The background to the litigation is set out in the judgment of this Court dismissing an appeal by Mr Hassoun from the order for security for costs made by the District Court. [4]
In brief, Mr Hassoun operated a vehicle repair business from leased premises in Kogarah. On 8 August 2008, the premises were damaged by a fire which had been deliberately lit. On 4 September 2008 Mr Hassoun made a claim under an insurance policy he held with Lumley. The claim was denied and Mr Hassoun commenced the District Court proceedings against Lumley claiming damages. The proceedings were commenced in April 2011, two years and eight months after the fire.
A coronial inquiry took place between November 2011 and August 2012. The inquiry was suspended in August 2012 and the matter referred to the Director of Public Prosecutions. On 23 August 2012, Lumley informed Mr Hassoun that it had denied his claim on the basis that it had been made fraudulently.
The history of the litigation is recounted in the CA Judgment. Gleeson JA noted that the proceedings had been adjourned on several occasions pending completion of the coronial inquiry. Thereafter, there was a history of non-compliance by Mr Hassoun with orders made by the District Court, culminating in an order made on 12 December 2013 that Mr Hassoun could rely on no further evidence without the leave of the Court.
On 17 March 2014, Lumley filed a notice of motion seeking an order for security for costs. It was common ground at the hearing of the motion that Mr Hassoun was impecunious. However, Mr Hassoun did not give evidence in support of his opposition to the order sought by Lumley.
Robison DCJ found that Mr Hassoun had not provided a satisfactory explanation for his non-compliance with orders; that there was no evidence to support Mr Hassoun's contention that his impecuniosity was due to Lumley's refusal to indemnify him; and that stultification of the proceedings, although usually a significant factor on an application for security for costs, was not a major consideration given the history of the matter, particularly the delays and the costs incurred by both parties.
This Court granted Mr Hassoun leave to appeal but dismissed his appeal. Gleeson JA pointed out that although a strong case is required for an order staying proceedings until security for costs is given, Robison DCJ had exercised a discretionary judgment on a procedural issue. Thus Mr Hassoun could not succeed unless he could establish an error of the kind that would vitiate the exercise of discretion on the principles discussed in House v The King. [5]
Gleeson JA examined the evidence before Robison DCJ in considerable detail and concluded that Mr Hassoun had not demonstrated that Robison DCJ had made any error of the relevant kind. Gleeson JA noted that: [6]
"The unexplained delay and repeated past procedural non-compliance by [Mr Hassoun], the large future costs involved to [Lumley] and the failure of [Mr Hassoun] to show that the order for security would stultify the proceedings, were factors additional to [Mr Hassoun's] impecuniosity, which his Honour was entitled to conclude demonstrated a strong case to order a stay subject to the giving of security."
[2]
The Proceedings Before the Primary Judge
Mr Hassoun did not provide security for costs either before or after delivery of the CA Judgment. On 27 March 2015, three weeks after the CA Judgment was delivered, Lumley filed its notice of motion seeking dismissal of the proceedings for want of prosecution and failure to comply with Court orders. [7]
Lumley's motion came before the primary Judge on 5 June 2015. On that day, Mr Hassoun proffered a deed of charge executed by his wife over an asset owned by her. Her Honour pointed out several respects in which the proffered security was deficient. Mr Hassoun's senior counsel then applied for an adjournment in order to address the deficiencies. The primary Judge granted the adjournment.
At the adjourned hearing on 25 June 2015, Mr Hassoun's senior counsel informed the primary Judge that Mr Hassoun's wife was no longer prepared to offer the deed of charge as security for Lumley's costs. The evidence adduced at the adjourned hearing indicated that Mr Hassoun was to be charged with offences arising out of the fire and that the family's resources were needed to deal with that issue.
Mr Hassoun then made an oral application to set aside the order for security for costs that had been made by Robison DCJ. Further evidence was led in support of the application, including evidence as to the reasons why Mr Hassoun's wife had withdrawn her offer. The evidence also indicated that Mr Hassoun financial position was even worse than when the order for security had been made, largely because he had been informed that his workers compensation payments would soon be terminated.
[3]
The Primary Judgment
The primary Judge referred to the evidence adduced at the hearing and observed that its effect was that Mr Hassoun was unable to meet the order for security for costs.
There was no dispute before the primary Judge that she had power to discharge the order for security. [8] However, her Honour rejected the application to vacate the order for security for the following reasons:
"Counsel agree that the relevant test is whether there has been a material change of circumstances as set out in the Federal Court decision of Truth About Motorways [Pty Limited] v [Macquarie] Infrastructure Investment Management Limited. [9] I decline to find there has been a material change of circumstances. Judge Robison found that [Mr Hassoun] was impecunious - that is still the case. While the prospect of the [Mr Hassoun] losing his sole source of income would be relevant to the issue of stultification, this was an issue when the fully contested hearing took place before Judge Robison who weighed up all of the relevant circumstances in arriving at his decision to make the Order. I decline to vacate that order".
Her Honour then considered Lumley's motion to dismiss the proceedings on the basis, as she said, of the principles stated by Leeming JA in Evans v Cleveland Investments Global Pty Ltd. [10] In that case, Leeming JA identified five factors relevant to an application founded on a failure to comply with an order for security for costs.
The primary Judge addressed the five matters identified by Leeming JA as follows:
"Firstly, the Order for Security was made on 13 May 2014. Although the Order was not stayed, I accept that it was reasonable for [Mr Hassoun] to await the outcome of the Appeal. That was delivered on 6 March 2015. The security was ordered to be paid within 21 days. There has accordingly been a period of about three and a half months since the order was made.
Secondly, [Mr Hassoun] has been on notice of the application for dismissal since shortly after the appeal decision was delivered.
Thirdly, the evidence establishes that in the foreseeable future [Mr Hassoun] is unlikely to be able to further fund the proceedings.
Fourthly, I accept that there is prejudice to [Lumley]. I take into account there have been past costs orders made against [Mr Hassoun], and the evidence before me suggests that [Mr Hassoun] will not be able to meet those orders.
Fifthly, I must take into account the position of the Court. There has been a delay in the past. The fire occurred in 2008. The proceedings were commenced in 2011. It is now 2015. Some of the delay has been explained. It was placed in the "Not Ready" list until mid-2012 because of a pending coronial inquiry into the fire. There is also evidence from [Mr Hassoun's] solicitor as to some of the delay being due to his own personal difficulties. Nevertheless, the overall very slow progress of the matter is in conflict with s 56 of the Civil Procedure Act."
For these reasons, her Honour made orders dismissing the statement of claim.
[4]
The Application for Leave to Appeal
An applicant seeking leave to appeal from an interlocutory judgment involving matters of practice and procedure must ordinarily show that the application gives rise to a question of principle or that the decision appealed from has worked a substantial injustice. [11] No doubt where the effect of an order is to terminate proceedings, there may be a greater likelihood of injustice if leave is not granted, than in cases where the order does not have that effect. Whether this is so in a particular case will depend on the circumstances.
[5]
Discharge of the Order for Security
The final issue addressed by the primary Judge was Mr Hassoun's application to set aside the order for security for costs. Senior counsel for Mr Hassoun expressly accepted the proposition advanced by Lumley that the application could not succeed unless Mr Hassoun could show a material change of circumstances. Her Honour therefore applied the principle both parties considered to be appropriate. In these circumstances, it can hardly be said that the application for leave to appeal from her Honour's refusal to set aside the order for security involved a matter of principle. Nor can it be said that her Honour erred in principle in rejecting Mr Hassoun's application.
Mr Gross QC, who appeared with Mr Williams for Mr Hassoun, submitted that leave to appeal should be granted in order to allow Mr Hassoun to challenge her Honour's finding that there had been no material change of circumstances since the order for security for costs was made. That foreshadowed challenge raised no issue of principle.
In any event, Mr Gross did not establish a seriously arguable basis for the challenge. He contended that her Honour had overlooked evidence suggesting that Mr Hassoun's financial position had worsened. But her Honour did not overlook the evidence on this issue; she expressly referred to it. Furthermore, as her Honour pointed out, the important point was that it was indisputable that at all material times Mr Hassoun had been impecunious.
Mr Gross also submitted that Mr Hassoun's affidavits read at the adjourned hearing before the primary Judge, linked his impecuniosity to Lumley's refusal to indemnify him for losses caused by the fire. But there was nothing to indicate that Mr Hassoun could not have given this evidence at the hearing before Robison DCJ. On the contrary, the evidence was plainly available at that time. An attempt to rerun proceedings by putting on evidence that was available and could have been adduced at an earlier hearing does not involve a material change of circumstances.
Mr Hassoun's application for leave to appeal from her Honour's refusal to discharge the order for security for costs raised no question of principle. Nor did Mr Hassoun make out an arguable case that her Honour erred in the principles she applied or in the findings that she made. Mr Hassoun did not demonstrate that he would suffer significant injustice if leave to appeal from her Honour's order was refused.
[6]
Dismissal of the Statement of Claim
Mr Gross did not dispute that the primary Judge was entitled to approach Lumley's motion seeking dismissal of the statement of claim by reference to the five matters identified by Leeming JA in Evans v Cleveland Investments Pty Ltd. He submitted, however, that her Honour had erred by failing separately to take into account the interests of justice. He pointed out that the five matters identified in Evans are not necessarily exhaustive of all material circumstances that should be considered [12] and that s 56(1) of the CP Act states that the overriding purpose of the Act and the rules of court is to facilitate the just, cheap and quick resolution of the real issues.
The Primary Judgment cannot be understood as overlooking the prejudice to Mr Hassoun in dismissing the proceedings. Her Honour was clearly aware that the order being sought by Lumley was the dismissal of the statement of claim. She took into account the fact that Mr Hassoun had not only failed to comply with the order requiring the provision of security, but was highly unlikely to be able to do so in the foreseeable future. Her Honour also took into account that the evidence showed that Mr Hassoun was highly unlikely to be able to fund the proceedings. In addition, the evidence of Mr Hassoun's solicitor was that because of the criminal proceedings, it was quite likely that the District Court hearing would have to be deferred pending completion of the criminal proceedings, thereby increasing the prejudice likely to be suffered by Lumley if the District Court proceedings remained on foot.
Mr Hassoun did not establish a basis for arguing that the primary Judge erred in principle or that her Honour overlooked the need to take account of the interests of justice. Her Honour's view, in substance, was that since Mr Hassoun had failed to comply with the order to provide security for costs, was extremely unlikely to be able to provide security in the future and, in any event, was unlikely to be able to pursue the case, it was in the interests of justice to terminate the proceedings.
Mr Gross also complained that the primary Judge did not have regard to an affidavit by Mr Hassoun's solicitor explaining that his ill-health had contributed to Mr Hassoun's non-compliance with court orders. This affidavit had actually been sworn prior to the hearing before Robison DCJ, but for some reason was not read on Mr Hassoun's behalf at that hearing. In any event, her Honour referred to the affidavit and clearly took into account the personal difficulties experienced by the solicitor when deciding to dismiss the statement of claim.
[7]
Conclusion
For these reasons the Court dismissed the application for leave to appeal and ordered Mr Hassoun to pay Lumley's costs.
[8]
Endnotes
Hassoun v Wesfarmers General Insurance Ltd t/as Lumley General (District Court (NSW), Balla DCJ, 25 June 2015, unrep) (Primary Judgment). The order for security was made by Robison DCJ: Hassoun v Wesfarmers General Insurance Ltd t/as Lumley General (District Court (NSW), Robison DCJ, 13 May 2014, unrep).
District Court Act 1973 (NSW), s 127(2)(a); National Mutual Life Association of Australia Ltd v Grosvenor Hill (Qld) [2001] FCA 237; 183 ALR 700 at [8]-[9] per curiam.
[2015] NSWCA 254 at [8]-[9] per curiam.
Hassoun v Wesfarmers General Insurance Ltd t/a Lumley General [2015] NSWCA 33; 18 ANZ Insurance Cases 62-071 at [3]-[10] (Gleeson JA, McColl JA and Beech-Jones J agreeing) (CA Judgment).
[1936] HCA 40; 55 CLR 499 at 505.
CA Judgment at [98].
Pursuant to s 61 of the Civil Procedure Act 2005 (NSW) (CP Act) and Uniform Civil Procedure Rules 2005 (UCPR) (NSW) rr 12.7(1), 42.21(3).
UCPR r 36.16.
[2001] FCA 1603 (Hely J).
[2013] NSWCA 439 at [5], citing Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377 at [24].
In re the Will of FB Gilbert (deceased) (1946) 46 SR (NSW) 318 at 323 (Jordan CJ); Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ).
Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377 at [25].
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Decision last updated: 13 April 2016
Parties
Applicant/Plaintiff:
Hassoun
Respondent/Defendant:
Wesfarmers General Insurance Limited t/a Lumley General
THE COURT: On 25 June 2015, a Judge of the District Court (Balla DCJ) dismissed an application by the applicant (Mr Hassoun) (the plaintiff in the District Court proceedings) to vacate an order made on 13 May 2014 that he provide security for costs in the sum of $70,000.00. [1] The primary Judge also made an order on the application of the respondent (Lumley) (the defendant in the District Court proceedings) that Mr Hassoun's statement of claim filed on 24 March 2011 be dismissed for want of prosecution or by reason of a failure to comply with orders of the Court. Her Honour delivered a short ex tempore judgment giving reasons for making these orders.
Mr Hassoun filed a summons on 25 September 2015 seeking leave to appeal from the decision of the primary Judge. Leave was required because the orders made by the primary Judge, although resulting in dismissal of the proceedings, were interlocutory. [2]
The matter was listed for a concurrent hearing of the application for leave and the substantive appeal, but the Court invited the parties to address the question of leave first. At the conclusion of argument, the Court dismissed the application for leave to appeal, with costs, and stated that reasons would be delivered in due course. These are the Court's reasons.
The Court has borne in mind the observations made by Beazley P in La La Land Byron Bay Pty Ltd v The Independent Liquor and Gaming Authority, [3] as follows:
"The purpose of the requirement for leave is to "[promote] the availability, the speed and the efficiency of justice": Coulter v The Queen [1988] HCA 3; 164 CLR 350 at 359 per Deane and Gaudron JJ. The same purpose underlies what is required of reasons in refusing leave. The court is not required to give reasons such as are appropriate for a full appellate determination. Rather, the reasons required on the refusal of leave are directed to why leave is refused, having regard to the principles governing the court's discretion in determining whether to grant or refuse leave, discussed above. …
The reasons stated by the court in refusing leave are thus conventionally short, usually being no more than a few pages, directed to why, having regard to the principles governing leave, the case is not an appropriate matter for the grant of leave. Short reasons are appropriate, sufficient and necessary for the proper administration of justice."