Hassoun v Wesfarmers General Insurance Ltd t/a Lumley General

Judgment

1. McCOLL JA: I agree with Gleeson JA.
2. GLEESON JA: This is an application by Mr Hassoun for leave to appeal against an order by a judge of the District Court that Mr Hassoun provide the sum of $70,000 as security for the costs of the respondent (Wesfarmers) and that the District Court proceedings be stayed until the security was given: Hassoun v Wesfarmers General Insurance Ltd t/as Lumley General (District Court (NSW), Robison J, 13 May 2014, unrep). The leave application was heard concurrently with the appeal so that if leave to appeal be granted, the argument on the leave application would stand as that on appeal.

Background

1. Mr Hassoun owned and operated a business from leased premises at Railway Parade, Kogarah, known as Signature Auto Body Smash Repairs. He had operated this business as a sole trader since December 2004. Mr Hassoun insured the business premises against certain risks including loss or damage by fire (the policy). The cover limits provided under the policy taken out with Wesfarmers included: $126,000 for fire and specified perils; $50,000 for removal of debris; and $170,000 for business interruption.
2. The period of risk under the policy extended from 26 February 2008 to 26 March 2009. On 30 July 2008 Mr Hassoun requested an increase of $20,000 in the cover for fire and specified perils to $146,000. Wesfarmers agreed to this request and increased the fire cover limit to $146,000 on 1 August 2008.
3. On 8 August 2008 the premises were damaged by fire. It is common ground that the fire had been deliberately lit. The premises and its contents were totally destroyed in the fire. On 4 September 2008 Mr Hassoun made a claim under the policy.
4. On 24 March 2011 Mr Hassoun commenced proceedings in the District Court against Wesfarmers. The delay between the date of the fire in August 2008 and the commencement of the proceeding was unexplained. The statement of claim was served on Wesfarmers' solicitors on 12 April 2011.
5. In his statement of claim, Mr Hassoun claimed damages against Wesfarmers for its refusal to indemnify him under the policy. The damages claimed as particularised included: the value of tools, equipment, stock and materials of $141,180; lost trading profits and wages for 12 months from 8 August 2008 "in the order of $170,000"; and lease payments for the business premises to 30 September 2008 of $3,067.38 per month.
6. A coronial inquiry into the fire took place in November 2011 and May, June and August 2012. On 7 August 2012 the coroner suspended the coronial inquiry and referred the matter to the Director of Public Prosecutions for consideration of charges to be laid against two known persons specified by the coroner. On 23 August 2012 Wesfarmers' solicitors wrote to Mr Hassoun advising him that Wesfarmers denied his claim on the basis that it had been fraudulently made. The letter contended that the fire was deliberately lit and that Mr Hassoun was either directly responsible or had organised or procured the actions of third parties to light the fire.
7. The letter also asserted an additional ground for the insurer denying the claim for indemnity: that Mr Hassoun had forged financial records to falsely indicate that his business was running at a profit in order to obtain indemnity under the business interruption section of the policy and that he had deliberately and intentionally provided false information and documentation to the insurer.
8. The essential issue in the District Court proceedings is whether Wesfarmers is entitled to refuse to indemnify Mr Hassoun on the grounds that the claim is fraudulent. It is common ground that Wesfarmers bears the onus of proof of establishing the serious allegations of fraud against Mr Hassoun.

The course of the District Court proceedings

1. It is necessary to refer to what occurred in the District Court proceedings in some detail, as the failure by Mr Hassoun to comply with procedural directions was a significant matter relied upon by Wesfarmers in seeking a stay of proceedings until security for costs was given by Mr Hassoun. The relevant chronology is as follows.
2. On 10 June 2011 the case was placed in the inactive list for a period of six months, to be reviewed on 12 December 2011. Thereafter it was adjourned on two further occasions pending completion of the coronial inquiry.
3. On 28 August 2012 the Court made directions including that Mr Hassoun serve all his evidence by 18 September 2012. He failed to comply.
4. On 18 December 2012 the Court made directions including that Mr Hassoun serve all evidence by 28 February 2013. Mr Hassoun failed to comply; he served a single witness statement (his own) on 20 May 2013, almost three months late.
5. On 23 May 2013 the Court made directions including that Mr Hassoun serve a schedule of damages together with all lay and expert evidence by 17 July 2013. Mr Hassoun failed to comply; he filed a schedule of damages two days late on 19 July 2013, and did not serve any further evidence.
6. On 22 July 2013 the Court made further directions including that Mr Hassoun file lay and expert evidence on the issue of damages, if not agreed or admitted, by 30 August 2013. Again he failed to comply.
7. On 20 September 2013 the Court directed Mr Hassoun to serve all outstanding evidence and obtain and serve a loss adjuster report in respect of quantum by 1 November 2013, and stood over the proceedings for further case management directions on 12 December 2013. Costs of that day were awarded in favour of Wesfarmers. Mr Hassoun failed to comply. Subsequently on 5 November 2013 he served an additional statement dated 5 November 2013 and a schedule of damages, but no report from a loss adjuster.
8. On 11 November 2013 the Court directed the parties to undertake mediation. A mediation was held on 19 November 2013, but was unsuccessful.
9. On 9 December 2013 Mr Hassoun's solicitors served an additional witness statement from Mr Hassoun dated 5 December 2013 and an amended schedule of damages.
10. On 12 December 2013 the Court made an order in the nature of a "guillotine" order, that Mr Hassoun could not rely on any further evidence without leave of the Court and could not rely on any evidence that had not been served as at 12 December 2013 without seeking the leave of the Court. The Court also made directions that Wesfarmers serve any evidence by 20 March 2014, and Mr Hassoun serve any evidence in reply by 17 April 2014.
11. Wesfarmers did not serve its evidence by the date directed. Instead it filed a notice of motion on 17 March 2014 seeking security for costs and rulings on the evidence filed by Mr Hassoun pursuant to s 192A of the Evidence Act 1995 (NSW). The evidence admissibility application had been foreshadowed by the legal representatives for Wesfarmers at the directions hearing held on 11 November 2013. The application came before the primary judge on 13 May 2014.

Evidence before the primary judge

1. On the hearing of the application, Wesfarmers relied upon an affidavit from its solicitor which annexed correspondence between the parties' solicitors. Exhibited to that affidavit was a bundle of documents which became Exhibit 1. This included three signed statements of Mr Hassoun, being his witness statements in the proceedings dated 20 May 2013, 5 November 2013 and 5 December 2013. Exhibit 1 was tendered by counsel for Wesfarmers expressly for the purpose of the s 192A application and admitted into evidence without objection. No order was sought or made limiting the use which could be made of those documents to the s 192A application.
2. Mr Hassoun did not swear an affidavit. He relied upon an affidavit from his solicitor which annexed correspondence between the parties' solicitors principally on the topic of which party had failed to comply with the timetable for service of evidence. The correspondence from Mr Hassoun's solicitor to Wesfarmers' solicitor also advised that Mr Hassoun wished to file an amended statement of claim withdrawing his claims for the cost of removal of debris and his claim against Wesfarmers for breach of duty of utmost good faith.
3. After the evidence had been read and documents tendered, there was discussion between the primary judge and counsel as to the order in which the applications should be dealt with. Ultimately, at the request of counsel for Mr Hassoun, his Honour proceeded to deal first with the application for security for costs.
4. It was common ground before the primary judge that Mr Hassoun was impecunious, but counsel for Mr Hassoun contended that he should not be ordered to give security essentially for four reasons: 1. that Mr Hassoun's claim was prima facie regular and must be treated as having a reasonable prospect of success; 2. that his admittedly impecunious state was caused by the conduct of Wesfarmers in failing to indemnify him under the policy; 3. any order for security would stultify the litigation; 4. Wesfarmers had delayed in seeking an order for security for costs.

The reasons of the primary judge

1. In ordering security to be provided and that the proceedings be stayed until this had occurred, the essence of the primary judge's reasoning was as follows.
2. First, the primary judge noted that Mr Hassoun had failed to adduce any affidavit evidence in relation to the application and that such failure did not assist his resistance to the application for security for costs. Mr Hassoun challenges this finding by pointing to his witness statements which had been tendered in evidence by Wesfarmers. I will return to the significance of this evidence below.
3. Next the primary judge observed that there was no satisfactory explanation by Mr Hassoun for the delay in the proceedings and his failure to comply with directions. In this context his Honour referred to the objects of the Civil Procedure Act 2005 (NSW) (CPA) and that the parties, their legal practitioners and the Court are all bound by the provisions of the CPA. His Honour also referred to the guiding principles in s 56 of the CPA and stated that it was incumbent upon any plaintiff to ensure that proceedings are progressed in accordance with the principles of case management and to comply with every case management order. The primary judge noted that Mr Hassoun had failed to comply with the Court's directions.
4. His Honour identified the real issue in the proceeding as being how the fire occurred and whether Mr Hassoun had anything to do with it as Wesfarmers alleged in its defence. His Honour observed that this was not a matter to be determined by the Court on the interlocutory application before it.
5. Turning to Mr Hassoun's argument that it should be inferred that Wesfarmers' refusal to indemnify Mr Hassoun was the cause of his impecuniosity, his Honour acknowledged that in a proper case inferences could be drawn from admissible evidence, but stated that here there was a complete lack of evidentiary foundation to that end. He noted that impecuniosity, of itself, was not a matter that would normally warrant the granting of an order for security for costs, but was relevant when considered in the light of other matters relied upon by Wesfarmers including the absence of any satisfactory explanation by Mr Hassoun for the delay in the prosecution of the proceedings since it was commenced in 2011.
6. His Honour referred to the observations of Beazley JA in Prynew Pty Ltd v Nemeth [2010] NSWCA 94; 28 ACLC 10-026 at [16] concerning the difference between the onus of proof on an applicant for security and the evidentiary burden on the party opposing an order for security who seeks to establish a reason why security should not be granted. His Honour concluded that Mr Hassoun had failed to provide any reliable evidence that his impecuniosity had been caused by Wesfarmers' refusal to indemnify him under the policy. Indeed his Honour observed that Mr Hassoun's impecuniosity appeared to be directly derived from other factors not within the responsibility or control of Wesfarmers. Mr Hassoun challenges this finding.
7. His Honour also referred to the delay by Wesfarmers in making the application but considered that this was not a disqualifying factor in view of Wesfarmers' attempts to have the matter progressed as quickly as possible.
8. Finally, his Honour considered the issue of stultification of the proceedings in the event that a security for costs order was granted. After referring to Li v State of New South Wales (Li v NSW) [2013] NSWCA 165 at [45] where this Court reaffirmed the principle that the onus of establishing stultification rests on the party asserting it, his Honour referred to [46] where this Court said: The stultification of proceedings is recognised to be a powerful factor to be taken into account in deciding whether an order for security is appropriate.
9. Nonetheless his Honour concluded that stultification was not a significant issue in the present case as it might have been if the application for security had been brought at an earlier time, given the history of the matter and the delays thus far and the costs no doubt incurred by both parties. Furthermore, his Honour found that Mr Hassoun had not discharged the evidentiary burden of demonstrating that the proceedings would be stultified if an order for security was made. Mr Hassoun challenges this finding.
10. His Honour proceeded to make orders as sought in paragraphs 1 and 2 of the notice of motion. The terms of these orders were: 1. An order that within 21 days of 13 May 2014, the plaintiff provide security for costs in the sum of $70,000. 2. Order that the proceedings be stayed pending the provision of security referred to in order 1.
11. No objection was taken by Mr Hassoun either below or on appeal to the form of the orders sought by Wesfarmers and made by the primary judge.
12. In a discussion between his Honour and counsel immediately following giving judgment on the application, his Honour stated that he had intended but omitted to say in his judgment that he was perfectly satisfied that the affidavit evidence concerning Wesfarmers' expected future costs of litigation was entirely appropriate with respect to the quantum of future costs.

Order for security

1. The security for costs order which is challenged was made in respect of a litigant, being an individual who was concededly impecunious. There was no issue before the primary judge (or on appeal) as to the power of a District Court judge to make such an order. The primary judge proceeded on the basis that the District Court had power to order the provision of security as a condition of the exercise of its power to stay proceedings under s 67 of the CPA which provides: Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.
2. That provision is in similar terms to s 156(1) of the District Court Act 1973 (NSW) (DCA) which provides that at any stage of any proceedings, the Court may, on terms, order that the proceedings be stayed.
3. In Philips Electronics Australia Pty Ltd v Matthews (Philips Electronics) [2002] NSWCA 157; 54 NSWLR 598 at [47], Hodgson JA held (Mason P agreeing), that s 156 gave the District Court power to make an order staying proceedings unless and until security for costs was given. Hodgson JA also held (at [50]-[52]) that the power was not limited by the terms of the rules, which specified circumstances in which it was appropriate to make such an order against an individual (at that time Pt 40 r 1 of the District Court Rules 1973 (NSW) (DCR)).
4. Nonetheless, Hodgson JA expressed the view (at [53]) that the existence of Pt 40 r 1, indicating the usual circumstances in which security for costs would be ordered, meant that a "strong" case would need to be made out that it was necessary in the interests of justice to stay proceedings until security for costs was provided. Mason P (at [13]) in agreeing with Hodgson JA, described the circumstances in which the power to order a stay conditional upon the grant of security in categories falling outside Pt 40 r 1 as being "exceptional".
5. The same provisions which were considered in Philips Electronics are now to be found in s 67 of the CPA, s 156 of the DCA and the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.21. However UCPR r 42.21 includes some new provisions, relevantly, sub-rule (1)(f), (1A), (1B) and (4). There were no equivalent rules in Pt 40 r 1 of the DCR. It is appropriate to set out r 42.21 in its current form: 42.21 Security for costs (1) If, in any proceedings, it appears to the court on the application of a defendant: (a) that a plaintiff is ordinarily resident outside Australia, or (b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or (c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or (e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, or (f) that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given. (1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant: (a) the prospects of success or merits of the proceedings, (b) the genuineness of the proceedings, (c) the impecuniosity of the plaintiff, (d) whether the plaintiff's impecuniosity is attributable to the defendant's conduct, (e) whether the plaintiff is effectively in the position of a defendant, (f) whether an order for security for costs would stifle the proceedings, (g) whether the proceedings involves a matter of public importance, (h) whether there has been an admission or payment in court, (i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant, (j) the costs of the proceedings, (k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute, (l) the timing of the application for security for costs, (m) whether an order for costs made against the plaintiff would be enforceable within Australia, (n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff. (1B) If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given.
6. Counsel for Wesfarmers submitted that the change in the rules reflected in r 42.21(4) had the consequence that the test in Philips Electronics no longer applied. That is, it was contended that it is unnecessary for an applicant for a stay conditional upon the grant of security to establish a "strong" case, or an "exceptional" one. As will be seen, it is unnecessary to reach a concluded view on that submission in the present case.
7. I would add however that it should not be thought that the express statement in r 42.21(4), that the rule does not affect the provisions of any other statutory power under which the Court may require security for costs, should be seen as necessarily inconsistent with the view of the majority in Philips Electronics as to the circumstances in which it may be appropriate to stay proceedings conditional upon the grant of security.
8. Counsel for Mr Hassoun placed emphasis on the usual circumstances in which security may be ordered against a natural person as contemplated by r 42.21(1), none of which were applicable here, as an indicator that the primary judge erred in this case in ordering a stay of proceedings subject to the giving of security for costs. However it was not argued by Mr Hassoun that Philips Electronics was incorrect and should not be followed.

Restraint on appellate court intervention

1. It may be accepted, applying the test in Philips Electronics, that to make an order staying proceedings until security for costs is given requires a strong case or an exceptional one. Nevertheless the primary judge explained why he did make such an order, which is clearly a discretionary matter of a procedural nature with which this Court would not usually interfere. This is because it is not usually conducive to the "just, quick and cheap resolution of the real issues" in proceedings to intervene prior to the conclusion of the proceedings below: CPA, s 56(1); Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65; 98 ACSR 301 at [21] (Macfarlan JA); In re the Will of F B Gilbert (1946) 46 SR (NSW) 318 at 323; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177.
2. Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. It is well-established that it is not sufficient merely to show that the trial judge was arguably wrong: Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32].
3. Here there is no issue of principle or question of general importance. It is relevant, however, to consider the degree of hardship for the applicant if leave were refused. If security has been ordered on an erroneous basis, security which Mr Hassoun cannot provide, such that the proceedings would be terminated or forever stayed, then Mr Hassoun's substantive rights will have been affected. A grant of leave would be appropriate in those circumstances.
4. Mr Hassoun must demonstrate on appeal an error of the kind discussed in House v The King [1936] HCA 40; 55 CLR 499 at 505 - that is, an error of fact, an error of principle, a failure to take some material matter into account, the taking of an immaterial matter into account, or a result that is so unjust as to suggest that one of the foregoing errors must have been committed, even though it is not apparent: Morris v Hanley [2001] NSWCA 374 at [14] (Heydon JA).
5. Here Mr Hassoun relies upon five alleged errors in his draft notice of appeal.

Cause of Mr Hassoun's impecuniosity

1. The first error was said to be his Honour's conclusion that Mr Hassoun did not establish that there was a causal link between the fire and his impecuniosity.
2. In support of this complaint it was contended that the primary judge erred in five respects: first, in finding that there was no evidence to support the conclusion that there was such causation; secondly that he failed to give consideration to Mr Hassoun's witness statements; thirdly that he denied procedural fairness to Mr Hassoun in relying on some parts of Mr Hassoun's witness statements and not others; fourthly that he erred in placing reliance on the absence of an affidavit from Mr Hassoun when his witness statements were in evidence; and finally that he mistook the facts as to the events which had caused Mr Hassoun's impecuniosity and that his conclusion was unreasonable.
3. These contentions are to be addressed in the context where Mr Hassoun had the onus of establishing both the adequacy of his financial position before the fire and that Wesfarmers' actions have caused, or at least materially contributed to, his inability to meet an order for security for costs: Jazabas Pty Ltd v Haddad [2007] NSWCA 291; 65 ACSR 276 at [94] (McClellan CJ at CL; Mason P agreeing); Fiduciary Ltd v Morningstar Research Pty Ltd (Fiduciary v Morningstar) [2004] NSWSC 664; 208 ALR 564 at [100] (Austin J); Wollongong City Council v Legal Business Centre Pty Ltd [2012] NSWCA 245 at [33] (Beazley JA; Meagher and Barrett JJA agreeing).
4. It may be accepted that in some circumstances the inference that the defendant's conduct has caused the plaintiff's impecuniosity might be plain. Austin J in Fiduciary v Morningstar at [88] referred to the example of a successful plaintiff carrying on business for some time that had been ruined after the intervening conduct of the defendant. In such a case, his Honour said: the Court may be able to conclude that the defendant's wrongdoing caused the plaintiff's financial collapse, without the plaintiff having to prove its previous financial strength in detail. But, his Honour continued that in a case: where the corporate plaintiffs had not been operating in Australia for a sufficiently lengthy period of time to establish a track record, it is correct, in my view, to require them to prove that they were in an adequate financial state, prior to the commencement of their association with the Morningstar interests, to have been able to meet an adverse costs order in the proceeding.
5. Before the primary judge, counsel for Mr Hassoun submitted that inferences could be drawn that Wesfarmers' conduct in failing to indemnify Mr Hassoun under the policy had either caused, or at least materially contributed to, Mr Hassoun's impecuniosity. When asked by the primary judge what evidence supported this contention, counsel referred only to paragraph 9 of Mr Hassoun's witness statement of 5 December 2013. Counsel said it was unnecessary to refer to any other paragraphs of the witness statements. In doing so, Counsel limited his submission to the very general evidence of Mr Hassoun that he had conducted business for approximately four years. Relying on this evidence, counsel then submitted that "obviously" the destruction of the business premises would have had an impact on Mr Hassoun's financial position.
6. The difficulty with Mr Hassoun's approach to the impecuniosity causation issue is twofold. First, no attempt was made before the primary judge to demonstrate with any specificity what was Mr Hassoun's financial position was before the fire. In particular, it was not established that Mr Hassoun was trading profitably before the fire.
7. Secondly, insofar as counsel for Mr Hassoun drew attention on appeal to other evidence in Mr Hassoun's witness statements, to which his Honour's attention had not been drawn, such evidence did not establish that Mr Hassoun was trading profitably before the fire. The relevant parts of Mr Hassoun's witness statements were identified as paragraphs 21 and 24 of the statement of 5 November 2013 and paragraph 29 of the statement of 5 December 2013. On analysis this evidence does not rise to the level suggested in oral argument on appeal.
8. First, paragraph 21 contained no more than a statement of Mr Hassoun's belief that if the fire had not intervened on August 2008 he would have been able to continue to "grow" his business. This begs the question as to the profitability of the business prior to the fire.
9. Secondly, the material in paragraph 24 goes no further than identifying certain expenses of the business. No attempt was made in the witness statement, nor in submissions before his Honour (or on appeal), to demonstrate what was the net profit of the business prior to the fire on either a weekly, monthly or annual basis.
10. Finally, the material in paragraph 29 of Mr Hassoun's 5 December 2013 statement, which concerned Mr Hassoun investing heavily in new equipment for the business over five years to make the business run profitably so that work could be completed efficiently and on time, contained at best a most generalised conclusion about the profitability of the business. Little, if any, weight could be given to such a conclusionary statement. The material did not demonstrate that the business was in fact profitable immediately before the fire.
11. Contrary to Mr Hassoun's submissions, his Honour did give consideration to Mr Hassoun's witness statements. His Honour referred to them expressly on this very issue. There was no denial of procedural fairness in his Honour accepting a submission by Wesfarmers, based on certain paragraphs of the 5 December 2013 witness statement, to which his Honour was taken by counsel for Wesfarmers, that any impecuniosity of Mr Hassoun appeared to be directly derived from other factors not within the responsibility or control of Wesfarmers. This may be taken to be a reference to Mr Hassoun's work injury in 1994 and its consequences; the previous loss-making business conducted by Mr Hassoun in 2004; the further work injury suffered by Mr Hassoun in September 2010, whilst working as a furniture deliverer and installer; and the unsuccessful take-away business operated by Mr Hassoun in 2011.
12. Furthermore his Honour was correct to find that there was no reliable evidence as to Mr Hassoun's impecuniosity and its cause having regard to his failure to provide any affidavit evidence. His Honour was not obliged to give weight to unsworn evidence in witness statements, let alone statements at a high level of generality, which failed to descend to the detail of Mr Hassoun's financial position and profitability of his business immediately prior to the fire. I reject the submission that his Honour mistook the facts, or that his conclusion was unreasonable.

Whether case management grounds an irrelevant consideration

1. The second error was said to be that his Honour took into account case management grounds in light of the objectives of the CPA when ordering security.
2. In support of this complaint it was contended that his Honour failed to have regard to three matters: first, that there was no continued procedural non-compliance by Mr Hassoun with court directions; secondly, that his Honour ignored Wesfarmers' own procedural default in failing to serve its evidence by 20 March 2014; and thirdly, that the order for security in effect punished Mr Hassoun for past procedural failures.
3. Each of these complaints is without merit.
4. As to the first complaint, his Honour referred to the chronology of procedural non-compliance which was attached to the submissions on behalf of Wesfarmers. It was common ground based on this chronology that Mr Hassoun was no longer in default. What his Honour regarded as significant, and properly so in my view, was the absence of any satisfactory explanation by Mr Hassoun for the prior history of delay on his part.
5. As to the second complaint, his Honour said that he had had regard to the affidavit of Mr Hooper, Mr Hassoun's solicitor, affirmed on 12 May 2014. That affidavit asserted that Wesfarmers was in default in compliance with the timetable for service of its evidence. It should not be doubted that his Honour did not have regard to this matter when he considered and rejected Mr Hassoun's submission that Wesfarmers had delayed in bringing the application. His Honour found that Wesfarmers had done its best to have the matter progressed as quickly as possible and had brought the application as an avenue of last resort.
6. As to the third complaint, his Honour was entitled to infer, having regard to the absence of any, let alone a satisfactory, explanation for Mr Hassoun's repeated past failures to comply with directions and the large future costs to Wesfarmers, that there was a risk of future non-compliance against which Wesfarmers was entitled to be protected by a stay of proceedings conditional upon the provision of security for costs (which was limited to future costs). There was no error by his Honour in taking this factor into account and giving it significant weight.

(a) Prospects of success

1. The third error was said to be that his Honour had failed to take into account all relevant factors bearing upon the exercise of his discretion to order security for costs.
2. In oral argument, this complaint was narrowed to two related matters (Tcpt 22, lines 41-45). It was argued that his Honour had failed to consider the prospects of success or merits of the proceedings and the genuineness of the proceedings, being matters which the rules provide the Court may have regard to when considering whether to order security for costs relying upon the power conferred under r 42.21(1A)(a) and (b).
3. Although the factors in r 42.21(1A) were not directly applicable on the stay application, r 42.21 was relevant as indicating the usual circumstances in which security for costs would be ordered and the factors which may be taken into account in deciding whether to do so: Philips Electronics at [53].
4. Nonetheless, this complaint is unfounded. Nothing in his Honour's reasons suggests that he doubted that the proceedings were genuine or bona fide. Having correctly identified the essential issue between the parties, being how the fire occurred and whether Mr Hassoun had anything to do with it, his Honour properly determined that the Court was not in a position to form a view on the likely prospects of success of the proceedings.
5. His Honour may be taken to have treated the prospects of success as a neutral factor in his consideration of the issue of security for costs. That approach is entirely unexceptional where, as in this case, the material before the Court did not enable a view to be formed on the likely prospects of success of the proceedings. Moreover, the stay application was not the occasion to engage in a mini-trial as to the likely outcome of the proceedings.

(b) Stultification

1. A separate complaint was made in relation to his Honour's finding on the issue of stultification. It was not in dispute on appeal that this was an issue on which Mr Hassoun had the onus to demonstrate stultification: Li v NSW at [45].
2. The primary judge concluded that stultification did not loom large in circumstances of this case where the proceedings had been pursued by Mr Hassoun for a period of over three years. His Honour also observed that costs had no doubt been incurred by Mr Hassoun (and Wesfarmers) since the filing of proceedings in March 2011.
3. It was submitted that his Honour erred, because stultification of the proceedings should have been inferred from Mr Hassoun's conceded impecuniosity.
4. In the absence of evidence from Mr Hassoun concerning how he had funded the proceedings so far, and whether he had access to support or funding from others, there was no error in his Honour reaching his conclusions regarding stultification. Mr Hassoun could have sought to demonstrate that an order for security for costs would stultify the proceedings by filing an affidavit explaining these matters, but failed to do so. His Honour was entitled to take into account the absence of evidence from Mr Hassoun on the issue of stultification.
5. One further matter should be mentioned. No submission was made to his Honour by Mr Hassoun that a factor weighing against ordering security was the prejudice to Mr Hassoun of any wasted costs incurred in prosecuting the District Court proceedings. Such a submission would need to have been supported by evidence from Mr Hassoun. Here again the absence of evidence was significant.

(c) Impecuniosity of a natural person

1. Counsel for Mr Hassoun emphasised that security for costs would not be ordered against a natural person under UCPR r 42.21 merely on account of his impecuniosity. So much may be accepted in cases where the power to order security is based on this rule, having regard to the terms of r 42.21(1B). The primary judge took the approach that impecuniosity, of itself, would not normally warrant an order for security, but was relevant when considered in combination with the other matters relied upon by Wesfarmers. That approach is entirely in accordance with authority.
2. In Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; 239 CLR 75 at [91], Heydon J said that "the supposed 'general principle … that poverty is no bar to a litigant' is a severely qualified one". In Green v CGU Insurance Ltd [2008] NSWCA 148; 67 ACSR 105, Hodgson JA (at [33]) accepted that it is clearly established that the Supreme Court does have a discretion to order security for costs against a natural person in circumstances falling outside those set in the previous Supreme Court Rules, which were in similar terms to those in the UCPR.
3. The circumstances in which natural persons have been ordered to provide security because some factor in addition to impecuniosity have been present, were reviewed by Lindgren J in Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [33]. It is unnecessary on the present application to examine those cases in any detail. It is sufficient to observe that delay, non-compliance with court directions, cost involved for the defendant, the plaintiff's failure to show that the order would stultify proceedings, or that the sum ordered was not oppressive, are all relevant factors in addition to impecuniosity, which may warrant an order for security for costs.
4. Here the primary judge did not order security merely on account of Mr Hassoun's impecuniosity. No error of approach has been demonstrated.

Briginshaw heavy onus

1. The fourth error was said to be that his Honour failed to consider the argument against security that Wesfarmers as insurer bore a heavy onus on the Briginshaw standard of proving that Mr Hassoun fraudulently caused the fire which destroyed his business.
2. This complaint is related to the complaint dealt with above (at [72]) regarding how his Honour dealt with the prospects of success of the proceedings. His Honour referred to the fact that Wesfarmers had the onus to make out its defence (that the claim was fraudulent). Although his Honour did not expressly refer in his reasons to the Briginshaw onus of proof (see now s 140 of the Evidence Act 1995 (NSW)), he should be taken to have clearly had this in mind when he concluded that the prospects of success of the proceedings was not capable of resolution on the application.
3. Further, it was not suggested before his Honour or on appeal that Wesfarmers' defence was not genuine or bona fide. No application had been made by Mr Hassoun for the defence to be struck out. His Honour did not fail to consider the "onus" argument. The weight to be given to this factor, viewed alone and also in combination with the other relevant factors, was a matter for his Honour.

Inadequate reasons ground

1. The fifth error was said to be that his Honour failed to properly consider the evidence and given adequate reasons for his conclusions.
2. These complaints should be rejected.
3. The authorities concerning the requirements for proper reasons for judgment were reviewed in this Court in Pollard v RRR Corporation Pty Ltd (Pollard v RRR Corporation) [2009] NSWCA 110 (McColl JA; Ipp JA and Bryson AJA agreeing) at [56]-[67]. See also Keith v Gal [2013] NSWCA 339 at [109]-[119] (Gleeson JA; Emmett JA and Simpson J agreeing). It is sufficient to note the following matters.
4. The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. The test of adequacy is relative. The failure to refer to some of the evidence, particularly in an interlocutory judgment, does not necessarily indicate that the judge has failed to discharge the duty which rests upon him or her. This is more so where his Honour's attention has not been expressly drawn to such evidence, nor have submissions been made based upon it.
5. Ultimately the question is whether the asserted failure to provide sufficient reasons promotes "a real sense of grievance" and denies "both the fact and the appearance of justice having been done", thus working a miscarriage: Mifsud v Campbell (1991) 21 NSWLR 725 at 728; Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 442 (Meagher JA).
6. This Court has also emphasised the need for caution in not "picking over" an ex tempore judgment and the need to give due allowance for the pressures under which judges of the District Court are required to deal with cases before them: Pollard v RRR Corporation at [56] (McColl JA); Maviglia v Maviglia [1999] NSWCA 188 at [1] (Mason P).
7. Here it is relevant that his Honour was dealing with an interlocutory application on a matter of procedure and that the judgment was given ex tempore. Both parties relied on written submissions which were provided to his Honour at the commencement of the application, his Honour had the benefit of an adjournment to read those submissions, the parties then sought to supplement the written submissions by short oral argument, and his Honour proceeded to give judgment immediately. His Honour dealt with the issues raised by the parties and the evidence to which his attention was specifically drawn by counsel for the parties.
8. In my view, the criticism of his Honour's reason as being inadequate because they do not expressly refer to parts of the evidence, including witness statements of Mr Hassoun, to which his Honour's attention was not specifically drawn by either counsel, is unwarranted and unjustified.
9. His Honour's reasons dealt shortly and succinctly with the arguments which had been advanced before him, both in terms of the relevant evidence and the factors relevant to the exercise of the discretion in the present case. His Honour's reasons adequately addressed those matters. Mr Hassoun could not have any real sense of grievance that he does not know why his Honour ordered a stay subject to the giving of security.

Asserted erroneous approach to the stay application

1. In oral argument counsel for Mr Hassoun advanced a further complaint. This was that the primary judge focused purely upon the question whether security for costs should be ordered, and not whether a stay should be ordered conditional upon the grant of security.
2. The relief sought by Wesfarmers in order 2 of its notice of motion was a stay of proceedings until security for costs was given, being security in an amount of $70,000 as sought in order 1. His Honour referred to the terms of this relief at the commencement of his judgment and his reasons make clear, that he understood that he was being asked to exercise the power to stay proceedings until security was given.
3. His Honour properly focused upon whether security should be ordered, as this was a condition of the stay sought by Wesfarmers. His Honour's reasons show that he had in mind whether a stay was appropriate in the "interests of justice", when he observed that there was a tension between the competing interests of Mr Hassoun in having his case proceed to a determination and the interests of Wesfarmers to be protected against the risk of being exposed to the expense of defending its position but wholly frustrated by the inability of Mr Hassoun to satisfy any future costs order against him. His Honour determined that the balance of the relevant considerations favoured an order for a stay.
4. The unexplained delay and repeated past procedural non-compliance by Mr Hassoun, the large future costs involved to Wesfarmers 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.
5. It is immaterial that a judge of this Court might have come to a different conclusion in the same circumstances.
6. The contention that his Honour failed to address the relevant question raised by the stay application should be rejected.

Conclusion and orders

1. In light of the rejection of Mr Hassoun's submissions asserting error by the primary judge, or that his conclusion is unreasonable or plainly unjust, the appeal should be dismissed with costs.
2. I propose the following orders:
3. Grant leave to appeal.
4. Direct that a notice of appeal in terms of the draft notice contained in the White Book be filed within 14 days.
5. Appeal dismissed with costs.
6. BEECH-JONES J: Save for what follows I agree with Gleeson JA and the orders proposed by His Honour.
7. In the ordinary course an order for security for costs would not be expected to be made against an individual who sues their insurer after their home or business burns down. Such persons may not be impecunious but, even if they are, that is usually insufficient in itself to warrant an order for security. Further, without limiting the matters that could avoid an order for security, presumably many such plaintiffs can explain on affidavit that their impecuniosity has arisen because of the fire and that any order for security will prevent them from litigating.
8. However in this case the primary judge found that an order for security was justified given Mr Hassoun's impecuniosity and his extensive history of delay and non-compliance with Court directions. His Honour found that these matters warranted an order protecting Wesfarmers against incurring further wasted costs in the future. Otherwise there was no satisfactory evidence supporting the contention that Mr Hassoun's impecuniosity was caused by Wesfarmers denial of indemnity or that the effect of the order would be to stultify the proceedings. Mr Hassoun's statements were not capable of establishing either matter but, even if they were, the primary judge was not obliged to act on them. There may be good reasons why a plaintiff in a case such as this may not provide an affidavit on an interlocutory application but, if they do not, they bear the consequences of that decision.

Amendments 10 March 2015 - Amendment to catchwords DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 March 2015