Kimberley Developments Pty Ltd v Bale

Security for costs

1. Orders for security for costs on appeal to this Court are provided for by Uniform Civil Procedure Rules 2005 (NSW), r 51.50, which relevantly provides: "(1) In special circumstances, the Court may order that such security as the Court thinks fit be given for costs of an appeal. (2) Subject to subrules (1) and (3), no security for costs of an appeal is to be required. (2A) … (3) Subrules (1), (2) and (2A) do not affect the powers of the Court under rule 42.21 (which relates to security for costs)."
2. The intent of subr (3) is unclear. Rule 42.21 applies generally to the provision of security for costs in the Supreme Court. In subr (1) six circumstances which may justify an order for security for costs are set out. Those presently relevant are: (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. and (f) that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings."
3. The power to order security for costs pending an appeal was previously conferred by the Supreme Court Rules 1970. Those provisions were in terms substantially similar to UCPR r 51.50(1) and (2); they required that "special circumstances" be established, and provided that, in the absence of special circumstances, no security for the costs of an appeal to the Court of Appeal shall be required. The principles applicable to an application for security for costs under the Supreme Court rule pending an appeal were laid out in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143; [2004] NSWCA 136, and helpfully summarised by Basten JA in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 as follows at [18]: "(1) no order for security should be made in the absence of 'special circumstances'; (2) consideration of what may constitute special circumstances should not be fettered by some general rule of practice; (3) impecuniosity, without more, will usually be insufficient; (4) an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of a harassing nature; (5) where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made, and (6) the subject matter of the appeal, including an issue as to the liberty of the individual, or a public interest may provide a reason for not imposing a security order which would stifle the continuation of the appeal."
4. Counsel for Ms Bale relied on the decision of Macfarlan JA in Yu Xiao v BCEG International (Australia) Pty Ltd [2022] NSWCA 223, in which an order for security for costs pending appeal was made. There appears in that case to have been two principal reasons for a conclusion that special circumstances justifying an order existed. First, the trial judge in that case had found (in conclusions not challenged in the notice of appeal) that the appellants (who were the defendants in the first instance proceedings) had "maintained a fabricated defence … from a position of special advantage" sufficient to warrant an indemnity costs order. Second, during the course of the trial, one of the appellants had taken steps to execute documents to encumber his assets, and had, indeed, continued to do so even after orders restraining him from doing so, to which he had consented, were made.
5. It is not clear what Ms Bale sought to gain from Macfarlan JA's decision. There is no comparable delinquency in this case. It is true, as I have outlined above, that Ward P found, in effect, that Mr Darwiche had fabricated evidence about the payment of the $300,000 to Mr Schein. But there was no evidence that Mr Darwiche or Kimberley attempted to dispose of assets that might otherwise be available to meet a costs order, and, indeed, it was central to Ms Bale's claim that Kimberley had no assets to dispose of, and that Mr Darwiche was indigent.
6. Nor can anything helpful to Ms Bale's case be drawn from the identification of the appellants. Ms Breust apparently saw something sinister in the fact that only Kimberley and Mr Darwiche were appellants in the current appeal. Reference was made by counsel to a notice of intention to appeal filed in December 2022, following the orders of Ward P, in which Kimberley, Mr Trigas and Super Start Batteries, but not Mr Darwiche, were nominated as proposed appellants. But counsel was unable to identify in any of the previous parties any appellable interest in the orders made by Leeming JA.
7. It is well accepted that a relevant consideration pointing to refusal of an application for security for costs is that any impecuniosity on the part of the appellant is attributable to the conduct of the respondent who is the applicant for security. That appears to be the principle on which Mr Weinberger relied in his response to Ms Breust's letter. However, what Mr Weinberger called a "loss of net value" to Kimberley was attributable solely to the loss of the Forest Lodge property which Kimberley had by its (and Mr Darwiche's) unconscionable conduct obtained. There is now no challenge to the findings of Ward P to that effect. Such a loss is scarcely a reason for refusing a security for costs order, and I do not take that circumstance into account.
8. I am, nevertheless, satisfied that Ms Bale has failed to establish the "special circumstances" necessary before an order can be made.
9. The notice of motion is dismissed with costs.

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