FEDERAL COURT OF AUSTRALIA Battaglia v Provident Capital Limited (In Liquidation) (No 2) [2014] FCA 956 Citation: Battaglia v Provident Capital Limited (In Liquidation) (No 2) [2014] FCA 956 Parties: STEFANO BRUNO BATTAGLIA v PROVIDENT CAPITAL LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 082 735 573 and PERPETUAL CORPORATE TRUSTEE LIMITED ABN 99 000 341 533 File numbers: NSD 2497 of 2013 Judge: PERRAM J Date of judgment: 4 September 2014 Catchwords: PRACTICE AND PROCEDURE – application for security for costs – whether applicant ordinarily resident in Australia Cases cited: Logue v Hansen Technologies Ltd (2003) 125 FCR 590 Date of hearing: 4 September 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Counsel for the Applicant: Mr D Parish Solicitor for the Applicant: Yates Beaggi Lawyers Counsel for the Respondents: Mr B Koch Solicitor for the Respondents: Henry Davis York IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2497 of 2013 BETWEEN: STEFANO BRUNO BATTAGLIA Applicant AND: PROVIDENT CAPITAL LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 082 735 573 First Respondent PERPETUAL CORPORATE TRUSTEE LIMITED ABN 99 000 341 533 Second Respondent JUDGE: PERRAM J DATE OF ORDER: 4 SEPTEMBER 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for security for costs be dismissed. 2. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2497 of 2013 BETWEEN: STEFANO BRUNO BATTAGLIA Applicant AND: PROVIDENT CAPITAL LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 082 735 573 First Respondent PERPETUAL CORPORATE TRUSTEE LIMITED ABN 99 000 341 533 Second Respondent JUDGE: PERRAM J DATE: 4 SEPTEMBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT (Revised from transcript) 1 By an interlocutory application dated 1 August 2014, the respondents seek an order that the applicant provide, within fourteen days, security for the costs of the respondents by payment into Court of the amount of $195,000 or in such other form or amount as the Court sees fit. The basis upon which that application was initially made was that Mr Battaglia is ordinarily resident in Argentina. There is material which has been put before this Court which provides strong corroboration for that proposition. That material consists in the main of an affidavit which was prepared on behalf of the applicant towards the end of last year in interlocutory proceedings before Foster J. 2 Those proceedings concerned an attempt on the applicant's part to restrain the exercise by one or more of the respondents of powers of sale which had accrued to them under certain security documentation given in respect of land. In the course of the proceedings before Foster J, the applicant's solicitor swore an affidavit in which he said at paragraph 4 that he was informed by the plaintiff and believed 'that [the plaintiff] resides in Argentina for most of each year. Shortly after I met with him in early October 2013, he departed for Argentina'. There is some dispute as to whether this is actually so. To understand the nature of that dispute, it is necessary for there to be a retracing of steps back to the underlying allegations in the proceedings. 3 The applicant has executed guarantees and mortgages in favour of some of the respondents and those securities have been called upon. The applicant formally conducted a construction business but after a period, retired. I interpolate that the applicant is now in his late seventies. The business was then taken over by his sons. The gist of the case concerns whether the sons then impermissibly used the property of their father, the applicant, to take out loans for the construction business, as he contends, or whether the father is to be bound by the sons' actions. Put another way, the father denies ever having given approval for the execution of the security documentation. 4 In the course of that debate, the applicant has asserted that the proposition that he had gone to Argentina to be resident there from 2009 was an aspect of the fraud of his sons and that he had never intended that statement to have been made. As events transpire, it is not necessary for me to resolve that debate. This is because since the commencement of these proceedings, the applicant has, on any view, been in Australia. By itself, that would not be an answer to the respondent's application. However, since having arrived back here from Argentina, the applicant has suffered the considerable misfortune of a stroke, the consequence of which has been that he has been both hospitalised and rendered out of contact with his solicitors. 5 On the eve of the present application, there was served on behalf of the applicant an affidavit of Mr Watson which deposed in some little detail to the residency position and, to an extent, the financial position of the applicant. According to a medical certificate attached to the applicant's solicitor's affidavit, Mr Battaglia suffered a stroke on 13 July of this year and was discharged back to his home on 31 July this year. He was then re-admitted to Sutherland Hospital on 26 August with a headache and some difficulty walking, which is being currently investigated. 6 The position of the applicant's solicitor is that he has been unable to obtain instructions directly from the applicant because of his condition and has been forced, in effect, to communicate with the applicant through his wife, Florentina. On 1 September, that is, only a few days ago, the solicitor had a conversation with Florentina during which some items of information were discerned. It became clear that the applicant had only been discharged from hospital on the evening of 31 August; that he was at home with his wife who was caring for him and that she was being assisted in that endeavour by one of her sons; that he had been told that he is not to drive for two months; and that he is not to fly. 7 Importantly for present purposes, Florentina informed the solicitor that the applicant's ongoing care was going to be provided by his family in Australia. Significantly, she informed him that he had no relatives in Argentina and his only other relative outside of Australia was a sick brother in Italy. It seems to me, therefore, that on the basis of that evidence I would conclude, given his advanced age and the fact of his having had a stroke, that the presence of all of his carers in Australia means that this is where he is going to remain. There is an additional matter I would mention too, that given the structure of the health system in this country, it is probably in the applicant's interest that he remains here rather than returning to Argentina. The effect of Florentina's evidence is also to attribute to him a statement to this effect: The solicitor asked: 'Has Stefano said anything to you about returning to Argentina?' And Florentina replied: 'Yes, he says he doesn't want to go back as he has nothing to go back for. He says he wants to stay here with his family and be cared for by them.' 8 The question then arises whether Mr Battaglia is resident in Australia for the purposes of the law of security for costs. That question was considered by Weinberg J in Logue v Hansen Technologies Ltd (2003) 125 FCR 590. Having considered the authorities dealing with the question of security for costs where the issue of residence is in dispute, his Honour said this at 599, [26]: 'What these cases and others like them seem to establish is that the test for ordinary residence depends to a significant degree upon the state of mind of the person whose residence is in question. The language used in a number of the cases focuses upon whether the person habitually and normally resides in the jurisdiction and does so for a settled purpose.' 9 The question then is, what is Mr Battaglia's settled purpose? I am satisfied that, as a consequence of his having had a stroke and of his close family being in Australia and of the nature of the Australian health system, it is more likely than not that Mr Battaglia's settled purpose is to remain in this country. From this it follows that he is resident in Australia for the purposes of the law surrounding security for costs. Consequently, the respondents' application should be dismissed. That said, until yesterday when the affidavit of Mr Watson was served containing details of Mr Battaglia's residency, the position of the respondents was effectively irresistible and, but for last night's affidavit, I would have ordered security for costs in some amount on the basis that he was not resident within the jurisdiction. 10 Indeed, on prior occasions when the matter has been before Court and the question of security for costs has been discussed, my impression has been that today's debate was most likely to be about the quantum of security rather than about its availability. It is difficult in those circumstances to be critical in any way of the respondents in having brought the application. I would not be willing to order the respondents to pay any costs before today and even in relation to today they can hardly be blamed for not having digested the full significance of the affidavit on the run. 11 The critical question is whether the applicant should be ordered to pay the respondents' costs in view of the provision of the affidavit going to residency at such a late hour in the course of the proceedings. There, again, it is difficult to be critical of the applicant. The occurrence of the stroke has rendered it essentially impossible, or at least very difficult, for his solicitor to obtain instructions and it is apparent from the face of Mr Watson's affidavit that there has been neither delay on the part of the applicant's solicitor nor really any conduct on the part of the applicant for which he can be blamed. On this view of things the stroke is a misfortune which has happened to him and which has derailed the proceedings in the fashion which has been described. 12 In those circumstances it seems to me that the appropriate order is that there should be no order as to costs. I have contemplated whether I should order costs to be costs in the cause but I think the events of this morning are really best described as an unfortunate event which has happened to the parties in the case. The orders I make are that the application be dismissed and that there be no order as to costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 5 September 2014