Mongey v Demetriou [2019] NSWSC 444 (23 April 2019)

Last Updated: 23 April 2019

Supreme Court New South Wales

Case Name:	Mongey v Demetriou
Medium Neutral Citation:	[2019] NSWSC 444
Hearing Date(s):	16 April 2019
Date of Orders:	23 April 2019
Decision Date:	23 April 2019
Jurisdiction:	Common Law
Before:	Harrison J
Decision:	(1) Order the plaintiff within 28 days to provide security for the costs of the second defendant in the amount of $50,000 in a form suitable to the second defendant and to the Court. (2) Stay the proceedings pending compliance by the plaintiff with order (1). (3) Order that the costs of this application should be the costs in the proceedings.
Catchwords:	COSTS – security for costs – where plaintiff is resident in Ireland and has no assets in NSW – where defendant’s motion for security for costs was filed almost eleven months after proceedings commenced by plaintiff – whether there is material to enhance the value of the presumption of prejudice flowing from the defendant’s delay in brining security for costs application – whether the balance of competing factors weights in favour of the defendant – plaintiff to provide security for costs.
Legislation Cited:	Civil Procedure Act 2005 NSW, s 100 Contracts Review Act 1900 NSW, s 7 Uniform Civil Procedure Rules 2005 NSW, 42.21
Cases Cited:	Commissioner of Taxation Vasiliades [2016] FCAFC 170; (2016) 344 ALR 558 Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148 Morris v Hanley [2001] NSWCA 374 Ollerenshaw v The Uniting Church in Australia Property Trust (NSW) [2017] NSWSC 1637 Pilkin v Sony Australia Ltd [2018] FCA 1018 PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; [1991] HCA 36
Category:	Procedural and other rulings
Parties:	Thomas Raymond Mongey (Plaintiff) Janette Ashley (Second Defendant)
Representation:	Counsel: M W Sneddon (Plaintiff) Solicitors: Blunden & Montgomery (Plaintiff) Marc Ryckmans, Somerset Ryckmans (Second Defendant)
File Number(s):	2018/102898
Publication Restriction:	Nil

JUDGMENT

1. HIS HONOUR: By notice of motion dated 15 March 2019, the second defendant moves the Court for an order pursuant to UCPR 42.21(1)(a) that the plaintiff provide security for her costs upon the basis that he is ordinarily resident outside Australia. It is not in dispute that the plaintiff is ordinarily resident in Dublin, Ireland.
2. UCPR 42.21(1)(a) provides as follows:

“42.21 Security for costs
(1) If, in any proceedings, it appears to the court on the application of a defendant:

(a) that a plaintiff is ordinarily resident outside Australia,
...

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.”

3. The proceedings were commenced by statement of claim filed on 3 April 2018. The plaintiff sues upon an agreement for loan made on or about 8 October 2010. He alleges that he advanced the sum of $600,000 to the defendants on terms that the principal would be repaid by no later than 7 October 2013 together with interest calculated at the rate of $40,000 per annum. The first defendant paid interest to the plaintiff at that rate in 2011 and 2012 and repaid a total of $100,000 in reduction of the principal in 2012 and 2013. In those circumstances, the plaintiff’s claim is for the sum of $500,000 together with interest calculated in accordance with the agreement or alternatively pursuant to s 100 of the Civil Procedure Act 2005. The second defendant has not personally made any payments in reduction of either principal or interest.
4. The second defendant contends in her defence that she is not liable to the plaintiff for the repayment of any monies advanced by him. She maintains that she never beneficially received the monies advanced by the plaintiff because they went to a company that was involved in a proposal to reacquire and develop a golf course that had been “illegally transferred to North Qld Development Pty Ltd” causing the first defendant and the second defendant’s late husband to suffer financial loss. (The second defendant’s husband died in 2005). Although the second defendant admits that the loan agreement on which the plaintiff sues in terms obliges her to repay the monies advanced by the plaintiff, she says that she did not understand what she was doing when she signed it and that in any event the parties later agreed to vary it so as to exclude her from any further liability. The second defendant raises other matters in response to the statement of claim, including a contention that the loan agreement is liable to be rectified to accord with the agreement that was actually made, that she entered into it in reliance upon misrepresentations, that the loan agreement is unconscionable and should be set aside and that she is otherwise entitled to relief in accordance with s 7 of the Contracts Review Act 1980.
5. The second defendant has so far not filed a cross claim, which on one view appears clearly to be necessary if at least some of the matters referred to in her defence are to sound in her favour.
6. The plaintiff does not suggest that the application for security for costs would stifle the proceedings. In an affidavit sworn by him on 28 March 2019 he said this:

“6. The first and second defendant’s conduct has resulted in a severe diminution of my retirement savings by an amount of the loan of $600,000 plus the loss of interest of $40,000 per annum and the opportunity loss of further investments as the funds have not been repaid.
7. An order for costs [sic, security] would not stifle the proceedings, however given the costs that I will suffer in having to fly to and stay in Australia for the hearing, the costs of accommodation and travel within Australia, the costs of food and the like would add greatly to the financial burden upon me.”

7. Instead, the plaintiff opposes the application upon the single basis that it has been brought too late and that as a consequence of the second defendant’s delay, it should, in accordance with authority, be refused on discretionary grounds.
8. The second defendant’s motion was filed a little short of eleven months after the proceedings were commenced. The second defendant filed her defence on 16 May 2018. On 5 February 2019 the proceedings were listed for hearing commencing on 30 September 2019 with an estimate of four days.
9. The second defendant relied upon what was said by Hodgson JA in Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148 as follows:

“[57] In my opinion, it is not necessary, in order for a plaintiff to show prejudice from delay, that the plaintiff prove what the plaintiff would have done if the application had been made earlier; although if a plaintiff does prove that it would not have gone ahead with the proceedings if the application had been brought when it should have been, this would be a very powerful consideration against granting security in the case of a delayed application. In my opinion, where substantial costs have been incurred since the time when an application for security should have been brought, it would be unreasonable to deny the existence of prejudice unless the plaintiff can prove exactly what the plaintiff would have done if the application had been brought earlier.”

10. In the circumstances of this case, in which there is no evidence of what the plaintiff would have done if the application had been made earlier, the plaintiff placed considerable emphasis upon the force of these remarks. Comments to a similar effect are also to be found in Morris v Hanley [2001] NSWCA 374 where Heydon JA said this:

“[29] The plaintiff says she is ready for hearing. The defendants say they are not. In this respect what the defendants say is not implausible in view of the breadth of the further allegations made in the pleadings as amended by leave on 23 May 2000. The case may not be ready for hearing, but the plaintiff has evidently suffered a substantial diminution in financial resources with a view to readying it for hearing. It is never easy for defendants to succeed in an application for security for costs against a natural person where that application is in part based on the ground of that natural person’s lack of funds. It becomes significantly harder for defendants to succeed where they permit the plaintiff to throw money away on the litigation which will never be recoverable in a costs order against the defendants by reason of the successful application for security. As the primary judge rightly said, the decision whether or not to order security in this case ‘is a difficult decision’.”

11. More recently, in Ollerenshaw v The Uniting Church in Australia Property Trust (NSW) [2017] NSWSC 1637, Walton J commented as follows:

“[55] A delay in the bringing of an application for security is a factor in the exercise of the discretion: Idoport v NAB at [68]. Delay will weigh less significantly if the hearing is not imminent or there has been some forewarning or foreshadowing of an application. It has been found that the longer the delay, and the greater the costs the plaintiff has been allowed to incur, the less likely an order will be made: Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114.
[56] It was submitted by the plaintiff that the bringing of this application has been delayed and that the preparation for this application, namely, the necessary provision of an evidentiary statement from the plaintiff, has caused great distress to the plaintiff. However, I agree with the submissions of the fifth defendant that there was no evidence as to any prejudice suffered by the plaintiff as a result of delay. That distress was referred to in limited detail in the evidence of Ms Powell. Further, there was no evidence as to how that distress had any effect upon this application.”

12. In PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48, Bell P and Simpson AJA commented as follows:

“[10] What his Honour said in terms was that ‘the fact that [the] defendant [had] delayed the bringing of an application for security for costs will be less relevant, and possibly even irrelevant, unless it can be seen to have generated or produced some consequence of significance.’ (Emphasis added). His Honour’s use of the word ‘possibly’ in the sentence quoted illustrates that he formed no final view in respect of that matter and cannot fairly be taken to have endorsed or embraced such a view. His Honour’s statement that delay will be ‘less relevant’ unless it can be seen to generate or produce some consequence of significance is not criticised in the Draft Notice of Appeal and rightly so in our opinion.
[11] The relative significance of delay in the making of a security for costs application and as a factor in the exercise of judicial discretion to award security for costs will inevitably vary with the facts of each case, the nature, extent and cause for any delay and the overall justice of the case. Insofar as his Honour suggested that some authorities established that delay could ‘possibly even [be] irrelevant, unless it can be seen to have generated or produced some consequence of significance’, we would not agree. In our opinion, delay will invariably be a relevant discretionary factor in any application for security for costs, but the degree or extent of its relevance will vary according to the circumstances of any given case along a spectrum from the slight to the extreme.”

13. The material before me does not helpfully inform the significance of the delay in this case. Accepting the proposition that delay will always be a relevant factor in considering the second defendant’s application, it becomes difficult other than presumptively to assess how it should affect the exercise of my discretion. The plaintiff has not maintained that delay by the second defendant has caused him to act, or to refrain from acting, in a particular way that will cause him prejudice if he is ordered at this stage of the proceedings to provide security for the second defendant’s costs. That is not to say that the plaintiff carries or bears some onus to lead evidence to establish the existence of such prejudice, and the authorities do not suggest as much. The simple proposition is that the effect of the delay cannot be examined in other than a theoretical sense. It is a discretionary factor that prima facie favours the plaintiff.
14. The delay in the bringing of the present application is not great in absolute terms. The plaintiff, however, emphasises that it is significant in relative terms. For example, the application was not filed until after the proceedings had been allocated a date for hearing by which time, presumably, considerable work would have been done by the plaintiff’s legal representatives by way of preparation. For reasons that will be apparent from what I have already observed, that must remain no more than an assumption on my part.
15. It is also relevant in this context to observe that the plaintiff’s case against the second defendant is relatively uncomplicated. It seems uncontested that he advanced $600,000 without security pursuant to a loan agreement on basic terms and that the second defendant was a party to that agreement. The plaintiff’s entitlement to succeed against the second defendant will in all probability be co-extensive with her success of the matters she has raised in her defence and which will probably be agitated by way of a clearly pleaded cross claim. The question of whether or not the matter should have been given a hearing date having regard to the prospect that the pleadings may yet expand is not one that I am required to answer.
16. In further support of his opposition to the application, the plaintiff emphasises that the iniquity to which UCPR 42.21(1)(a) is directed is in this case insignificant to the extent that the potential difficulties for the second defendant in satisfying a costs order in her favour in the Republic of Ireland are small. He relies in that respect upon material referred to in his affidavit which outline the prerequisites that have to be met under Irish common law before a foreign judgment will be deemed to be enforceable in that country. Briefly, they are that:
    • (a) the judgment must be for a definite sum;
    • (b) the judgment must be final and conclusive; and
    • (c) the judgment must be given by a court of competent jurisdiction.
17. The plaintiff contends that none of these requirements is likely to trouble the second defendant if she were in due course to attempt to register a judgment for costs from this Court in Ireland.
18. However, the second defendant relied without objection upon some portions of an article dated October 2012 entitled “Enforcement of Foreign Judgments in Ireland” which included the following:

“In contrast to the provisions of the Regulation, which have streamlined enforcement of foreign judgments between EU member states, the procedures available under Irish common law for enforcement of foreign judgments in Ireland from non-convention countries are very restrictive. Although there is some evidence of judicial reform in Ireland which would suggest the Irish Courts are free to assess the competency criteria, at the moment the situation remains that if a judgment originates from a non-convention country, the judgment is often unenforceable as a practical matter. When the enforcement of a foreign judgment is not possible as a result of the Irish courts adhering to long-standing common law rules, the plaintiff may be forced to re-litigate the matter de novo in Ireland, and that course of action may present insurmountable practical or legal obstacles such as excessive costs or expiry of the limitation period.”

19. It seems not to be in doubt that the plaintiff has no assets in New South Wales. His affidavit reveals that he has “two investment properties [in Ireland] which are mortgaged and [that] is how [he] derive[s] his retirement income”.
20. The second defendant places significant reliance upon what was said by McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; [1991] HCA 36 at 323:

“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.”

21. The second defendant also relied upon Pilkin v Sony Australia Ltd [2018] FCA 1018 at [32] and Commissioner of Taxation Vasiliades [2016] FCAFC 170; (2016) 344 ALR 558 at 578. The second defendant contended that the plaintiff cannot point to the existence of any countervailing circumstances or competing considerations to counter or override the “great weight” referred to by McHugh J that should be accorded to the plaintiff’s residence in Ireland.
22. It seems to me that the balance of competing factors in this case clearly weighs in favour of the second defendant. The plaintiff is resident in Ireland. The recovery of costs in that jurisdiction pursuant to an Australian judgment is by no means straightforward. The plaintiff chose this jurisdiction. He has no assets here. There is no material to enhance the value of the presumption of prejudice flowing from the delay in bringing the present application beyond bare presumption.
23. I note in passing that UCPR 42.21(1A)(i) specifies whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant as a potentially relevant matter in considering whether it is appropriate to make an order that the plaintiff give security for costs. In this case there was no evidence of any prejudice to the second defendant caused by such delay.
24. It follows in my view that the plaintiff should provide security for the costs of the second defendant. The second defendant’s solicitor Martin Rosenblatt deposed to the quantum of the anticipated costs. The total of those costs discounted by 15% came to a figure of $78,200. Counsel for the plaintiff challenged some of the constituent parts of that sum but did not challenge the following:
    • (a) Solicitor’s preparation for hearing $7,500
    • (b) Counsel’s preparation for hearing $20,000
    • (c) Solicitor’s final hearing attendance $16,000
    • (d) Counsel’s fees on brief at hearing $20,000
    • (e) Disbursements including court and transcript fees $2,500.
25. Those figures total $66,000. After the application of a 15% discount the final sum comes to $56,100.
26. I consider that the plaintiff should provide security for the second defendant’s costs in the rounded sum of $50,000. The orders that I make are therefore as follows:
    • (1) Order the plaintiff within 28 days to provide security for the costs of the second defendant in the amount of $50,000 in a form suitable to the second defendant and to the Court.
    • (2) Stay the proceedings pending compliance by the plaintiff with order (1).
    • (3) Order that the costs of this application should be the costs in the proceedings.

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