Territory.

36 I have perused the papers which have been filed in the appeal, and considered the submissions of the parties in relation to the amount of security which should be ordered. Although the appellant's case is extensive and raises numerous issues, those issues are not unduly complex, and the hearing of the appeal should not require more than one day. Counsel for the appellant said, in effect, that if security were to be ordered, the amount claimed by the respondent (namely, $20,000) was reasonable. That concession does not, however, bind me in the exercise of my discretion to fix an appropriate amount.