Guan v Lui

Guan v Lui - [2020] NSWCA 251 - NSWCA 2020 case summary — Zoe

Judgment

MACFARLAN JA: Pursuant to a Notice of Motion filed on 1 October 2020 the respondent to this appeal (Mr Kevin Lui) seeks an order that the appellant (Ms Xiuyan Guan) provide security for Mr Lui's costs of the appeal. The appeal is fixed for a one day hearing on 22 October 2020.
In the proceedings in the Common Law Division which gave rise to the appeal, Mr Lui sought orders against Ms Guan in relation to an agreement between them and another party dated 18 January 2015. Ms Guan defended the proceedings, inter alia, on the basis that Mr Lui was unable to recover amounts claimed because he had acted as an unlicensed real estate agent (see s 8 of the then-named Property, Stock and Business Agents Act 2002 (NSW)). By judgments of 28 June 2019 and 14 April 2020, Walton J found in Mr Lui's favour, awarding him $780,000 in damages, $215,638.94 in pre-judgment interest, and costs ([2019] NSWSC 803; [2020] NSWSC 398).
Ms Guan's Notice of Appeal, as filed on 26 May 2020 and amended on 1 September 2020, challenges his Honour's findings concerning s 8. The appeal is likely to turn upon the proper characterisation of the arrangements and conduct found by his Honour.
On 7 August 2020 Mr Lui served on Ms Guan an order for her examination on oath, to assist in Mr Lui's enforcement of the judgment entered in his favour. The examination was conducted on 17 September 2020 and revealed the following matters of present relevance:

Ms Guan lives in rented accommodation with her adult daughter.
Ms Guan receives unemployment benefits from the Australian Government and pays cash to her daughter as a contribution towards the rent.
Ms Guan does not own any property.
Ms Guan has been assessed as having a tax liability of $1 million.
Ms Guan has money of only about $10,000.
Ms Guan owned an iron ore company in China but transferred her shares to her husband who lives in China after she became "trapped" in Australia as a result of action taken by the Australian Taxation Office which prevented her from leaving Australia.
If the Australian Taxation Office permitted her to travel overseas Ms Guan could "easily" bring some money back to the country and avoid bankruptcy.
If Ms Guan needs money she asks her husband for it.
Ms Guan does not have the money to pay Mr Lui's legal costs if she loses the appeal.

Rule 51.50(1) of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") gives this Court the power to order that security be given for the costs of an appeal if "special circumstances" exist. In the absence of those circumstances, no security is to be required (see sub-r (2)). A recent consideration of r 51.50 and of earlier authorities is to be found in the decision of Bell P in Mr D v Ms P [2020] NSWCA 174.
In support of Mr Lui's application for an order for security, his counsel relied on a number of matters, including that whilst Ms Guan is admittedly impecunious in the sense that she is unable to pay her judgment debt out of assets in Australia that she owns, her evidence given on her recent examination was that when she needs money she is able to request her husband in China to provide it. The clear inference from this evidence was that if Ms Guan were ordered to provide security for Mr Lui's costs of the appeal, she would be able to comply with the order by obtaining the necessary funds from her husband. She did not adduce any affidavit evidence to suggest that this was not the case. In these circumstances Dr Greinke, who appeared for her in this Court, was unable to press the contention earlier made in Ms Guan's written submissions that if a security order were made her appeal would be stifled.
In my view these matters constitute "special circumstances" entitling the Court to make an order for security and warranting that it do so. Ordinarily, impecuniosity of an appellant who is a natural person is not a sufficient basis for an order for security but here, whilst Ms Guan is impecunious in the sense that the judgment will not be able to be enforced against her, she has a means, by request to her husband, to obtain funds to meet such expenses as she wishes to pay. There is in my opinion an essential unfairness to Mr Lui in Ms Guan effectively being immune from enforcement by Mr Lui of his judgment and of costs orders he has obtained or may obtain, when at the same time Ms Guan has ready access to funds to pay her lawyers in these proceedings and the proceedings to which the Australian Taxation Office is a party which are on foot, and to pay any other expenses that she chooses.
In light of these matters, it is unnecessary to address the submission of Mr Afshar, who appeared for Mr Lui in this Court, that Ms Guan's appeal has only poor prospects of success.
In further response to the application for security for costs, Dr Greinke submitted on behalf of Ms Guan that in exercising its discretion the Court should take into account that Mr Lui was guilty of unexplained delay in making his application for security. I do not however consider that there has been any disqualifying delay. First, as a result of uncertainty as to what issues the Notice of Appeal was intended to raise, the Registrar directed on 12 August 2020 that Ms Guan file by 26 August 2020 an amended Notice of Appeal, together with her submissions on the appeal and a chronology. She did this on 1 September 2020. The next day Mr Lui requested the provision of security for his costs of the appeal. Secondly, on 7 August 2020 Mr Lui served the examination order referred to above, as a result of which Ms Guan was examined as to her financial position on 17 September 2020. That examination revealed the significant matters referred to in [4] above. Following correspondence between the solicitors concerning Ms Guan's production of financial records, the Notice of Motion seeking security was filed on 1 October 2020.
Notwithstanding those matters, I consider that the time at which the application for security was made should be taken into account in determining the quantum of the security to be ordered. As preparation for the appeal progressed some distance in the absence of a security order, the security should in my view be limited to cover prospective costs only.
Mr Lui's solicitor provided by affidavit an estimate of Mr Lui's incurred and future costs of the appeal likely to be recovered on an assessment of costs. Mr Afshar sensibly, and necessarily, accepted that the estimates in the affidavit of time to be spent in relation to the appeal required reconsideration in light of Mr Lui's now better appreciation of the issues likely to arise on the appeal.
Taking this into account, I allow for solicitors' costs the sum of $4,000 to include GST and disbursements other than counsel's fees. As to counsel's fees, I allow the sum of $10,000. In respect of Mr Lui's costs of this motion for security, I allow $6,000 to cover both solicitors' and counsel's fees.
For these reasons, I make the following orders: 1. Pursuant to UCPR r 51.50(1), order the appellant to provide security for the costs of the respondent to the appeal by paying into Court on or before Thursday 15 October 2020 the sum of $20,000. 2. Grant leave to the respondent to apply on Monday 19 October 2020, by Notice of Motion filed and served on Friday 16 October 2020, for an order pursuant to UCPR r 51.50(2A) for the dismissal of the appeal on the basis of non-compliance with Order (1). 3. Order the appellant to pay the respondent's costs of his Notice of Motion for security for costs.

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