Appeal - Stay of primary action - Security for costs - Turns on own facts

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

Rules of the Supreme Court 1971 (WA), O 63 r 10(5)

Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172

Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194

Cox v Mann [2006] WASC 125

Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308

Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1

1 McLURE JA: The appellant (defendant) in each appeal seeks a stay of the assessment of damages pending the outcome of the appeal. The respondent (plaintiff) in each appeal applies for an order for security for the costs of the appeal in the sum of $14,000.

2 The relevant background is detailed in the reasons of Master Newnes in Cox v Mann [2006] WASC 125. What follows is taken from the Master's reasons.

3 On 18 February 2005 the respondents each commenced proceedings for defamation against the appellant. The proceedings have taken a common course. A statement of claim was filed on 9 March 2005 and served on the appellant. A defence was filed on 18 March 2005. The respondents filed applications for summary judgment in each action on 22 June 2005 which were dismissed on 15 September 2005. The appellant was in each action given unconditional leave to defend and required to file and serve an amended defence on or before 29 September 2005. The appellant failed to do so. On 25 November 2005 the appellant's solicitors filed a notice that they had ceased to act for the appellant and that he now acted in person.

4 At a status conference on 29 November 2005 the Case Management Registrar ordered in each action that:

"The defence be struck out and the [respondent] have leave to move for such judgment and costs to which he is entitled unless the [appellant] do file and serve an amended defence by 13 December 2005."

5 The appellant attended the status conference in person. On 20 December 2005 the respondents each applied by notice of motion for judgment, damages to be assessed and costs. A copy of the application, endorsed with the hearing date was in each case sent to the appellant by registered post.

6 The applications for judgment came before the Acting Master in chambers on 11 January 2006. The appellant failed to attend the hearing. In his absence, the Acting Master ordered that the appellant pay the respondents' damages to be assessed and the respondents' costs of the action and the application to be taxed. The orders were drawn up and extracted by the respondents' solicitors on 24 January 2006.

7 On 21 February 2006 a notice of appointment of solicitors was filed in each action on behalf of the appellant and the following day the appellant filed applications in each action to extend the time for compliance with the order made by the Acting Principal Registrar on 29 November 2005. The applications were supported by an affidavit of the appellant. In that affidavit he states that he was confused by the order of 29 November 2005 to file an amended defence, particularly in circumstances where, on the applications for summary judgment, it had been found that he had an arguable defence. He says that nevertheless he prepared a document which was entitled "revised defense (sic)" and sent it to the respondents' solicitors and attempted to file it at the Court. It was rejected for filing at Central Office. The proposed defence annexed to the appellant's affidavit disclosed that it was not in a form which could be filed as an amended defence. It was in the form of a handwritten letter. The appellant acknowledged that he received copies of the notices of motion for judgment but said that on 11 January 2006, on the way to Court, his vehicle broke down. He said he rang the Court at 8.30 am and "advised the lady of my situation". He said he was told to get to the Court as soon as he could, but if he could not they would have to adjourn the hearing and the Court would advise him of the new hearing date. The appellant did not say what happened thereafter of his endeavours to get to Court.

8 Master Newnes dismissed the application for an extension of time on the basis that he had no power to extend time unless and until the judgments in each action had been set aside on appeal. There is no appeal from that decision.

9 The Master observed, correctly in my respectful opinion, that it was not inevitable that judgment would have been given on 11 January 2006. He said (at [28]):

"The difficulties experienced by the [appellant] in understanding what was required of him by the orders of the Case Management Registrar, and his inability to file an amended defence, were matters that were open to him to advance in opposition to the applications for judgment and also in support of an application to extend the time in each case for the filing of an amended defence. That, of course, did not occur as the [appellant] did not appear on the hearing of the motion."

10 Under r 41 (read with r 3) of the Supreme Court (Court of Appeal) Rules 2005 (WA), the discretion to stay an action pending an appeal is unfettered and the applicant for a stay carries the onus of showing that the circumstances are appropriate for a stay to be granted. The Full Court in Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 at [9] distilled the relevant principles. The applicant must demonstrate that appropriate circumstances exist. Appropriate circumstances may exist if it is shown that the appeal may be rendered nugatory or that serious consequences will flow to the applicant unless a stay is granted. Even so, a stay will generally still be refused unless it can be established that the appeal has reasonable prospects of success and if that hurdle can be overcome, a stay may still be refused where it appears the balance of convenience does not lie in the applicant's favour.

11 The evidence establishes that there will be serious consequences to the appellant in the event a stay is not granted. The appellant has very limited financial means which jeopardises his capacity to retain legal advisors to act for him in the actions and associated proceedings. He will be significantly prejudiced if he is required to fund legal advisors to represent him in the assessment of damages and to prosecute the appeals.

12 Turning to the merits of the appeals, I understand the appellant's case in the appeals to be in effect that through no fault of his own, he was deprived of the fundamental right to be heard on the respondents' application for judgment: see Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1; Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at 188. Where there has been a miscarriage of justice of that nature, and because the appeal is by way of rehearing, it is unnecessary to establish error by the decision-maker: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at 203. The Court will ordinarily be satisfied that there has been a miscarriage of justice if a person has suffered adverse orders in circumstances where his or her failure to appear is adequately explained unless it also appears that no different result would be reached on a rehearing or that a rehearing would work an irremediable injustice to the other side: Allesch v Munz at 188.

13 As to prejudice, the respondents primarily rely on the legal costs they have incurred. The respondents' solicitor deposes that she estimates the respondents have together incurred party and party costs of $7374 as a result of the appellant's failure to file a defence within the time specified by Master Newnes on 15 September 2005. The costs incurred up until 11 January 2006 would not of themselves have required that judgment be entered. As Master Newnes observed, it was not inevitable that judgment would be given on 11 January 2006. The respondents also rely on the costs incurred after the entry for judgment. As to the costs associated with the assessment of damages, not all would be wasted. If the appeal succeeds and the appellant is permitted to defend the action, the getting up for the assessment of damages would be required in any event. Further, by 1 March 2006 at the latest, it must have been apparent to the respondents that the appellant was seeking to avoid the effect of, or challenge, the orders made on 11 January 2006 and the basis of that challenge. It is arguable that any costs involved in resisting that attempt are costs associated with the appeals. Moreover, any costs prejudice caused by the fact that the respondents are taking action against an impecunious defendant would arguably have less weight in light of any proven miscarriage of justice.

14 For these reasons, I am satisfied that the appellant has (at least) reasonable prospects of succeeding in the appeals. Further, having regard to the nature and merits of the appeals and the potential costs prejudice to all parties if the assessment continues, the balance of convenience favours the grant of a stay.

15 Accordingly, I hereby order that there be a stay of the assessment of damages in actions CIV 1190 of 2005 and CIV 1191 of 2005 with the costs of the stay applications reserved.

16 The respondents in each appeal apply under r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA) for an order for security for costs of the appeal. Rule 44(1) provides that a party may, at any time after an appeal is commenced, apply for an interim order. An interim order is defined to mean, inter alia, an order that an appellant provide security for a respondent's costs (r 3). This power is to be compared with former O 63 r 10(5) of the Rules of the Supreme Court 1971 (WA) which provided that the Full Court may, in special circumstances, order that such security shall be given for the costs of an appeal as may be just. Under the new rules, the discretion is unfettered.

17 In this case the appellant has (at least) reasonable prospects of succeeding in his claim that he was deprived of a fundamental right of our justice system, being the right to be heard on a matter that adversely affected his interests. Further, the rejection of the respondents' summary judgment applications demonstrates that he has an arguable defence in the primary actions. It is clear from the affidavit of Miriam Power filed in support of the security for costs application that the appellant does not have the financial capacity or access to funds to enable him to provide the security sought by the respondents or indeed any security for costs. Thus the order would frustrate a genuine appeal that has reasonable prospects of success. I note the appellant has failed to satisfy outstanding costs orders made in the respondents' favour. However, that is a consequence of the respondents commencing proceedings against an impecunious party. The clear balance of relevant factors requires the Court to refuse to order security for costs. I hereby order that each application for security for costs be dismissed and that the respondents pay the appellant's costs of the applications in any event.

• Background
• The stay application
• Security for costs