Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers

Court of Appeal (NSW)|2018-03-19|Before: Christopher P, Simpson JA

Solicitors: Zali Burrows Lawyers (Applicant) Fraser Clancy Lawyers Pty Ltd (Respondent) File Number(s): 2017/270892

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

Judgment

SIMPSON JA: This is an application for security for costs made by notice of motion filed on 19 December 2017 in judicial review proceedings commenced in this Court by Riva NSW Pty Ltd ("Riva"). Given the history of the proceedings that will emerge, confusion will be avoided by referring to the parties by their (abbreviated) names. The respondent to the application for judicial review, and the applicant for security for costs, is a firm of solicitors trading as Fraser Clancy Lawyers ("Fraser Clancy"). Since the proceedings in which the application is made are judicial review proceedings, it is necessary that Fraser Clancy establish that exceptional circumstances exist justifying the order they seek: Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), Pt 59.11.

Security for costs

There is abundant power in the Court to make an order for security for costs. The power derives from UCPR Pt 42, the Corporations Act 2001 (Cth), and the inherent jurisdiction of the Court. However, particular restraint applies where the order is sought in relation to judicial review proceedings. UCPR 59.11 provides: "59.11 Security for costs (1) A plaintiff is not to be required to provide security for costs in respect of judicial review proceedings except in exceptional circumstances. (2) Where a plaintiff: (a) invokes an open standing provision, or (b) commences representative proceedings, the court is not to treat the plaintiff as bringing proceedings for the benefit of a third party for the purposes of considering whether exceptional circumstances exist. (3) This rule has effect despite rule 42.21."

Consideration

I am satisfied that exceptional circumstances have been made out in this case. The long history of litigation makes it apparent that Riva, through Mr Ferella, will not meet any costs order. Riva itself has no assets other than trust assets which would not ordinarily be available to meet a costs order. Counsel who appeared for Riva pointed out that the Deed establishing the Cavallino Family Trust provides that Riva may claim from trust assets by way of indemnity for legal costs incurred on behalf of the Trust. That, however, is small comfort to Fraser Clancy. The history demonstrates clearly the unlikelihood that those controlling Riva (principally Mr Ferella) would exercise the right to claim the indemnity.
It is clear that the administration of Riva is undertaken by Angelo Ferella. Mr Ferella has stated, on more than one occasion, that Riva would not pay costs, or would not pay security for costs. That that is his intention is borne out by the history I have outlined above, and by the fact that no costs have ever been paid (other than by garnishee order), despite costs orders against Riva having been made on at least five occasions.
Moreover, it is relevant to take into account Riva's prospects of success in its judicial review proceedings. The only issue in the application is whether the District Court had jurisdiction to make the order. In his decision of 29 October 2014, Emmett JA stated categorically: "It is certainly an order within the jurisdiction of the District Court." (at [23])
Counsel for Riva relied upon the principle that security for costs will not be ordered where to do so would "stultify" the proceedings. There was, however, no evidence that that would be the case. There was no evidence that Riva could not meet the order; there was no evidence that, if the order were made, Riva could not proceed with its application. There was no basis on which to conclude, even as a possibility, that the proceedings would be "stultified" if the order were made.
There remains a question of the quantum of the order. Fraser Clancy claim an order in the amount of $70,000. That amount is supported by an affidavit of Christopher Clancy, who quantified the costs he anticipated. Counsel for Riva protested, somewhat faintly, that the claim seemed excessive for an application limited to a narrow question of law. However, no evidence contradicting the assessment of Mr Clancy was adduced, and Mr Clancy was not required for cross-examination. In those circumstances I accept his evidence.
I note that the order sought is quantified on the basis that costs will be assessed on an indemnity basis. Even if Fraser Clancy is successful, there is no guarantee that costs would be so quantified. However, the history suggests that there is more than a remote possibility that that would be the result. Again taking into account the history, in my opinion, the amount ordered should provide against the possibility that an indemnity costs order might be made against Riva. If that does not eventuate, then any amount remaining can be returned to Riva.
I am satisfied that the history is such that a security for costs order ought to be made.
The orders I make are: 1. Riva NSW Pty Ltd, within twenty-one (21) days of this date, is to provide security for the costs of Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers in the sum of $70,000, by paying that sum into Court, or, if the parties are able to agree, by way of bank cheque or direct transfer into the trust account of Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers. 2. In the event of non-compliance with Order 1, the proceedings be dismissed. 3. Riva NSW Pty Ltd is to pay Mark A Fraser and Christopher P Clancy trading as Fraser Clancy Lawyers costs of and incidental to this application for security for costs.

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: 22 March 2018

Legal Profession Act 2004(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (2)

Cited By (6)