Cowell v Taylor [1885] 31 Ch D 34

Coyle v Cassimatis [1994] 2 QdR 262

Coyne v The West Australian Newspapers Ltd & Ors (No 1) (1996) 15 WAR 51

Engel Pty Ltd v Leeds & Ors, unreported; FCt SCt of WA; Library No 940403; 20 July 1994

Lavery v BSD Consultants Pty Ltd, unreported; FCt SCt of WA; Library No 940415; 8 August 1994

Lloyd v Tedesco [2002] WASCA 63

Sarac v Croation House Hrvatski Dom, unreported; FCt SCt of WA; Library No 940403; 12 December 1995

Zortec Australia Pty Ltd v DHS Holdings Pty Ltd & Anor, unreported; FCt SCt of WA; Library No 920609; 13 August 1992

1 MASTER NEWNES: This is an application by the defendant under O 25 of the Rules of the Supreme Court for an order that the plaintiff provide security for the defendant's costs of the action.

2 The action involves a dispute as to the plaintiff's entitlement to an interest in certain land which was purchased and registered in the defendant's name during the course of a de facto relationship between the plaintiff and the defendant, which lasted from 1985 until late 2000.

3 According to the defendant, at the time the relationship commenced he was employed by Western Collieries, although he was on workers' compensation due to a work accident. He says that for approximately the next 12 months he was on and off work, until in September 1986 he ceased work altogether after an unsuccessful back operation. At the time the defendant lived at 15 Coombes Street, Collie, which he had owned for approximately 20 years. The property was valued at $37,000. He also had a new car worth about $13,000 and household furniture. He says that the plaintiff had minimal furniture, and a motor vehicle which was later sold for $175. The plaintiff had a son from a previous relationship. There were subsequently two children of the de facto relationship between the plaintiff and the defendant.

4 It appears that when the defendant ceased work he received a lump sum payment of $125,000, which included money from a pension fund, an accrued long service leave entitlement, holiday pay and a lump sum workers' compensation payment. With that money he bought five houses ("the rental houses") in Collie from Westrail in 1987. Some were leasehold and others were freehold. They were bought at various times during 1987. Two of the houses cost $5,000, another cost $3,200 and the other two cost $4,000.

5 The defendant says in December 1988 he purchased the land on which he currently lives in Coalfields Highway, Collie. He paid $36,000 for the block of land and in 1994 built his current home on it. He moved from 15 Coombes Street to his current address in 1994.

6 The defendant says that he obtained rent for the rental houses after he acquired them but the rents did not amount to a great deal of money because the premises were in relatively poor condition. He says that after he ceased work he devoted his time to domestic duties and looking after and renovating the rental houses.

7 The defendant claims that during their relationship the plaintiff did not have any remunerative employment apart from some delivery of commercial mail into letterboxes and, for approximately 2-1/2 years, part-time cleaning work.

8 According to the defendant, the plaintiff kept her income for herself and their financial affairs were kept separate, although they did have a joint bank account. He says that the credit union at which he banked did not have an electronic banking system so from time to time he transferred funds from that account to the joint account to enable electronic transfers to be made to pay bills and for other transactions. He says the plaintiff had her own separate Westpac account.

9 The defendant also says that he usually collected the rent from the tenants of the rental houses and the rent was normally deposited into his credit union account. He denies that he and the plaintiff ever pooled money or ever discussed any joint endeavour in relation to the rental houses. The defendant says that the plaintiff has never contributed to the rental houses and there has never been any joint endeavour between them in connection with those properties or otherwise.

10 The defendant says that the property in which he lives is now worth approximately $150,000 but is the subject of a mortgage for $50,000. According to the defendant, his total assets are now worth something between $133,000 and $156,000, depending upon whether he can obtain a freehold title to one of the rental houses. He says that in 1986 his total assets were in the order of $175,000 to $178,000. However, although the evidence on the point is not entirely clear, it appears that at least some of the rental houses have increased substantially in value since they were acquired.

11 In his affidavit the defendant says that the plaintiff has no assets, apart from personal effects, and she has no independent income. The two children of the relationship live with the defendant, to whom the plaintiff pays child support of $9.96 per fortnight. When he is in Collie the plaintiff's son by her former relationship also lives with the defendant.

12 The plaintiff's version of events is quite different. According to the plaintiff, the defendant purchased the rental houses in consultation with her and in an endeavour to ensure financial security for them and their children. The plaintiff says that during the relationship with the defendant she paid for improvements to the rental houses, as well as fees and charges and rent owed to Westrail on the lease of the rental houses before they were converted to freehold title. The plaintiff says she painted, decorated, paved, fenced, landscaped and carried out other improvements to the rental houses in the belief that she was engaged in a joint endeavour with the defendant to provide them and the children with permanent financial security. She says that she pooled finances with the defendant and that they operated a joint savings account. The plaintiff says she contributed her income to the payment of household expenses, to mortgage payments in respect of the Coalfields Highway property and to the expenses associated with the leasing and renovation of the rental houses.

13 The plaintiff claims an interest in the rental houses and the Coalfields Highway property arising by way of a constructive trust.

14 The plaintiff says that her current income consists of a disability pension and a small amount of rental assistance. She has almost no savings and does not own any real estate. The plaintiff rents a house in Collie for $95 per week and has a variety of other expenses including relatively large repayments on a car. She says she is also indebted to her solicitors for work they have done in these proceedings and, although she is of very modest means, she has spent a lot of time and money assisting her solicitors in preparing the matter to go to trial. The plaintiff says she is concerned that if this application succeeds she will not be able to have the case heard.

15 It is clear that the plaintiff would not be in a position to meet any order for costs made against her in the proceedings. It was not contended otherwise. The defendant's counsel also submitted that the merits of the plaintiff's claim were "paper-thin". He submitted that in the circumstances this was an appropriate case where security for costs should be ordered.

16 A number of grounds were relied upon by the plaintiff in opposing the application. In the first place her counsel rejected the contention that the plaintiff's case was weak and submitted that the case was reasonably arguable.

17 It is not appropriate on an application of this sort to attempt to draw any firm conclusions about the merits of the case, unless the evidence is clear. I do not consider that the evidence before me can be so described. It is plain that the case will turn on the outcome of disputed issues of fact and that the credibility of the witnesses will be important in determining those issues. In those circumstances all that can be said on the material before me is that the plaintiff appears to have a fairly arguable case.

18 The plaintiff also submitted that the defendant's delay in bringing the application was of itself sufficient for the application to be refused.

19 The defendant's counsel conceded that this application was brought late in the day. The writ of summons was issued on 18 December 2001 and served on 31 January 2002. The defendant filed a memorandum of appearance on 8 February 2002. His defence was filed on 20 February, together with a request for further and better particulars of the statement of claim. Those particulars were provided by the plaintiff on 24 May 2002. Discovery was then given by the defendant on 16 July 2002 and additional particulars of the statement of claim, for which the defendant had pressed, were provided by the plaintiff on 28 August 2002. The plaintiff's discovery was provided on 17 September 2002.

20 On 24 January 2003 the action went to mediation in Bunbury but the mediation was unsuccessful. This application was then brought on 14 February 2003. By way of explanation for the lateness of the application, the defendant says that once the mediation was unsuccessful it was apparent to him that the plaintiff actually wanted to go to trial, "thus then crystallising the need for me to apply for security for costs".

21 It is well established that an application for security for costs must be made promptly: McLaughlin v Daily Telegraph Newspaper Co Ltd [1904] HCA 5; (1904) 1 CLR 143; Foss Export Agency Pty Ltd v Trotman (1949) 67 WN (NSW) 1. The further a plaintiff has proceeded in an action and the greater the costs the plaintiff has been allowed to incur without steps being taken to apply for an order for security for costs, the more difficult it will be for the defendant to persuade the court that such an order is not, in the circumstances, unfair or oppressive: Bryan E Fencott Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 514.

22 In Buckley v Bennell (1974) 1 ACLR 301 at 309, Moffitt P expressed it in this way:

"The right to seek security for costs and to stay proceedings, with the possible result that a claim ... is frustrated, is a powerful weapon. Therefore, the litigant who seeks to use it against his opponent is at risk of not having it available unless the application is made and persevered with in circumstances involving the least oppression of his opponent. The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money towards litigating its claim."

23 Although his Honour's comments were made in the context of an application under s 363 of the Companies Act, they apply, in my respectful opinion, with at least equal force to an application against an individual plaintiff under O 25.

24 I should add, too, that the introduction of O 1 r 4A and O 1 r 4B of the Rules of the Supreme Court emphasises the need for such an application, which may delay the action or even bring it to an end entirely, to be brought promptly to minimise the prospect that the costs the parties have incurred and the resources of the Court have been wasted.

25 It appears that this action is close to the point at which it can be entered for trial. One substantive issue remains outstanding. In early September 2002 the plaintiff's solicitors sent to the defendant's solicitors a proposed amended statement of claim. The overall effect of the proposed amendments is to plead more clearly a joint endeavour by the plaintiff and the defendant in the purchase and development of the rental houses and the Coalfields Highway property. Leave to make the proposed amendments has not yet been sought. However, subject to the resolution of that and any other interlocutory matters that arise as a consequence, including any amended defence, the matter is ready to be entered for trial.

26 There is no evidence that any prior intimation was given to the plaintiff that security for costs would be sought. The defendant has been aware of the plaintiff's financial circumstances from the outset and it is not suggested that there has been any significant change in those circumstances during the course of the proceedings. It is self evident that the costs of litigation of this sort would be very onerous for a person of such limited means and, quite apart from the plaintiff's affidavit evidence, it is clear from the stage the matter has reached that substantial costs would have been incurred by the plaintiff to date.

27 I do not regard the defendant's explanation for the delay in bringing this application as satisfactory. It smacks of a tactical decision by the defendant to keep this card up his sleeve, to be played at the eleventh hour if the claim could not be settled on terms acceptable to him beforehand. In any event, the result is that the plaintiff has been put to considerable expense pursuing this litigation, only to have this application sprung without warning late in the day.

28 In my view this application has been brought too late. The plaintiff is, and has always been known by the defendant to be, of very limited means. The defendant has stood by while the plaintiff has incurred substantial expense pursuing this litigation. In the circumstances I consider it would be unfair to the plaintiff to require her now to put up money as security for the defendant's costs.