New South Wales Supreme Court CITATION : Aliperti v Official Trustee [2000] NSWSC 315 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2551/96 HEARING DATE(S) : 16 March 2000 JUDGMENT DATE : 13 April 2000 Saverio & Elisabetta Aliperti (P) PARTIES : The Official Trustee in Bankruptcy (D1) Joseph Aliperti (D2) Westpac Banking Corporation (D3) JUDGMENT OF : Austin J COUNSEL : D K L Raphael (P) Sally Nash (Solicitor) (D1) SOLICITORS : Penhall & Co (P) Sally Nash & Company (D1) CATCHWORDS : PRACTICE & PROCEDURE - security for costs - where order for representation of a deceased plaintiff has been made LEGISLATION CITED : Corporations Law s 1335 Supreme Court Rules Pt 8 r 16 Cowell v Taylor (1883) 31 Ch D 34 Dean & Chapter of Ely v Gayford (1853) 16 Beav 561 Denston v Ashton (1869) LR 4 QB 590 CASES CITED : Hughes v Canon Australia Pty Ltd (1990) 8 ACLC 209 Re Hart [1963] NSWR 627 Thune v London Properties Ltd [1990] 1 All ER 972 Yates Property Corporation Pty Ltd v Boland (Federal Court of Australia, 16 January 1998, Davies J, unreported) DECISION : First plaintiff's application for order appointing a person to represent the estate of the deceased second plaintiff granted; first defendant's application for security for costs denied THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J THURSDAY 13 APRIL 2000 2551/96 . SAVERIO AND ELIZABETTA ALIPERTI V THE OFFICIAL TRUSTEE IN BANKRUPTCY & 2 ORS JUDGMENT 1 HIS HONOUR: This judgment relates to two applications by notice of motion in the proceedings. The first is an application by the first plaintiff that one of his sons be appointed representative of the estate of the second plaintiff, who died after the proceedings were commenced. The second is an application by the first defendant that the plaintiffs provide security for costs in the sum of $18,100. The proceedings 2 The proceedings began by summons filed on 25 June 1996. The plaintiffs claim declaratory and other relief with respect of a property at 28 Dock Road, Birchgrove. The registered proprietor of an undivided one-half share of that property is Joseph Aliperti, the second defendant. He is one of the sons of the plaintiffs. He became bankrupt by a sequestration order made in the Federal Court on 31 May 1995, and the Official Trustee in Bankruptcy (the first defendant) was appointed trustee of the bankrupt's estate. The Birchgrove property was subsequently sold by Westpac Banking Corporation as mortgagee, and the first defendant currently holds $70,529.10. 3 The plaintiffs seek declarations that the half share of the property registered in the name of the second defendant is not his property for the purposes of s 58 of the Bankruptcy Act, 1966 (Cth), and that he held his half share in trust for them, and that they are entitled to receive the net proceeds of sale of that half share. They say that they provided the purchase money for the second defendant's half share and that they lived in the property as their own, making decisions on such matters as renovations, and permitting their children (including the second defendant) to live there without thereby conferring any beneficial interest on them. If the plaintiffs succeed, the money held by the first defendant will be paid to them, but otherwise the first defendant will distribute it to unsecured creditors of the second defendant. 4 It appears that the proceedings languished in about August 1996, and the Court's record indicates that on 28 April 1999 the file was closed because it was judged to be inactive. However, on 1 November 1999 the first defendant filed a Notice of Change of Solicitor and the matter was resuscitated. I am informed by the legal representatives for the parties that they have now filed their affidavit evidence and the matter is in the Registrar's next callover list for the purpose of allocation of a hearing date. No doubt the applications now before me were stimulated by the change of solicitor. The application for the appointment of a representative 5 The second plaintiff, Elisabetta Aliperti, died on 2 October 1997. Nothing was done to deal with the consequences of her death upon the proceedings until a notice of motion was filed on 9 March 2000. In its original form, the notice of motion sought an order that Ralph Aliperti be appointed as administrator ad litem of the estate of Elisabetta Aliperti for the purpose of the proceedings. 6 The English Court of Chancery had jurisdiction to appoint a person as administrator ad litem if the person was willing so to act: Dean & Chapter of Ely v Gayford (1853) 16 Beav 561, 51 ER 896. However, it appears that with the adoption of statutory provisions which authorised the Court to appoint a representative in equivalent circumstances (Chancery Procedure Act 1852, s 44), the appointment of an administrator ad litem became rare and it became more usual to appoint a representative pursuant to the statutory provisions and rules of Court: see Butterworths Australian Legal Dictionary , entry for 'ad litem'. The English statutory provision became s 24 of the Equity Act 1901 (NSW), and a comparable provision is now found in Part 8 Rule 16 of the Supreme Court Rules. 7 Rule 16 is in the following terms: '(1) Where in any proceedings it appears to the Court that a deceased person was interested, or that the estate of a deceased person is interested, in any matter in question in the proceedings and that he has no personal representative, the Court may, on the application of any party - (a) order that the proceedings continue in the absence of a person representing the estate of the deceased person; or (b) by order (with the consent of the person appointed) appoint a person to represent that estate for the purposes of the proceedings. (2) An order under subrule (1), and any judgment or order subsequently entered or made in the proceedings, shall bind the estate of the deceased person to the same extent as the estate would have been bound had a personal representative of the deceased person been a party to the proceedings. (3) Before making an order under this rule, the Court may require notice of the application for the order to be given to such (if any) of the persons having an interest in the estate as it thinks fit.' 8 In the present case the first plaintiff seeks to invoke Rule 16(1)(b), by the appointment of his son, Ralph Aliperti, to be the representative of his deceased mother, the first plaintiff's wife, in the proceedings. In Re Hart [1963] NSWR 627, 630, McLelland CJ in Eq observed that an order is never made where the proposed appointee is unwilling to act. In the present case, however, Ralph Aliperti has filed an affidavit which indicates that he is willing to act. In Re Hart McLelland CJ in Eq said that after the order has been made, the representative should be added as a party and described 'AB appointed by order dated --- to represent the estate of CD, deceased', and the words 'since deceased' should be added after the name of the party whose estate is represented by virtue of the order. 9 I have decided that an order should be made under Rule 16(1)(b) in the present case. The evidence is that by her last will Elisabetta Aliperti left the whole of her estate to her husband, the first plaintiff, and appointed him executor. The first plaintiff is the applicant and therefore necessarily consents to the order which is sought, and he has filed an affidavit purporting to renounce probate, swearing that he has not intermeddled in his deceased wife's estate. 10 It would therefore be open to Ralph Aliperti to apply to this Court for letters of administration c.t.a. However, the evidence is that the value of the estate does not warrant such application. Apart from insignificant personal effects Mrs Aliperti had no assets in New South Wales other than her claimed interest in the proceeds of sale of a half share in the Birchgrove property, the subject of the present proceedings. She had no liabilities other than contingent liabilities arising from these proceedings and other proceedings in this Court, No 2808 of 1996. 11 The first defendant does not oppose the application, though he says that the evidence that there are no assets in the estate, and the making of the order, reinforce his case for security for costs. 12 Rule 16 (3) empowers the Court to require that notice of the application be given to persons having an interest in the estate, before the order is made. In my opinion it is unnecessary for any further notification to be made in this case. The sole beneficiary under the last will of the deceased, her husband, is the applicant for the order under Rule 16. 13 The following appears to be the appropriate form of order: '1. I appoint Ralph Aliperti to represent the estate of Elisabetta Aliperti for the purposes of these proceedings. 2. I direct that the title to the proceedings be amended by adding as a plaintiff 'Ralph Aliperti, appointed by order dated 13 April 2000 to represent the estate of Elisabetta Aliperti, deceased', and that the words 'since deceased' be added after the name of Elisabetta Aliperti.' The application for security for costs 14 By a notice of motion filed on 11 February 2000, the first defendant seeks an order that the plaintiffs provide security for costs in the sum of $18,100. The first defendant estimates his costs and disbursements of defending the proceedings to be that amount. He relies on the Court's inherent power to order security for costs, as part of its power to regulate its own practice and procedure. He also relies on Part 53 Rule 2 (1) (b) of the Supreme Court Rules, which authorises the Court to make an order for security for costs where it appears 'that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so'. 15 The first defendant submits that the plaintiffs cannot succeed in the proceedings. He asserts that the Birchgrove property was never owned by the plaintiffs, and that they do not appear to have resided in it. He relies on the indefeasibility of the second defendant's title. In support of the contention that the plaintiffs never resided in the Birchgrove property, he adduces evidence in the form of a large number of documents executed by the first plaintiff and his deceased wife at relevant times, giving their address as a place other than 28 Dock Rd Birchgrove. 16 I have decided not to make an order for security for costs, notwithstanding the forceful submissions made on the first defendant's behalf. 17 A useful starting point for exploring the law in this area is the judgment of Bowen LJ in Cowell v Taylor (1883) 31 Ch D 34. His Lordship said (at 38): 'The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity.' 18 The plaintiffs submit that this is a fundamental rule which should not lightly be departed from. They contrast the case of individual plaintiffs with the case of a corporate plaintiff, noting that in the latter case s 1335 of the Corporations Law appears to reverse the basic rule. The rule that poverty should not be a bar to justice has been applied in recent times: Thune v London Properties Ltd [1990] 1 All ER 972; Yates Property Corporation Pty Ltd v Boland (Federal Court of Australia, 16 January 1998, Davies J, unreported). 19 The first defendant draws attention to some apparently serious weaknesses in the plaintiffs' case. In my view it is highly unlikely that the Court would be persuaded, in an interlocutory application before hearing all of the evidence, that the plaintiffs' case was so weak that the fundamental rule should be overridden. In the present case the crucial facts occurred in about 1977 and the evidence currently before me is very limited. It may be that further evidence will turn up on subpoena or in some other way, shedding a different light on the case. Assuming that it can ever be appropriate to make an order for security for costs on the ground of weakness of the plaintiff's case, I am far from persuaded that it is appropriate to do so in the present case. 20 There is, however, a potentially relevant exception to the general rule. It was discussed by Bowen LJ in Cowell v Taylor . His Lordship said (at 40): 'The present Master of the Rolls in his judgment says: 'Insolvency alone is not a ground for compelling security. But an exception has been engrafted on that rule, where the plaintiff is merely lending his name for the benefit of another person, and is therefore not the real plaintiff in the action; as, where he has assigned his interest in the debt to another. There is no authority, however, for extending that exception to the case of an executor or an assignee of a bankrupt.' The same point was before the Court of Queen's Bench in Denston v Ashton (1869) LR 4 QB 590. The Court took time to consider their judgment, and then said that they were unable to find any authority in favour of enforcing security for costs in such a case …' 21 It seems to me that this exception is inapplicable in the present case. This is not a case where the plaintiffs are merely lending their name to the proceedings for the benefit of someone else. The first plaintiff is suing for his own benefit. The second plaintiff having died, she has been replaced by her son, who sues in a representative capacity. In my opinion a plaintiff who sues in a representative capacity pursuant to an order of the Court under Part 8 Rule 16 is in an analogous position to an executor, and on the authority of Cowell v Taylor such a person does not fall within the exception to the general rule. 22 The first defendant will have access to the first plaintiff in the event that he succeeds and obtains an order for the plaintiffs to pay his costs. There is no evidence as to the first plaintiff's assets, and therefore no basis for asserting that he would be unable to meet a liability to pay costs. Although the evidence is that the estate of the second plaintiff is of no value, that ought not to prevent her representative from asserting her rights. 23 The plaintiffs urged that the first defendant's application should fail on the ground of delay, if for no other reason. They referred to such cases as Hughes v Canon Australia Pty Ltd (1990) 8 ACLC 209. I do not find it necessary to rely on delay in order to reach a conclusion favourable to the plaintiffs. Additionally, I would not be persuaded that the delay in this case would be sufficient of itself to deny relief to the first defendant if I were otherwise inclined to grant it. The case has not yet been set down for hearing. The application for a representative order was made only after the application for security for costs was filed, and the evidence does not make it clear that the first defendant found out about the second plaintiff's death at a much earlier date. 24 My conclusion, therefore, is that the first defendant's application for security for costs must fail. I shall hear the parties on the question costs of the application, though I am inclined to the view that costs should follow the event. * * * * * * * * * Last Modified: 09/25/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.