HAI v SBF[2007] QCA 399

SUPREME COURT OF QUEENSLAND

[1]  McMURDO P:  I agree with Williams JA.

[2]  WILLIAMS JA: This is an application for leave to appeal against an order for security for costs made in favour of the respondent by a District Court judge relying on r 772 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”).  In order to resolve the issues raised on the hearing of the application it is necessary to refer to the background litigation. 

[3]  The applicant and the respondent were in a de facto relationship which obviously came to an end in about September 2002.  On 1 April 2003 the present respondent commenced proceedings in the Maroochydore Registry of the District Court seeking orders pursuant to s 286 of the Property Law Act 1974 (Qld):  No 76 of 2003.  As was noted by the District Court judge in his reasons for judgment on the application for security for costs the original proceeding was principally concerned with obtaining an order that a dwelling at 30 Shorehaven Drive, Noosaville jointly owned by the parties be sold and the proceeds divided.  It is not clear what happened over the next three and half years but by September 2006 that relatively simple issue had not been resolved.  On 18 September 2006 a consent order was made which, if carried into effect, would have resolved all issues between the parties.  That consent order commenced with declarations pursuant to s 280 of the Property Law Act that the present applicant had sole title to certain specified property and that the present respondent had sole title to other specified property.  Relevantly that order then went on to provide:

"4.Pursuant to Sections 286(1) and 333(1)(a) of the Property Law Act (Qld) 1974, on or before 90 days from the date of this Order (hereinafter referred to as "the date of settlement") … the Applicant [the present respondent] transfer to the Respondent [the present applicant] all of her right title and interest in and to the property situated at 30 Shorehaven Drive …

5. Pursuant to Sections 286(1) and 333(1)(d) of the Property Law Act (Qld) 1974 on the date of settlement the Respondent [the present applicant] pay by bank cheques:

(a)the sum of $77,000.00 to the trust account of the solicitors for the Applicant [the present respondent]; and

(b)the sum required to discharge the loan secured by mortgage in favour of [the father of the present respondent] … estimated in the amount of $206,000.00.

…

7.Pursuant to Sections 286(1) and 333(1)(g)(i), (k), (m) and (o) of the Property Law Act (Qld) 1974 the Respondent [the present applicant] be forthwith responsible for all and any monies owing … to the Respondent's father … secured by mortgage [on the Shorehaven Drive property]".

[4] The order also provided that each party was at liberty to apply for enforcement of those orders or consequential orders.

[5] The applicant has exhibited to an affidavit he has filed in this Court a letter from Hopgood Ganim Lawyers (his then solicitors) dated 8 January 2007 in which the following statements were made:

"We confirm we have informed you of our client's predicament regarding his funding arrangements to pay to your client the sum of $77,000.00 and to discharge the mortgage to your client's father in accordance with the property adjustment orders. 

We confirm our client was to obtain the funds required to pay your client pursuant to the orders and to discharge the orders to your client's father from his father. …

Accordingly our client is unable to obtain the necessary funds required to complete the transaction.  Our client was only informed of this on 20 December 2006.  Our client is extremely disappointed in the circumstances.  However these matters are out of his control.

As a result and in accordance with our client's obligation to pay your client pursuant to the terms of the order, our client has instructed us that he will now proceed to list the property for sale in order to meet payment of your client's entitlement (together with default interest) and to meet payment of the monies due to your client's father pursuant to the mortgage."

[6] So far as it is revealed by the material available to this Court nothing then occurred prior to 5 April 2007 when the present respondent filed an application seeking a variation of the order of 18 September 2006 because it had not been complied with by the present applicant.  The principal order sought was that the parties enter into a listing agreement with a Trevor Elliott of Remax Property Specialists with respect to the sale of Shorehaven Drive and consequential orders.  That application stated that on the hearing on 27 April the then applicant [the present respondent] would rely on the affidavit of her solicitor S N Cartwright sworn for April 2007; unfortunately that affidavit is not currently before this Court. 

[7] The transcript of proceedings before the District Court judge on 27 April 2007 discloses that the present respondent was represented by counsel and the present applicant, the then respondent, appeared in person.  The present applicant had some papers, apparently containing a valuation of the property from other agents, but that material was not in proper form.  He had no affidavit.  It appears that his principal submission was that an agent other than Elliott should be appointed and the reserve price should be higher than that requested by the present respondent.  Understandably the judge rejected the material which was not in proper form.  When that was intimated by the judge the respondent said "Perhaps we could have an adjournment".  The judge replied: "No, I'm not going to adjourn it.  I'm going to deal with the matter today.  It's gone on long enough." 

[8] As already noted the proceedings had been on foot since 1 April 2003 and the consent order of 18 September 2006 had not been complied with.  The present applicant was clearly in default under the consent order and the only significant issues he raised at the hearing on 27 April were with respect to the identity of the real estate agent to have the conduct of the sale of the property and the reserve price. 

[9] The judge then proceeded to make an order in terms of the draft handed to him by counsel for the present respondent.  There is clearly an error in that the order said it was made "by consent" whereas that was clearly not the case.  But nothing really turns on that in the present application. 

[10] In addition to making the order appointing Elliott to be the real estate agent handling the sale the court made a number of consequential orders.  There was an order that the property be listed for sale "at an advertised sale price as recommended by the President of the Real Estate Institute of Queensland but to achieve a sale price of no less than $650,000.00."  There was also an order that if the property did not sell within a specified time period it be listed for sale by auction with a reserve price "of no less than $650,000.00".  Further, the appointed agent was directed after sale to pay by bank cheques the following:

"(a)To the trust account of the solicitors for the Applicant the sum of $77,000.00 plus interest on that sum …

(b) To [the father of the respondent] … the sum required to discharge the loan secured by mortgage … being $130,000.00 plus interest at 8% per annum calculated monthly to the date of payment;

…

(d)to [the applicant’s father] … the sum required to discharge the loan secured by mortgage … being $160,000.00 plus interest at 8% per annum calculated monthly to the date of payment."

[11] It will be noted that in the original order of 18 September 2006 it was said that the estimated amount payable to the father of the respondent was $206,000.00 and no amount was specified as being the payment to the applicant’s father.  It is a clear inference from the material that no monies were paid either to the father of the respondent or the applicant’s father between 18 September 2006 and 27 April 2007.  As already noted the affidavit of Cartwright supporting the April application is not currently before this Court, but the obvious inference is that the amounts of $130,000.00 and $160,000.00 referred to in the order of 27 April were the principal amounts secured by the respective mortgages.  In other words that principal would have been attracting interest probably since at least April 2003.

[12] In this Court counsel for the respondent from the bar table intimated that approximately $600,000.00 was needed to pay out both mortgages, including interest, at the present time, but that figure was not verified.  But if interest at eight per cent per annum calculated monthly has been running on what appears to be the principal amount secured by each mortgage for some four years, a total amount of approximately $600,000.00 is not unrealistic.

[13] By Notice of Appeal filed 25 May 2007 the present applicant filed a Notice of Appeal against the judgment of 27 April 2007.  The grounds of appeal alleged that the judge showed bias against the present applicant, that the judge relied on irrelevant matters and was not scrupulously fair, refused an adjournment, made orders without considering the financial ramifications of those orders and made orders which unfairly disadvantaged the respondent (the present applicant).  There are other grounds but the flavour of the appeal can be gleaned from what I have summarised.  The orders sought were that the order of 26 September 2006 not be varied except to order that as from 9 January 2007 the present applicant be no longer responsible for the payment of interest including interest on the mortgages, and that the property at 30 Shorehaven Drive "be listed for sale immediately at a price determined by the plaintiff".  I assume that by referring to the "plaintiff" the present applicant was intending to refer to himself. 

[14] In other words the only relief sought was relief from paying interest and an order that he have control of the sale.  It is difficult to see what justification there is for relieving him from paying interest when he failed to comply with the consent order of September 2006 and the latter variation only demonstrates the antagonism the present applicant has to anything proposed by the present respondent.

[15] The strong inference is open that the appeal from the order of 27 April 2007 is part of tactics of the present applicant in ongoing litigation over the property against a background where there are also proceedings before other courts in relation to custody of children of the relationship.

[16] It was against that background that the present respondent applied for security for costs.  In an affidavit by the solicitor for the present respondent in support of the application for security for costs it was asserted that attempts to have the property listed in accordance with the order of April 2007 had been thwarted by the present applicant's failure to co-operate. 

[17] On the hearing of the application for security for costs the present applicant effectively told the judge that he was not able to pay any money into court to await the outcome of the appeal or provide a bond from an institution for an amount ordered by the court.  In the course of his reasons for ordering security the judge said: "According to the respondent he is impecunious.  If security is sought as ordered he will be unable to provide it." 

[18] It has to be said that the material before the judge at first instance on the application for security for costs was sparse.  But the judge had knowledge of the matter because of the previous orders he had made.  He took the view that there was little prospect of success on the appeal and that in effect it was a tactic adopted by the present applicant to delay the proceedings further.  He also noted that there was very little in dispute between the parties.  There was according to the present applicant a dispute as to the identity of the real estate agent who should be responsible for the sale, and he asserted that the reserve price should be approximately $750,000.00 rather than $650,000.00. But the current order would not preclude a sale at more than $650,000.00 if that was on offer.  In those circumstances he ordered the present applicant provide security in the sum of $13,000.00.

[19] The applicant has sought leave to appeal against that order.  The principal grounds alleged are that the order stifles the primary appeal, the judge was biased, the judge ignored law, and the judge relied on the irrelevant rather than the relevant.  Such grounds do not suggest there is substantial merit in the appeal against the security for costs order.  The strong inference is open that the present application is part of the delaying tactics invoked by the present applicant, and that he is using the litigation as a war of attrition.

[20] Though, as I have said, the material before the judge at first instance was sparse given all of the background it cannot be said that there was such an error in the exercise of discretion as to warrant the granting of leave to appeal against the order.  The judge referred to and applied the appropriate considerations in arriving at his decision.  The order for security was relatively modest, namely $13,000.00, and was more than supported by the present respondent's material. 

[21] In the circumstances the application for leave to appeal should be refused with costs.  It should be further ordered that if security is not provided within 28 days the appeal against the order of 27 April 2007 be struck out with costs unless the court otherwise orders.

[22] JERRARD JA:  This proceeding was an application by the applicant to this Court for orders setting aside orders made on 23 August 2007 in the District Court.  Those orders granted an application made under Uniform Civil Procedure Rules 1999 (Qld) r 772 for an order that the applicant provided security for costs in an appeal to this Court, lodged by him, against orders made in the District Court on 27 April 2007 varying earlier orders between the same parties in the District Court made on 18 September 2006.  The latter orders were made by consent, and required that the applicant pay $77,000 to the respondent’s solicitor’s trust account within 90 days, and also pay other significant sums in discharge of a mortgage.  the applicant had been unable to obtain the necessary money to make those ordered payments, and on 27 April 2007 the District Court varied its earlier order made by consent.  the applicant opposed the variations sought. 

[23] His grounds of opposition included that several documents which he had set aside for the court proceedings that day, and a valuation, had disappeared from his home over the past few days, although he did not ask for an adjournment for that reason.  His two principal objections were that the proposed amended orders required that the parties’ jointly owned property be offered for sale at no less than $650,000, which he regarded as a considerable undervalue, and also that he completely distrusted the real estate agent suggested as the nominated agent in the proposed order.  The learned judge dealt with the first objection by amending the proposed draft order, to require that the sale be at an advertised sale price as recommended by the President of the Real Estate Institute of Queensland, but to achieve a sale price of no less than $650,000.

[24] the applicant then asked the judge to read some documents the applicant had brought with him to the court, but the judge declined to do so, remarking that the applicant ought to have put them into evidence in a proper form beforehand.  The learned judge then proceeded to amend the orders, and the applicant did not get to place the names of any other real estate agents – who were acceptable to him – before the learned trial judge, prior to the judge making the (varied) orders.  On this appeal he provided two names of acceptable agents, one of whom was another employee of the agency that employed the agent named in the order of 27 April 2007.

[25] the applicant filed a Notice of Appeal to this Court on 25 May 2007, appealing the amended order, on the grounds, inter alia, that the learned judge had shown bias, been unfair, and that there was relevant evidence not available on the date of hearing that was now available.  That allegedly relevant evidence presumably included the identity of agents acceptable to him.

[26] The respondent to that appeal, the respondent, then applied in the District Court for an order under UCPR r 772 that the applicant provide security in the amount of $26,510 for Ms Samala’s costs of and incidental to the appeal.  That application for an order for security was heard on 17 August 2007, by the same judge who had made the orders on 27 April 2007, amending the earlier consent orders.  The judge delivered his reasons and orders on 23 August 2007, and those reasons for judgment included reference to the terms of UCPR r 772, which provides that either this Court, or the court that made the decision appealed from, may order an appellant to give security in the form the court considers appropriate for payment of any costs the Court of Appeal may award to a respondent.  the applicant contends in his appeal challenging those orders made on 23 August 2007 that it was unfair that the judge hearing the application for security for costs was the judge whose orders were under appeal, and that the application should have been made to this Court.

[27] The last submission is supported by a further argument, that proceedings on the appeal had reached a stage at which the costs of the stay application were virtually wasted, because the appeal could have been heard in this Court within a matter of weeks.  the applicant otherwise alleges bias and error of law by the learned judge.

[28] The reasons for judgment on 23 August 2007 record that the effect of the consent order of 18 September 2006 was that the applicant was to pay $77,000 to Ms the respondent’s solicitor’s trust account within 90 days, and pay her father the sum required to discharge a loan used in the purchase of a property owned jointly by the applicant and the respondent, and secured by a mortgage over it, and further that the applicant was also to be responsible for all monies owing by himself and the respondent to his father.  Those reasons record that the payments required to be made to Ms Samala and the two fathers totalled $367,000.  The respondent was to transfer her interest in that property to the applicant.  The orders when varied on 27 April 2007 provided for the parties to enter into a listing agreement with the nominated real estate agent for the sale of the property:

• firstly as an exclusive agent for three months;
• if not sold, an open listing for a further two months;
• if not sold, the property was to be listed for sale by auction.

[29] The orders provided that for the periods of exclusive agency and open listing, the advertised sale price was to be that recommended by the President of the Real Estate Institute of Queensland, but to achieve a sale price of not less than $650,000; if it went to auction the reserve price was to be set at not less than $650,000.

[30] The reasons for judgment then referred to the reasons of this Court in Natcraft Pty Ltd & Anor v Det Norske Vericas & Anor [2002] QCA 241, where the judgment sets out some matters relevant to determining an application for security for costs.  Those included:

• a respondent’s prospect of success on the appeal;
• the financial position of a respondent;
• any delay in bringing applications.

[31] The reasons for judgment of 22 August 2007 record that the applicant described himself as impecunious and the judge concluded that if security was ordered, the applicant would be unable to provide it.  It appears that the applicant does not challenge the conclusion he would be unable to provide security, but he denies he is impecunious.  He says he has sufficient equity in the property to be sold to pay any ordered costs of the appeal on the figures quoted by the learned trial judge, and on the assumption the sale was for at least $650,000, the applicant is correct.  the respondent’s counsel suggested the debts to the two fathers totalled close to $615,000; but nether side put any affidavit evidence about those debts to either court.  On what the trial judge was apparently told, the applicant may have no currently available cash to provide security for costs, but may be able to satisfy a costs order.

[32] Those reasons for judgment go on to say that the applicant wanted the jointly owned property sold, and so did the respondent.  If and when it was sold the amount remaining, if any, after other payments, was to be paid to the applicant. 

“[19]The property needs to be sold so that the effect of the consent order can be carried out and financial matters between these two people can be finalised.  The ongoing disputing revolves around how it should be sold.  The respondent wants to control the way the sale proceeds.  The orders made on 27 April 2007 were designed to achieve an equitable result for both as they had earlier agreed, with an independent person and a processor achieving the sale.

[20]It seems to me the grounds of appeal against the background I have set out present bleak prospects of success of the appeal.”

[33] The learned judge then proceeded to order security for costs in the amount of $13,000.  the applicant objects to what he regards as the disadvantage caused to him by those orders, particularly because of his disinclination to have any dealings with the agent ordered to conduct the sale.  He disagrees with the description of himself as impecunious, because he contends he has substantial funds locked up in the property to be sold.  He says he is the only party who either benefits or looses from the correct or incorrect marketing and sale of the property, because the benefits for the other parties are fixed.  His written argument acknowledges that he had told the learned judge that he would be unable to pay any ordered security for costs, because his assets were so tied up. 

[34] the applicant’s prospects of success in his appeal against the orders made on 27 April 2007 are hard to assess.  He says now he really only challenges the named agent, a matter that could result in the order being varied by consent.  He also says the order is unworkable, on grounds that could also be resolved by consent orders.  If his appeal is limited to the identity of the agent, he may succeed because not given a second opportunity to present written matter on that to the judge. 

[35] the applicant admits that he will be unable to provide security for the respondent’s cost of that appeal, if ordered to do so.  He had not demonstrated that the appeal against the orders made on 27 April 2007 has progressed so far that ordering security for costs of that appeal was pointless.  He has shown that on one set of figures given to a court, he would ultimately be able to pay costs of an appeal.  For that reason there is sufficient doubt shown about the strength of the two grounds most relied on by the learned judge, to justify setting aside the order for security for costs.

[36] I would allow the appeal, set aside the orders made on 23 August 2007, and order in lieu that the application by the respondent, for an order for security for costs from the applicant in his appeal filed 4 May 2007 CA Number 4505/07, be dismissed, with the respondent ordered to pay the applicant costs of that application and of this appeal, both assessed on the standard basis.