Plaintiff v Defendant

Supreme Court of Victoria|2016-10-04|Before: GARDE J

PRACTICE - Security for costs - Inherent jurisdiction of the Supreme Court to order security for costs - Nature of cause of action - Prospects of success - Plaintiff bankrupt - Unpaid costs orders - Numerous statements of claim filed - Security for costs ordered

1 By order of the court on 25 July 2016, the fourth amended statement of claim in this defamation proceeding ('the current proceeding') was struck out.[1] The facts and circumstances relating to this proceeding are fully set out in the previous ruling.

2 The defendant's application for security for costs remains to be determined. The defendant seeks security for costs in the amount of $140,000 or such other amount as the Court considers appropriate.[3]

3 The defendant relies on the affidavits of Nicola Sophie Drakeford dated 22 April 2016 ('Ms Drakeford's affidavit') and of Anthony Thomas Maher dated 21 April 2016 ('Mr Maher's affidavit').

4 Ms Drakeford's affidavit refers to statements of claim dated 9 February 2015, 22 February 2016, 21 March 2016, and 4 April 2016.[4] Two subsequent versions of the statement of claim have been filed on 17 August 2016 and 23 August 2016.

5 It also refers to six other proceedings brought by the plaintiff against the defendant for defamation or discrimination in the Supreme Court, County Court and Victorian Civil and Administrative Tribunal ('VCAT').[5] There are three other proceedings issued by the plaintiff against the defendant or persons representing the Serbian Orthodox Church where preliminary discovery was sought.[6]

6 As at 22 April 2016, three proceedings including the current proceeding remained on foot.[7]

7 Ms Drakeford's affidavit refers to thirteen costs orders against the plaintiff made in the Supreme Court or by VCAT over the period of May 2013 to February 2016.[8] A bill of costs totalling $155,712.45 was prepared by the defendant in relation to proceeding S CI 2013 00059.[9] On 25 July 2016, another costs order was made against the plaintiff in the current proceeding.[10]

8 The plaintiff was made bankrupt on 22 January 2015 following a bankruptcy notice for an unpaid debt for legal costs and interest owed to the defendant in the amount of $15,829.21.[11] On 13 April 2016, the plaintiff's trustee in bankruptcy advised the defendant's solicitor that he was of the view that 'there will be no dividend to unsecured creditors'.[12] The plaintiff has failed to pay any of the costs owed by him to the defendant.[13] No amount of costs ordered against the plaintiff by any court or by VCAT has ever been paid.[14]

9 Mr Maher is a partner in the firm of solicitors acting for the defendant. He has provided estimates of the likely costs of the defendant in this proceeding. He has been a legal practitioner for 17 years, and was a principal of another firm for 5 years.[15] Mr Maher deposes that the amount of $64,171.30 is a reasonable estimate of the defendant's likely party-party costs of defending the proceeding up to trial.[16] He also deposed that $75,000 is a reasonable estimate of the defendant's likely party-party costs of defending the proceeding at trial.[17] Mr Maher did not include any estimate of the costs of any further interlocutory applications by the plaintiff.[18]

10 The estimate of total costs prior to trial of $64,171.30 includes the application for security for costs, the opposition to the plaintiff's application under s 23 of the Limitations of Actions Act 1958 (Vic), discovery by both parties, interrogatories, the preparation of witness statements and counsel's fees.[19]

11 The plaintiff has not provided any affidavit which contests the costs estimate made by Mr Maher.

12 In the course of his submission, Senior Counsel for the plaintiff applied to cross-examine Mr Maher as to his costs estimate. However, there is no alternative estimate of legal costs provided by the plaintiff. I consider Mr Maher's estimate a reasonable estimate of likely costs in a heavily litigated proceeding with a protracted and chequered history. Mr Maher's evidence solely relates to the quantum of legal costs and disbursements. Little benefit would be achieved by permitting Senior Counsel to cross-examine Mr Maher as to costs. The deponent of an affidavit in an interlocutory application is not required to attend for cross-examination unless the Court orders that the deponent be examined before the Court.[20] In the circumstances of this interlocutory application, there is no good reason why the court should so order. The additional legal costs, including counsel's fees, of an order requiring Mr Maher to attend for cross-examination are not warranted.

13 There have been a number of significant observations made by courts as to the plaintiff's conduct of other proceedings.

14 In a ruling in the separate proceeding of S CI 2013 00059[21] on 21 November 2014, Dixon J said:

However, in relation to the costs of the first defendant in the proceeding, I am persuaded that the plaintiff has never been able to establish a tenable cause of action against the first defendant that it is able to pursue in accordance with the law of defamation in this state. His unmeritorious conduct in continuing to seek out of time to charge the first defendant with publication of defamation appears part of a wider dispute concerning the affairs of the Serbian Orthodox Church, and the circumstances that lie behind his attempted proceedings against the first defendant are not a matter that has been fully explained before me. The inference of an ulterior motive is open from the dogged insistence of Mr Trkulja on retaining the first defendant in the proceeding despite the substantial and increasing passage of time since the events complained of. Mr Trkulja is not ignorant of the limitation period or the principles that govern when it may be extended due to his experiences in respect of the causes of action based on the letters in the first incident. Mr Trkulja should have known that the proposed amendments by 6A and 6B and later by the amended paragraph 7 had no chance of success. Mr Trkulja's conduct in pressing to retain the first defendant in the proceeding has been unreasonable.

In the circumstances, I will order that the first defendant's costs of the proceeding be taxed on an indemnity basis. Other costs will be taxed on the standard basis. I will not make an order for the costs of the second notice to produce, which in any event is not pressed by the defendants at this stage, and I do not propose to investigate the circumstances in which costs were reserved by Daly AsJ. Those costs can remain reserved costs to be dealt with at the conclusion of the proceeding.[22]

15 In a further ruling in the same proceeding made on 16 December 2014,[23] Dixon J said:

I considered the recusal application to be without any merit whatsoever. Further I considered it to be an application that appeared to be made for a tactical basis. In my ruling of 21 November 2014, I expressed my reservations that the plaintiff might be seeking tactical advantage for his own personal reasons in pressing his claims against the first defendant. I did not then consider myself to be in a position to make a positive finding that the pleading amendments were pressed to gain a tactical advantage against the first defendant in the litigation. I stated that tactical advantage needed to be achieved in accordance with the rules rather than by an indulgence sought from the court. I was not satisfied that the plaintiff's application to bring the claim against the first defendant was made in good faith.

I have today expressed similar concerns that the plaintiff appeared attracted to taking tactical positions in this litigation. My concerns were that taking such positions without properly understanding the rules of conduct, both the ethical rules observed by advocates and the overarching obligations imposed upon litigants by the provision of the Civil Procedure Act, resulted in conduct by the plaintiff that can be regarded, at the very least, as unreasonable. The significant feature of the conduct is not how it should be characterised from the perspective of the plaintiff. The plaintiff was, as I have already said, constrained by his lack of knowledge, training and experience in the law and it is not for that reason that he should be required to pay indemnity costs.

There are, however, significant ongoing expenses created for the defendants by reason of the unreasonable applications that have been brought by the plaintiff against them. The circumstances that now warrant the adjournment of the trial of the proceeding were present on 21 November 2014. Although Mr Trkulja has not sought leave to appeal, it is not on this basis that he has succeeded in adjourning the trial. Rather, it is because I recognise that within a short period of time he expects to be in a financial position to seek to vindicate his rights properly represented before a jury. The circumstances which lead to that conclusion were available and could have been explored before the court on 21 November. In that sense, I consider that the plaintiff's failure to raise those issues on that occasion created an unreasonable need for a further application to vacate the trial date. That further application was encrusted with a recusal application that lacked any identifiable merit, and an unwillingness to prosecute the assertion that counsel should be restrained before a court while pressing that complaint in broadly circulated email.

Bearing all of those considerations in mind, I consider that the costs of the two summonses issued since 21 November 2014, together with the costs they have been thrown away since 21 November 2014, have been unnecessarily imposed on the defendants and the defendants have been unreasonably exposed to those cost. The defendants have established special circumstances that entitle departure from the usual basis for taxation and to an award of costs on an indemnity basis, although that order will be confined to the period since 21 November 2014.[24]

16 The plaintiff lodged an application for leave to appeal against several of the orders of Dixon J in the proceeding under discussion. In an application for security for costs arising from that proceeding, the Court of Appeal ordered that security for costs be provided by the plaintiff..[25]

17 In a joint judgment, the Court of Appeal stated:

The respondents make application for security for costs of the appeal on three bases, namely: that the applicant is an undischarged bankrupt; that the applicant has failed to pay a number of costs orders made in favour of the respondents; and, if the appeal fails, the applicant will not pay to the respondents any costs that the court may order against him.

The principal affidavit in support of that application, sworn by the solicitor for the respondents, amplifies the grounds that are contained in the application. First, it is pointed out that on 5 December 2004, Dixon J ordered (inter alia) that the proceeding not be refixed for trial until: the applicant has filed a notice of trial; has paid eight sets of costs ordered against him in previous interlocutory proceedings; and has filed a notice of appearance by a solicitor instructed to conduct the trial on his behalf. The applicant has not complied with those orders, and, accordingly, the proceeding cannot be fixed for trial.

Secondly, the respondents' solicitors depose that the costs, that are owed by the applicant to the respondents, amount to the sum of $155,712.45, excluding the costs of taxation. None of those costs have been paid by the applicant to the respondents. Thirdly, the applicant was declared bankrupt on 22 January 2015, by order of the Federal Circuit Court, pursuant to a bankruptcy notice for an unpaid debt owed by the applicant to the first respondent, for an unpaid debt of $15,829.21. A creditors' report in the bankruptcy was issued on 4 March 2015, noting that the only substantial assets of the applicant were unpaid costs orders of $400,000 from previous defamation proceedings in which the applicant had been successful. In recent correspondence with the respondents' solicitors, the trustee in bankruptcy has stated that, at this stage, it is unlikely that any dividend will be paid to the creditors of the applicant in the bankruptcy.

...

Rule 64.38(2)(a) [of the Supreme Court (General Civil Procedure) Rules 2005 (Vic)] provides that the Court of Appeal, on the application by a party, may make an order for security for costs of an appeal or of an application before the court. The factors, relevant to the exercise of the discretion, have been discussed in a number of cases. They include (among others): the prospects of success of the appeal; the degree of risk that a costs order would not be satisfied; whether the making of an order would be oppressive by stifling a reasonably arguable claim; whether any impecuniosity of the appellant (or applicant) arises out of the conduct complained of; whether there are any aspects of public interest militating against the making of such an order; and whether there are any particular discretionary matters relevant to the application.

In the present case, it is clear, on the material, that the applicant is impecunious, and it is highly likely that, if he is not successful on the application, or the appeal, he will be unable to pay any costs of the successful respondents. Thus, unless an order for security is made, the respondents will be required to meet their own costs of the application or appeal, regardless of whether they are successful or not.

That consideration, of itself, is particularly material in light of the history of the interlocutory proceedings in this case. The proceedings commenced more than two and a half years ago. During that time, the applicant has sought to rely on five different versions of his statement of claim. As we have already noted, by seeking leave to appeal the orders of Dixon J, of 23 October and on 21 November, the applicant, in effect, is seeking to rely on two different statements of claim in the proceeding. In light of what we have described as the tortured history of the interlocutory proceedings in the case, in our view the criticisms made by Dixon J of the conduct of the applicant in the proceedings, in his Honour's reasons dated 3 December 2014, are soundly based.[26]

18 Senior Counsel for the plaintiff opposed the application for security for costs. The main submissions advanced on behalf of the plaintiff were:

(1) a security for costs order was not contemplated by the order of Dixon J of 22 March 2016;

(2) it would only be appropriate to consider security for costs after the defendant has filed a defence;

(3) the prospects of success are a relevant consideration, and it is appropriate to consider defences such as justification, qualified privilege and fair comment; and

(4) the court would be better placed to consider whether a security for costs order should be made, and the amount of a security for costs order after the filing of a defence.[27]

(2) the plaintiff has issued a number of other proceedings against clergy and staff of the Serbian Orthodox Church of Australia. In these proceedings, courts and tribunals have made a considerable number of costs orders against the plaintiff. None has been paid. The plaintiff has not sought to enter into any arrangement for payment or even part payment of any of the orders. He has not evinced any intention of paying any of the orders;

(3) the plaintiff claims to be impecunious. He has not paid any fees for filing proceedings with the Court. He has said on more than one occasion that he has not money to pay for representation. He has no assets.

(4) Costs orders against the plaintiff in relation to interlocutory steps in this proceeding continue to accumulate. The defendant continues to incur costs and suffer the prejudice of unpaid orders and ongoing open-ended expense.

(5) It is all but certain that if the plaintiff is unsuccessful he will not pay associated costs orders.[28]

Inherent jurisdiction to order security for costs

20 In addition to its powers under r 62.02 of the Rules, the Court has inherent jurisdiction to order security for costs.[29] In Guss v Sullivan,[30] Byrne J held that a submission that 'in the case of a civil proceeding the only circumstances in which security for costs may, as a matter of jurisdiction, be ordered against a natural person are those set out in Rule 62.02' was 'contrary to established authority'.[31] The inherent jurisdiction to order security for costs provides an important safeguard. It permits the court to require security for costs where that is necessary in the interests of justice in circumstances that fall outside the categories found in r 62.02 of the Rules.

21 The plaintiff's prospect of success in the proceeding is an important consideration in determining whether security for costs should be ordered:

(1) The plaintiff first brought a claim for defamation against the defendant in 2013 arising from the publication of a ruling concerning the plaintiff dated 8 February 2011 ('the ruling').[32] According to the plaintiff, the ruling was published by newsletter and on church notice boards in some 50 Serbian Orthodox Churches in Australia and New Zealand.[33] However, any defamation resulting from the publication of the ruling in the diocese was not actionable because the proceeding was out of time.[34]

(2) In the present proceeding, the plaintiff claims to have been defamed by the republication of the ruling on the www.novinar.de website in Germany ('the website'), and the downloading of the ruling by a number of specific individuals. Given the plaintiff's claim regarding the prior widespread publication of the ruling across Australia and New Zealand (which is not actionable), it is difficult to see what difference the downloading of this ruling by a number of specific individuals makes. As a result, there is a serious risk that even if successful, the claim made as a result of the downloading of the ruling, might only result in a modest or nominal award of damages.

(3) For the defamation claim made by the plaintiff to succeed, the plaintiff must show that the republication of the ruling on the website was the natural and probable consequence of the original publication of the ruling. This will be a highly contentious issue at trial.

(4) There are very real concerns about the alleged defamation. The ruling was published as part of a postscript to an article which is scathingly critical of the defendant. The author of the article is not identified. It is difficult to see why the defendant should be responsible for a postscript in an article published by an opponent in a public attack on him and his office.

(5) There will be a serious question as to whether the voluntary act of an unidentified third party in sending or uploading the ruling to the website breaks the chain of causation.

(6) The plaintiff does not suggest that the defendant had any influence or sway over the website, or that the defendant requested, authorised or knew of the publication on the website. He does not suggest that the owner or controller of the website was under any obligation or beholden to the defendant in any way.[35]

22 At this time, no defence has been filed or served. There may be additional defences under the Defamation Act 2005 (Vic) relied on by the defendant. However, this does not alter the conclusion that the plaintiff faces serious obstacles in proving his case, and that there are substantial risks associated with the proceeding, including the risk that even if the plaintiff is successful, the damages awarded might be modest or nominal.

23 In addition to concerns about the prospect of success, and as the defendant submitted, there are other considerations which strongly favour the making of an order for security of costs:

(1) The plaintiff has issued a large number of proceedings against the defendant in courts and at VCAT. This is one of the remaining proceedings in a long saga of proceedings directed against the defendant and involving the Serbian Orthodox Church.

(2) There have been many costs orders made against the plaintiff in the numerous proceedings he has issued. The uncontested evidence is that the plaintiff has not made any payment whatsoever in satisfaction or reduction of any amount of the costs that he has been ordered to pay. The plaintiff has conducted all of these proceedings with apparent impunity as to costs orders. As a result, unless security for costs is ordered, there is every reason to expect that the plaintiff's invulnerability to costs orders will continue in the future. It is in the interests of justice and consistent with the principles underlying the Civil Procedure Act 2010 (Vic) that the Court ensure that the plaintiff conduct this proceeding responsibly and with accountability for costs orders made by the Court.

(3) The plaintiff was made bankrupt in January 2015 by reason of his own failure to pay legal costs and interest ordered against him as a result of his own actions and conduct. His trustee in bankruptcy has advised that there will be no dividend in favour of unsecured creditors.

(4) It is all but certain that if the plaintiff is unsuccessful in this proceeding, he will be unable to pay the defendant's costs of the proceeding.

(5) The costs that the plaintiff has caused the defendant to incur in the present proceeding are substantial. There have been numerous versions of the statement of claim. The last version was struck out. Two later versions have since been filed. It would be unjust for the defendant to be left without recourse and exposed to the ever increasing burden of costs caused by the plaintiff's conduct of the proceeding in this manner.

(6) The proceeding has not progressed beyond an early stage despite the fact that the writ was issued as far back as 16 April 2014.

(1) While it is true that Dixon J did not address the provision of security for costs in his order of 22 March 2016, no application seeking security for costs appears to have been returnable before him. The summons seeking security for costs and the supporting affidavits are all dated in April 2016. Since March 2016, there have been three more proposed amended statements of claim. The first of these was struck out by order made on 25 July 2016.[36]

(2) It is also true that no defence has been filed. No statement of claim in proper form has yet been filed. Nonetheless it is desirable that security for costs be provided. The fact that no defence has been provided does not operate as a bar to an order for the provision of security for costs.

(3) The prospect of success of a claim is an important consideration, and is addressed above.[37] The possible availability to the defendant of defences under the Defamation Act 2005 (Vic) cannot improve the plaintiff's prospect of success.

25 I have come to the conclusion that there should be an order made requiring the plaintiff to provide security for costs. It would be unfair to permit the plaintiff to conduct this proceeding without the defendant having any prospect of recovering costs from the plaintiff if successful in the proceeding. It would not be oppressive to the plaintiff having regard to the nature and strength of his claim and in the circumstances of the current proceeding to require security for costs. There is no public interest which would preclude the making of an order for security for costs. It would not be unjust or inequitable, or in any way unfair to the plaintiff, if a security for costs order is made even though the plaintiff's claim will be dismissed if security for costs is not provided.

26 As to quantum, I generally accept the evidence of Mr Maher. In my view, Mr Maher's affidavit makes a fair and reasonable estimate of the legal costs the defendant is likely to incur in this proceeding. However, I propose to disallow the costs relating to the defence of a possible application under s 23 of the Limitation of Actions Act 1958 [38], and reduce the quantum of costs to $55,000. I am not satisfied that the claimed costs for this item will be incurred. However, I am satisfied that the other costs claimed including discovery by both parties, interrogatories (given the unusual circumstances of this case), counsel fees and witness statements are all reasonable. No allowance is made in Mr Maher's estimate for further interlocutory applications by the plaintiff, which are more likely than not to occur. The sum of $55,000 does not include trial costs. It will be necessary for the defendant to come back to the court for additional security should the security provided for costs prove inadequate and also to obtain security for trial costs. As to the time for the security to be provided by the plaintiff, a period of 60 days is reasonable.

27 For the reasons I have given, the Court will make orders in accordance in the following terms:

(1) By 4:00pm on 5 December 2016 the plaintiff provide to the Prothonotary, by payment into Court or in another form acceptable to the Prothonotary, security for the defendant's costs of this proceeding in the sum of $55,000.

(2) If such security is not provided by 4:00pm on 5 December 2016, and pursuant to r 62.04 of the Rules, the proceeding is dismissed.

[1] Trkulja v Dobrjevic [2016] VSC 421.

[3] Defendant's summons dated 22 April 2016 [5].

[5] Ibid [10]. The cases are Trkulja v Dobrijevic, Videkanic, Gudelj & Zabic: S CI 2013 00059 (Supreme Court - defamation); Trkulja v Videkanic & Gudelj: S CI 2014 01799 (Supreme Court - defamation); Trkulja v Dobrijevic: CI 15 007814 (County Court - defamation); Trkulja v Dobrijevic & St Archdeacon Stefan Serbian Orthodox Church: A6/2013 (VCAT - discrimination); Trkulja v Dobrijevic, Videkanic & Zabic: S APCI 2014 0156 (Supreme Court Court of Appeal - appeal of interlocutory orders in S CI 2013 00059); Trkulja v Dobrijevic & St Archdeacon Stefan Orthodox Church: S CI 2014 06014 (Supreme Court - appeal of interlocutory orders in the VCAT proceeding A6/2013).

[6] Ms Drakeford's affidavit [11]. The cases are: Trkulja v Gudelj on behalf of the Serbian Church School Community St Archdeacon Stefan: S CI 2011 02125 (preliminary discovery proceeding); Trkuljua v Gudelj on behalf of the Serbian Church School Community St Archdeacon Stefan: S CI 2011 03469 (preliminary discovery proceeding); Trkulja v Dobrijevic on behalf of the Serbian Orthodox Diocese of Australia and New Zealand: S CI 2011 03914 (preliminary discovery proceeding).

[10] Order of the Honourable Justice Garde dated 25 July 2016.

[20] Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('Rules'), r 40.04(1)(a).

[21] Trkulja v Dobrijevic (No 2) [2014] VSC 594.

[23] Trkulja v Dobrijevic (No 3) [2014] VSC 614.

[25] Trkulja v Dobrijevic [2015] VSCA 281.

[26] Ibid [37]-[39], [43]-[45] (citations omitted).

[27] Plaintiff's submissions for hearing on 26 August 2016 dated 25 August 2016 [18] - [22].

[28] Submissions on behalf of the defendant dated 25 August 2016 [53] - [60].

[29] Lines v Tanna Pty Ltd [1987] VicRp 53; [1987] VR 641, 642; Nord v Truitt [1987] Vic SC 530, 10 referring to Rajski v Computer Manufacture & Design Pty Ltd (1982) 2 NSWLR 443, 447.

[31] Ibid [10]; J.H. Billington Ltd v Billington [1907] 2 KB 106, 107; Hansens Pty Ltd v Adco Constructions Pty Ltd (1991) 4 ACSR 347, 353; BIL (NZ Holdings) Ltd v Era House Ltd (1991) 23 NSWLR 280, 283-286; Thunderdome Racetiming & Scoring Pty Ltd v Dorian Industries Pty Ltd (1992)109 ALR 196, 203.

[32] See Trkulja v Dobrijevic [2013] VSC 261.

[33] Plaintiff's affidavit in support of summons dated 23 August 2016, Exh MT1 [4].

[34] See Trkulja v Dobrijevic [2013] VSC 261 [2], [38].

[35] Trkulja v Dobrijevic [2016] VSC 421 [14].

[36] Order the Honourable Justice Garde dated 25 July 2016.

Limitations of Actions Act 1958(Vic)

Court (General Civil Procedure) Rules 2005

Court (General Civil Procedure) Rules 2015

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