Sigalla v Nationwide News Pty Limited and Anor

Supreme Court of NSW|2010-11-25|Before: Schmidt J, Simpson J, Schmdit J

CITATION : Sigalla v Nationwide News Pty Limited and Anor [2010] NSWSC 1419

CATCHWORDS : PROCEDURE - costs - security for costs - plaintiff - whether ordinarily resident outside of New South Wales - Rule 42.21 of the Uniform Civil Procedure Rules - plaintiff bankrupt - Australian citizen - passport surrendered - United States visa cancelled - resident for tax purposes - no assets in jurisdiction - plaintiff resides with family in Sydney in holiday rental accommodation - ordinarily resident outside New South Wales not established - motion dismissed - costs

LEGISLATION CITED : Bankruptcy Act 1966 (Cth) Uniform Civil Procedure Rules 2005

ASIC v Sigalla [2009] NSWSC 1205 ASIC v Sigalla [2010] NSWSC 547 CASES CITED : Re Little Olympian Each Ways Ltd [1994] 4 All ER 561 PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321 TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465

Andrew John Sigalla - Plaintiff PARTIES : Nationwide News Pty Limited - First Defendant News Digital Media Pty Limited - Second Defendant

COUNSEL : Mr CA Botsman - Plaintiff Mr JR Clarke - Defendants

SOLICITORS : Plaintiff - unrepresented Defendants - Blake Dawson Lawyers

10 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SCHMDIT J

2009/297869 ANDREW JOHN SIGALLA v NATIONWIDE NEWS PTY LIMITED AND ANOR

JUDGMENT 1 HER HONOUR: By motion filed in February 2010 the defendants sought orders requiring the plaintiff to give security for its costs of the proceedings in the sum of $200,481.60 and that the proceedings be stayed, until that security is given. The proceedings were commenced in October 2009 by statement of claim in which various allegations of defamation were advanced in relation to reports published in The Australian newspaper about the plaintiff in relation to his former position at TZ Limited. He was formerly employed as the managing director and chairman of that company. 2 The matter was listed for hearing on 9 June when it was adjourned by Simpson J on the plaintiff's application, in order that he be given the opportunity to put on an affidavit as to his residence in New South Wales. To that point his position had been advanced by an affidavit sworn by his solicitor, only on the basis of information and belief. The hearing of the motion was later further adjourned, for various reasons. At one point the plaintiff was unrepresented, but at the hearing counsel appeared on his behalf. While the plaintiff had filed affidavits in the proceedings since the adjournment of the June hearing, they were not finally read. The plaintiff relied on a number of documents, in order to advance his case. 3 The defendants' motion was supported by an affidavit sworn by its solicitor Ms Goodman, in which she deposed that the plaintiff's former solicitor had advised in November 2009 that the plaintiff had resided in New York until August 2009; that he had since resided in Sydney; and that he would be seeking a permanent residential address in Sydney prior to Christmas 2009. In February 2010, the plaintiff's former solicitor advised that all of the plaintiff's assets were in this jurisdiction, other than a margin loan account, in respect of which steps were being taken to have funds brought to Australia. Despite this advice, the plaintiff had never provided any residential address in Australia and had put on no evidence to establish that he has assets here. 4 At the time of the hearing the plaintiff had not put on an address for service, as the Rules required, no longer being represented by his former solicitors, but he undertook to do so. 5 The costs of the proceedings were estimated by Ms Goodman to amount to some $334,136, of which security was sought for 60%, or $200,481.60. 6 There is no question that Part 42.21 of the Uniform Civil Procedure Rules permits a security for costs order to be made in circumstances where a plaintiff ordinarily resides outside the State. The Rule provides: "42.21 Security for costs (cf SCR Part 53, rules 2, 3, 4 and 5; DCR Part 40, rule 1; LCR Part 31, rule 11A, Part 31A, rule 11) (1) If, in any proceedings, it appears to the court on the application of a defendant: (a) that a plaintiff is ordinarily resident outside New South Wales, or (b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or (c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or (e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given." 7 The defendants argued that Rule 42.21(1)(a) requires that an assessment be made of the plaintiff's present position and not an assessment of what might occur in future. It requires that a plaintiff usually or habitually be a resident in the jurisdiction, connoting a degree of continuity up to the present time. A person may not 'ordinarily' be resident in more than one country. In determining if a plaintiff is ordinarily resident outside New South Wales, consideration had to be given to the plaintiff's connection with New South Wales. The location of the plaintiff's assets, within and outside the jurisdiction and the plaintiff's residence for income tax purposes, were also relevant considerations. 8 It was also submitted that a person whose visit is short or temporary in nature is unlikely to be a resident, but the period of residence in NSW is itself not decisive. The quality and character of the plaintiff's behaviour must be assessed. In evidence were documents which showed the amount of time the plaintiff had spent in Australia between 2004 and 2010. They showed that he spent increasing amounts of time overseas, namely 20% in 2004, 39% in 2005, 42% in 2006, 56% in 2007, 58% in 2008 and 57% in 2009. This, together with other material in evidence was argued to show that the plaintiff had no desire to reside in this jurisdiction, to the contrary he desired to live in the United States and had taken various steps to pursue that desire. All of this material established that he was not now ordinarily resident in NSW. 9 It was also argued to be relevant that the plaintiff's former solicitors had advised the defendants that the plaintiff had given undertakings to the Court in the ASIC proceedings not to leave the jurisdiction. He was then recognised as a flight risk (see ASIC v Sigalla [2009] NSWSC 1205 at [20]). It followed, it was submitted, that if those undertakings came to an end, he might choose to leave the jurisdiction. The plaintiff had also been found to have given false evidence in respect of proceedings which determined whether he had deliberately breached court orders and was in contempt (see TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465 at [51] - [52]). The plaintiff had no reason to remain here once the proceedings had concluded and the defendants had no security that his undertakings, or those proceedings, would not end before the completion of these proceedings. 10 The plaintiff's present accommodation was also submitted not to be consistent with being ordinarily resident in the jurisdiction. It followed that while it might be concluded that the plaintiff is now resident in NSW, that he is ordinarily resident here did not follow. In the circumstances the Court should exercise its discretion to order security. In PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321 at 323, McHugh J observed: "To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction." 11 Security in the amount of $200,000 was pressed. 12 The plaintiff's case was that the test to be applied was a qualitative, not a quantitative one. The defendants had to show that the plaintiff usually or habitually resided outside the State. That could not be shown, particularly given the evidence that the plaintiff, an Australian citizen, now resided here again with his family, in circumstances where he no longer had a visa to live and work in the United States, nor employment there. Account would also be taken of the fact that given his circumstances, the plaintiff was obliged to live in Australia for the foreseeable future. 13 It could not be overlooked that the plaintiff's insolvency was not a matter to be taken into account in determining whether security should be required. Under the Rules poverty of a natural litigant was not a ground for requiring security to be given. It would also be considered that the result of the order sought would effectively be to stultify the proceedings.

Consideration 14 On the evidence, when the proceedings were commenced the plaintiff did not state an address within NSW. The address given was that of his then solicitors. Until late August 2009, the plaintiff resided in New York, where he worked as the managing director and chairman of TZ Limited, positions which he had held since January 2007, having from 2004 to 2009 been its President. While the company has its registered office here, it operates its business in the United States, where the plaintiff lived for a time with his family. How long he lived there was not established, nor was it suggested that he owned any residence there, or in Australia. 15 It was not in issue that the plaintiff returned to Sydney in 2009 to deal with legal issues arising from litigation brought against him by ASIC. He remained and his family returned later to join him. There is evidence that his children were enrolled in Sydney schools. When he initially returned the plaintiff resided in five star hotels. He now resides in an apartment rented from a company offering holiday apartment rentals. 16 On the evidence the plaintiff has no assets of value in the jurisdiction. There is a question as to whether any assets which he may have could be realised, given the other proceedings in which he is involved. 17 In evidence were various documents produced by the plaintiff in answer to notices to produce, as well as documents produced in response to subpoenas issued to his accountants. From this material it is apparent that the plaintiff paid no income tax in Australia between 2005 and 2009. In 2008, the plaintiff received advice from his accountants as to his residential status for tax purposes and the tax implications of remaining an Australian resident, or becoming a United States resident. He has not, however, produced any documents which show that he paid income tax in the United States, even though there is evidence that he earned income in that period while working there, $A864,776 for the fiscal year 2009, for example. The plaintiff's employment ended on 2 June 2009. The evidence does not establish that he ever became a United States resident for tax purposes. Rather, it suggests that he has failed to pay tax. Reference is made in the decisions on which the defendants referred to the plaintiff being pursued for this failure by the Australian Tax Commissioner. 18 It was not in contest that the plaintiff has been a bankrupt since June 2010. In August 2010, he surrendered his passport to the trustee. He has been the subject of various orders of this Court, including asset preservation orders (see ASIC v Sigalla) and orders made in relation to contempt (see TZ Ltd). In May 2010, in ASIC v Sigalla [2010] NSWSC 547, it was noted that the parties to those proceedings had agreed that the only potential source of funds available to the plaintiff was from his family company ZMS Investments Pty Ltd, a company which is in receivership, with liabilities seemingly exceeding its assets, which are in any event the subject of a freezing order. Reference is also there made to the plaintiff funding his representation and living expense with the support of his wife's family. 19 After his employment with TZ Limited ceased, the plaintiff's US visa was cancelled. Advice of this was given to the plaintiff in September 2009. His family was then still residing in the United States. He applied for, but was refused another visa. In October 2009 the Consulate General of the United States advised him that his visa application was refused. He was advised that all applicants were obliged to 'demonstrate sufficient ties to their country of permanent residence to qualify for a US nonimmigrant visa' and that they 'will depart the United States at the end of their authorized temporary stay'. It was concluded:

"At this time, your wife and children are presently in the United States, even though their status, derivative from your E2 visa, is no longer valid. (As you know, this Consulate revoked that visa based on information that you were no longer working for the sponsoring company.) Additionally, you yourself were present in the United States for a substantial period of time over the past year on E2 status. Based on the facts above, you appear to have very strong ties to the United States at this time, and as such we must refuse your visa. This is not permanent refusal, and you may reapply at any time. However, we generally recommend waiting until a significant change in your life situation occurs prior to reapplying."

20 The plaintiff's family subsequently returned to live with him in Sydney. 21 It seems to me, weighing all of the evidence in the balance, that it must be concluded that the defendants had not established that the plaintiff is ordinarily resident outside New South Wales. Clearly he lived with his family in the United States for a number of years, while employed for TZ Limited. Even in the latter period, he spent over 40% of his time in Australia. There was some debate as to whether it is possible for an individual to be ordinarily resident in more than one place. That possibility has been recognised (see Re Little Olympian Each Ways Ltd [1994] 4 All ER 561 at 566), but need not be determined in this case. The plaintiff's residence in the United States was brought to an end by his dismissal from his former employment in mid-2009, which resulted in the revocation of the visa which permitted him to live and work in that country. That also brought to an end his family's visa and so they returned to live with him in New South Wales, where they all appear to remain. 22 Where a person ordinarily resides, is obviously capable of altering. It seems to me that the question is one to be decided at the time that the application for security arises to be determined (see Re Little Olympian Each Ways Ltd at 564). That does not mean that it is to be decided on the basis of a mere snapshot of where a plaintiff resides at that particular time, that is but one factor which must be considered, together with all of the other relevant evidence. That a plaintiff has ordinarily been resident in a different place in the past, or might wish to reside elsewhere in the future, is relevant, but not alone determinative of the question of where the plaintiff is ordinarily resident, at the time that the question arises to be decided. 23 In this case it appears that the plaintiff resided in Australia before he went to live in the United States for some years. He has resided in New South Wales ever since his departure from the United States in 2009, after the termination of his employment and the cancellation of his visa. It seems that he lives here with the support of family, albeit now only in holiday rental accommodation, on a month to month basis. He does not appear himself to have any other means of support, perhaps apart from that to which he might be entitled from the State. He appears to be an unemployed bankrupt, who has surrendered his passport. Even if it be accepted that the plaintiff has a desire to reside elsewhere than Australia, there is no evidence that he has the means to do so, let alone the right. Those are important considerations which may not be overlooked, it seems to me, in reaching a conclusion on the question of whether the plaintiff is ordinarily resident outside the State. No matter the position before his return to the jurisdiction, the evidence does not establish that he has, any longer a usual or continuing residence elsewhere. Nor may the fact that none of the evidence suggests any connection, or intention to reside anywhere in Australia other than in New South Wales, be overlooked. 24 In all of those circumstances, I am unable to conclude that the plaintiff is ordinarily resident outside New South Wales. 25 It was not in issue that in accordance with the provisions of the Bankruptcy Act 1966 (Cth), that the plaintiff is entitled to pursue these proceedings (see s 60(4)). The scheme of the Rules does not envisage that an impecunious litigant in person my be required to provide security, other than when falling within the provisions of Rule 42(1)(a), (b), (c) or (e). That has not been shown. Were it otherwise, I would not accept the plaintiff's argument that to make the order sought, would be to stultify the proceedings. That would require evidence to be led by the plaintiff as to his financial circumstances, which has not been brought forward. 26 Nevertheless, for the reasons I have explained, I am not able to conclude on the evidence that it has been shown that the plaintiff is ordinarily resident outside New South Wales and so the order sought must be refused.

Order 27 For the reasons given, the motion must be dismissed. Costs should follow the event. Accordingly, I order that the defendants' motion be dismissed and that it bear the plaintiff's costs of the motion, as agreed or assessed. **********

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