FEDERAL COURT OF AUSTRALIA

Mensink v Parbery [2017] FCA 1248

ORDERS

THE COURT ORDERS THAT:

1.    Within 28 days of the date of these orders the appellant give security for the respondent’s costs of the appeal in the sum of $70,000 by:

(a)    paying the money into Court; or

(b)    providing to a Registrar of this Court an unconditional bank guarantee from an Australian-owned bank (as recognised by the Australian Prudential Regulation Authority) in a form acceptable to the Registrar.

2.    The appeal be stayed until security is given in accordance with Order 1.

3.    In the event that the security referred to in Order 1 is not provided within 42 days of the date of these orders, and unless the Court otherwise orders before that time, the appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WIGNEY J:

1    Mr Clive Mensink is a former director and company secretary of Queensland Nickel Pty Limited (In Liquidation). Queensland Nickel is in the process of being wound up. Mr Stephen Parbery and Mr Michael Owen have been appointed special purpose liquidators. On 27 February 2017, the primary judge ordered Mr Mensink to appear before a Deputy Registrar on 27 March 2017 to be examined pursuant to a summons issued pursuant to s 596A of the Corporations Act 2001 (Cth). Mr Mensink did not comply with that order. He did not attend for examination on 27 March 2017. On the same day, the primary judge made an order that Mr Mensink be arrested and brought before the Court for examination. A warrant was subsequently issued. On the following day, the primary judge signed a statement of charge which charged Mr Mensink with contempt for failing to comply with the order made on 27 February 2017 and an earlier order made by a Registrar. His Honour also made a number of orders, including an order that a warrant issue for Mr Mensink’s arrest. That warrant was issued the following day.

2    Mr Mensink appealed the orders made by the primary judge on 27 and 28 March 2017. The appeal has not yet been listed for hearing. That is in part due to the interlocutory application that is the subject of this judgment. The liquidators, who are the respondents to Mr Mensink’s appeal, applied for an order that Mr Mensink provide security for the costs of the appeal in the sum of $138,500. Mr Mensink opposed the application.

3    For the reasons that follow, this is an appropriate matter for an order for security for costs, though not for the full amount sought by the liquidators.

BACKGROUND

4    Mr Mensink was a director of Queensland Nickel at various times between 2012 and 2017. He was also the company secretary between mid-2013 and early-2017.

5    On 18 January 2016, at a time when he was the sole director of Queensland Nickel, Mr Mensink placed the company into voluntary administration. The period of voluntary administration was relatively short-lived. On 22 April 2016, a meeting of Queensland Nickel’s creditors resolved to wind up the company, with the result that the then administrators became the company’s liquidators. Shortly thereafter, on 18 May 2016, an order was made appointing Mr Owen and Mr Parbery special purpose liquidators of Queensland Nickel for the purpose of, among other things, investigating dealings or transactions between Queensland Nickel and its related entities. A third special purpose liquidator appointed at the same time, Mr Ayres, subsequently resigned as liquidator in March 2017.

6    On 3 August 2016, a summons for the examination of Mr Mensink was issued pursuant to s 596A of the Corporations Act. That summons was returnable on 19 August 2016. It soon became apparent, however, that Mr Mensink had departed the country by that time, thus rendering personal service of the summons impossible.

7    On 15 December 2016, a Registrar of the Court ordered substituted service of an amended summons for Mr Mensink’s examination, and adjourned the summons to 22 February 2017. On 31 January 2017, Mr Mensink swore an affidavit in which he stated as follows (as drafted):

Reasonable excuse

I am currently undertaking a cruise whereby the journey ends on the 8 February 2017, which is 9th February 2011 (Australian Time). Following the end of the current Journey. I have made extensive arrangements to travel to Europe and spend time with my late father’s family in Holland. My overseas travel has been a long-standing arrangement and if I do not follow the current arrangements I will incur significant damages. In addition to personal and health determents [sic] set out hereunder; I will incur substantial financial costs and damages if I broke my current committed schedule which would have me returning to Australia in late July 2017. My father’s family are elderly and this may be the last time I have to spend time with them.

Examinations, Time and Legal Advice

I understand I am required subject to a reasonable excuse not to attend to the Federal Court of Australia on 9th February 2017 and from day to day until excused by the Court for examination by the GPLs and from 22nd February 2017 and thereafter from day to day until excused by the Court for examination by the SPLs on the 15th December 2016. I have not received any documentation in respect of such examinations nor have I had the opportunity of meeting with and discussing matters with an Australian Lawyer to properly prepare for any examination and to understand the information the GPLs and SPLs are seeking. In such circumstances I do not believe it is not reasonable to expect my attendance at the examinations without having the benefit of appropriate Legal advice.

I am amongst other things and for the reasons set out in this my affidavit not able to attend to the examinations as it would not be reasonable for me to do so.

8    Mr Mensink failed to appear before the Registrar for examination on 22 February 2017. The Registrar’s response was to refer the question of whether a warrant should be issued for Mr Mensink’s arrest to the primary judge.

9    On 27 February 2017, the primary judge made orders that required Mr Mensink to attend for examination before a Registrar on the morning of 27 March 2017 for the purpose of complying with the order made by the Registrar on 15 December 2016. If Mr Mensink failed to appear before the Registrar that morning, the orders provided that he was required to appear before the primary judge at 2:15pm on the same day to show cause why a warrant for his arrest should not issue. The orders were made subject to the condition that the liquidators pay for Mr Mensink’s return airfare from a port in Europe to be nominated by Mr Mensink. The orders contained a penal notice addressed to Mr Mensink concerning the punishment for failure to comply with the orders.

10    It would appear that Mr Mensink was not happy about the orders made by the primary judge. He filed an interlocutory application on 3 March 2017 seeking to set aside the 27 February orders. He was represented by a solicitor at the hearing of that application. On 8 March 2017 the primary judge dismissed the application: see Parberry [sic], in the matter of Queensland Nickel Pty Ltd (in liq) [2017] FCA 880.

11    Mr Mensink did not comply with the orders made on 27 February 2017. He failed to attend for examination before the Registrar on the morning of 27 March 2017. He also failed to appear before the primary judge to show cause why a warrant for his arrest should not issue. The primary judge’s response was to make an order, pursuant to r 11.10 of the Federal Court (Corporations) Rules 2000 (Cth), that Mr Mensink be arrested and brought before the court to attend for examination.

12    Rule 11.10 of the Corporations Rules provides as follows:

11.10 Default in relation to examination

(1)    This rule applies if a person is summoned or ordered by the Court to attend for examination, and:

(a)    without reasonable cause, the person:

(i)    fails to attend at the time and place appointed; or

(ii)    fails to attend from day to day until the conclusion of the examination; or

(iii)    refuses or fails to take an oath or make an affirmation; or

(iv)    refuses or fails to answer a question that the Court directs the person to answer; or

(v)    refuses or fails to produce books that the summons requires the person to produce; or

(vi)    fails to comply with a requirement by the Court to sign a written record of the examination; or

(b)    before the day fixed for the examination, the person who applied for the summons or order satisfies the Court that there is reason to believe that the person summoned or ordered to attend for examination has absconded or is about to abscond.

(2)    The Court may:

(a)    issue a warrant for the arrest of the person summoned or ordered to attend for examination; and

(b)    make any other orders that the Court thinks just or necessary.

13    On the following day, 28 March 2017, the primary judge signed a statement of charge for contempt for failing to comply with the orders dated 15 December 2016 and 27 February 2017. His Honour also ordered that a warrant issue, pursuant to rule 42.14 of the Federal Court Rules 2011 (Cth), for the arrest and detention of Mr Mensink until he was able to be brought before the Court to answer the contempt charge.

14    Rule 42.14(1) and (2) of the Rules provide as follows:

42.14 Arrest

(1)    If an application for punishment of a contempt has been filed, or a proceeding has been started for punishment of a contempt, a party making the charge may apply to the Court for:

(a)    an order that the person charged give security for the person’s appearance to answer the charge; or

(b)    a warrant for the person’s arrest and detention in custody until the person is brought before the Court.

(2)    The party making the charge under subrule (1) must satisfy the Court that the person charged is likely to abscond or otherwise withdraw from the jurisdiction of the Court.

15    Both arrest warrants were subsequently issued on 29 March 2017.

16    By notice of appeal filed 13 April 2017, Mr Mensink appeals from the arrest warrant orders, as well as ancillary orders dated 28 March 2017 concerning substituted service and costs. The grounds of appeal are in the following terms:

1.    The learned primary judge made each of the said orders in circumstances there where there was no evidence and no proper basis upon which the learned primary judge could conclude that the Appellant had notice of orders made by the Court on 15 December 2016 and 27 February 2017 requiring, respectively, his attendance for examination on 27 February 2017 and 27 March 2017.

2.    The learned primary judge erred in ordering that a warrant be issued for the arrest of the Appellant under r 11.10 of the Federal Court (Corporations) Rules 2000 (Cth) in that:

a.    The learned primary judge failed to consider, or failed to adequately consider, whether the Appellant had reasonable cause for not attending Court on 27 March 2017.

b.    There was no proper basis upon which the learned primary judge could conclude that the Appellant did not have reasonable cause for not attending Court on 27 March 2017.

3.    The learned primary judge erred in ordering that a warrant be issued for the arrest and detention of the Appellant under r 42.14(1)(b) of the Federal Court Rules 2011 (Cth) (Rules) in that:

a.    The learned primary judge failed, or failed adequately to consider, whether the Appellant was likely to abscond or otherwise withdraw from the jurisdiction within the meaning of r 42.14(2) of the Rules;

b.    There was no proper basis upon which the learned primary judge could conclude that the Appellant was likely to abscond or otherwise withdraw from the jurisdiction within the meaning of r 42.14 (2) of the Rules;

c.    The statement of charge filed by the Respondents on 28 March 2017 was defective in that:

i.    In relation to Charge 1, the Court’s orders of 27 February 2017 were not personally served on the Appellant as required by r 41.07 of the Rules;

ii.    In relation to Charge 2, the orders of District Registrar Baldwin of 15 December 2016 were not endorsed as required by r 41.06 of the Rules.

SECURITY FOR COSTS: RELEVANT PRINCIPLES

17    The Court’s jurisdiction to hear an appeal from a judgment of the Court constituted by a single judge exercising the original jurisdiction of the Court is conferred by s 24 of the Federal Court of Australia Act 1976 (Cth). Section 4 of the Federal Court Act defines ‘judgment’ as, relevantly, a “judgment, decree or order, whether final or interlocutory”.

18    Under s 56 of the Federal Court Act, the Court or a judge has the power to order an appellant in such an appeal to give security for the payment of costs that may be awarded against him or her of such amount and in such manner and form as the Court or judge directs.

19    Rule 36.09 of the Rules contains rules relevant to an application for security for costs of an appeal. Rule 36.11(1) of the Rules provides, in effect, that such an application can be heard by a single judge.

20    The principles that apply in relation to security for costs applications are well known. It is well accepted that whether or not an order ought to be made is a matter for the discretion of the Court or judge. The discretion is a broad one. But for the requirement to act judicially, the discretion is effectively unlimited or unconfined.

21    The various considerations that may bear upon the making of an order have been considered in numerous authorities. Those considerations include: the appellant’s prospects of success; the extent of the risk that a costs order against the appellant will not be met if the appeal is unsuccessful; whether the making of an order for security for costs would be oppressive, in that it would stifle a reasonably arguable claim; whether any impecuniosity of the appellant arises out of the conduct complained of; whether there are other aspects of the public interest that weigh in the balance against the making of an order for security; and whether there are any particular discretionary matters peculiar to the circumstances of the case: see generally Equity Access Ltd v Westpac Banking Corporation [1989] FCA 520; (1989) ATPR 40-972 at 50,635 [24]; Soh v Commonwealth of Australia [2008] FCA 1524 at [10]; Clack v Collins (No 1) [2010] FCA 513 at [13]; Dye v Commonwealth Securities Limited [2012] FCA 992 at [26]; Elston v Commonwealth of Australia [2014] FCA 704 at [32].

22    Security for costs may be more readily granted in respect of an appeal. In Tait v Bindal People [2002] FCA 322, Spender J explained the difference in principle between security for costs at first instance and appellate level as follows (at [3] and [4]):

The difference is that, at the [appellate] level, 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.

In a sense, it would be giving to a person who has been on the receiving end so to speak of a determination by the courts a free hit at great cost to the other party in the appeal proceedings …

Evidence relied on by the parties

23    The liquidators relied primarily on an affidavit sworn by Mr Owen. In that affidavit, Mr Owen set out, in some detail, the relevant background to the issue of the examination summons, Mr Mensink’s repeated failures to appear on the dates appointed for his examination, and the making of the relevant orders by the primary judge. It is unnecessary to expand on the background facts contained in Mr Owen’s affidavit beyond the summary provided earlier. Mr Owen’s affidavit also contained evidence concerning a number of matters relevant to Mr Mensink’s present circumstances and the risk that a costs order against Mr Mensink may not be met, or may not be able to be readily enforced, if his appeal is unsuccessful. Some of those matters have already been referred to.

24    The liquidators also relied on two affidavits sworn by their solicitors that attached transcripts of public examinations and banking documents that have been obtained by the liquidators in the course of their investigations.

25    The principal points that emerge from that evidence are as follows.

26    First, Mr Mensink appears to have left Australia in June 2016. That was only a matter of months after Mr Mensink, as sole director of Queensland Nickel at the time, appointed administrators to Queensland Nickel. In his affidavit sworn in January 2017, Mr Mensink claimed that he had embarked on a cruise and then planned travel to Europe to spend some time with his late father’s family. He also said that he planned to return to Australia in late July 2017.

27    Second, Mr Mensink did not return to Australia in July 2017. Indeed he remains overseas to this very day.

28    Third, the affidavit sworn by Mr Mensink in January 2017 was the last piece of information received from Mr Mensink concerning his whereabouts and intentions. He has essentially been incommunicado since that time. Mr Mensink’s present whereabouts are unknown to the liquidators. Indeed, somewhat surprisingly, Mr Mensink’s whereabouts are apparently unknown to his solicitor and barristers, each of whom has been representing Mr Mensink for some time.

29    Fourth, the available inferences from all the facts and circumstances include that since late January 2017, Mr Mensink has been aware that he was required to attend the Federal Court for examination, that since that time he has deliberately made his whereabouts difficult to ascertain to anyone involved in this proceeding, and that he has no apparent intention of returning to Australia, at least while he faces the prospect of being examined by the liquidators.

30    Fifth, Mr Mensink appears to consider himself to be retired from the workforce. Mr Mensink’s uncle, Mr Clive Palmer, who, to put the matter in neutral terms, had previously been associated with Queensland Nickel and other companies associated with it, said in a public examination conducted by the liquidators in May 2017 that, as a result of the primary judge’s orders on 28 March 2017, he had resolved that no further payments would be made to Mr Mensink. Documents produced to the liquidators subsequent to that examination, however, reveal that Mr Mensink has been receiving, and seemingly continues to receive, a payment of $8,019.54 per fortnight from one of the companies associated with Mr Palmer, Mineralogy Pty Limited. In a public examination conducted in September 2017, Mr Palmer said that he knew that Mr Mensink continues to be paid sums by Mineralogy as “salary” as part of his package upon ceasing employment.

31    Sixth, Mr Palmer appeared to indicate, in answer to a question asked of him during the September examination, that he or Mineralogy had been meeting legal costs incurred by Mr Mensink in Australia and deducting that from Mr Mensink’s pay entitlements.

32    Seventh, Mr Mensink is the registered proprietor of two parcels of real estate in Australia. Both properties are mortgaged to the Westpac Banking Corporation. There is no evidence of the value of those properties or what, if any, equity Mr Mensink has in them. Documents produced to the liquidators by Westpac, however, tend to suggest that the mortgages secure two loan facilities that Mr Mensink has with Westpac. Those facilities were both drawn down in December 2015. The initial drawdown amount for one of the facilities was $378,000. The balance of that facility in March 2017 was a debit balance of $377,831. The initial drawdown amount of the second facility was $409,200. That remained the debit balance of the facility as at June 2017. Mr Mensink also has an associated “offset account”. The fortnightly payments from Mineralogy are deposited into the offset account and interest payments for the two loan facilities are deducted from it. The balance of the offset account as at June 2017 was $156,500.

33    Eighth, there is no evidence that Mr Mensink has any other assets in Australia.

34    In relation to the quantum of the security for costs order sought by the liquidators, the liquidators relied on a report prepared by an expert costs consultant, Mr Adam Bloom. In that report, Mr Bloom estimated that the liquidators’ reasonable legal costs and outlays in respect of the appeal would be $138,500. More will be said about Mr Bloom’s estimate later. Suffice it to say at this stage that it is, to say the least, somewhat surprising that legal costs of almost $140,000 could reasonably be incurred for a relatively straightforward one day appeal.

35    Mr Mensink relied on affidavit evidence from his solicitor, Mr Iskander. Mr Iskander provided his own estimate of each party’s costs of the appeal. It stood in stark contrast to Mr Bloom’s estimate. Mr Iskander’s estimate was $42,040. Mr Iskander’s affidavit also exhibited the title searches for each of the properties registered in Mr Mensink’s name. He also annexed the transcript of the hearing before the primary judge on 27 March 2017.

Should security for costs be ordered?

36    On balance, this is an appropriate matter for an order for security for costs. There are three main considerations that lead to that conclusion. They are, in summary: first, Mr Mensink is overseas and there is no indication that he plans to return to Australia; second, the evidence, such as it is, concerning Mr Mensink’s sources of income and assets in Australia suggest that there is, at the very least, a significant risk that if a costs order is made against Mr Mensink, the liquidators will have no ready means of enforcing that order; and third, Mr Mensink’s prospects of success in the appeal are, at best, a neutral consideration.

37    There is one consideration that tends to weigh against ordering security for costs. That consideration is that, at least on one view of it, the appeal concerns Mr Mensink’s liberty. That consideration, however, does not outweigh the other considerations.

Mr Mensink is outside the jurisdiction

38    As has already been noted, Mr Mensink has been outside Australia since June 2016. His present whereabouts are unknown, at least to those directly involved in this proceeding. He has apparently suggested to his uncle, Mr Clive Palmer, that he is contemplating not coming back to Australia.

39    Mr Mensink’s lack of enthusiasm for returning to Australia is perhaps not surprising in all the circumstances. What it does tend to indicate, however, is that Mr Mensink is apparently content to continue to ignore orders that have been made by the Court. Putting the merits or otherwise of Mr Mensink’s appeal grounds to one side for the moment, it is difficult to imagine that Mr Mensink is not by now well-aware of the summons and orders that have been made for his attendance for examination. He was certainly aware, at least in general terms, by January 2017 that he had been summoned to attend the Court for examination. He swore an affidavit in an apparent endeavour to avoid returning to Australia to be examined in February 2017. He has not been seen or heard of since that time. Solicitors and counsel have been retained to appear for him, including in respect of the appeal from the orders made by the primary judge and in relation to this application. While the source of the instructions provided to Mr Mensink’s solicitors and counsel remains unclear, it is difficult to imagine that Mr Mensink is not aware, at least in general terms, of the proceedings involving him in Australia. If he is not, it could reasonably be inferred that his ignorance could only be as a result of wilful blindness on his part.

40    The attitude that Mr Mensink has displayed to the Court’s orders, his continuing absence from Australia, and his apparent unwillingness to reveal his whereabouts are highly relevant in considering the risk that any order for costs against Mr Mensink will not be satisfied. It is, to say the very least, a fair inference that he is unlikely to voluntarily comply with any adverse costs order that may be made against him in respect of the appeal. It would accordingly be necessary for the liquidators to attempt to enforce the order. That would be no mean feat in circumstances where Mr Mensink’s whereabouts overseas are unknown.

41    Why, it may be asked rhetorically, should the liquidators be put to the considerable trouble, expense and uncertainty of attempting to enforce any costs order in all the circumstances.

42    In the particular and somewhat peculiar circumstances of this case, Mr Mensink could now effectively be considered to be a foreign resident, at least for the purposes of this security for costs application. The fact that a party is not ordinarily resident in the jurisdiction is a relevant consideration in relation to an application for security for costs. In some cases, this consideration can be a matter of “great weight”: Logue v Hansen Technologies Ltd [2003] FCA 81; (2003) 125 FCR 590 at [38]; PS Chelleram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 at [323]. This is such a matter.

Property in the jurisdiction

43    Mr Mensink is the registered proprietor of two properties in the jurisdiction. Both are mortgaged to Westpac. There is evidence to suggest that the mortgages secure loan facilities, the debit balances of which are sizable. There is no evidence concerning the value of the properties. Accordingly, the equity that Mr Mensink has in the properties is unknown. It was, of course, within Mr Mensink’s power to adduce evidence concerning the value of these properties. He has chosen to adduce no evidence in relation to his assets and sources of income, aside from tendering the title searches through his solicitor.

44    It should also be reiterated in this context that, even if Mr Mensink had equity in the properties, the liquidators’ task in seeking to enforce a costs order against the properties would unquestionably be difficult, time consuming and costly given that Mr Mensink’s whereabouts overseas was unknown. It is difficult to see why, in all the circumstances, the liquidators should be put to that trouble and expense.

45    The evidence concerning Mr Mensink’s assets in Australia supports the conclusion that there is, at the very least, a real risk that, if a costs order is made against him in relation to the appeal, the liquidators will have no means, or no ready means, of enforcing that order.

Prospects of success of the appeal

46    Both the liquidators and Mr Mensink advanced detailed submissions concerning the merits and strength of Mr Mensink’s appeal. The liquidators submitted that the appeal had no real prospects of success. It was submitted on Mr Mensink’s behalf that Mr Mensink had reasonable prospects of success. In all the circumstances, however, it is undesirable to give any detailed consideration to those submissions. That is best left to the appeal proper.

47    There is no doubt that in an appropriate case the bona fides and merits of the relevant claim can be taken into account in the exercise of the discretion concerning security for costs where there is material from which some assessment can be made: Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514. That would apply equally, in the case of an appeal, to the merits of an appeal. On the other hand, a line of authority indicates that the prospects of success ought to be regarded as a neutral factor in the exercise of the discretion: see for example Litmus Australia Pty Ltd (in liq) v Canty [2007] NSWSC 670 at [28]; Jazabas Pty Ltd v Haddad [2007] NSWCA 291; (2007) 65 ACSR 276 at [84]; Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at [37] and [38]; Equity Access at 50,636; Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 at 624; Australian Equity Investors, An Arizona Limited Partnership v Colliers International (NSW) Pty Ltd [2012] FCAFC 57 at [15]. Where, however, it is obvious that the action or appeal has strong prospects of success, it may be wrong to treat the merits of the action or appeal as only a neutral factor: Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2016] FCA 530 at [33]-[34].

48    This is not a matter where it could be said that the merits of the appeal are clearly or obviously strong. Given the nature of the appeal grounds and the foreshadowed submissions in support of them, it is not possible to form any real view about the strength or otherwise of Mr Mensink’s appeal grounds without giving detailed consideration to the transcript of the proceedings before the primary judge, the evidence that was before his Honour and the competing submissions. That is a matter best left to the Full Court hearing the appeal. While it may, for the purposes of this application, be accepted that the appeal is bona fide and has some prospect of success, that is at best a neutral consideration.

The proceeding is an appeal

49    As noted earlier, security for costs may be more readily granted in respect of an appeal. It is, however, somewhat doubtful that the considerations referred to by Spender J in Tait apply with full force in this matter. Mr Mensink does not appeal from a judgment against him, but rather from orders for his arrest, together with a number of ancillary orders, arising from his default or failure to comply with an examination summonses.

50    The liquidators submitted that, while there was no final trial in the formal sense, the principles relevant to security for costs in the context of an appeal should nevertheless apply here. Mr Mensink was legally represented at the relevant hearings before the primary judge, and his solicitor made submissions on his behalf. On that basis, it was submitted that the difference between this appeal and an appeal from a final judgment was “slight” but not material. In response, Mr Mensink submitted that on no view could the hearings before the primary judge on 27 and 28 March 2017 be considered to be fully contested hearings. They were, by contrast, “done on the run” and Mr Mensink’s solicitor was really only in a position to make very brief submissions in response to what was happening. In Mr Mensink’s submission, the appeal will ventilate new arguments that were never properly ventilated before the primary judge. Accordingly, the fact that this is an appeal should not be a major factor in the Court’s consideration of whether to order security.

51    There is some force in Mr Mensink’s submission that the observations of Spender J in Tait do not apply with full force in this matter. While s 4 of the Federal Court Act defines ‘judgment’ as a “judgment, decree or order”, in this matter there was no fully contested hearing before the primary judge and there are no reasons. While submissions were advanced on Mr Mensink’s behalf at the relevant hearings, ultimately it cannot be said that this is a case where there is a risk of injustice to a successful litigant who is compelled to contest a matter for a second time without a probability of obtaining their costs if ultimately successful: cf. Bethune v Porteous (1892) 18 VLR 493 at 494; see also Soh at [11]. That said, the fact that this proceeding is an appeal does tend to favour the grant of security, though in the particular circumstances it is not a matter that is deserving of great weight.

The appeal concerns Mr Mensink’s liberty

52    It may be accepted that the fact that the proceedings concern the liberty of the subject is generally an important consideration that weighs against the grant of an order for security for costs: Hood Barrs v Heriot [1896] 2 QB 375 at 376-377; King v Commercial Bank of Australia Ltd (1920) 28 CLR 289 at 293; Kennedy v McGeechan [1978] 1 NSWLR 314n at 315; Mobilia v Voudiotis [2002] VSCA 72; (2002) 4 VR 327 at [3]. It is not, however determinative or decisive. It is only one factor in an overall review of all the circumstances: King at 293; Mobilia at [3].

53    It may equally be accepted that this appeal concerns Mr Mensink’s liberty. That is because the appeal concerns a warrant for Mr Mensink’s arrest and potential detention, at least for a period of time.

54    In the particular circumstances of this case, however, the fact that the appeal concerns Mr Mensink’s liberty is not deserving of considerable weight. It does not outweigh the other considerations that support the making of an order. There are a number of reasons why that is so.

55    First, there is no suggestion, let alone evidence, that the making of an order for security for costs would stifle the appeal. There is no evidence that Mr Mensink would not be able to comply with, or would have difficulty complying with, the security for costs order sought by the liquidators. Given that Mr Mensink is still receiving not insubstantial payments from Mineralogy, it is at least open to infer that he will be able to comply with an order for security for costs if one is made. Further, given that Mr Palmer has apparently been meeting Mr Mensink’s legal fees to date, it may be inferred that Mr Palmer would provide the security necessary to comply with any such order if Mr Mensink did have any difficulties.

56    Second, the period of time during which Mr Mensink may be deprived of his liberty as a result of the orders that are the subject of the appeal may be very short. If Mr Mensink is arrested pursuant to either the order made on 27 March 2017, or order 9 of the orders made on 28 March 2017, he will be brought before the Court at the earliest opportunity. He will then have an opportunity to apply for bail, or orders for release on conditions akin to bail, pending the examination and the hearing of the contempt charge.

57    Third, it is relevant that, to the extent that the orders involve the deprivation of Mr Mensink’s liberty, that situation has only arisen because, on just about any view of the relevant facts and circumstances, Mr Mensink has ignored, and continues to ignore, Court orders. That is relevant to an assessment of the weight that should be given to this consideration.

Conclusion

58    When all the relevant considerations are weighed up, the balance clearly falls in favour of ordering that Mr Mensink provide security for costs. There is, in all the circumstances, a significant risk that Mr Mensink will not voluntarily comply with any adverse costs order that may be made against him. That would leave the liquidators in the invidious position of having to enforce the order against Mr Mensink in circumstances where his whereabouts are unknown. While Mr Mensink is the registered proprietor of two properties in Australia, the equity he has in those two properties is at best unclear. It is, in any event, difficult to see why the liquidators should be put to the considerable trouble and expense of seeking to enforce any adverse costs order against those properties in circumstances where Mr Mensink continues to absent himself from the jurisdiction. Those factors outweigh the fact that the appeal concerns, to an extent, Mr Mensink’s liberty. In the particular and somewhat peculiar circumstances of this matter, that consideration is not deserving of significant weight.

QUANTUM OF SECURITY

59    The amount of security that may be ordered is within the discretion of the Court. It is not necessarily the case that the Court will order an amount that will provide a complete indemnity against costs. Much will depend on the particular facts and circumstances of the case.

60    As has already been noted, the liquidators relied, in relation to quantum, on a report prepared by an experienced costs assessor, Mr Bloom. Mr Bloom expressed the opinion that the liquidators’ reasonable costs in relation to the appeal, including this application, would be likely to be $138,500. Of that amount, $68,200 was referrable to fees incurred by the liquidators’ solicitors, and $70,300 was referrable to counsel’s fees. Mr Bloom’s report was generally well-reasoned, and the methodology employed by him was sound and consistent with the Rules. He was not cross-examined.

61    Mr Mensink relied on affidavit evidence from his solicitor, Mr Iskander. Mr Iskander expressed the view that Mr Bloom’s estimates assumed a “particularly litigious approach” to the appeal by the liquidators. He estimated that the reasonable costs of running the appeal would be approximately $30,000 to $40,000 for each party, though a table that contained a breakdown of his estimate arrived at a figure of $42,040. Of that amount, only $7,040 was referrable to solicitors’ fees. Mr Iskander noted that the appeal was limited to points of law, that Mr Mensink bore the primary responsibility for the preparation of the appeal books, that the majority of work required to be undertaken to prepare the matter for hearing was properly the work of counsel alone, and that the work required to be undertaken by the parties in relation to the security for costs application was likely to exceed the work required to be undertaken to run the appeal itself. Mr Iskander was not cross-examined.

62    The difference between the liquidators’ estimate of costs, based on Mr Bloom’s report, and the estimate of $42,040 provided by Mr Mensink’s solicitor, is almost $100,000. It is not easy to resolve the difference of opinion, particularly because there was no cross-examination and no detailed submissions on the question of quantum. As noted earlier, however, the estimate of almost $140,000 arrived at by Mr Bloom is somewhat surprising given that the appeal concerns a very confined and uncontentious factual background and fairly narrow questions of law. It is also probably fair to say that, given that the parties both made detailed written and oral submissions concerning the prospects of success of the appeal for the purposes of this application, almost all of the relevant research and preparation for the appeal has already been undertaken.

63    When careful consideration is given to Mr Bloom’s report having regard to the features of the appeal just referred to, it would seem that he has overestimated the work that would be reasonable for both the solicitors and counsel to do in preparing the appeal for hearing. In particular, it would appear that he has overestimated the work that the solicitors would need to do to prepare for the appeal, and overestimated the further work that would need to be undertaken by counsel, particularly in relation to written submissions. This overestimation appears to have been the result of Mr Bloom not having a complete and accurate appreciation of the particular features of the appeal to which reference has already been made.

64    It is doubtful, for example, that the following costs could be considered to be necessary or reasonable in all the circumstances: costs of just over $12,000 (including solicitors costs of over $3,000) to be incurred in relation to counsel’s advice on prospects; costs of just over $6,000 (including almost $4,000 referrable to work by the solicitors) relating to the consideration of Mr Mensink’s appeal submissions and chronology; costs of $18,500 (including costs of almost $4,000 referrable to the solicitors) for the preparation of the liquidators’ written submission on appeal; costs of $4,500 (including $2,000 referrable to the solicitors) relating to the consideration of Mr Mensink’s reply submissions; solicitors costs of over $5,000 referrable to “updating trial brief/preparing authorities”; solicitors costs of over $4,000 for attendance at directions hearings (at which hearings junior counsel was to appear); and solicitors costs of almost $10,000 for “hearing preparation”. In relation to those items, it is doubtful that an advice on prospects would be necessary (or reasonable) and most of the work in respect of the appeal submissions and authorities, in particular most of the work that would involve the solicitors, would appear to have already been done.

65    What has just been said concerning Mr Bloom’s estimates is not intended to amount to a criticism of Mr Bloom. The difficulty would appear to be that he was perhaps not fully apprised of some of the somewhat unique features of this appeal. It is perhaps possible to conceive of an appeal where costs of almost $140,000 might be considered reasonable. This appeal, however, is not such an appeal.

66    By the same token, Mr Iskander’s estimate of the costs of the appeal would appear to be an underestimate. While it may be true that most of the work in relation to the appeal is likely to be undertaken by counsel, it is somewhat unrealistic to suggest that solicitors costs of $3,520 for preparation would suffice. Equally, the approach taken by the parties to this application for security for costs would suggest that it would be reasonable to assume that a “particularly litigious” approach may be taken by both parties to the appeal. That said, there is nothing in Mr Bloom’s report to suggest that he made any such assumption.

67    In all the circumstances, and taking into account the opposing estimates of Mr Bloom and Mr Iskander, and the submissions of the parties, a reasonable amount of security for costs would be $70,000.

CONCLUSION AND DISPOSITION

68    An order will be made that Mr Mensink give security for the liquidators’ costs in the sum of $70,000.

69    There are some minor issues with the form of the orders sought by the liquidators.

70    First, the proposed orders do not state what would constitute acceptable security. In the circumstances, it would be appropriate to indicate that the appropriate security in the sum of $70,000 should be paid into Court, or that an unconditional bank guarantee be provided by or on behalf of the appellant from a recognised bank, in a form acceptable to a Registrar of the Court, to be held by the Registrar until further order.

71    Second, the proposed orders provide that the security must be provided within 14 days. In all the circumstances, however, it would be reasonable to allow Mr Mensink 28 days to comply with the order. The proposed orders also provide for the dismissal of the appeal if security is not provided within the time provided. It would, however, be preferable for the orders to allow a further period of 14 days before the appeal is dismissed. It would be open to Mr Mensink to apply to have the appeal relisted for further case management during that period to make submissions as to why the appeal should not be dismissed.

72    Orders will be made accordingly.

Associate:

Dated:    24 October 2017