Leave and security for costs for an incarcerated appellant – Mr D v Ms P [2020] NSWCA 174

Authors: Amanda Kmetyk and Andrew Howard

Principles

• Pursuant to s4 of the Felons (Civil Proceedings) Act 1981 (NSW) (Felons Act), a person who is in custody as a result of having been convicted of a serious indictable offence may not institute any civil proceedings in any court except by the leave of that court.

• The two statutory pre-requisites to the exercise of the discretion to grant leave, pursuant to s5 of the Felons Act, are that the proceedings are not an abuse of process, and that there is prima facie ground for the proceedings.

• No order for security for costs should be made in the absence of 'special circumstances'.

• In ordering security for costs, the Court does not set out to give a complete and certain indemnity.

Background

This judgment dealt with two notices of motion in relation to an appeal sought to be brought from the decision of Simpson AJ (the primary judge) in Ms P v Mr D [2020] NSWSC 224.

In the proceedings at first instance, Ms P claimed damages against Mr D arising from eight separate assaults, seven of which were alleged sexual assaults. Four of the sexual assaults were admitted and the balance, although contested, were found to have taken place.

The primary judge awarded damages in the sum of $853,550 together with costs. The damages amount comprised a sum of $275,000 plus interest of $88,550 for general and aggravated damages, $40,000 for medical and associated expenses, $150,000 for past economic loss, $200,000 for future economic loss, and exemplary damages of $100,000 which was referable only to the four assaults that were contested.

On 17 June 2020 Mr D filed a Notice of Appeal going to the disputed sexual assaults, damages and interest on past damages. Because of his incarceration for a serious indictable offence, Mr D required leave to be able to institute any proceedings pursuant to s 4 of the Felons (Civil Proceedings) Act 1981 (NSW) (Felons Act). By Notice of Motion dated 14 July 2020, Mr D sought leave nunc pro tunc to retroactively institute the appeal.

An important feature of the appeal is that it recognises that the respondent, Ms P, will still be entitled to a verdict and an amount of damages; the real issue is as to what amount. Given that a significant component of the damages awarded will remain, and that none of the damages awarded by the primary judge have been paid, Ms P filed a Notice of Motion in which she sought a stay of proceedings until security for costs are provided, or in the alternative dismissal of the proceedings if security is not provided.

Decision

The application for leave proceeded on the basis that the lodging of an appeal amounted to the institution of “any civil proceedings in any court” within the meaning of s 4 of the Felons Act.

Justice Bell noted the Felons Act was designed to prevent persons in custody from attempting to institute vexatious or frivolous actions. The two statutory pre-requisites to the exercise of the discretion to grant leave outlined at s5 of the Felons Act are that the proceedings are not an abuse of process, and that there are prima facie grounds for them.

The Court noted that the "prima facie" requirement represents a relatively low threshold. While Justice Bell considered Mr D's prospects could not be regarded as strong, he did not accept that Mr D's appeal should be characterised as "hopeless" and in the absence of any suggestion of abuse of process leave was granted.

Turning to the application for security for costs the Court had to consider whether there were "special circumstances" for an order for security for costs pursuant to r51.50 of the UCPR.

While the Court noted it is not possible to make a detailed analysis of the appellant's prospects of success on an appeal, the Court noted that some analysis must be undertaken for the purposes of the “special circumstances” calculus that the authorities¹ indicate should be undertaken, which include amongst other things that: consideration of what may constitute special circumstances should not be fettered by some general rule of practice; an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; and that such an order should usually not be made where a bona fide and reasonably arguable appeal will be stifled by an order for security.

The Court also noted the legal principle outlined by Spender J in Tait v Bindal People [2002] FCA 322 at [3] that there is a difference in the consideration of the ordering of security for costs at the appellate level as "there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust”.

On the basis that four of the sexual assaults were admitted and given a concession by counsel for Mr D during the primary proceedings, the court noted Mr D must have negligible prospects of reducing the amount of general and aggravated damages awarded which, together with interest, amounted to about $350,000.

On the basis of Mr D’s asset position, Justice Bell concluded that even if Mr D were to succeed in reducing or eliminating the exemplary damages component of the award and reducing the economic loss component of the award, any reduced judgment is likely still to be for a very significant amount, in Ms P’s favour. Further, if successful in resisting the appeal his Honour determined it is inevitable that Ms P will be left out of pocket in respect of costs.

Justice Bell did not accept that the appeal would be stultified if an order for security was made, found that special circumstances existed and ordered the Appellant to provide security for the Respondent's costs.

In making orders for security the Court confirmed the Court does not set out to give a complete and certain indemnity.

Why this case is important

This case confirms a number of legal principles and serves as a reminder that:

• A person incarcerated as a result of a serious indictable offence requires leave to institute any proceedings so as to prevent persons in custody from attempting to institute vexatious or frivolous actions.

• With respect to the requirement that there be “prima facie ground” pursuant to s 5 of the Felons Act, this is a relatively low threshold, such that leave is likely to be granted in the absence of any suggestion of abuse of process.

• In special circumstances, the Court may order that such security as the Court thinks fit be given for costs of an appeal.

• Consideration ought to be given to making an application for security for costs where there are arguments that "special circumstances" exist, particularly at the appellate level where there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent will be deprived of his costs.

---

¹ Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18]