_Robson v Robson & Anor_

Judgment (127 paragraphs)

[1]

[1] KEANE JA: On 22 November 2004 the plaintiff commenced proceedings against the defendants seeking orders for the transfer to him of shares in a company alleged to be held by the defendants on trust for the plaintiff. A defence was filed on

[2]

16 December 2004 and the action has since proceeded through the interlocutory steps towards a trial. The defendants raised the question of the provision by the plaintiff of security for their costs by letter dated 17 February 2005. The defendants' approach was promptly rebuffed by the plaintiff, but no application was made in this regard by the defendants until 6 September 2007. This application was heard on 25 September 2007 when the application was dismissed. The action was subsequently set down for trial in March 2008.

[3]

[2] The defendants' application was founded upon r 671(c) and (h) of the Uniform Civil Procedure Rules 1999 (Qld) ("the UCPR"). Briefly stated, the defendants' contentions were that the learned primary judge should have held that the case fell within either or both of these rules because the plaintiff did not include his residential address in the claim whereby he commenced this action and has deliberately sought to render himself immune from the consequences of an adverse order for costs in the event that his claim fails. The learned primary judge held that the requirements of these provisions of the UCPR for the making of an order for security for costs had not been met.

[4]

[3] The defendants appeal against the dismissal of their application, contending that the learned primary judge erred in his understanding of r 671(c) and (h) and in relation to the operation of these provisions in the circumstances of the case.

[5]

[4] It is necessary to set out the relevant provisions of the UCPR before addressing the defendants' challenges to the decision of the learned primary judge.

[6]

[5] Rule 670 of the UCPR provides relevantly:

[7]

(1) On application by a defendant, the court may order the plaintiff to give the security the court considers appropriate for the defendant's costs of and incidental to the proceeding.

[8]

(2) This rule applies subject to the provisions of these rules, particularly, rules 671 and 672."

[9]

[6] Rule 671 of the UCPR provides relevantly:

[10]

The court may order a plaintiff to give security for costs only if the court is satisfied -

[11]

(c) the address of the plaintiff is not stated or is misstated in the originating process, unless there is reason to believe this was done without intention to deceive; or

[12]

(e) the plaintiff is ordinarily resident outside Australia; or

[13]

(f) the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient property of a fixed and permanent nature available for enforcement to pay the defendant's costs if ordered to pay them; or

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(h) the justice of the case requires the making of the order."

[15]

[7] Rule 672 of the UCPR provides relevantly:

[16]

In deciding whether to make an order, the court may have regard to any of the following matters -

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(a) the means of those standing behind the proceeding;

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(d) for rule 671(a) - the impecuniosity of a corporation;

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(e) whether the plaintiff's impecuniosity is attributable to the defendant's conduct;

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(f) whether the plaintiff is effectively in the position of a defendant;

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(g) whether an order for security for costs would be oppressive;

[22]

(h) whether an order for security for costs would stifle the proceeding;

[23]

Rule 671 (c)

[24]

[8] In relation to r 671(c), the learned primary judge summarised his conclusions as follows:

[25]

"As to paragraph (c), the address given for the plaintiff within the claim is simply c/- Hopgood Ganim Lawyers who at all times have been his solicitors in these proceedings. I think that results in the address of the plaintiff not being stated or correctly stated in the originating process for the purposes of paragraph (c). However, that paragraph contains the rider 'unless there is reason to believe this was done without intention to deceive'.

[26]

That matter is the subject of evidence, albeit evidence by the plaintiff's solicitor, Mr Jardine, on information and belief from the plaintiff. Mr Jardine explains that the plaintiff is presently working in Sweden. He left for Sweden on 4 September and is expected to return to Australia in about mid-October. According to Mr Jardine's affidavit, the plaintiff did not provide his residential or business address within the claim, not because of an intention to deceive on his part, but because the plaintiff was fearful for his safety, if the first defendant, who is his brother, became aware of that address.

[27]

For the purposes of paragraph (c) of Rule 671 it seems unnecessary to reach a concluded view about that because the rider is in terms of whether there is reason to believe that the non-statement or mis-statement of the address was done without intention to deceive. Having regard to Mr Jardine's affidavit, there is such a reason for such a belief and accordingly, the ground under paragraph (c) of Rule 671 is not made out."

[28]

[9] The defendants dispute the cogency of the evidence referred to by his Honour, but do not cavil with the learned primary judge's summary of the evidence. Indeed, notwithstanding a spirited attack on the evidence adduced on behalf of the plaintiff, the defendants do not contend that the learned primary judge should have found, in terms of r 671(e) or (f) of the UCPR, that the plaintiff is ordinarily resident outside Australia. To the extent that this assertion was conveyed by the arguments agitated on the appeal, it was outside the scope of the defendants' application and notice of appeal and should not be entertained by this Court.

[29]

[10] The defendants' attack upon his Honour's conclusion in relation to r 671(c) is put on the basis that his Honour proceeded on an erroneous view of the effect of the phrase "reason to believe that the non-statement or mis-statement of the address was done without intention to deceive."

[30]

[11] To the extent that the defendants seek to argue that this phrase requires the Court to make a positive finding on the balance of probabilities that the non-statement or mis-statement of the plaintiff's address was done without intention to deceive, the defendants' contention effectively reads out of the sub-rule the words "there is reason to believe".

[31]

[12] The defendants sought to support their construction of r 671(c) by reference to cases concerned with administrative decision-making, such as Power v Hamond;[1] but these decisions are concerned with the construction of statutes which condition the power of an administrative decision-maker to affect rights of citizens upon the existence in the decision-maker of "reason to believe" that a particular state of affairs exists. It is readily understandable that, in such a context, the phrase, "reason to believe", should be taken to import the need for the decision-maker to have a preponderant sufficiency of reason to warrant the making of a decision. The authorities cited by the defendants are of little assistance in the interpretation of the rider to r 671(c) of the UCPR. This provision is concerned with an interlocutory appraisal of what will often be incomplete evidentiary materials relating to a plaintiff's reasons for an erroneous or incomplete statement of his or her address. It is not concerned with whether there is a sufficient basis for action by the

[32]

decision-maker adverse to the rights of another person.

[33]

[13] In any event, even if r 671(c) requires the judge to determine finally on the balance of probabilities that the non-statement or mis-statement of the plaintiff's address in the claim was done without intention to deceive, in this case, having regard to the evidence before the learned primary judge, a conclusion other than that the

[34]

non-statement of the plaintiff's address in his claim occurred without intention to deceive would have been perverse. The only evidence of the plaintiff's intention was all one way.

[35]

[14] It may also be noted, in this regard, that the claim document filed by the plaintiff gave his address as care of his solicitors. The plaintiff's claim actually identified the "plaintiff's residential or business address" as c/- Hopgood Ganim Lawyers. No-one could reasonably have regarded this statement as suggesting that the plaintiff actually lived in, or carried on business at, the offices of his solicitors. Further, service of process, such as process concerned with obtaining or enforcing an order for costs, would be sufficient to enable the defendants to pursue any rights which they might obtain against the plaintiff.

[36]

Rule 671(h)

[37]

[15] The defendants' principal argument under this rubric is that this case falls within

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r 671(h), not merely because he has no visible assets in Australia, but because the plaintiff has voluntarily rendered himself judgment-proof so far as an order for costs is concerned by deliberately ensuring that he has no visible assets in Australia which might be available to meet an order for costs against him. The learned primary judge rejected the defendants' argument on the basis that the evidence before him did not warrant a finding of fact to that effect. The defendants pointed to the circumstance that in Family Court proceedings to which the plaintiff was a party he swore that he had no assets, and, yet, he has been able to maintain the present proceeding. The learned primary judge said:

[39]

"The terms of paragraph (h) are then relied upon, that is, it is argued that in all the circumstances, 'the justice of the case requires the making of an order'.

[40]

The plaintiff's circumstances are somewhat unusual. According again to Mr Jardine's affidavit, the plaintiff has been living at various addresses in or around Brisbane for at least much of the life of this litigation. In particular, it is said, that he currently lives at an address at Sinnamon Park and has been living there for nearly 18 months. The likelihood that he does live there is somewhat enhanced by two things: One, there is evidence of a Yellow Pages Directory showing that a business with which he is associated gives as its address this address; two, there is evidence on the defendant's side that the first defendant believes that he may be living there.

[41]

The plaintiff however, according to Mr Jardine's affidavit, has no assets within Australia, except for the cause of action upon which he claims in these proceedings. According to Mr Jardine's affidavit then, the plaintiff has been living here at least for some years, and although he travels frequently and conducts business outside Australia, it is somewhat unusual that he has no assets at all here, such as a bank account or a car.

[42]

The defendants also strongly rely upon what was said or not said by the plaintiff as a party to proceedings in the Family Court where it would appear he was prepared to declare that he had no assets at all. He has managed to prosecute these proceedings and to arrange for funds for that purpose to be provided, and moreover there is no suggestion by him that if security is ordered the proceedings would be stifled. And, as I have mentioned, he has been actively conducting business, it would seem, outside Australia, and perhaps within Australia, having regard to that Yellow Pages entry, now for some time.

[43]

I would be prepared to infer, therefore, that he has some financial substance, but, the evidence does not permit any more precise finding than that.

[44]

The defendants argue that I should infer that such assets as he has are located where they are, because he means to keep them from Australian creditors, including the defendants in the event that his claim against them is unsuccessful, and he is ordered to pay their costs.

[45]

Although, as I have said, his circumstances are somewhat unusual, I am not persuaded to draw such an inference. I say that notwithstanding what is forcefully argued for the defendants, by reference to what occurred in the Family Court. Indeed, something of an alternative submission was put by Mr Morris QC for the defendants in his reply, which is the fact that the plaintiff has taken advantage of his assets being outside Australia in the way in which it is said he conducted his Family Court proceedings, or the proceedings there against him, and that in itself, that makes out a ground for the provision of security in terms of paragraph (h) of Rule 671.

[46]

But I am not persuaded to accept that alternative submission. Assuming that he had substantial assets at the time that he declared for the Family Court proceedings that he had [none], that conduct is undoubtedly discreditable and it is conduct which is relevant in the consideration of whether relevant inferences should be drawn adverse to him for the purposes of the present application. Ultimately, however, I am not prepared to draw the inference, as [I] have said, that he has kept his assets where they are to keep them from creditors. Undoubtedly he does conduct business outside Australia, and is frequently out of Australia as he is now on business purposes. Those facts tend to provide some logical explanation for why such assets as he has are outside rather than inside Australia."

[47]

[16] In this Court, Mr Morris QC, who appeared with Mr Brennan of Counsel, on the defendants' behalf, was unable to suggest that the learned primary judge had overlooked evidence to the effect that the plaintiff actively divested himself of assets or deliberately arranged his affairs so that his only assets were located outside Australia. In my respectful opinion, the learned primary judge's findings of fact were correct, and are decisive of this aspect of the defendants' argument.

[48]

[17] In this Court the defendants sought to attack the judgment below on the footing that the learned primary judge had erroneously confined the broad language of r 671(h), which uses the phrase "the justice of the case", by treating a case of a plaintiff who deliberately divests himself or herself of assets as the only case where it can be said that the justice of the case enlivens the power to make an order under r 671(h) of the UCPR. In truth the learned primary judge did not adopt such an approach: his Honour was simply addressing the argument which was put to him by the defendants.

[49]

[18] In their argument in this Court the defendants submitted that the prerequisite in

[50]

r 671(h) is satisfied in this case because the plaintiff has no assets within Australia to meet an order for costs if his action fails, and there is no suggestion from the plaintiff's side that an order for security will stifle the pursuit of the plaintiff's claim.

[51]

[19] It seems to me that the text and structure of r 671 and r 672 require the court to treat the preconditions of making an order for security, which are stated in r 671, separately from the discretionary factors, which are stated in r 672. The latter fall for consideration only when the court is satisfied that the discretion to make an order has been enlivened under r 671. The provisions of r 671 are concerned to identify the occasions on which an order for security for costs may be made, while the provisions of r 672 are concerned to state the considerations which bear upon whether an order should be made. Rule 671 and r 672 thus require the court to deal separately with issues which, under the statutory provisions in relation to the giving of security for costs by a corporate plaintiff, have been dealt with in a global fashion - "in all the circumstances of the case"[2] - where the principal concern of the court tends to be focused upon whether the litigation of the individual's claim will be stifled by reason of the plaintiff's lack of financial means if an order for costs is made.[3] Notwithstanding the broad language of r 671(h), r 671 seems to me to have been deliberately intended to limit the occasions when application for security for costs should be entertained by the court.

[52]

[20] The heading to r 671 describes what follows as "prerequisite for security for costs", and introductory language of r 671 makes it clear that the power of the court to order that an individual plaintiff give security for costs is confined to only those cases expressly described in sub-rules (a) - (h). The express identification in

[53]

r 672(h) of the potential of an order to stifle the litigation as a discretionary factor bearing upon whether or not the power to order security should be exercised tends to suggest that the absence of any such potential in the order will not serve to satisfy the requirements of r 671(h). Consideration of that potential is required by r 672(h) where the court has decided that the power to order security for costs has already been enlivened by reason of the satisfaction of one of the requirements prescribed by r 671 such as r 671(h). It would be odd if the consideration in r 672(h) was relevant to determining whether r 671(h) is satisfied.

[54]

[21] More importantly for present purposes, r 671(f) would be rendered otiose if the general language of r 671(h) were to be held to encompass a case where the plaintiff has no assets in Australia to meet an order for costs if the plaintiff's action fails, and the action would not be stifled by the making of an order because of, for example, the plaintiff's ownership of assets located overseas. Indeed, if r 671(h) were given an operation unconfined by its context, all the other provisions of r 671 would be unnecessary.

[55]

[22] How then is one to understand r 671(h)? The application of r 671(h) may be informed by analogy with the particular provisions of r 671(b) to (f), but the exercise then being performed is to determine whether, having regard to the residential status and circumstances of the plaintiff, or the capacity in which the plaintiff brings the proceeding, the occasion for the making of an order has arisen. When r 671(h) speaks of "the justice of the case" being such as to "require the making of an order", it must, I think, be taken to refer to the justice of the case in terms of these kinds of circumstances rather than in terms of the considerations set out in r 672. Thus, it seems to me that r 671(h) allows for the possibility that the justice of the case, considered in terms of the circumstances in r 671(b) to (g) or analogous circumstances and without reference to r 672, may be said to require the making of an order. Even in such a case, however, the court may then conclude that an order should not be made as a matter of discretion by reason of one or more of the considerations in r 672, such as, for example, in r 672(b) or (i).

[56]

[23] Mr Morris QC is correct to observe that the language of r 671(h) is broad; but the generality of that language is limited by the considerations of text and structure to which I have referred. These considerations lead me to conclude that a case will not fall within r 671(h) merely because a resident of Australia has no assets here and will not be prevented from pursuing his or her action by an order for security.

[57]

[24] I should also say that this conclusion does not result in a significant narrowing of the circumstances in which an order for security for costs may now be made compared to what has previously been the case. No case was cited of an order for security being made against a resident plaintiff who has no assets in the jurisdiction on the basis that he or she has assets abroad from which to fund the litigation.

[58]

[25] It may readily be accepted that an example of the kind of case which would fall within r 671(h) is afforded by the case of a resident plaintiff who has, in fact, voluntarily taken steps to divest himself or herself of assets so as to ensure that he or she is able to pursue his or her claim while effectively immune from adverse consequences of the failure of that person's claim.[4] In such a case the making of an order for security for costs will not infringe the longstanding policy reflected in

[59]

r 671 that the poverty of an individual should not be allowed to be a barrier to access to justice. Where there is no hindrance to the prosecution of proceedings because a plaintiff's lack of assets in Australia has been manufactured to defeat an order for costs against the plaintiff which might be made by the Court at the conclusion of the proceedings, the policy of the law that poverty should not be a barrier to justice is not infringed. In such a case, the justice of the case will favour the making of an order to prevent a plaintiff from deliberately and cynically thwarting the power of the court to cast the cost burden of unmeritorious litigation upon the plaintiff. The findings of fact made by the learned primary judge mean that the present is not a case in which the plaintiff can be seen to have deliberately taken steps in order to thwart the court's processes in the event that his action fails.[5]

[60]

[26] At the highest for the defendants it can be said that the plaintiff has only a shadowy residential connection with Australia, and that considerations of ordinary fairness suggest that he should be made to give security for the defendants' costs because it is not suggested that such a requirement would be likely to stifle his claim. The court could not accede to such an argument without first considering contrary discretionary indications, such as, for example, the strength of the plaintiff's claim, the delay by the defendants in bringing this application and the expense which the plaintiff has been allowed to incur by reason of that delay. But the court does not have power to order security simply because of the perception that such an order is fair as between the parties. If the court is to have such a broad discretion an amendment to the UCPR would be necessary. In any event, some amendment would seem to be desirable in order to clarify the relationship between r 671(h) and r 672.

[61]

"Ultimately then, [the plaintiff] is a natural person who has brought proceedings here either as a resident throughout the life of these proceedings or as a resident for most of the life of these proceedings and a current resident of Queensland.

[62]

In my view, no pre-requisite in terms of Rule 671 has been established with the consideration therefore of the discretionary factors indicated by Rule 672 is unnecessary. The application for security for costs will be dismissed."

[63]

[28] In my respectful opinion, a different conclusion is not open to this Court. I take that view having regard to the evidence before the learned primary judge and the limited nature of the discretion to order for security for costs pursuant to r 671 of the UCPR.

[64]

[30] The defendants should pay the plaintiff's costs to be assessed on the standard basis.

[65]

[31] MUIR JA: I agree with the reasons of Keane JA and with the orders he proposes save in one respect. Although I acknowledge the force and logic of Keane JA's reasons, I am not persuaded that r 671 and r 672 require a two-stage process under which matters listed in r 672 become relevant only where the court is satisfied in terms of one or more of the paragraphs of r 671.

[66]

[32] In my view, the role of r 672 in identifying matters to which "the court may have regard" in deciding whether to make an order is to provide a checklist of those matters which are normally relevant to the determination of an application for security for costs. The matters listed in r 672 also encompass many, if not most, of the circumstances normally relevant to a determination of whether "the justice of the case requires the making of the order."

[67]

[33] I do not discern an intention that in determining whether "the justice of the case requires the making of the order" regard may not be had to any of the matters listed in paragraphs (b), (c), (f), (i), (j) or (k) of r 672. Frequently, it will be the case that one or more of the matters listed in r 672 will inform the determination under

[68]

r 671(h). That would have been apparent at the time the Uniform Civil Procedure Rules were made.

[69]

[34] Rule 671(h) is extremely broad and, if construed literally and without textual constraints, it would render otiose the other paragraphs of the rule. Paragraph (h), however, is part of a list of matters the fulfilment of any one of which will enliven the discretion to make an order. It is plainly intended that the other paragraphs inform the construction of paragraph (h). It may be inferred from paragraph (a), for example, that it is not the intention of the rule to interfere with the well-established principle that "so far as natural persons are concerned poverty was no bar to a litigant."[6] Accordingly, the impecuniosity of a natural person plaintiff will not, without more, fulfil the requirements of paragraph (h).

[70]

[35] I accept that r 671(h) will not apply merely because a plaintiff resident of Australia has no assets here and will not be prevented from pursuing his or her action by an order for security. That conclusion, I think, flows from paragraphs (e) and (f). Paragraph (e) deals with plaintiffs who are ordinarily resident outside Australia. Paragraph (f) is concerned with the more specific class of persons who are or are about to become ordinarily resident outside Australia in circumstances in which there is reason to believe that they may not have sufficient property in the jurisdiction to meet the defendant's costs.

[71]

[36] That is not to say, however, that want of assets in the jurisdiction by an Australian resident plaintiff may not, in combination with other matters, including those listed in r 672, compel a conclusion that "the justice of the case requires the making of" an order for security for costs. Whether such a conclusion is warranted depends on the weighing of those matters favouring the making of an order against those matters which do not.

[72]

[37] The exclusion from this process of the matters listed in r 672, to my mind, would impose an unintended limitation on the broad scope of paragraph (h) and promote an unduly artificial approach to the determination of security for costs applications.

[73]

[38] The foregoing views on the construction of r 671 and r 672 have no bearing on the outcome of this case. No flaws have been exposed in the reasoning of the primary judge concerning the non-applicability of r 671(h) or the exercise of his discretion. And as McMeekin J points out in his reasons, there are reasons, other than those canvassed by the primary judge, which support the conclusion that the justice of the case did not require the making of an order for security for costs.

[74]

[39] McMEEKIN J: The appellants are the defendants in the action. They sought an order from P McMurdo J that the plaintiff/respondent give security for costs.

[75]

P McMurdo J declined to so order, holding that the necessary pre-requisite for such an order required by r 671 UCPR had not been made out.

[76]

[40] The facts of the matter are more fully set out in the judgement of Keane JA and

[77]

[41] The ancient tradition of the common law was that no hurdle, in the form of a security for costs order, would normally be put in the path of a citizen seeking to come before the court to vindicate their claimed rights. There needed to be special reason. That tradition has been preserved in the current Rules. Those special reasons now find their form, in this jurisdiction, in r 671 UCPR. The rules themselves make plain, and the appellants here accept, that one of the pre-requisites in r 671 must first be established to found jurisdiction in the court.

[78]

(a) Whether his Honour applied the correct test in his application of Rule 671(c);

[79]

(b) If his Honour did not apply the correct test in his application of Rule 671(c) whether application of the correct test would have resulted in the necessary pre-requisite being made out on the case on the facts before his Honour;

[80]

[81]

sub-rule 671(h) of the UCPR were not satisfied in all the circumstances of the case;

[82]

(d) If it be held that either pre-requisite of Rule 671 was satisfied whether, in the exercise of the discretion thereby granted to the court, security for costs should have been ordered.

[83]

"The court may order a respondent to give security for costs only if the court is satisfied -

[84]

(c) The address of the respondent is not stated or is misstated in the originating proceeding, unless there is reason to believe this was done without intention to deceive;"

[85]

[44] The address of the respondent given on the originating process was care of his solicitor's firm. His solicitor swore, on information and belief, that this was done because the respondent was in fear of the first defendant, who is his brother, and did not wish to reveal to him his address. This claim was supported by a statutory declaration provided on 31 May 2001 by the mother of the respondent and the first defendant. She declared that on two occasions the first defendant had threatened to kill the respondent, that she believed the first defendant had guns stored at his home, and that she had no doubt that he had meant what he said. No evidence was led by the first defendant before his Honour contesting either the statutory declaration made by his mother or the claim that his brother was in fear of him. In the circumstances his Honour held that the evidence was sufficient to satisfy the rider in sub-rule 671(c):-

[86]

"Unless there is reason to believe this [i.e. the non-statement or misstatement of the address] was done without intention to deceive."

[87]

[45] Mr Morris of Queen's Counsel who appeared for the appellants contended that his Honour applied the wrong test - namely that his Honour considered that the qualification to the sub-rule was invoked "merely because there was some evidence that there was no intention to deceive" rather than the correct test which would require him to turn his mind to the question whether the evidence was sufficient to induce the relevant state of mind in a reasonable person.

[88]

[46] It is not shown that his Honour did apply the test that the appellants characterise as wrong. If his Honour did apply that test then there is some authority to support such an approach - see Boucat Bay Co Ltd (in liq.) v Commonwealth [1927] HCA 59; (1927) 40 CLR 98 at 101 per Starke J. where it was held that in forming the required belief the decision maker "must not act dishonestly, capriciously, or arbitrarily". I agree with Keane JA that little guidance can be obtained from cases involving very different legislation and considerations not akin to the nature of the enquiry here - an interlocutory one with often incomplete evidentiary materials.

[89]

[47] However in my view the learned primary judge was plainly right in holding as he did whatever test be applied.

[90]

[48] Firstly, the reason given was consistent with there being no intention to deceive, was unchallenged by any contradictory evidence and was supported by the statutory declaration from the mother which itself was unchallenged. That was sufficient to induce a belief in a reasonable person that the non-statement or misstatement of the address was done without intention to deceive.

[91]

[49] Secondly, the address given was patently not the respondent's residential address - the defendants were not deceived in the sense they thought that was the true address. Further, as it turns out, the first defendant knew where the respondent did reside - at least for a significant part of the life of the litigation.

[92]

[50] Thirdly, the address given was probably the best address at which the respondent could be contacted given his peripatetic lifestyle. If he had given the address that he resided in when the proceedings commenced that would have long since been irrelevant. Considerations of this type were held relevant to a refusal to allow security for costs in Chellew v Brown [1923] 2 KB 844 where the respondent was a master mariner and gave as his address his sister's residence where he had never resided save for two weeks some time before.

[93]

[51] Mr Morris was inclined to submit that there is a requirement in the rule that the court must be satisfied of the innocent explanation on the balance of probabilities. That is plainly not so. The very use of the phrase "reason to believe" makes it clear that there is no intention in the rule that the respondent establish on the balance of probabilities why the address was not stated or misstated. As well such an approach is consistent with the authorities that have considered the phrase "reason to believe" in various contexts; e.g. Power v Hammond [2000] VCA 25 at [106] per

[94]

Chernov JA; Boucout Bay Co Ltd (In Liq) v Commonwealth [1927] HCA 59; (1927) 40 CLR 98 at 101 per Starke J.

[95]

[52] Further it seems to me that the onus lay upon the appellants to demonstrate sub-rule 671(c) had been satisfied - that included demonstrating that the omission or misstatement of the address was done with the intention to deceive. No doubt there was an evidential onus on the respondent to raise the innocent explanation relied on but, having done so, the overall onus remains on the applicants to establish the prerequisites for the order.

[96]

[53] Mr Morris seeks to meet this onus by pointing to inferences that could be drawn from the respondent's itinerant life style, his lack of assets, at least within this jurisdiction, and an alleged false statement to the Family Court in proceedings between him and his wife. The difficulty with the submission is that alternative inferences were at least equally open on the evidence. His Honour refused to draw the inferences sought and I cannot see that he was wrong in doing so.

[97]

[54] It is apparent that the respondent conducted businesses overseas, and has done so for years, and regularly travels. The appellants do not contend that he is not resident within the jurisdiction and indeed there was detailed evidence before the learned primary judge as to the various addresses within the jurisdiction where the respondent had resided from time to time. Whether the evidence given to the Family Court was false is not established - he swore to having no assets then, but there is no evidence that he did, apart from the shares the subject of the present litigation. Whether he forgot about the declaration of trust or set out to deliberately mislead is not shown. Assuming the latter, whilst establishing that the respondent had behaved discreditably towards the court and his wife on that occasion, it does not advance this case at all.

[98]

"The court may order a plaintiff to give security for costs only if the court is satisfied -

[99]

(h) The justice of the case requires the making of the order."

[100]

[57] Plainly enough his Honour was required to look at all relevant factors in the case to decide whether the "justice of the case" led to a requirement that an order for security be made. The appellants argue that his Honour did not look at all the factors but rather to only two - namely whether the respondent had deliberately placed his assets beyond the reach of his creditors or whether he had taken advantage or intended to continue to take advantage of the fact that his assets are beyond the reach of his creditors.

[101]

[58] For my part I do not see that the learned primary judge fell into so obvious an error. Rather the expressions that his Honour used reflected precisely the submissions made to him by the appellants.

[102]

[59] Mr Morris submits that the following factors demonstrate injustice: that the respondent is free to pursue the appellants; that this will cause them substantial expense; that whatever resources he has from which he is funding the action are beyond his clients' reach; that there is no frustration of the respondent's suit by ordering security; and that there is no disadvantage to the respondent if the order is made.

[103]

[60] The appellants' submissions rely on the matter mentioned in sub-rule 672(l) and the converse of the matters mentioned in sub-rules 672(g) and (h). These submissions raise the interesting question of whether the factors mentioned in r 672 UCPR are relevant to a consideration of the injustice ground mentioned in r 671.

[104]

[61] Keane JA has set out the provisions and I will not repeat them. The factors mentioned in r 672 are ones which might well be ordinarily relevant to a consideration of the justice of the case although not exhaustive of those factors. The argument that they are to be ignored in an assessment of "the justice of the case" turns on an implication drawn from the drafting of the rules. I acknowledge the force of the analysis preformed by Keane JA. However a number of matters combine to persuade me to the view that it is proper to have regard to factors mentioned in r 672: the reference to "the justice of the case" is as broad as can be imagined; there is no express direction to ignore the factors in r 672; the scope for those factors to be material to any such assessment; and the evident injustice of ignoring some of those mentioned - such as the very foundation of the appellants' case here that they may not be able to enforce a costs order in this jurisdiction.

[105]

[62] Turning then to the appellants' arguments I observe that they depend principally, if not entirely, on the proposition that it is unfair that the respondent is protected from an order as to costs when it is possible that he has assets overseas. It might be immediately observed that no rule, at least in its terms, supports so wide a proposition, nor was any case cited where those mere facts alone were sufficient to order security against a natural person.

[106]

[63] All the evidence really shows is that the respondent leads a peripatetic existence, that his business takes him out of the country, that he has not acquired assets within Australia, and that he may or may not have assets outside the country. To assert that he has a source of funds sufficient to fund this litigation is not the same as asserting he has assets hidden in some other location out of the reach of creditors, and deliberately so. These facts singly or in combination do not result in a requirement that the justice of the case requires the making of the order.

[107]

[64] The blatant reorganisation of the respondent's affairs that led the court to require security in Cherry & Ors v Read [1996] FCAFC (21 November 1996) and the evidence of "self inflicted" lack of assets that grounded the jurisdiction to make an order for security in Shannon v ANZ Banking Group Limited (No 2) [1994] 2 Qd R 563 per Williams J (as he then was) at 564 are not features of this case.

[108]

[65] The appellants point to the respondent's frequent absences from Australia on business. So much is conceded by the respondent. However, the respondent is an Australian citizen. He returns to Australia periodically. According to the affidavit of his solicitor he has resided at various addresses in Brisbane during the course of this proceeding. The solicitor provided four locations at which the respondent had lived within the last three years and for extended periods of time - six to 18 months. That circumstance takes this case outside the well recognised "foreign suitors" exception to the general rule that security is not required of a respondent who is a natural person. That basis for the jurisdiction finds expression in the current rules in sub-rules 671(e) and (f). Those provisions were not relied on by the appellants before the learned primary judge. Nor, as I followed the submissions, were they relied on here.

[109]

[66] In my view his Honour was quite right in refusing to draw the inference that the appellants argued for. Further, in my view he was quite right to find that there was nothing in the justice of the case that required the making of the order.

[110]

[67] His Honour expressly declined to exercise the discretion as, in his view, r 671 was not satisfied, so the discretion was not enlivened. If it be relevant to look at the matters mentioned in r 672 to inform the decision as to the justice of the case the appellants are hardly helped.

[111]

(a) The long delay that has occurred in making the application. The long standing rule in seeking orders of this type is that they be made promptly once the defendant becomes aware of the facts on which the application is based. If it is not made promptly it is almost inevitable that there will be some prejudice to the respondent. Here the respondent is asked to find $173,000 in security. The appellants concede that is too much but, whatever the figure, it will be a substantial one. The matter is now set for trial on 25 March - only a few weeks away. To saddle any plaintiff with the task of finding a large sum of money when already on the door of the court involves prejudice.

[112]

(b) Whilst the defendants first raised the issue of security for costs by letter of 17 February 2005, which demand was promptly refused, no application was then made and the issue was not again raised until July 2007 and after the respondent had requested the trial date. The respondent was entitled to rely on the apparent abandonment of the issue.

[113]

(c) The delay has not only been extensive but followed on a summary judgment application brought by the respondent. Proceedings commenced on 22 November 2004. The defendants filed their first defence on 16 December 2004 and amended them significantly in late 2005. The summary judgment application was heard on

[114]

21 December 2005. At the very least one would have thought that the summary judgment application would have galvanised the appellants but it was not to be so.

[115]

(d) There is no adequate explanation for this delay. The appellant's solicitor swore that at some unidentified point in time after the proceeding commenced:

[116]

"...we decided not to make any application for security for costs and to wait and see whether the respondent would prosecute this proceeding, and if so, whether he did so diligently."

[117]

That, with respect, is not the proper approach to applications of this type. Nor is it apparent that there was any dilatoriness on the part of the respondent;

[118]

(e) The respondent's case on its face appears to be a bona fide one and with reasonable prospects. He pleads a declaration of trust by which the appellants were obliged to transfer shares in a company to him. They have not yet done so. None of this is disputed.

[119]

(f) These proceedings have the added peculiarity that when the respondent applied for summary judgment in December 2005 the appellants only obtained leave to defend conditional upon them providing security by way of a guarantee. That was so because of the somewhat jaundiced view that the learned applications judge then took of the amended defence. The appellants plead: that they signed the declaration of trust not intending to create a trust; that they were under the influence of the respondent when they signed the deed and he took unconscionable advantage of that; or that he exercised undue influence over them; that there was a later separation agreement which had the effect of assigning the respondents' rights to them; that the respondent has disclaimed any interest in the shares; and that the arrangements are void as they were a sham entered into for the purpose of defrauding the Commonwealth. It is not proper to say anything about the defences here save that the very multiplicity of defences does not inspire confidence.

[120]

[69] If these factors be relevant to the "justice of the case" they don't assist the appellants. Had the discretion arose it is far from plain that it should have been exercised in the appellants' favour

[121]

[70] I agree with the orders proposed by Keane JA.

[122]

[1] [2006] VSCA 25 esp at [105]. See also Boucaut Bay Co Ltd (In Liquidation) v Commonwealth [1927] HCA 59; (1927) 40 CLR 98 esp at 102.

[123]

[2] Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 at 626; Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 at 529.

[124]

[3] See Bell Wholesale Co Ltd v Gates Export Corporation [1984] FCA 34; (1984) 2 FCR 1.

[125]

[4] An example of such a case is Shannon v Australia and New Zealand Banking Group Limited (No 2) [1994] 2 Qd R 563. See also Cherry & Ors v Read & Ors [1996] FCAFC (21 November 1996).

[126]

[5] Cf Shannon v Australia & New Zealand Banking Group Limited (No 2) [1994] 2 Qd R 563 at 564.

[127]

[6] See Harpur v Ariadne [1984] 2 Qd R 523 at 526

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (127 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)