Page v Airag Aviation Services Pty Limited

Refusal of the adjournment application

1. At the hearing of the motion, shortly before its submissions concluded, Airag made an application which was opposed and I refused, that the hearing be adjourned, so that it could obtain evidence to lead in support of further orders as to security, in specified amounts, which it then sought to articulate. Those orders had only been formulated during an adjournment and had not been disclosed to Mr Page until announced in court on resumption of the hearing. That such orders had ever been discussed before was not apparent.
2. In the circumstances I was well satisfied that this application could not be granted. Airag having to that point not only had a fair opportunity to advance its case before the Registrar, but to resist the orders sought at the hearing of the motion. Its approach did not adhere to the requirements of s 56 of the Civil Procedure Act, which is concerned with the obligations imposed in relation to the overriding purpose there specified, the just quick and cheap resolution of the real issues in the proceedings.
3. Mr Page had exercised the right granted by r 9.19 to seek a review of the Registrar's orders. The parties had not agreed to any amount of security and no application had been made for that to be determined by the Court, as the Registrar's order contemplated, until Airag sought to make its belated oral application at the hearing.
4. Airag was bound by the forensic decisions it had made, both to make no such application before the hearing of the motion and to lead no evidence on the motion to support its case, despite the review of the Registrar's orders which Mr Page pursued. By way of contrast, Mr Page's motion was supported by evidence, to which Airag had chosen not to respond, or object to.
5. Further, the refusal of its belated application would not preclude it pursuing any other motion in relation to security, supported by evidence, that it might wish to advance in future.
6. An adjournment thus did not provide a just basis on which to defer the resolution of the matters over which the parties had joined issue on the motion, given Airag's belated, unexplained decision to seek an opportunity to lead evidence to support orders for security in respect of specified amounts.
7. The course sought to be pursued requiring not only the Court's leave, but the adjournment of the hearing, with a costs thrown away order, at a time when submissions were almost concluded. All in order that it could advance this new case, never to that point foreshadowed.
8. I was well satisfied that this could not justly be permitted, given that one of the purposes of the Act and applicable rules is to ensure that litigation is not so conducted, by ambush and surprise.

The Registrar's decision

1. It was only in May 2024 that Airag filed its security motion.
2. In her decision the Registrar observed that the proceedings had been held in abeyance while the findings of the Coroner's Court were awaited. They were delivered on 26 May 2023. A mediation the parties then pursued was unsuccessful. They also pursued negotiations about the terms of storage of and access to the wreckage of the plane.
3. The Registrar explained the parties' cases and concluded that:

• Mr Page's claim was genuine, but his agreed prospects of success was a neutral factor;
• Airag's filing of the application for security was not inappropriate, given the history of the matter;
• Mr Page had not provided any records which evidenced his financial position, but it had been conceded that he would not be in a position to satisfy any material costs order;
• while the evidence suggested that his injures, disabilities and reduced employment capacity were the result of the incident, it did not establish that his impecuniosity had resulted from that incident;
• Mr Page having failed to call any evidence from his solicitors about "the litigation funding arrangement he has in place with his solicitors, with the result that he had not satisfied his onus of establishing that he would not be able to obtain finance or financial support from them, they arguably standing to benefit from the outcome of the proceedings", the Registrar was not satisfied that an order for security would stifle the proceedings; and
• there being no clear evidence of funds Mr Page held in the UK, Airag's case that reliance on enforceability there was irrelevant, given that Mr Paige ordinarily resided in the Czech Republic, where it would be difficult to enforce any costs order, had to be accepted.

1. In the result the Registrar concluded that Airag should not be required to defend Mr Page's claim without security and that Mr Page should be ordered to provide it.

Issues

1. There is no issue between the parties that:

• Mr Page ordinarily resides outside Australia, that triggering the jurisdiction to make an order for security: r 42.21(1)(a).
• Such residence has in the past been accepted as a matter of considerable weight on an application for security: PS Chellaraum and Co Ltd v China Shipping Co [1991] HCA 36 at [7] and r 42.21(1).
• But r 42.21(1A) now provides that "If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity".
• a review application does not involve an appeal and an applicant does not have to demonstrate material error, the onus being "to make out a case that the court, in the interests of justice, should exercise its discretion" to intervene: Tomko v Palasty (No. 2) [2007] NSWCA 369 at [7].
• that the Registrar wrongly understood that Mr Page had a litigation funding agreement with his solicitors.
• Mr Page has reasonable prospects of success.

1. What remained in issue was whether the Registrar's orders should be set aside or any other security ordered.

The parties' cases.

1. Mr Page's case was that the Registrar erred in not giving proper weight to his demonstrably strong prospects of success, given the evidence and findings of the Coroner about the cause of the crash. That having had regard to the evidence of the last person who had performed work on the plane, for whom Airag was vicariously liable and who had made relevant admissions about its maintenance. That evidence supporting a finding of negligence, as well as the existence of a causal link between the crash, Mr Page's psychiatric injury and his resulting damages.
2. Mr Page contended that in finding that he had litigation funding, the Registrar had misunderstood the cases the parties had advanced, as well as the evidence. His only relationship with his solicitors was governed by a conditional costs agreement and his solicitors were not litigation funders.
3. Further, that Airag had failed to adduce material that would enable the Court to estimate the costs of the litigation, it not yet having filed a defence. It had also not adequately explained its delay in seeking the security order. The result of the order made being that he had effectively been shut out of his pursuit of the psychiatric injury Airag had caused him, which continued to prevent him from working and had adversely affected his financial position, so that he could not provide security.
4. In the result the Registrar's orders were manifestly unreasonable and if security was warranted, it could only be for a modest amount.
5. While not disputing that Mr Page had reasonable prospects of success, Airag contended that more could not be established at this stage, despite the results of the Coronial proceedings. The result was that the Registrar had not been incorrect in concluding that his prospects were a neutral consideration on its application.
6. It was accepted that stultification was a relevant factor, Mr Page's solicitors were not funding the litigation, but it was not accepted that there was error in the Registrar's conclusion that they stood to benefit from this "speculative litigation". It followed that the order for security would not stultify the proceedings.
7. Nor had there been any delay in bringing its application for security, it having been made once Airag was put on notice that Mr Page was not a resident. His foreign status being the most compelling factor to be weighed on its application, given what was decided in PS Chellaraum and Co Ltd.
8. I am unable to accept what was advanced for Airag.

The requirements of the Rules

1. The matters the Court may have regard to on an application for security are specified in r 42.21(2). They include: (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.

What the evidence established

1. There was no issue that the proceedings are genuine and that Mr Page has reasonable prospects of success.
2. It is settled that the strength of a claim is not necessarily neutral when advanced bona fide and gives rise to real issues about whether the Court is able to make an assessment of the strength or weakness of the case: Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [99] - [101]. Here it was conceded that while his claims would be resisted with expert evidence, they still had reasonable prospects of success.
3. That Mr Page is not ordinarily resident and has no assets here is relevant, as is the difficulty of recovering any costs ordered in the Czech Republic, unlike the UK. The absence of a mechanism for enforcing the Court's judgment in a foreign jurisdiction weighing in favour of a grant of security.
4. Impecuniosity is a factor which is relevant both to the oppressiveness of an order for security as well as to the prejudice to which Airag will be exposed, by way of the inability to recover its costs of the litigation: Li v State of New South Wales [2013] NSWCA 165 at [49]. As is whether Mr Page's difficult financial position was caused by Airag, that position being established by his unchallenged evidence about how he came to be in his current position.
5. The fundamental purpose of the Rule being to ensure that unsuccessful proceedings do not cause injustice to a defendant. But still the Court's discretion must be exercised bearing in mind that the applicant for the security must meet the onus of adducing evidence to enable the Court to make an appropriate order, that usually requiriingrequiring a rationally explained and reasonably based estimate of the costs for which security is sought.
6. Here Airag has made no such estimate.
7. While litigation funding is also a relevant consideration, it is agreed that contrary to what the Registrar concluded, Mr Page does not have the benefit of such funding. He and his solicitors have entered into a conditional costs agreement on a no win, no fee basis permitted by the Legal Profession Uniform Law (NSW) 2014, about which his solicitor gave unchallenged evidence: s 181.
8. That does not establish that they have agreed to secure his costs: Zakka v George Elias t/as Cadmus Lawyers [2012] NSWCA 277 at [10]. Nor is that established by his solicitor's evidence, that he has access to funding for his disbursements.
9. Also necessary to consider is Mr Page's unchallenged evidence that when he purchased his property in 2015, his intention was to establish a buffalo dairy farm; he obtained a $60,000 grant which required a 5 year commitment to expanding the farm; up until 2017 he was also undertaking remunerative work in the Czech Republic and Europe, but from 2016 he had increasingly prioritised the farm, intending to be a full time farmer for a period, with the goal of then returning to a civil service role in the UK, where his EU experience was in demand.
10. At the time of the plane crash he was working at the farm about 70 hours per week, without assistance. In 2019 he was informally offered a role in the UK which would have generated annual income of $180,000. But because of the ongoing consequences of the injuries he suffered after the crash, he was unable to continue all of his farm work or to take up the UK role, because of the anxiety and distress which he continued to suffer. The eventual result being that he was no longer able to farm for profit, or to pursue other work, being able only to do just enough to keep the farm running at a much reduced level.
11. The result was that monthly repayments of Mr Page's $200,000 mortgage, which was secured by the property, had to be met by income generated by his wife's business. The farm could not be sold because of the terms of his grant, which require the farming to be continued until 2026.
12. Mr Page also explained his now limited cash reserves, which he needed to meet living expenses, as well as what he expected to receive from a UK pension when he turned 60. He also explained his limited other assets, which he could not sell.
13. He explained that as a result of the injuries which he suffered because of the crash, he now had no means to provide for security, without adversely affecting the farm and the wellbeing of his wife and child. That was also not challenged.
14. Mr Page explained why he wished to pursue the negligence which he understood had resulted in his daughter's death, as well as his own injuries and the death of others. He also explained the basis for his belief that an order for security would significantly and detrimentally affect his mental health. He also said: "Being ordered to provide security for the Defendant's cost will prevent me from continuing to pursue my claim. I am not in a position to take out a loan. I am also not in a position to borrow money from friends nor family." (CB 323)
15. I am satisfied that this unchallenged evidence must be accepted, supported as it was by the also unchallenged report of the psychiatrist Dr Skarbek. She had examined Mr Page and considered the report of his treating counsellor and psychotherapist. She explained the protracted battle for parenting orders and access arrangements between he and his daughter's mother, which had resolved in 2014 with Mr Page being given access to his child on alternate weekends and holidays, as well as their close and loving relationship.
16. The very unfortunate psychological consequences of his daughter's death were also explained, which it is unnecessary to describe here. As was the impact on Mr Page's ability to work, given ongoing adverse impacts of his continuing daily anxiety and distress, including for his daily life and his finances. He having been unable to resolve his intense emotions of anger, blame and powerlessness about his daughter's death, caused as it was by a man-made maintenance error.
17. Mr Page, who did not have a past psychiatric history, has been diagnosed to be suffering a substance abuse disorder, as well as a major depressive illness and post-traumatic stress disorder, a condition now regarded to be chronic. The resulting reduction in his functional capacity, which cause him ongoing distressing and problematic symptoms which it is also unnecessary to explain, were also described.
18. It was also noted in the report that Mr Page was of high premorbid intelligence, had worked as a diplomat and was struggling to operate his farm, even though it now had only a small number of livestock, as the result of his ongoing problems. This reflected that his capacity for work had been greatly affected by his continuing ill health, with the result that his business is not profitable, livestock having died and his plans for the farm are no longer realisable.
19. Mr Page's symptoms were observed to be at a severe level, requiring intensive treatment for at least a 2-3-year period, with the likely result being that he would only have a partial work capacity for the rest of his life. His condition not having changed for the last 3 years despite psychological treatment, Dr Skarbek considered it to be unlikely that he would have a significant response to medication and likely that his condition had now achieved maxim medical improvement.

The Registrar's orders must be set aside

1. Weighing all of this evidence and the matters which the parties advanced in the balance, I have concluded that the orders which the Registrar made must be set aside.
2. That Mr Page does not live in Australia enlivened the discretion given by the Rules to make a security order, but the Rules required that an order for security for costs notbenot be made merely on account of his impecuniosity.
3. Even before the Act and this rule came into effect, in Chelleranum McHugh J observed, there in the case of a corporate appellant resident out of and without assets within the jurisdiction which the evidence established was hopelessly insolvent, that it did "not necessarily follow that an order for security for costs should be made against it": at [8].
4. Here it is the position of an injured person whose health and livelihood appears to have been very detrimentally affected by the negligence which he pursues, whose circumstances arose to be considered. But there is no suggestion that he is a bankrupt.
5. Despite the disagreement between the experts at the Coronial Inquiry, given what it established, Airag properly conceded that Mr Page has reasonable prospects of establishing his case. That did not make his prospects a neutral consideration on its application, even if it were accepted that his prospects were not strong, as he contends.
6. But on all the evidence led on the motion, I am satisfied that there is a basis for that submission. Mr Page's prospects thus support the making of the review order which he seeks.
7. That evidence also establishes that before the death of his child Mr Page was a healthy man whose financial situation permitted him to devote his time to the development of his farm, until the planned resumption of the pursuit of his earlier successful career in 2020, in which he expected to earn a salary of $180,00 per year.
8. While Mr Page did not provide his financial records, his unchallenged evidence was that his financial circumstances are now much reduced because of the consequences of his child's death, which include that he could not take up that position or continue to operate the farm at a profit. With the further results that he could no longer meet his mortgage repayments, had but limited funds left in his bank account, was expecting to have to live off a pension and had also not been left with the means to meet a security order.
9. For its part Airag, which had still made no estimate of the costs for which it claimed to be entitled to security, did not challenge any of this evidence.
10. I do not consider that Mr Page's application must fail because he did not provide financial records to support his case. Realistically, in the circumstances he had to proceed on the basis that such any final order for security would have to be for a considerable amount, given what is likely to be dealt with at the hearing, including in respect of expert evidence. Still Airag did not disclose what order it would seek.
11. I am also satisfied that it has to be accepted that Mr Page's current situation has been the result of the psychiatric conditions which he only began suffering after he learned of his daughter's death. They are now chronic and unlikely to improve with further treatment.
12. The parties agreed that Mr Page does not have the benefit of a litigation funding arrangement, as the Registrar incorrectly understood. They also agreed that Shine Lawyers are not and were not litigation funders for the purpose of these proceedings.
13. Further, that on 22 August 2020, the Corporations Amendment (Litigation Funding) Regulation 2020 (Cth) (the Regulation) required litigation funders to be licensed and registered in accordance with other financial service operators pursuant to the Australian Financial Services Scheme administered by the Australian Securities Investment Corporation.
14. But in June 2022, it was decided in LCM Funding Pty Limited v Stanwell Corporation Limited [2022] FCAFC 103 that litigation funding schemes were not governed by the Regulation as they were not enabled by s 9 of the Corporations Act 2001 (Cth).
15. In December 2022 the Corporations Amendment (Litigation Funding) Regulation 2022 operated to provide litigation funders with an exemption from the Corporations Act managed investment scheme regime, Australian Financial Services Licence (AFSL) requirements, product disclosure regime and anti-hawking provision (i.e. unsolicited sales of financial products).
16. Still Shine Lawyers has not agreed to provide Mr Page such funding. That accords with Ms Flynn's evidence about the constraints imposed by the Uniform Law, which must also be accepted.
17. Here it is an individual who has real prospects of establishing that injuries which have placed him in his current difficult personal and financial circumstances, which also preclude him from providing security, were caused by Airag. That without even establishing the likely costs of the proceedings which it might be entitled to recover, if he is unable to establish his case, Airag obtained an order for security which, given the history of the proceedings, it must be accepted unjustly stifles Mr Page's pursuit of his claims.
18. On all the unchallenged evidence I am satisfied that the continuation of the orders which the Registrar made may not be permitted. On the current evidence there is a real likelihood that Mr Page will succeed and Airag will never be in a position where it faces difficulty in enforcing any order for costs made in its favour.
19. I am thus satisfied that Mr Page's pursuit of his damages claim should not be further stifled by the continuation of the Registrar's security orders, no evidence having been led by Airag on which they could justly be maintained.

What orders should now be made?

1. That raises the question of what orders should now be made.
2. Given the requirements of s 56 of the Act and its concern with the just, quick and cheap resolution of the real issues in the proceedings, I am satisfied that Airag should now put on its long delayed defence, within 28 days.
3. That being the usual time contemplated by the Rules and it now long having had the benefit of the outcome of the Coronial Inquiry, which was provided in May 2023. And there being no apparent basis for any further delay in the orderly progress of this matter to hearing, on the cases which the parties advanced.
4. That also means that the current listing before the Registrar on 11 December should be deferred.

Costs

1. The usual order under the Rules is that costs follow the event. In this case that is an order that Airag pay Mr Page's costs of his motion.
2. Unless the parties approach within 7 days with short written submission, that will be the Court's order.

Orders

1. For these reasons I order that: 1. The Registrar's orders for security be set aside; 2. Airag file and serve its defence within 28 days; 3. Unless the parties approach within 7 days with short written submissions, Airag pay Mr Page's costs of his motion, as agreed or assessed; 4. Airag file and serve its defence within 28 days; 5. The parties confer about the further orders required for preparation of the matter for hearing; 6. The directions hearing before the Registrar on 11 December 2024 be vacated; and 7. The matter is be adjourned to the Registrar's list for further directions at 9.30 am 128 December 2024.

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