Nadeem v Bindaree Food Group Pty Ltd

Court of Appeal (NSW)|2023-10-12|Before: Leeming JA, Adamson JA

Solicitors: CMC Lawyers (Applicant) McCabes (Respondent) File Number(s): 2023/154848 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 5 May 2023 Before: Andronos SC DCJ File Number(s): 2022/282438

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] Sheikh Nadeem (the applicant) sought leave to appeal against an order for security for costs made against him on the application of Bindaree Food Group Pty Ltd (the respondent). The applicant commenced proceedings in the District Court for damages for loss alleged to have been suffered by him as a consequence of an injury sustained while he was working at the respondent's abattoir on a temporary work visa. The respondent sought security for costs in reliance of r 42.21(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW) as the applicant was ordinarily resident outside Australia and lives in Fiji. The primary judge ordered the applicant to provide security by paying a total of $75,000 into Court. The applicant was granted leave to appeal on the grounds that the primary judge erred in not considering the ease and convenience of enforcing a NSW judgment in Fiji and that an appropriate order for security would have been no more than the costs which would be expended in enforcing the judgment in Fiji. Pursuant to s 46A(2) of the Supreme Court Act 1970 (NSW), the Chief Justice directed that the Court which was constituted by two judges for the leave application hear and determine the appeal on those grounds. The Court held (Adamson JA, Leeming JA agreeing) allowing the appeal: Regarding leave to appeal (1) Usually, leave to appeal would be refused in circumstances where the primary judge was exercising a discretion which could only be disturbed by establishing House v The King (1936) 55 CLR 499; [1936] HCA 40 error and which concerned a matter of practice and procedure at an interlocutory level. However, in the present case, if the Court were not to intervene, there would be a substantial risk of injustice: [19]. Regarding the grounds of appeal (2) The applicant demonstrated error in the primary judge's exercise of the discretion with respect to security for costs. The primary judge was in error in failing to appreciate the significance of a finding that there was an ease with which District Court judgments could be enforced in Fiji and in failing to factor the finding into the assessment whether security for costs ought be ordered and in what amount. In the absence of any mention of this factor or indication in his Honour's reasons, it ought reasonably be inferred that his Honour did not take the matter into account: [22]-[23], [27]. 3 The effect of the primary judge's order was to put the respondent in a far better position than it would have been had the applicant resided in Australia. This is not the purpose of an order for security for costs: [24]. 4 Security for costs, if granted, ought not exceed the differential cost of enforcement in Fiji: [30].

JUDGMENT

LEEMING JA: I agree with Adamson JA.
ADAMSON JA: By summons filed on 7 August 2023, Sheikh Nadeem (the applicant) seeks leave to appeal against the following orders made by Andronos SC DCJ (the primary judge) on 5 May 2023 which were made on the application of Bindaree Food Group Pty Ltd (the respondent) as follows: "(1) The plaintiff is to provide security for the defendant's costs by paying the following sums into Court: (a) The sum of $10,000 ten (10) weeks prior to the date by which the defendant is ordered to serve its expert evidence on quantum. (b) The sum of $12,000 ten (10) weeks prior to the date by which the defendant is ordered to serve its expert evidence on liability. (c) The sum of $3,000 six (6) weeks before the date on which the proceedings are first set down for a mediation conference or other form of alternative dispute resolution. (d) The sum of $50,000 eight (8) weeks before the date on which the proceedings are first set down for hearing. (2) In the event that the plaintiff defaults on any of the above orders, the proceedings are stayed. (3) The plaintiff is to pay the costs of the motion as assessed or agreed."

The commencement of the proceedings

The background to the application is as follows. By statement of claim filed on 21 September 2022, the applicant commenced proceedings in the District Court (the Court below) for damages for loss alleged to have been suffered by him as a consequence of an injury he sustained to his left arm. At the time of the injury, the respondent, whose home is Fiji, was in Australia on a temporary work visa. Regional Workforce Management Pty Ltd (Regional), a labour hire company which employed the applicant, had contracted with the respondent to provide labour for the respondent's abattoir. In about 2019, the applicant commenced working at the respondent's abattoir in Inverell. The applicant alleges that, on 8 October 2021, he was directed to perform "sticking" work, which he had not done previously. Sticking required the worker to stab the neck of each cow with a knife in order to cause it to bleed before being slaughtered. When the applicant tried to use the knife on a cow, the cow kicked the knife out of his hand. The knife inflicted a wound to the applicant's arm.
After a period off work, he returned to work at the respondent's premises. On 8 September 2022, Regional notified the applicant that his contract would terminate on the following day. The conditions of the applicant's visa required him to leave Australia within a week of the termination of his employment. The applicant left Australia on 14 September 2022, spent some time with his wife's family in Samoa and returned to Fiji.

The respondent's application for security for costs

By notice of motion filed on 24 January 2023, the respondent sought security for costs. It relied on Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.21(1)(a), as the applicant was ordinarily resident outside Australia. In support of its notice of motion, the respondent relied on the affidavits of Peter Miller affirmed 24 January 2023 and Kevin McMenamin sworn 1 May 2023. Mr Miller deposed as to the applicant's location (in Fiji) and set out his estimates of the costs likely to be incurred by the respondent in defending the proceedings. Mr McMenamin annexed documents obtained on subpoena with a view to establishing that the termination of the applicant's visa was not the consequence of the injuries he sustained at the respondent's abattoir.
In opposition to the respondent's application, the applicant relied on two affidavits of his solicitor's employed law graduate, Jacob Zeitoun, sworn 28 February 2023 and 3 May 2023 respectively. In his first affidavit, Mr Zeitoun largely set out the instructions he had received from the applicant, including as to the circumstances in which the applicant had sustained the injury, that he had been unable to find work since returning to Fiji, that he had no assets in Australia, Fiji or anywhere else, that he had exhausted his savings which required him to rely on relatives for financial assistance and that, if ordered to pay security for costs, he would not be able to comply with the order. In addition, Mr Zeitoun annexed bank statements in the applicant's name which had little or no balance in them. In his second affidavit, Mr Zeitoun confirmed that that applicant did not allege that his visa was terminated as a consequence of the injury, but rather that the applicant's impecuniosity was as a result of the injuries sustained (which were said to be as a result of the respondent's alleged negligence).
At the hearing of the respondent's application, the primary judge raised with the applicant's counsel the form of Mr Zeitoun's evidence, which did not include any statement by Mr Zeitoun that he believed his instructions. The applicant's counsel accepted that to be the case, but also sought to rely on the bank statements annexed to Mr Zeitoun's first affidavit in support of the submission that an order for security would stultify the proceedings.
The applicant's counsel, after making submissions as to why security ought not be ordered, put an alternative submission that, if security for costs was ordered, the order should be limited to the additional costs of enforcing the judgment in Fiji (WB, 236). She took the primary judge through the relevant statutory material which established the process by which a judgment of an Australian court could be enforced in Fiji. She also took the primary judge through the scale costs and submitted that the range of enforcement costs might be $5,000-$10,000. This figure was not controverted.

The primary judge's reasons for ordering security

At [12] of the reasons, the primary judge listed the matters on which the parties had addressed (WB, 23) as follows: "(1) The plaintiff's impecuniosity; (2) The merits and genuineness of the proceedings; (3) Whether the plaintiffs impecuniosity was caused by the conduct of the defendant; (4) Whether an order for security would stifle the proceedings; (5) The ease and convenience of enforcing a New South Wales judgment in Fiji; and (6) The quantum and timing of any orders and proportionality."
The primary judge found, at [20] (WB 25), that the applicant's claim was genuine and had been brought bona fide and that his Honour was unable to form a view as to the merits of the claim on the basis of the limited material before him.
The primary judge referred to the applicant's representations to Mr Zeitoun that, if he were ordered to pay security, the proceedings would be stultified because he would not be able to pay it. The primary judge said at [30] (WB 26): "This falls short of the evidence one would normally expect to see, in which the deponent indicates he, she or they believes the representation to be true. Indeed, this was a recurring if perhaps unavoidable defect in the plaintiff's evidence because, while Mr Zeitoun was able to say he had been informed of certain matters, he appears to have been unable to depose to a belief in what he had been told. This derogates from the weight (and ordinarily even the admissibility in an interlocutory application) of the evidence. Accordingly, the evidence of apprehended stultification is insufficient for me to conclude that the proceedings would be stultified if any order for security were made."
The primary judge made the following finding about enforcement in Fiji of any judgment ordered by the Court below at [32]: "Ease and convenience of enforcing a NSW judgement in Fiji The Foreign Judgements Act 1991 (Cth) operates to facilitate the enforcement of a costs judgement in this Court against a resident of Fiji. Counsel for the plaintiff led the Court through the relevant statutory instruments and court rules of Fiji, which established to my satisfaction that registration and enforcement of a costs judgement in this Court in the Supreme Court of Fiji would be a straightforward and inexpensive exercise."
The primary judge turned to the amount of security to be ordered and summarised Mr Miller's evidence before noting, at [37] (WB 27), that the amount sought by the respondent was $108,445.20.
The primary judge set out his conclusions as follows: "Assessment 38 In exercising the discretion to order security, the Court must do its best to balance the competing interests of the parties and the competing (often conflicting) principles and rationales governing its exercise. On the one hand, a defendant ought not be put at risk of being unable to recover its costs where the jurisdictional basis for an order for costs has been made out. On the other hand, an order for security represents a barrier to the conduct of proceedings, even if it is not established on the evidence that stultification or hardship would result. 39 Weighing the competing interests and on the basis of the evidence before me, I will order the plaintiff/respondent to provide security for the costs of the defendant/applicant, although I will not order the full amount sought, notwithstanding the reasonableness of Mr Miller's estimates. Security for costs generally does not provide total protection against irrecoverable costs. It appears appropriate to me, in the whole of the circumstances, that a lesser sum be ordered. 40 In light of the above, I consider a fair balance of the potential detriment to each party is to order security be provided in tranches, timed to precede stages of the proceedings where the defendant will be required to undertake expenditure which it would be at risk of being unable to recover should it succeed in defending the plaintiffs claim. 41 As the defendant has been broadly successful on the motion, it should have its costs on the ordinary basis."

The grounds in respect of which leave was refused

The applicant sought leave to appeal on eight grounds. The Court, at the conclusion of the leave application, refused leave to appeal on the following six grounds:

(a): that the orders, unless disturbed, would bring an end to the proceedings;
(b): that the primary judge was in error in attributing less weight to Mr Zeitoun's evidence because he did not say that he believed the applicant's instructions;
(c): that, because of the error in (b), the primary judge had erroneously found that the evidence of apprehended stultification was sufficient to allow the conclusion that the proceedings would be stultified if an order for security was made;
(d): the primary judge erred in his findings on the applicant's impecuniosity;
(f): the order for security was more than was warranted; and
(g): that ordering security was contrary to the interests of justice and fairness on public policy grounds.

Leave to appeal was refused on those grounds for the following reasons. Grounds (a)-(d) turned on the form of the evidence adduced on behalf of the applicant in the Court below. The primary judge raised the issue of concern with the applicant's then counsel, who conceded that it was not evidence of the underlying fact. The applicant's counsel could have corrected the form of the evidence at that juncture, if it had been able to be corrected but did not do so. This matter does not raise any issue of principle which would warrant a grant of leave: Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 and Jaycar Pty Ltd v Lombardo [2011] NSWCA 284.
Ground (f) does not raise any issue of principle such as would warrant leave, beyond that which is covered by ground (e). Having regard to the grant of leave in respect of grounds (e) and (h) (set out below), it is not necessary to address ground (g), which does not arise for present consideration. In ground (g), the applicant sought to raise a wider question of the fairness of Australia recruiting cheap labour from other countries and, by requiring security for costs before foreign workers can sue Australian employers or companies for which, the putative plaintiffs have provided work. This had not been raised before the primary judge and, without expressing any view on its merits, there is no proper basis to grant leave to appeal on a question of practice and procedure on a point that was not raised at first instance.

The grounds in respect of which leave was granted

On 12 October 2023, the Court granted leave to appeal on the following grounds: "(e) His Honour erred in not considering the ease and convenience of enforcing a New South Wales judgement in Fiji, and that requesting an enforcement of such a judgment in Fiji was a straightforward and inexpensive exercise pursuant to the Reciprocal Enforcement of Judgments Act 1992 (Cth). His Honour accepted that fact in his judgment, and it was not challenged by the Defendant in the interlocutory proceeding. However, his Honour did not ascribe any significance to that conclusion, noting only that enforcing judgment was straightforward. (i) In failing to consider the impact of his finding on the Defendant's ability to enforce in Fiji expeditiously and inexpensively, his Honour failed to give any consideration to an extremely important consideration. (ii) In failing to accord any weight to the fact that registration of a foreign judgment in Fiji pursuant to the Foreign Judgments Act 1991 (Cth) was, in his Honour's words, a straightforward and inexpensive exercise, his Honour deprived himself of the opportunity of considering whether the Defendant, if successful and awarded costs, would be among other things in any different position enforcing such a costs judgment against the Plaintiff in Fiji as opposed to in Australia. A consideration of that point ought to have resulted in no order for security for cost being made. At the very least, ease of registration of a judgment ought to have been carefully weighed with all the other factors which it is incumbent on the Court to consider in arriving at a fair and just exercise of the discretion afforded by UCPR rule 42.21. … (h) In light of the evidence accepted by the Court, if there was to be an order for security after a proper reflection upon all the factors which needed to be considered, an appropriate order for security would have been no more than the costs which would be expended by the Defendant's solicitors in effecting registration of the judgment in Fiji, and the fees of the Fiji Court for such registration."
The primary judge was exercising a discretion which could only be disturbed by this Court if House v The King (1936) 55 CLR 499; [1936] HCA 40 error were established. Moreover, the discretion concerned a matter of practice and procedure at an interlocutory level. Usually, leave to appeal would be refused in such circumstances: see Hession v Century 21 South Pacific Ltd (In Liq) (1992) 28 NSWLR 120 at 122C-E (Meagher JA, Kirby P and Cripps JA agreeing) (Hession). However, in the present case, for the reasons set out below, the applicant has established not only House v The King error but that, if this Court were not to intervene, there would be a substantial risk of injustice to the applicant. In these circumstances, the grant of leave in respect of grounds (e) and (h) was warranted.

The hearing of the appeal

As noted in the Court's orders made on 12 October 2023, the Chief Justice directed, pursuant to s 46A(2) of the Supreme Court Act 1970 (NSW), that the Court, constituted by Leeming JA and myself, hear and determine the appeal on those grounds. Such a direction may be made in respect of an appeal from the District Court, in respect of which leave to appeal is required and which is not an appeal against a final judgment, if the Chief Justice is of the opinion that the appeal is not likely to require the resolution of a disputed issue of general principle: s 46A(1)(d) and (3) of the Supreme Court Act.
Mr Lee, who appeared on behalf of the respondent in this Court and in the Court below, submitted that it was plain from the primary judge's finding at [32] (set out above), that his Honour had considered the ease with which judgments of the District Court of New South Wales could be enforced in Fiji. He submitted that the decision whether to grant security for costs was a discretionary one and that the applicant had not shown that that the discretion had miscarried.
I do not accept this submission. Although the primary judge accepted the ease with which District Court judgments could be enforced in Fiji and made a finding to that effect, there is no indication in the reasons for judgment that his Honour appreciated the consequences of such a finding or factored the finding into the assessment whether security ought be ordered and in what amount. I consider that, in the absence of any mention of this factor, beyond the bare finding, it ought reasonably be inferred that his Honour did not take the matter into account in the decision whether to grant security.
The factor was a highly significant one to the discretion whether to grant security. Hence his Honour was in error in failing to appreciate its significance. The starting point is that poverty is no bar to a litigant: Cowell v Taylor (1885) 31 Ch D 34 at 38. Thus, if the applicant resided in Australia he would not, all other things being equal, be required to give security for the respondent's costs, no matter how indigent he was. Because he does not reside in Australia, the respondent, if it is successful in the proceedings, will have to enforce any order for costs in its favour in Fiji rather than Australia. The only prejudice the respondent is likely to suffer by reason of the location of the applicant's residence is that, if successful, it may have to incur the additional costs associated with enforcing a costs order in its favour in Fiji, rather than in Australia. As the primary judge found, any such order will be relatively easy and inexpensive to enforce in Fiji.
The effect of the primary judge's order was to put the respondent in a far better position than it would have been had the applicant resided in Australia. This is not the purpose of an order for security for costs.
While it is appropriate that orders for security, such as the one made in the present case, be made against companies, the reason for such orders is different from the present case. An order for security against a corporate plaintiff may be made if there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so (UCPR, r 41.21(1)(d)) because, unless it is made, those standing to benefit from success in proceedings brought by the corporate plaintiff (usually the shareholders of the company) do not bear the burden of an adverse costs order (because the company has a separate legal personality from its shareholders, who are not liable for its debts or to comply with orders made against the company): Hession at 123 (Meagher JA, Kirby P and Cripps JA agreeing). That an order for costs is not generally made against a liquidator (who, where a party, is personally liable for costs) demonstrates the point.
The position is otherwise with a natural person. Any order for costs against the applicant can be enforced against him in Fiji. The only difference is that the costs of enforcement are higher. In these circumstances, I am not persuaded that security beyond this differential ought be ordered: see the approach endorsed in Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd [2011] NSWCA 84 at [32] (Young JA, Campbell and Whealy JJA agreeing).
For these reasons, the applicant has demonstrated House v The King error in the primary judge's exercise of the discretion with respect to security for costs. The orders made by the primary judge ought, accordingly, be set aside and this Court ought exercise the discretion afresh on the basis of the material before the Court below.
Mr Lee submitted that there was no utility in disturbing the orders made by the primary judge because of lack of materiality. He submitted that the Court could not be satisfied that any order that security for costs would be complied with.
The answer to this question is that time will tell. I am not satisfied that an order for security in an amount falling within the range for enforcement would, because it could not be paid, necessarily stultify the proceedings. First, it would have been hardly likely that the applicant's counsel in the Court below would have put this quantum forward as an alternative to that sought by the respondent had she not been relatively confident that the amount could be paid. Secondly, it is a matter of common knowledge that solicitors acting for plaintiffs in personal injury cases are often required to find disbursements incurred in the conduct of litigation, including filing fees, the cost of experts' reports etc. Thus, even on the assumption (which would appear to me to be well made) that the applicant himself could not fund the security, his solicitors may be prepared to do so.
For the reasons referred to above, security for costs, if granted, ought not exceed the differential cost of enforcement in Fiji. The evidence, taken with the submissions, established that it was in the order of $5,000-$10,000. I accept the primary judge's assessment that it is not possible to determine the prospects of success of the applicant's claim for damages on the materials before the Court.
In my view, security in the sum of $7,500 ought be ordered to reflect the approximate costs of enforcing an order for costs in Fiji, in the event that a costs order is made against the applicant. I regard 28 days as a sufficient time within which the amount ought to be paid.
I note that on 12 July 2023, the respondent filed a notice of motion for dismissal of the proceedings pursuant to UCPR, r 42.21(3), on the ground that the security ordered had not been paid. This notice of motion has been stood over pending this Court's decision.

Costs

The parties also made submissions on costs. Mr Lee submitted that this Court ought not disturb the order for costs in the Court below because, if this Court orders security for costs, the respondent has still been successful in its application. He submitted that the respondent had been successful on all but one of the issues that arose before the primary judge and that costs ought follow the event. Mr Lee resisted the proposition that the costs of the motion ought be costs in the cause since he submitted that the application for security was a discrete issue, which was independent of the ultimate result of the proceedings. Mr Lee submitted that there ought be no order for costs of the leave application or the appeal, because of the mixed success which both parties might have enjoyed (depending on the orders made by this Court).
Mr Beale, who appeared for the applicant in this Court (but not the Court below), submitted that the applicant ought have his costs of the appeal since the respondent ought to have conceded the error and agreed to a new order for security for costs for the higher costs of enforcement in Fiji.
Had the respondent applied for security for costs in an amount referable to the costs of enforcing a costs order in Fiji, and the applicant resisted such an order, it would have been entitled to its costs of the notice of motion. However, the applicant was reasonably entitled to resist the order for security sought in the Court below. I consider that the applicant ought have his costs of the respondent's (defendant's) motion in the District Court.
As to the costs in this Court, I consider that there ought to be no order as to costs. While the applicant has been successful, there were several grounds in respect of which he sought leave to appeal which did not warrant a grant of leave. Costs have been needlessly expended by the respondent in responding to those grounds. I accept Mr Lee's submission that the appropriate order for costs in this Court is that there be no order as to the costs of the leave application or of the appeal.

Proposed orders

For the reasons given above, I propose the following orders: 1. Allow the appeal. 2. Set aside the orders made by Andronos SC DCJ on 5 May 2023 and, in lieu thereof, make the following orders: 1. Order the plaintiff to provide security for the defendant's costs by paying the amount of $7,500 into Court within 28 days of the date of this order. 2. Order the defendant to pay the plaintiff's costs of the defendant's notice of motion filed on 24 January 2023. 1. Make no order as to the costs of the leave application or the appeal.

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: 23 October 2023

Fiji The Foreign Judgements Act 1991(Cth)

Reciprocal Enforcement of Judgments Act 1992(Cth)

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