Under r 51.50(1) of the Uniform Civil Procedure Rules 2005 (NSW), the New South Wales Court of Appeal may, in special circumstances, order that such security as the Court thinks fit be given for costs of an appeal. Rule 51.50(2A) provides that, if an appellant or cross-appellant fails to comply with an order under r 51.50, the Court may order that the appeal or cross-appeal be dismissed.
In Pi v Zhou (No 3) [2017] NSWCA 224, Payne JA, sitting as a single judge of the New South Wales Court of Appeal, held that the Court had power in r 51.50(2A) to dismiss proceedings brought by an applicant for an extension of time to appeal by reason of the applicant’s failure to provide security for costs ordered by the Court under r 51.50(1). His Honour further held that, even assuming that r 51.50(2A) did not apply, the Court had inherent jurisdiction to dismiss the proceedings for failure to comply with an order to provide security for costs.
The background to the case was that the applicant had made a claim for damages for assault and various other torts against the respondents. The claim had been dismissed at first instance. After bringing two misconceived judicial review applications of the trial judge’s decision, the applicant had sought leave to appeal out of time from the trial judge’s decision. The respondents had then sought security for costs of the appeal. A single judge of the Court of Appeal had, amongst other things, ordered that the applicant provide security in the sum of $12,000 and had stayed the proceedings pending the provision of that security. The applicant had applied for a review of those orders. Following the review by three members of the Court of Appeal, the Court, by majority, had ordered that the applicant provide security in the sum of $12,000 and had continued the stay of the proceedings pending the provision of that security. The Court had also ordered that the matter be listed on a subsequent date before a judge of the Court for consequential orders or, in the event that the security had not been provided, for an order for dismissal of the proceedings.
The security was not provided and the matter came before Payne JA who gave the parties a further specific opportunity to address the question of whether the Court should dismiss the proceedings under r 51.50, or in the Court’s inherent jurisdiction, for the failure to provide the security.
After considering the applicant’s submissions, Payne JA indicated (at [20] and [23]) that the applicant’s central complaint was that security for costs should never have been ordered by the Court because of errors by the trial judge and the single judge of the Court of Appeal who had made the initial order for security for costs. His Honour, however, said that this complaint was not a matter that could be challenged before him. Special leave to appeal had not been sought nor had any application been made to vary or discharge the orders made. His Honour further said (at [21]) that the submissions made by the applicant had not addressed the only question currently before the Court, namely, whether the proceedings should be dismissed for the failure to provide the security which had been ordered.
His Honour acknowledged (at [22]) that there could be an issue about the Court’s power in r 51.50(2A) to dismiss the proceedings because the definition of “appellant” in r 51.2 arguably did not include the applicant who was formally an applicant for an extension of time to appeal. Under r 51.2, “appellant” is defined to mean a party that files a notice of appeal in the Court, and any other party joined as an appellant. Nevertheless, his Honour was of the view that r 51.50(2A) did provide power to dismiss the proceedings where an order for security for costs had been made under r 51.50(1). In any event, his Honour said, assuming that r 51.50(2A) did not apply, the Court had inherent jurisdiction to dismiss the proceedings for failure to comply with an order to provide security for costs.
His Honour indicated (at [24]) that the question of whether the Court should exercise its discretion to dismiss the proceedings required consideration of the following five factors set out in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271:
- the period that had elapsed since the security was ordered;
- the fact that the plaintiff had been on notice of the application for dismissal;
- the seeming inability of the plaintiff to further fund the proceedings;
- the prejudice to the defendant; and
- the position of the Court.
However, his Honour accepted (at [25]) that these factors were not exhaustive and that all the relevant circumstances were required to be taken into account, including the Court’s straining, consistently with the interests of justice, to avoid taking the radical step of denying the applicant his day in Court.
His Honour then made the following findings having regard to the five factors (at [26]):
- Over seven months had elapsed since the Court, following its review of the earlier orders, had made the order for security for costs and this was sufficient time for the applicant to have complied with the order if he was willing and able to do so.
- The applicant had been on notice for a significant period of time that the proceedings might be dismissed in the event that there was non-compliance with the order to provide security for costs.
- The applicant had made it clear in his submissions that he did not intend to provide the security for costs which had been ordered.
- The events that had given rise to the proceedings before the trial judge had occurred in January 2011 (over 6 years previously) and the respondents had had two judgments in their favour after lengthy and expensive litigation: first, in succeeding on the substantive claim before the trial judge and, secondly, in obtaining and later defending an order for security for costs. In this respect, there was a clear public interest in the final determination of the litigation.
- The position of the Court was that the proceedings had been stayed since June 2016 when the initial order for the security for costs had been made (a period which was in excess of a year) and the potential effect of that order on the applicant’s ability to conduct the proceedings had been recognised by the Court. A similar issue (that the appeal or proceeding was likely to be stifled) had arisen in Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377 but the Court of Appeal in that case had refused to discharge the order to provide security.
His Honour also took into account the following circumstances (at [27]):
- Summary dismissal was an extreme measure. Even if the applicant was able to commence fresh proceedings against the respondents, he could face a successful Limitation Act defence.
- The applicant’s default in complying with the order for the provision of security for costs was continuing and, on the evidence, it was highly unlikely that the order would be complied with.
After observing (at [28]) that the power to summarily dismiss proceedings served the dual purposes of ensuring fairness to litigants and preserving the integrity of the judicial system, his Honour concluded (at [29]) that, taking into account all the relevant circumstances of the case, and straining, consistently with the interests of justice, to avoid taking the extreme measure of dismissing the proceedings, it was appropriate to dismiss the proceedings for the failure to provide the security for costs.
Accordingly, his Honour ordered that the proceedings be dismissed.
