Di Carlo v Dubois P/L & Ors [2003] QCA 514

1 SUPREME COURT OF QUEENSLAND CITATION: Di Carlo v Dubois P/L & Ors [2003] QCA 514 PARTIES: SALVATORE DI CARLO (plaintiff/appellant) v DR PHILIP JAMES DUBOIS (first defendant/respondent/applicant) PHILIP DUBOIS (MEDICAL) PTY LIMITED ACN 010 673 864 (second defendant/respondent/applicant) DENNIS RICHARD OSBORNE, PHILIP JAMES DUBOIS, STEPHEN BENNETT KELLER, PIYOOSH KOTECHA, GARY EDWARD O’ROURKE, MARK JAMES READY, PETER STOREY, CHARLES BRUCE LEIBOWIZ, PETER CHARLES LUSH, NICHOLAS DAUNT, DAVID ALEXANDER NOBLE & PETER FERGUS LEGH TRADING UNDER THE FIRM NAME OR STYLE OF QUEENSLAND X-RAY SERVICES (third defendants/respondents/applicants) DR MICHAEL CORONEOS (fourth defendant) FILE NO/S: Appeal No 7132 of 2003 SC No 1281 of 1996 DIVISION: Court of Appeal PROCEEDING: Application for Security for Costs ORIGINATING COURT: Supreme Court at Brisbane DELIVERED EX TEMPORE ON: 17 November 2003 DELIVERED AT: Brisbane HEARING DATE: 17 November 2003 JUDGES: McMurdo P, Davies JA and Mullins J Separate reasons for judgment of each member of the Court, each concurring as to the order made ORDER: Application refused with costs to be assessed CATCHWORDS: PROCEDURE – COSTS – SECURITY FOR COSTS – OTHER REASONS FOR SECURITY - where application for security for costs - whether appellant shows lack of credit and reluctance to pay debts – whether appellant impecunious – whether appellant has good prosects of success on appeal – where application refused Bankruptcy Act 1966 (Cth), Part X Uniform Civil Procedure Rules 1999 (Qld), r 772 COUNSEL: R V Hanson QC, with P L Feely, for the appellant -- 1 of 8 -- 2 N M Cooke QC for the respondents/applicants SOLICITORS: Flower & Hart for the appellant Baker Johnson Lawyers for the respondents/applicants THE PRESIDENT: This is an application brought by the first, second and third respondents to the appeal for an order that the appellant give security for the first, second and third respondents' costs for the prosecution of his appeal in the sum of $15,000 under r 772 UCPR and that the appellant pay the respondents' costs of this application. The appellant claimed damages for injuries in respect of a medical procedure undertaken in 1993, asserting negligence. The trial was heard in the Trial Division over seven days in November last year. On 16 July 2003, the appellant's claim against the first, second and third respondents was dismissed with costs but the appellant was successful against a fourth respondent, Dr Coroneos, and was awarded damages of $80,000, with costs as between them. Since 24 December 1997, the appellant has been subject to a Part X arrangement under the Bankruptcy Act 1966 (Cth). That arrangement, which was amended on the 10th of September 1999 and again on the 21st of December 2000, was ultimately in these terms: "1. A maximum of $140,000, whereby the entire proceeds of the personal injuries claim are to be paid by 30 June 2001. The balance resulting from the proceeds of medical negligence claim are to be paid by 31 December 2001. 2. In addition, the debtor agrees to assign all book debts owing to him at the date of signing the Section 188 -- 2 of 8 -- 3 Authority. The resolution will agree to a proposal that the funds be applied first of all to meeting the professional costs and outlays of the Controlling Trustee and Trustee which are to be approved by the debtor's creditors. The balance remaining shall be applied by the Trustee in making payments rateably to all his creditors. Any surplus funds will be refunded to the debtor." The appellant was paid about $12,000 after costs in his personal injuries action against the Nominal Defendant, not related to this application, apparently before the 30th of June 2001. The applicant's material discloses that the appellant's debts under the Part X arrangement are in the vicinity of $253,532.51 or, in any event, a very substantial sum, and that only $6,967.97 has been received from the appellant by the controlling trustee, comprising $1,114.97 paid by the appellant on the 2nd of December 1997, $141.97 paid by him on the 16th of February 1998 and the balance paid by receipts of book debts owing to the appellant and paid to the trustee between February '98 and the 13th of November 2000. The appellant, who gave oral evidence and was cross-examined in addition to having sworn an affidavit, swore that he did not understand that under the Part X deed of arrangement he was required to pay the proceeds of the personal injuries claim against the Nominal Defendant until both that action and the medical negligence claim the subject of this application had been completed. This was because he wished to finalise both his outstanding actions and if necessary, to top up the -- 3 of 8 -- 4 amounts received and to repay whatever he could at that time to his creditors by, if necessary, amending the Part X arrangement. In the end, it seems that the trustee and creditors have not pursued this matter under the Part X arrangement; this is a matter for them and not directly a matter for this Court's consideration in this application. Mr Hanson urges this Court to see the appellant's failure to pay the $12,000 to his trustee as showing his lack of credit generally and demonstrating a reluctance to pay his debts. The appellant's explanation cannot be discarded completely. More important, however, is the issue as to whether he is in a position to pay his debts, that is, whether he is currently impecunious such that any costs order made against him in respect of his appeal would be rendered useless. He deposes that his current practice as a barrister enables him to meet substantial monthly expenses including taxation commitments under an arrangement with the Australian Taxation Office. He says that he is not impecunious and is able to meet his debts as they fall due and he has sworn that he has a number of assets including 1000 Commonwealth Bank shares, a number of motor vehicles including a $30,000 classic car. The applicant's material claims that the costs of resisting the appeal will be in the order of at least $15,000. The -- 4 of 8 -- 17112003 T25/CGC29 M/T COA254/2003 1 5 10 20 30 40 50 appellant deposes that the costs of the appeal will be less than $15,000 although he cannot say how much less. The factors relevant to the security for costs application on appeal include the appellant's prospects of success on appeal, his financial position and, if impecunious, the fact that the appellant has already had a lengthy Court trial which he lost on the merits. As to the first issue for consideration, it is difficult, especially in an appeal like this from a lengthy trial where many grounds of appeal have been raised, to investigate too deeply at this preliminary stage the merits of the appeal. I note however that many of the grounds of appeal relate to challenges to the trial Judge's findings of fact, including an unfavourable finding as to causation and in that respect the onus on the appellant is a significant one. Those matters are not however the sole grounds of appeal and it certainly cannot be said at this early stage that the appeal is without substance. Of more significance here is whether the appellant is impecunious. He is subject to a Part X arrangement under the Bankruptcy Act 1966 (Cth) and it seems he has not complied with the terms of that arrangement but as I have said this is really a matter for the trustee and the creditors. It is not directly relevant to the question of whether he is currently in a position to meet a costs order against him if he loses this appeal. The material he has placed before the Court has 60 -- 5 of 8 -- 17112003 T25/CGC29 M/T COA254/2003 1 6 10 20 30 40 50 established that he is earning an income as a barrister and has been able to maintain the costs of running his practice, pay his income tax commitments including his BAS commitments, to support his son and to pay his school fees at a private school. Additionally he has assets which well exceed the estimated costs of the appeal. In the end I am not satisfied that he is impecunious and unable to pay any costs order made against him in respect of this appeal. I would refuse the application with costs to be assessed. DAVIES JA: I agree with the orders proposed by the President and generally with her reasons. As to the respondent's prospects of success in his appeal Mr Cooke, in referring to the question of causation, referred to an argument relating to change evidentiary onus and some other matters which at least make the appeal arguable although, in my opinion, the prospects of success are not good. But that alone, in my opinion, would not be sufficient to entitle the applicant to an order for security for costs. As to ability to pay, I just mention in addition to the matters referred to by the President so far as assets are concerned, there was a second car, which Mr Di Carlo valued at $15,000, a motor bike which he valued at about $2,000 and a sum of somewhere between $8,000 and $12,000 which had, until a short time ago, been as high as $21,000 and varies up and down apparently in his bank account. 60 -- 6 of 8 -- 1 7 10 20 30 40 50 More importantly, in respect of ability to pay, Mr Di Carlo has sworn that his income, part time though it is, enables him to discharge his existing liabilities as they fall due, including the arrangement which he has made with the Income Tax Commissioner to pay off a past tax debt. Mr Di Carlo also mentions in respect of this tax debt that he expects that there would, in respect of a later assessment, be a refund due to him of something in the vicinity of $20,000 which would substantially offset that debt. For those reasons I cannot be satisfied on the evidence before this Court that either he will be unable to pay the costs of the applicant here if he fails in his appeal or that, as Mr Hanson attempted to argue before this Court, that it is likely that he will attempt to avoid payment of the costs ordered to be paid on completion of this appeal if in fact he fails. For those reasons, in addition to those referred to by the President, I agree with the orders she proposes. MULLINS J: I agree with the orders proposed by the President for the reasons given by the President and the additional reasons given by Justice Davies. ... 60 -- 7 of 8 -- 1 8 10 20 30 40 50 THE PRESIDENT: Perhaps I just simply - as Justice Davies says to me perhaps I shall amend the reasons simply to say a substantial sum. ----- 60 -- 8 of 8 --