Ministry of Foreign Affairs of the Republic of Italy v Simeone
[2016] QDC 160
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- Ministry of Foreign Affairs of the Republic of Italy v Simeone[2016] QDC 160
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Ministry of Foreign Affairs of the Republic of Italy v Simeone[2016] QDC 160
Ministry of Foreign Affairs of the Republic of Italy v Simeone[2016] QDC 160
DISTRICT COURT OF QUEENSLAND
CITATION: | Ministry of Foreign Affairs of the Republic of Italy v Simeone [2016] QDC 160 |
PARTIES: | MINISTRY OF FOREIGN AFFAIRS OF THE REPUBLIC OF ITALY (plaintiff) v PAULA SIMEONE (defendant) |
FILE NO/S: | D 4356/2011 |
DIVISION: |
|
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 24 June 2016 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 13 April 2016 |
JUDGE: | McGill SC DCJ |
ORDER: |
|
CATCHWORDS: | COSTS – Security for – plaintiff resident out of jurisdiction – plaintiff foreign state – practicalities of enforcement of costs order – security ordered. COSTS – Practice – costs of ex parte application for substituted service – whether order against defendant should be set aside – costs of application reserved. Castillejo v Botella [2008] QSC 333 – considered. Connop v Varena Pty Ltd [1984] 1 NSWLR 71 – considered. Engstrand v Brisbane City Council [2010] QDC 35 – distinguished. Firebird Global Master Fund II Ltd v Republic of Nauru [2015] HCA 43, (2015) 90 ALJR 228 – considered. Global Access Ltd v Educationdynamics LLC [2010] 1 Qd R 525 – followed. Re Independent State of Papua New Guinea [1999] 2 Qd R 365 – followed. Kent Heating Ltd v Cook On Gas Products Pty Ltd (1994) 59 ALR 277 – cited. National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 – cited. PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 65 ALJR 642 – applied. RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd (No 2) [2000] FCA 22 – cited. Republic of Costa Rica v Erlanger (1876) 3 Ch D 62 – applied. |
COUNSEL: | ME Wilson for the plaintiff DM Favell for the defendant |
SOLICITORS: | Porta Lawyers for the plaintiff Rouse Lawyers for the defendant |
- [2]On 1 November 2011 a claim and statement of claim were filed in this Court seeking to recover €98,603 as damages for breach of contract or as damages pursuant to s 82 of the Trade Practices Act 1974 (Cth). There was delay in serving the claim and statement of claim, to which I shall return, but a notice of intention to defend and defence were filed on 2 May 2013. An amended statement of claim was then filed on 20 August 2013, an amended defence on 16 September 2013, and a reply on 10 August 2015. On 1 December 2015 the defendant filed an application for security of costs, and to set aside a costs order made when substituted service was ordered. On 15 December that was adjourned until 25 January 2016 with costs reserved. On the latter date it came before me, when I placed the proceeding on the commercial list and raised an issue as to the standing of the then plaintiff. That issue was adjourned to 17 March 2016, and further adjourned by agreement of the parties to 13 April 2016, when the issue as to the identity of the plaintiff was resolved, and the application for security for costs was argued.
Identity of the plaintiff
- [3]When the claim and statement were first filed, the plaintiff was described as “Consulate of Italy for Queensland and the Northern Territory for the Ministry of Foreign Affairs of the Republic of Italy”. For reasons which I gave ex tempore on 13 April 2016, I held, following Green v Philippines Consulate General [1971] VR 12, that the consulate was not a juristic person, and hence incapable of suing in the District Court. It followed that the proceeding had not been validly constituted, and was probably a nullity, though I considered that it would be open to make an order substituting a juristic person as plaintiff, and in that way to preserve the proceeding. The legal representatives for the “plaintiff” then applied to substitute the Ministry of Foreign Affairs of the Republic of Italy as plaintiff.
- [4]There was evidence before me that the proceeding had been purportedly brought by the consulate as agent for the Ministry of Foreign Affairs of the Republic of Italy, which under the Italian Constitution was a juristic person capable of suing in its own name. I consider that if the Ministry is recognised under Italian law as a juristic person it should be recognised under Australian law in the same way, and made an order for substitution although I said at the time that the order did not involve a final determination on my part that the Ministry was a juristic person for the purposes of Australian law, or was the proper plaintiff in the proceeding. Apart from anything else, that was necessary because the defendant had effectively had no notice of the application, so it was necessary that her rights not be prejudiced by the order for substitution of the plaintiff.
Security for costs
- [5]The difficulty which arises in this case, as an application for security for costs, arises because of the nature of the plaintiff, in substance a foreign state. It is well recognised that a foreign state can litigate in the courts in this country, but prima facie a foreign state has the benefit of sovereign immunity under the Foreign States Immunities Act 1985 (Cth) (“FSIA”). One of the provisions of that Act, s 30, renders the foreign state immune from execution on any judgment or order of an Australian court. The immunity that a foreign state possesses can be waived in various ways, including by commencing a proceeding in an Australian court: FSIA s 10(6)(a).
- [6]I am prepared to accept that the effect of that submission to the jurisdiction in a proceeding referred to in that provision would extend to submitting to the jurisdiction of the Australian court to make an order for costs against it, but it is not obvious from a perusal of the Act as a whole that a submission to jurisdiction under Part II of the Act in that way also has the effect of waiving the immunity from execution conferred by s 30. In effect, the position may be that under the Act a court may validly make an order for costs against the foreign state, but an order so made cannot be executed against the foreign state. In that situation, whether the order for costs was met would depend on the question of whether, as a matter of policy, such orders for costs were met by the foreign state. There is authority for the proposition that, where as a matter of policy orders for costs against a foreign state would not be met, a foreign state can be ordered to give security for costs in relation to a proceeding in a Queensland court: Re Independent State of Papua New Guinea [1999] 2 Qd R 365.[1]
- [7]On the other hand, an order for costs made in proceedings where there have been a submission to jurisdiction would in principle stand as a judgment of the Court which, under the Italian equivalent of the Foreign Judgments Act, could be registered in Italy and would then be enforceable in Italy, subject I suppose to any question as to the effect of s 30 of the FSIA, or perhaps the Italian equivalent. There is some authority that in such circumstances security for costs should be ordered only in relation to the additional costs to which a party will be put as a result of the necessity of going through the process of registering the judgment in the foreign country, and any additional expense associated with executing it in that country: Connop v Varena Pty Ltd [1984] 1 NSWLR 71. On the other hand, in Castillejo v Botella [2008] QSC 333 an order for substantial security for costs was made in respect of a plaintiff resident in a foreign country without assets in Queensland, notwithstanding that an order for costs against him could have been registered in that country and enforced there. In effect, the approach in Connop was not followed.
- [8]The question of ordering security for costs against a foreign state suing in England was touched on in Republic of Costa Rica v Erlanger (1876) 3 Ch D 62, where the Court of Appeal ordered substantial security be provided by the plaintiff. James LJ said at p 68:
“Under the old practice no doubt the rule of the Court of Chancery was that if the plaintiff was abroad, whether he was a sovereign, sovereign state, or an individual, he should give security for costs.”
- [9]Mellish LJ said at p 69:
“The plaintiffs were a foreign republic having no property in this country, and if the defendants succeed they will probably not get their costs unless they have security.”
- [10]Baggallay JA, the third member of the court, said that it was “clearly a case in which security for costs should be given” (p 70). The approach adopted by the Court of Appeal in that matter was that the fact that the plaintiff was a sovereign state did not serve to distinguish the matter from a case where the plaintiff was a foreign individual, as long as no other plaintiff had relevant assets within the jurisdiction. On the basis of this and earlier decisions, Ambrose J in Re Independent State of Papua New Guinea (supra) said at [49] that the fact that the party was a friendly foreign state was irrelevant. In that case the matter was further complicated by the evidence of actual difficulties in obtaining enforcement in Papua New Guinea of a foreign order for costs, notwithstanding the existence of a Reciprocal Enforcement of Judgements Act and a Claims by and against the Government Act in that country.
- [11]Ambrose J found persuasive comments by McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 65 ALJR 642 at 643, where his Honour, after noting that the question involved the exercise of a discretionary judgment weighing all the circumstances of the case, said:
“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.”
- [12]His Honour referred to a number of other cases involving foreign plaintiffs who were not foreign states before ordering substantial security. In Castillejo (supra) substantial security was ordered, though in that case there was evidence indicating that there were practical difficulties in enforcement in Spain, due to the absence of an applicable treaty between Australia and Spain. That provides the basis for distinguishing the decision in Connop (supra), though his Honour noted that the decision had also been distinguished in Kent Heating Ltd v Cook On Gas Products Pty Ltd (1994) 54 ALR 277, in a case involving a New Zealand company, where however there was evidence of particular practical issues including potential difficulties in transmitting money out of New Zealand.
- [13]Overall, the position on the authorities appears to be that the fact that the foreign plaintiff is a sovereign state does not directly affect the exercise of the discretion to order security for costs, though it may be relevant if this has some practical effect on the ease or otherwise with which an order for costs made against the plaintiff in Australia will in fact be able to be enforced. The authorities also indicate that the mere fact that in theory orders for costs can be enforced against a foreign plaintiff is not as important as the practical considerations involved in enforcing such an order against such a plaintiff.
- [14]I was referred to the recent decision of the High Court in Firebird Global Master Fund II Ltd v Republic of Nauru [2015] HCA 43, (2015) 90 ALJR 228, which it was submitted was relevant to the question of the enforcement against the Republic of Italy of an order for costs obtained in Australia against it. It seems to me however that the circumstances dealt with in that case are distinct from the present circumstances. That was a case where a proceeding had been brought against the foreign state in a different foreign court, the Tokyo District Court, where judgment of ¥1,300,000,000, together with interest and costs, was obtained. That judgment was then registered in Australia under the Foreign Judgments Act 1991, without prior notice to Nauru, but once Nauru found out about the order it applied to set aside the registration. The High Court held that the Foreign States Immunities Act 1985 protected Nauru from registration under the Foreign Judgments Act, and subject to exceptions in the Immunities Act, from execution on that judgment against the property of Nauru in Australia. The court also held that there was a relevant exception to immunity from the proceeding, but not an exception from the immunity from execution. As a result the judgment was not set aside, but execution in the form of a garnishee order was.
- [15]That case has no direct relevance here, because in that case there was no question of the Republic of Nauru having submitted to the jurisdiction of the Australian Court which had registered the judgment, whereas here by commencing proceedings in Australia there has been a submission to the jurisdiction. On the other hand, the immunity from execution is a separate immunity under the Foreign States Immunities Act 1985, so the plaintiff, or at least the Republic of Italy, remains immune from execution in Australia on any order for costs made against it in these proceedings. That however merely has the effect of equating it with a foreign resident plaintiff who has no assets in Australia against which to execute. It does not I consider provide any justification for equating it with a foreign plaintiff who has assets in Australia which would be sufficient to satisfy any such order, which can be a basis on which an order for security for costs would be refused. That decision also does not affect the question of whether an order for costs made against the plaintiff by this court would be enforceable against the plaintiff in Italy under Italian law. In Firebird the High Court was not concerned with the enforceability of the foreign judgment against the Republic of Nauru in Nauru. The decision is therefore of little relevance to what I have to decide.
Submissions for the defendant
- [16]The defendant submitted that for practical purposes a costs order against the plaintiff would be unenforceable. That I think is better expressed by saying it would be unenforceable in Australia. It was submitted, without perhaps a great deal of evidentiary support, that enforcing the order against the plaintiff in Italy would be difficult if not impossible, and, more importantly, beyond the financial resources of the defendant, which were modest. The defendant is a teacher who was for a number of years the public officers of an incorporated association, Italingua, a non-profit organization with the purpose of teaching Italian language and culture in the Northern Territory.[2] The organization was supported by various government grants, including from the Australian and Italian Governments, before it was deregistered in June 2009.
- [17]The defendant is in a modest financial position, and it was submitted that it would be beyond her means to fund enforcement proceedings in Italy, in circumstances where there would have to be some uncertainty about the time, expense and trouble involved in recovering the funds, even assuming that they were ultimately recovered. The defendant also submitted that further factors supporting the making of an order for security for costs were that there were difficulties with the plaintiff’s case, the order would not be oppressive to the plaintiff, and would not stifle proceedings.
Submissions for the plaintiff
- [18]The plaintiff initially resisted the order for security on the ground that the consulate, in which name the proceeding was initially brought, was not out of the jurisdiction. As presently constituted however there is no doubt that the plaintiff is ordinarily resident outside of Australia, so that the discretion arises under r 671(e). It is unnecessary to consider the other paragraphs of the rule. The plaintiff acknowledged that it had declined to waive immunity against enforcement, and acknowledged also that the plaintiff holds no commercial property in Australia. It was also submitted, but again without any strong evidentiary basis, if an order for costs were made against the plaintiff, and such order was not satisfied, the order could be enforced against the plaintiff, through proceedings in Italy.[3]
Discussion
- [19]The claim was originally filed in November 2011, but not served until early 2013, and thereafter some time was spent in revising the pleadings. A notice of intention to defend having been filed in May 2013, there was an amended statement of claim filed in August 2013, and a mediation arranged but called off by the plaintiff, [4] but after further and better particulars were provided in November 2013 nothing happened until August 2015, when a reply to the amended defence was filed and served by the plaintiff, after it had given notice of intention to proceed. The defendant had dispensed with lawyers in June 2014, since the matter seemed not to be pursued, but engaged new lawyers in October 2015, and those lawyers raised again the question of security for costs.[5] The response in November 2015 from the plaintiff’s solicitors was unhelpful, and an application was made which however then ran into the difficulties about the identity of the plaintiff. The defendant’s characterization of the proceedings as having “moved at a leisurely pace” was I think justified.
- [20]With regard to the plaintiff’s prospects in the proceeding, all I can do at this stage is look at the pleadings. The pleading alleges that two grants were made by the Italian Government to Italingua, one in 2004 involving three payments totaling $93,977.36, and one in 2005 involving two payments totaling $70,908.54. In connection with these grants, contracts were concluded between the plaintiff and Italingua, but the basis of the plaintiff’s current claim is that, when making grant applications, Italingua engaged in misleading and deceptive conduct in that it made various representations which were not correct. In reliance on those misrepresentations, the grants had been made and hence the plaintiff has suffered loss. The defendant was a person who aided and abetted or was knowingly concerned in or a party to the misleading and deceptive conduct, and so was liable under s 75B of the Trade Practices Act.
- [21]There are difficulties with this claim apparent even on the pleadings. The representations relied on by the plaintiff are alleged not to have been correct, first on the basis that Italingua did not at the relevant time intend to carry out the programs in accordance with the terms and conditions of the grants, which was a relevant misrepresentation, but otherwise on the basis that various terms and conditions of the grant were not in fact complied with, which is not something which proves misleading and deceptive conduct. It was further alleged that the conduct was in trade or commerce, an expression which does not strike me as applying readily to the activities of a non-profit organization engaged in cultural support applying for Government grant finance.[6]
- [22]In order to make out a case under s 75B of the Act, it would be necessary not merely to show that the defendant had signed a form which contained promises by Italingua which ultimately came not to be honoured, but that at the time she signed the form and submitted it to the relevant Italian authority she knew that statements in the form as to Italingua’s intentions were false, or at least that it had no reasonable basis for making such statements. It is notorious that cases of accessorily liability under s 75B are much more difficult to prove than cases of misleading and deceptive conduct against corporations.
- [23]There is also the consideration that it would seem that any loss suffered by the plaintiff was suffered at the time the grants were made to Italingua, since it is alleged specifically in paragraph 41A that if the plaintiff had been aware that the representations were not correct it would not have awarded any grants. In those circumstances it would seem the losses were suffered in 2004 and 2005. The limitation period for claim for damages under the Competition Consumer Act 2010, or for that matter under the Trade Practices Act prior to the 2010 amendments, is six years, and if a cause of action arose at the time the grants were made then a proceeding commenced in November 2011 appears to be out of time.[7] The defendant has raised the limitation period in the defence (para 38), and in reply the plaintiff alleged that the damage suffered by the plaintiff did not occur more than six years prior to the commencement of the proceedings, but did not explain the basis upon which that allegation was made.
- [24]There is an argument that the loss suffered by the plaintiff was not suffered when the grant was made, but at some later point when the grant moneys ought to have been repaid in accordance with the terms of the contact between the plaintiff and Italingua. The difficulty for the plaintiff is that as the statement of claim is currently formulated the loss that is alleged is the loss suffered by the making of the grants, a loss which would appear to have been suffered when the grants were made. It is not alleged that if the relevant terms and conditions of the grant had been complied with by Italingua some amount would have been repaid to the plaintiff at some particular time, so as to provide the foundation for an allegation that the loss (of that amount) was suffered at the time when it ought to have been repaid, but was not. Overall, my impression of the pleadings is that the plaintiff’s case is not very promising, but I acknowledge that a case which may not look good on pleadings may improve at a trial, and I am not going to try the case in order to decide the application for security for costs.
- [25]As to the other matters relied on, on behalf of the defendant, that an order for security would not be oppressive to the plaintiff and would not stifle the proceedings, these are obviously correct; there is no reason to doubt that the plaintiff has the capacity to provide security for costs without any particular hardship, and if the plaintiff believes in its case there is no reason to think that proceedings will be stifled. This serves to distinguish my decision in Engstrand v Brisbane City Council [2010] QDC 35.
- [26]Overall, the fact that the plaintiff is effectively a foreign state means that it comes within the category of a foreign resident plaintiff, and there is the consideration that the plaintiff has no assets within the jurisdiction, or at least no assets against which execution can be brought. These are factors which are traditionally seen as providing a strong justification for an order for security for costs. There is no reason to think that the order will be oppressive or stifle the litigation, but if ultimately the litigation is unsuccessful and the defendant obtains an order for costs, because of her limited means it is to be expected that she would have great difficulty in taking steps to pursue whatever enforcement procedures are available in respect of that order in Italy. No comfort has been offered by the plaintiff in relation to the satisfaction of any such order that may be made, other than to confirm that the plaintiff would have the funds available to satisfy it, which is not in doubt. The statement by the Consul, Mr Camussi, that the Ministry “has numerous bureaucratic and lengthy processes”[8] does not encourage a belief in the prompt payment of any order for costs.
- [27]I accept that the fact that the plaintiff is a friendly foreign state is not a relevant consideration, and consider that I should approach the matter in the same way as I would approach an application in a proceeding commenced by any non-resident plaintiff. Although the proceeding has been on foot for some years, it has not advanced very far, largely because of the lack of perseverance with it on the part of the plaintiff. The question of security for costs was raised as early as 2013, and this present application was filed last year, the hearing of it being delayed by the fact that the plaintiff had sought to litigate in the name of something that is not a juristic person. Overall, I consider that in all the circumstances the discretion to order security for costs should be exercised, and they should be based on costs of a trial rather than just additional costs of enforcement in Italy, about which I have in any event no evidence.
- [28]As to the amount of such security, the plaintiff’s solicitor has estimated that the total costs extending to the costs of the trial will come to $135,800, but that appears to be on an indemnity basis.[9] He then gives an estimate of standard costs, based on a percentage of those costs, but this I suspect is a very broad brush approach. The plaintiff relied on an affidavit from a costs assessor, who estimated the costs from now to the first day of trial assessed on the standard basis of $25,900, with the costs of the trial at $6,440 per day thereafter.[10] This assessment assumes that a lot of work by way of preparation has already been done, and otherwise makes a series of assumptions which strike me as being somewhat optimistic in the circumstances.
- [29]In response many of the assumptions about the work that has already been done were disputed by a solicitor for the defendant,[11] including for example that the large number of documents in Italian which had been discovered by the plaintiff have not yet been translated by the defendant. Although one would expect that the defendant may be able to translate them personally, it may be thought better to have translations by independent persons which would be treated as more reliable by a court if the documents are ultimately put in evidence at a trial. The costs assessor has sworn a further affidavit in response to this affidavit, but would allow only a modest adjustment upwards in response to it, mainly in relation to the additional costs of mediation and the prospect of interlocutory application.[12] As to this, that the plaintiff pulled out of a mediation once before, and appears now to be determined to pursue the litigation, suggest that a mediation might not be a promising exercise, but the inefficiency with which the plaintiff has conducted the proceedings thus far does not augur well for an absence of interlocutory applications in the future.
- [30]Overall my impression is that the plaintiff’s costs assessor has been too restrictive in his estimates of the work involved in preparing a matter such as this, which strikes me as being potentially quite complicated. Apart from anything else, it seems to me that the current statement of claim is hopelessly inadequate and defective. There are a whole lot of allegations in it which are irrelevant and probably vexatious, and have nothing to do with the pleaded cause of action, and I have grave doubt as to whether the cause of action that is pleaded has been properly pleaded. There is a good deal of authority on what is needed in pleading a misleading and deceptive conduct case, and a case of accessorial liability under s 75B, most of which does not seem to have received much attention when this pleading was prepared. I expect that one thing which will have to occur in this proceeding in the future is that the pleadings will have to be put in proper order, and that will put the defendant to additional costs.
- [31]It also occurs to me that if this case does come to be properly pleaded the factual issues which arise could become more complex, and the number of witnesses required could well increase. In this context, it is a significant feature that the defendant resides in a suburb of Darwin, and will be put to significant traveling expenses to litigate a matter which the plaintiff has chosen to commence in the District Court at Brisbane. Presumably witnesses who can speak about the situation with Italingua in 2004 and 2005 may still be in Darwin, though I understand it is a place to and from which residents often move. The defendant’s witnesses may be anywhere by now.
- [32]Accordingly I think that the plaintiff’s costs assessor has been far too restrictive as to the defendant’s standard costs of the trial. I acknowledge that courts traditionally take a moderate approach to the determination of an amount to be fixed by way of security for costs, but in the present case when a defendant has quite modest means and it is the plaintiff who has the deep pockets I consider that a more generous approach ought to be adopted. Doing the best I can in the absence of a reliable estimate of the standard costs of a trial for the defendant, I fix a figure of $50,000 as security for the defendant’s costs up to and including the first day of the trial. The appropriate form of security is by way of payment into court or in the alternative an irrevocable and unconditional bank guarantee from a major Australian trading bank, or other security acceptable to the defendant’s solicitors.[13] I order that the security be provided within 60 days, and that the proceeding be stayed until it is provided.
Costs of the application for substituted service
- [33]The defendant also seeks to reopen the question of the costs ordered against her when an order for substituted service of the claim and statement of claim were made by another judge on 8 January 2013. That judge, who was hearing an application which was necessarily made ex parte, made an order for substituted service and ordered that “the defendant pay the costs of and incidental to the application on a standard basis”. Since the order was made in the absence of the defendant, the court has power to reopen it under UCPR r 667(2)(a).
- [34]The application for substituted service was supported by an affidavit from a process server who referred to three incidents. The first was when he went to a particular address and spoke to a female person in the garden whom he said he told that he was there “to see Paola Simeone” in connection with a legal matter. He was told that she had never heard of him and then said “his is dead, leave me alone” and walked away. On 7 January he return to the property and saw another vehicle pull up at the property with a male and a female in it. He asked about “Paola Simeone” and the female asked what it was about, he replied he had legal papers for her and the male in the vehicle stated that the defendant was not known and then entered the property without further conversation. On a subsequent date he went to a particular school and was told by an employee in the office that the defendant did work there but was currently teaching a class and they were not prepared to disturb the class. He said “a female then came out of a room that appeared to match the photo of the defendant, however she stated it was definitely not her and she walked off very quickly”.
- [35]In her affidavit[14] the defendant said that she was at the relevant time residing at the address to which the process server went, and said she was the woman in the garden with whom he had the conversation on 6 December 2011, though she gave a different version of the conversation. She said he asked her “Is Polo here? Are you his wife?” to which she replied “I do not know any Polo. My husband has passed away. What do you want?” he then just turned around and walked off down the street. On 7 January 2012 the defendant says she was in Melbourne and could not have been the person who was seen at the property by him on that day. She produced emails confirming the airline bookings for the flights between Darwin and Melbourne. In relation to the incident at the college the defendant essentially denied that she was the woman who came out of the room who appeared to match the photo of the defendant.
- [36]It is obviously not possible for me simply from a consideration of the two affidavits to determine what actually happened on the occasions when attempts were made to serve the defendant, but the defendant’s affidavit does demonstrate that the material which was before the court on the basis of which the ex parte order for substituted service, and the costs order, were made does not tell the full story, in that it does not tell the defendant’s version of the story. On the defendant’s version of the story, it may well not have been appropriate to make an order for substituted service at all, but in my view it would not have been appropriate to order the costs of the application for substituted service be paid by the defendant.
- [37]In those circumstances, I consider that the order for costs made by the other judge against the defendant on 8 January 2013 should be set aside, and in lieu thereof I order that the plaintiff’s costs of the application for substituted service be reserved. The issue can then be resolved at the trial, when the trial judge will presumably have the benefit of evidence from the defendant, and cross-examination of her, and will be in a position to make an assessment of her credibility, and if the plaintiff wishes to call the process server to give evidence, of the credibility of the process server. The trial judge will then be able to decide what actually happened, and whether it is appropriate for the defendant to pay the costs of that application, or not.
- [38]Indeed, it seems to be that it is always a wise precaution to reserve the costs of any application which is made to the court on an ex parte basis, because necessarily both sides of the story have not been heard at that time. It is often appropriate for a court to act ex parte, with an application for substituted service being a classic example, but the possibility that the order is unjustified, or simply that there was in fact no conduct by the defendant which justified the making of an application for substituted service, may well mean that once all the facts are investigated it is possible to show that the application was not justified, in which case an order for costs against the defendant should not be made. Given the conflicting affidavit evidence, I am not in a position to decide that question at the moment, so the appropriate course is to reserve the question to the trial judge. My practice when an order is made on ex parte application is to reserve the costs.[15]
- [39]Accordingly, the orders I make on the application are:
- (a)Order that within 60 days the plaintiff provide security for the defendant’s costs of the proceeding up to and including the first day of the trial in the amount of $50,000, by way of payment into court, or an irrevocable and unconditional bank guarantee from a major Australian trading bank, or in another form acceptable to the solicitors for the defendant.
- (b)Order that the proceeding be stayed until security is provided.
- (c)Order that that part of the order of the court of 8 January 2013 which dealt with the question of the costs of the application filed 14 December 2012 be set aside under r 667(2)(a), and in lieu thereof order that the costs of that application be reserved.
I will invite submissions as to the question of costs when these reasons are delivered, but expect that they should follow the event.
Footnotes
[1]A decision on an application which must have been particularly well argued.
[2]Affidavit of defendant filed 11 December 2015, para 2, 13-16.
[3]Affidavit of Fiorino filed 22 February 2016, paras 12, 15, which offers little comfort to the defendant.
[4]Affidavit of Pawley filed 9 December 2015, para 12.
[5]They were first raised in November 2013: ibid, para 15, para 32.
[6]Cf RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd (No 2) [2000] FCA 22.
[7]Both of the 2005 grants were made in the first half of that calendar year.
[8]Affidavit of Camussi filed 14 December 2015, para 5.
[9]Affidavit of Rouse filed 9 December 2015 para 10.
[10]Affidavit of Graham filed 22 February 2016, para 11, 12.
[11]Affidavit of Pawley filed 17 March 2016.
[12]Affidavit of Graham sworn 12 April 2016.
[13]Modifying the approach in Global Access Ltd v Educationdynamics LLC [2010] 1 Qd R 525 at [65].
[14]Filed 11 December 2015.
[15]See also National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 538.