Mongey v Demetriou

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.

UCPR 42.21(1)(a) provides as follows:

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.

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.

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.

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:

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.

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.

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:

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:

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

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

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.

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.

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.

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:

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.

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:

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”.

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:

The second defendant also relied upon Pilkin v Sony Australia Ltd [2018] FCA 1018 at [32] and Commissioner of Taxation Vasiliades (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.

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.

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.

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:

Those figures total $66,000. After the application of a 15% discount the final sum comes to $56,100.

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: