Pi v Zhou

Evidence on the application

1. The respondents' evidence is that the costs incurred in the Supreme Court proceedings exceeded $35,000 (in respect of counsel's fees alone), and that the amount of costs claimed by the respondents on the party/party assessment of the costs ordered on 2 March 2016 is $4,192.10. The respondents' anticipated costs in respect of the leave application of $15,000 were not the subject of an estimate by the respondents' solicitor, but the reasonableness of the amount claimed was not challenged by Mr Pi.
2. There was evidence of an unsuccessful attempt to levy execution against Mr Pi's property in January 2016 to recover the costs ($1,200) ordered on 7 December 2015. On 29 January 2016, the Sheriff's Office issued a notice of non-levy stating that levy had not been made under a writ for levy of property because the address at which execution was attempted, namely, Unit 1, 25 Belmore Street, Burwood was the office of George Angus & Associates. The notice from the Sheriff's Office reported that Mr George Angus informed the Sheriff that Mr Pi used the address as a contact address only.
3. There was also evidence tendered of an admission by Mr Pi that he did not dispute the amount of $4,192.10 claimed by the respondents for the party/party costs assessment (no. 2016/118820) in respect of the order made on 2 March 2016. Mr Pi's notice of objection dated 3 June 2016 stated his ground of objection to the amount claimed as being that the respondents owed him a larger amount of costs under a separate interlocutory costs order made by McCallum J on 22 April 2015 in the Supreme Court proceedings. Mr Pi's claim for $14,647.40 is presently the subject of a separate party/party costs assessment (no. 2016/131663) lodged by Mr Pi dated 29 April 2016.
4. There is a conflict in the evidence (which it is unnecessary to resolve) as to the precise terms of the costs order made by McCallum J on 22 April 2015. Attached to Mr Pi's application for costs assessment dated 29 April 2016 is a copy of a "judgment/order" said to have been made on 22 April 2015 and entered on 23 March 2016. The terms of the "judgment/order" include: 1. Application to set aside default judgment is granted. 2. Defendants pay the plaintiff's costs of the notice of motion of the application to set aside the default judgment. 3. …... 4. …...
5. An affidavit from Mr Guang Wang, the respondents' solicitor, affirmed 4 May 2016, annexed a copy of the judgment from the Court's on-line registry, JusticeLink, issued on 1 April 2016, in respect of orders made and entered on 22 April 2015 in which the costs order is stated to be: I order the defendants to pay the plaintiff's costs of the hearing of the motion today.
6. Mr Wang gave unchallenged evidence that the effect of the alteration in the costs order increased Mr Zhou's and Mr Zhao's costs liability substantially.
7. It is convenient to first deal with the application for a stay on the ground that Mr Pi has not paid the costs of two earlier proceedings in this Court. A. Stay until costs of earlier proceedings paid
8. The stay of proceedings on this basis is sought under UCPR r 12.4 or s 67 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act).
9. UCPR r 12.4 provides that where proceedings have been discontinued, and a plaintiff is liable to pay the costs of another party in relation to those proceedings and before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced, the Court may stay the further proceedings until those costs are paid and may make such consequential orders as it thinks fit. Such an order prevents the injustice to the defendant of being saddled twice with unpaid costs: Hutchinson v Nominal Defendant (1972) 1 NSWLR 443 (Hutchinson v Nominal Defendant) at 450 (Isaacs J).
10. Section 67 of the Civil Procedure Act provides that, subject to the rules of the 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.
11. Importantly, UCPR r 51.1(3) provides "[s]ubject to this Part, the other provisions of these rules apply, so far as applicable, to proceedings in the Court", being a reference to the Court of Appeal. Sub-rule (4) provides that the rules referred to in sub-rule (3) have effect subject to certain modifications, relevantly, in respect to references to plaintiff and defendant, originating process, and such other modifications as are necessary.
12. In written submissions, the respondents contended that the word "discontinuance" in r 12.4 does not refer only to discontinuance by the plaintiff under r 12.1, but also applies to proceedings that have been dismissed, where costs are wasted as a result of the plaintiff's voluntary actions. This submission was directed to the second judicial review proceedings, which were disposed of by a dismissal order, rather than discontinuance by Mr Pi. Reference was made to Eriksson v Commonwealth Bank of Australia [2014] NSWSC 50 (Eriksson) (Robb J). However, it is clear from [13] of his Honour's reasons that the point was conceded in Eriksson.
13. In my view, it is doubtful that the reference to "discontinuance" in r 12.4 should be given such a wide meaning so as to include, as here, dismissal of proceedings under UCPR r 13.4 on the ground that they are frivolous, vexatious, or an abuse of the process of the court. Rule 12.4 is found in Div 1 of Pt 12 of the UCPR which deals with discontinuance of proceedings on the plaintiff's application. It is unnecessary, however, to decide this point in relation to the dismissal of the second judicial review proceedings, since there is sufficient power under s 67 of the Civil Procedure Act to order a stay of the proceedings, either permanently or until a specified day, if the circumstances warrant that course.
14. Here, the costs order on 7 December 2015 was made in consequence of the discontinuance of the first judicial review proceedings which were not properly brought. The amount of costs ordered by the Registrar was a modest amount. The proceedings in this Court seeking leave to appeal have been commenced against the same parties. The question is whether the proceedings involve a cause of action substantially the same as that for which the first judicial review proceedings were commenced.
15. In CGU Insurance Ltd v Watson (as Trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301, Giles JA (Spigelman CJ agreeing) observed (at [41]) that the necessity for the second proceedings to be in the same cause as the first has been variously stated. His Honour referred to Rice v Henley (1915) 32 WN (NSW) 54 at 54 where the expression used was "for the same cause", but with reference to the plaintiff relying on "the same facts and the same evidence"; and to Bowen v Hickey (1958) 78 WN (NSW) 820 (Bowen v Hickey) at 822, where the expression used was "based on the same facts", although Rice v Henley was cited, including its expression "for the same cause". His Honour noted that in Idoport Pty Ltd v National Australia Bank Ltd [2006] NSWCA 202, a case dealing with the Court's inherent jurisdiction to stay a second action in the same cause and against the same defendant until the costs of the first action were paid, the sameness of cause was expressed at [110] as "identity of issues" and at [112] as "an identity of the central issue".
16. Although the nature of judicial review proceedings is different to that of appeal proceedings, or, as here, an application for leave to appeal, this does not preclude their causes of action being regarded as substantially the same. In Dunbee Ltd v Gilman & Co (Australia) Pty Ltd (1968) 89 WN (NSW) 146, proceedings involving an application to register a judgment obtained in England in New South Wales were held to be for substantially the same cause of action as an action in the commercial list arising from the same facts and seeking the same relief. Here, the two sets of proceedings were based on the same facts and the same evidence and, in my view, essentially arise out of the same issues, namely, Mr Pi's claims for damages for breach of contract, alleged assault and damages for conversion of a washing machine: UCPR r 12.4(b). Alternatively, s 67 of the Civil Procedure Act would provide a source of power to grant a stay pending payment of the costs of $1,200.
17. The second judicial review proceedings, which were commenced by Mr Pi approximately two months after the first proceedings had been discontinued, were also brought improperly. The respondents were put to the trouble and expense of filing a notice of motion for dismissal of the proceedings, which was granted after a contested application. Importantly, as indicated, Mr Pi's notice of objection to the party/party costs assessment does not dispute the amount claimed of $4,192.
18. In oral argument, Mr Pi characterised the unpaid costs of the two judicial review proceedings in this Court (which were discontinued and dismissed, respectively) as a "cross-claim" by the respondents, which was substantially less than the amount of his separate claim for costs against them based on McCallum J's interlocutory costs order of 22 April 2015. This overlooked two matters. First, the costs orders were made in separate proceedings. Secondly and more importantly, Mr Pi's contention ignored the separate costs order that the respondents obtained against Mr Pi in the same Supreme Court proceedings on 9 November 2015. As indicated, the evidence is that the respondents incurred counsel's fees alone of $35,651 (including GST).
19. In making an assessment of the likely net position of the parties under the two costs orders in the Supreme Court proceedings (recognising that no order for set-off of costs orders seems to have been made under s 96 of the Civil Procedure Act), allowance should be made for those costs incurred by the respondents which potentially relate to the interlocutory costs order which Mr Pi obtained against them on 22 April 2015. Two invoices totalling $7,865 by reason of their dates (9 March 2015 for $2,860 and 22 April 2015, for $5,005 respectively), seem to relate to the costs order in favour of Mr Pi on 22 April 2015, assuming that order is in the wider terms as asserted by Mr Pi. Excluding the amount of $7,865, the costs incurred by the respondents in the Supreme Court proceedings (for counsel's fees alone) well exceed the amount of costs claimed by Mr Pi in relation to the order of 22 April 2015.
20. Although quantification of the parties' respective costs liabilities must await the outcome of the costs assessment process (and the respondents have not yet sought an assessment of the 9 November 2015 costs order in their favour), it can be said at this point that the respondents have a substantially larger claim for costs against Mr Pi in respect of costs of the Supreme Court proceedings, than he has against them. Accordingly, the existence of Mr Pi's separate claim for costs against the respondents in the Supreme Court proceedings is not a factor against the grant of a stay of these proceedings until the costs of both judicial review proceedings are paid.
21. It is common ground that Mr Pi is a disability pensioner and I have taken into account that the effect of the stay may be to prevent Mr Pi from pursuing the current proceedings. The likelihood of stultification of proceedings cannot be put any higher in view of the absence of evidence from Mr Pi as to his financial position, or the resources that may be available to him such as, from family or associates. Against this there is no suggestion, let alone evidence, that Mr Pi is likely to be in a position to pay the respondents' costs of the present proceedings if he is unsuccessful.
22. The merits, or absence of merits, of the leave application is another discretionary factor in considering the grant of a stay: Hutchinson v Nominal Defendant at 449 (Isaacs J) citing M'Cabe v Bank of Ireland (1889) 14 App Cas 413 at 416 (Herschell LJ) and 416 (Fitzgerald LJ). Notwithstanding the difficulty of properly considering the merits of the proposed appeal on the present application for a stay, I do not regard the prospects of success as a weighty factor in the present case for the reasons given below (at [45]-[50]) when addressing the application for security for costs.
23. The respondents should be protected against the unpaid costs of the discontinued and dismissed proceedings in this Court before having to incur further costs defending Mr Pi's claims on substantially the same causes of action in a third proceeding in this Court. Accordingly, there should be a stay of the present proceedings pending payment of costs of the two earlier judicial review proceedings.

B. Security for costs

1. The grounds upon which security is sought are (a) that the address of Mr Pi as the applicant is mis-stated in the summons seeking leave to appeal, and there is reason to believe that the mis-statement of the address was made with intention to deceive: UCPR, r 42.21(1)(b) or, alternatively, (b) that there are "special circumstances" which enliven the discretion to order security for costs under UCPR, r 51.50.

(a) Mis-statement of applicant's address

1. The prescribed form (Form 104) for the summons seeking leave to appeal requires an applicant's address to be stated. Here, the address for Mr Pi was stated in his summons as "1/25 Belmore Street, Burwood, NSW, 2134". This is the address of George Angus & Associates, a licensed conveyancer. Mr Pi does not live at or conduct a business from this address. He seems to use this address as a message service.
2. It has been said that the rationale for ordering security for costs when misdescription occurs is to ensure that the plaintiff by means of deception cannot avoid the burden of a potentially unsuccessful action: S E Colbran, Security for Costs (1993, Longman Professional) at p158 [8.2].
3. The issue in the present case is whether Mr Pi intentionally omitted his address from the summons seeking leave to appeal for the purpose of avoiding enforcement of a potential costs order if the application for leave or any appeal, if leave be granted, was unsuccessful. There is no direct evidence of any intention to deceive on the part of Mr Pi. Significantly, there is no evidence that the unsuccessful attempt to levy execution on Mr Pi's property at the Belmore Street address on 29 January 2016 came to the attention of Mr Pi before he filed his summons seeking leave to appeal on 8 March 2016.
4. I am not persuaded that Mr Pi misdescribed his address with the intention of avoiding the potential consequences of his action should he fail and a costs order be made against him. Mr Pi is a self-represented litigant. English is not his first language. He appeared on the present motion with the assistance of an interpreter. It is readily apparent that he has some difficulty understanding the procedural requirements in the rules. Although the circumstances of the error were not explained by Mr Pi, I am not prepared to find that there is reason to believe that the mis-statement of Mr Pi's address was made with the intention to deceive.

(b) Special circumstances

1. Special circumstances must be shown before order for security for costs of an appeal can be made under UCPR r 51.50.
2. In Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 (Preston) at [18] Basten JA said: The considerations engaged by the concept of "special circumstances" in relation to security for costs were considered by this Court in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143 (Beazley, Santow and Ipp JJA), and in Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Bryson JA, Sheller and Giles JJA agreeing). The following principles were identified: (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 an 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.
3. The last two factors, it was suggested by Basten JA, might better be seen as pertaining to the exercise of the discretion, rather than as potential special circumstances.
4. In Preston at [18], Basten JA also noted that the principles governing applications for security in the context of an unfettered discretion as set out by Beazley J (as her Honour then was) in the Federal Court in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189, at 197-198, remain relevant in assessing "special circumstances" for the purposes of the rules applicable when considering security for costs on an appeal.
5. When weighing all the circumstances of the case in the exercise of the discretion to order security for costs, it is necessary to keep in mind that the weight to be given to any circumstance depends not only on its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed (see P S Chellaram & Co Ltd v China Ocean Shipping Company [1991] HCA 36; (1991) 102 ALR 321, 323 per McHugh J).
6. The respondents submitted that the following special circumstances exist, justifying an order for security for costs of the application for leave to appeal: 1. Mr Pi has not paid the three previous costs orders; 2. the unsuccessful attempt to levy execution against Mr Pi's property in respect of the costs order for $1,200; 3. Mr Pi's impecuniosity; and 4. the absence of prospects of success or any public interest raised by the proposed appeal, and Mr Pi's lack of success on the merits at first instance.
7. The first two matters were established in the evidence. The third matter was common ground. The fourth matter is considered below.
8. Although Mr Pi asserts in his summons seeking leave to appeal that the amount in issue involves a claim for damages greater than $100,000, it is appropriate to proceed on the basis that Mr Pi is seeking leave to appeal and the question of prospects of success is directed to that application. It may be accepted that it is not possible to properly consider the merits of the leave application in an application for security for costs. As Bryson JA said in Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Porter v Gordian Runoff) at [22], this is a characteristic difficulty of applications for security for costs generally. Nonetheless, it is necessary to consider the merits, or absence of merits, of the proposed appeal, as this is relied upon by the respondents as a "special circumstance".
9. The first matter to note is that Mr Pi seeks an extension of time because the summons filed on 8 March 2016 was out of time by nearly a month. The explanation given is that, having filed a notice of intention to appeal on 3 December 2015, Mr Pi was under a misapprehension as to the correct procedure for challenging the decision of Adamson J. I am prepared to proceed on the basis favourable to Mr Pi; that (ignoring for the moment the merits of the proposed appeal) he has an arguable case for an extension of time for filing the summons seeking leave to appeal. It was not suggested by the respondents that the delay has caused them any prejudice.
10. The test for obtaining leave to appeal is well-known. 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 to merely demonstrate 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].
11. Here, there is no issue of principle or question of general importance. The proposed grounds in the draft notice of appeal essentially assert that her Honour's decision involved an error of law or fact (without identifying any particular error); that the decision is based on "false or untruths material" (without identifying such material); that there was no evidence justifying the decision; and that the decision was unreasonable.
12. Success in the proposed appeal requires Mr Pi to show that the findings of the primary judge are contrary to incontrovertibly established facts or uncontested testimony, or that her Honour failed to use or palpably mis-used her advantage, or that the findings are glaringly improbable or contrary to compelling inferences: Fox v Percy [2003] HCA 22; 214 CLR 118 (Fox v Percy) at [28]-[29]. Mr Pi did not attempt to explain how the Fox v Percy test would be met in the present case.
13. At its highest, the complaint by Mr Pi seems to be that her Honour should not have accepted the evidence of the respondents in preference to that of Mr Pi. This complaint was not based on either incontrovertibly established facts, or uncontested testimony that was inconsistent with her Honour's findings. It was not suggested that her Honour had failed to use or had palpably mis-used her advantage in assessing the witness' evidence. Nor did Mr Pi point in any way as to how it might be argued that her Honour's findings were glaringly improbable or contrary to compelling inferences.
14. Having regard to what needs to be established for an appeal against credit-based factual findings to succeed, the difficulties confronting Mr Pi on the leave application are formidable. I do not consider that Mr Pi has identified an injustice which is reasonably clear, nor arguable grounds of appeal.
15. Next, whilst Mr Pi asserted in oral argument that his impecuniosity is attributable to the conduct of the respondents, he did not point to any evidence which supported this assertion. I am not persuaded that he has demonstrated that this is the case.
16. Stultification of the proceedings if security is ordered is an important consideration to be weighed, particularly in light of Mr Pi's impecuniosity: Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; 208 ALR 564 at [72]. Against this, Mr Pi did not give evidence relating to his financial position, including whether or not there are others, such as family or associates, who may step in to assist him. The authorities make clear that stultification does not necessarily follow from a finding of impecuniosity: Hastings v Hastings [2009] NSWCA 294 at [14]; Levy v Bablis [2011] NSWCA 411 at [10].
17. There is no public interest element in the proposed appeal. The interests involved are primarily of a private character and special to Mr Pi and the respondents: Porter v Gordian Runoff at [18]. Nonetheless, I take into account that the decision of the primary judge has serious consequences for Mr Pi, both in denying his claim for damages and in the making of an adverse costs order against him.
18. The respondents have not delayed bringing their application for security. Although the respondents have a solicitor on the record, they were self-represented on the hearing of the motion. Mr Zhou informed the Court that they could not afford to pay for their current solicitor to appear, and would be engaging a new solicitor if Mr Pi pursued the application for leave to appeal. In the circumstances, the respondents should not be treated, for the purposes of the application for security, as unrepresented litigants in relation to the leave application with little, if any, exposure to further costs, other than out-of-pocket expenses. It is apparent that the respondents have already incurred costs to their solicitor in relation to the application for security, for which they should be currently protected if security is ordered.
19. There are weighty considerations favouring an order for security for costs. The financial burden of the costs of the leave application for the respondents as individuals is significant. Although the respondents succeeded at first instance, they have no protection on their claim of costs against Mr Pi. Even though security for costs may stifle the proposed appeal, the respondents' claim for protection is, in all the circumstances, a strong one. Mr Pi's prospects of success on the leave application are extremely weak and I do not consider that the proposed grounds of appeal are fairly arguable. In my view, special circumstances have been shown which enliven the discretion to order security for costs.
20. I would fix the amount of security at $12,000, being a little less than the amount sought by the respondents, in view of the absence of an affidavit supporting how the claim for $15,000 is made up. Unless the parties agree on an alternative form of security, security in that amount should be paid into court pending the outcome of the leave application and the proceedings should be stayed until the applicant, Mr Pi, complies with that order.

Conclusion and Orders

1. Mr Pi should provide security for costs to the respondents in respect of the leave application in the amount of $12,000. These proceedings should be stayed until (a) security in that amount is provided; and (b) Mr Pi pays the $1,200 costs ordered in respect of the first judicial review proceedings, and the costs, as assessed or agreed, in respect of the second judicial review proceedings.
2. As to the costs of the respondents' motion, there is no reason costs should not follow the event: UCPR r 42.1.
3. Accordingly, I make the following orders: 1. Stay these proceedings until the applicant (Mr Pi) has: 1. paid to the respondents (Mr Zhou and Mrs Zhao): 1. the costs of $1,200 ordered on 7 December 2015 in proceedings 2015/336639, and 2. the costs of the summons in proceedings 2016/41912 ordered on 2 March 2016, as assessed or agreed; and 1. provided security for the respondents' costs of the application for leave to appeal in accordance with order 2 below. 1. The applicant provide within 21 days security in the sum of $12,000 for the respondents' costs of the application for leave to appeal by payment of that amount into court. 2. The applicant (Mr Pi) to pay the respondents' (Mr Zhou and Mrs Zhao's) costs of the notice of motion filed 20 April 2016.

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: 24 June 2016