Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 Hearing dates: 8 February 2023 Date of orders: 15 February 2023 Decision date: 15 February 2023 Before: Ward P at [1] Adamson JA at [2] Griffiths AJA at [3] Decision: (1) Leave to appeal granted. (2) Appeal dismissed, with costs. Catchwords: COSTS – Security for costs – On appeal – Decision of the Supreme Court ordering the applicants to pay security for costs to first and second respondents – No House v The King error established in primary judge's exercise of discretion – Claim that the UCPR exclusively governs the Court's jurisdiction to order the payment of security for costs rejected Legislation Cited: Bankruptcy Act 1966 (Cth) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271 Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105 House v The King (1936) 55 CLR 499; [1936] HCA 40 Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886 Marshall v Megna [2013] NSWCA 30 Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82; [2002] NSWCA 32 Mitchell v Transport for NSW [2022] NSWCA 141 Mohareb v Harbour Radio Pty Ltd [2020] NSWCA 231 Morris v Hanley [2001] NSWCA 374 Ninan v St George Bank Ltd [2012] FCA 905; (2012) 294 ALR 190 Townsend v O'Donnell [2016] NSWCA 288; (2016) 78 MVR 283 Category: Principal judgment Parties: Roger Thomas Ward (First Applicant) Peter Shah Mahommed (Second Applicant) Westpac Banking Corporation Ltd (First Respondent) Karen Ann Cox (Second Respondent) Representation: Counsel: S Docker and E Keynes (First Respondent) D Allen (Second Respondent) Solicitors: Leonardus Smits Lawyer (Applicants) TG Legal + Technology (First Respondent) Shaba & Thomas Lawyers (Second Respondent) File Number(s): 2022/00123937 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of NSW Jurisdiction: Equity Date of Decision: 4 April 2022 Before: Lindsay J File Number(s): 2020/00247595 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] JUDGMENT 1. WARD P: I agree with Griffiths AJA. 2. ADAMSON JA: I agree with Griffiths AJA. 3. GRIFFITHS AJA: The applicants seek leave to appeal against orders made by Lindsay J in the Supreme Court on 4 April 2022. His Honour ordered that Mr Ward and Mr Mahommed, the first and second plaintiffs below, jointly provide security for costs of Westpac Banking Corporation Ltd, the first defendant below, in the sum of $150,000 and security for costs of Ms Cox, the third defendant below, in the sum of $125,000. His Honour ordered that the security be paid on or before 4 August 2022. The proceedings were stayed pending payment of the security. The second defendant did not appear below and did not seek security for costs. Nor did it play any role in the proceedings in this Court. It should also be noted that the time for providing the security for costs has been extended twice, first to 2 December 2022 and then to 17 February 2023. 4. The application for leave to appeal was heard concurrently with any appeal. Voluminous material was provided to the Court. The material from the Court below totalled 1576 pages alone and each of the parties provided copies of many authorities. The applicants' folder of authorities contained copies of 38 cases. 5. Initially, both the first (Westpac) and second (Ms Cox) respondents consented to the grant of leave to appeal. Counsel for those parties informed the Court that their respective clients were keen to obtain finality and that this had underpinned their consent. Counsel for Westpac explained that the basis for their client's desire for finality rested in their belief that the applicants would be able in any event to appeal as of right from any summary dismissal of the substantive proceeding based upon non-payment of the security for costs. 6. Having regard to Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271 and s 101(2)(e) of the Supreme Court Act 1970 (NSW), the correctness of that belief is questionable. During the course of closing addresses, counsel for Westpac withdrew that party's consent to the grant of leave, but made no submissions on the issue. 7. The Court indicated that it would reserve its judgment on the issue of leave and the parties then proceeded to address the various appeal grounds. 8. The Court accepts that it is in the interests of finality to have the appeal determined on its merits. This is not on the same basis as the respondents' initial position on leave; rather, primarily because the proceedings have been on foot since 2020 and, during that time, there have also been overlapping proceedings in both the Supreme Court (see Mahommed v Greenhills Securities Pty Ltd [2021] NSWSC 1178) and in the Federal Court (see Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886 (Mahommed FC)). 9. For convenience, I will refer to Mr Ward and Mr Mahommed as plaintiffs in the proceeding below and as applicants in the proceeding in this Court. The substantive proceedings summarised 1. Summarising the substantive proceedings below is not an easy matter, not the least because of the difficulties presented by the plaintiffs' amended statement of claim, which totalled 112 pages. As will shortly emerge, the prolixity and opaqueness of large parts of that pleading partly underpinned the primary judge's description of the proceeding as "oppressive". 2. As best the amended statement of claim and procedural history can be understood, the essential features of the plaintiffs' primary claims may be summarised as follows. 3. The proceedings were commenced in 2020 by Mr Ward and Mr Mahommed. The named defendants were initially Westpac and the Registrar General of Titles, NSW. On 31 May 2021, the plaintiffs filed an amended statement of claim joining Ms Cox in her capacity as administratrix of the estate of the deceased (Mr Dixon) and adding claims against the estate. 4. In summary terms, the following features of the amended statement of claim should be noted: 1. Mr Ward claims security over a property (Lovedale property) under an unregistered mortgage. 2. Mr Mahommed claims as a creditor under a guarantee in a Deed of Assignment dated 22 December 2014 pursuant to which Mr Dixon had allegedly undertaken to guarantee the payment of all moneys due, owing and payable by a company called Loire Consultants Pty Ltd. 3. Mr Mahommed also claims as the assignee of certain other rights of action identified in other documents. 4. Mr Mahommed also claims to have been appointed as the sole trustee of the Lovedale Ranch Unit Trust on 20 June 2018. Prior to that time, Loire was the trustee of the Lovedale Ranch Unit Trust. 5. Mr Mahommed contends, in relation to the latter claim, that an officer of Westpac fraudulently and dishonestly entered into a registered mortgage over the Lovedale property and a property at 49 Bruce Street, East Maitland (Maitland property), knowing at the time that both properties were owned under trusts held by (respectively) Loire as trustee of the Lovedale Ranch Unit Trust and Greenhills Securities Pty Limited as trustee of the Greenhills Finance Trust. 6. Mr Mahommed claims that, in relation to the Lovedale property, Mr Dixon obtained a Rocket Home Loan in about September 2010 and on 24 November 2010 executed a mortgage in favour of Westpac over the property for $1,160,000, ostensibly to complete a purchase of the Lovedale property for $1,800,000. At the same time, an allegedly fraudulent transfer of the property from Loire to Mr Dixon was executed. The alleged purpose was to enable Mr Dixon to settle the purchase. He refinanced the property for $680,000. 7. On 7 December 2010, Mr Dixon presented the forged title documents to Westpac in order to obtain the $1,160,000 loan. The bank manager at Westpac, and Mr Unicomb, a tax adviser, are said to have conspired to arrange for Mr Dixon to obtain the property. Mr Dixon did not pay the balance of the purchase price. 8. Westpac settled the advance to Mr Dixon and thereafter Mr Unicomb made payments to Westpac to conceal the alleged fraud. 9. Similar allegations are made in respect of the Maitland property owned by Mr Dixon. The plaintiffs contend that a loan of $195,000 was advanced directly to Mr Dixon in about July 2011 purportedly to purchase the Maitland property as an investment property. Mr Dixon is said to have executed a declaration of trust in favour of Greenhills as trustee of the Greenhills Finance Trust, being a trust put in place as a discretionary family trust for Mr Mohammed and his family. It is alleged that the Westpac loans manager and loan broker knew that Mr Dixon only held the property as trustee. 10. The causes of action relied on include fraud, breach of fiduciary duty and breaches of both the National Consumer Credit Protection Act 2009 (Cth) and the National Consumer Credit Code. 1. Westpac filed a cross-claim against Ms Cox in her capacity as administratrix of Mr Dixon's estate. Relevantly: 1. Westpac seeks judgment for possession of the Lovedale property, an order that Ms Cox make restitution to Westpac in the amount of $1,160,000 and other orders. 2. Westpac claims that Mr Dixon entered into a loan agreement for that amount secured by a mortgage over the Lovedale property. It contends that on 15 April 2013 Westpac issued a notice of default, and that Mr Dixon made no payment. A demand was served in March 2015 for the full amount owing under the loan agreement, being $1,269,824, which has never been paid. 3. Ms Cox admitted the allegations made by Westpac as outlined above, with the result that she concedes that possession should be given to Westpac. The applicants complain that this has thwarted their claims. 1. The value of the real estate of Mr Dixon's estate is estimated to be $1,500,000 (Lovedale property) and $450,000 (Maitland property). The primary judge's reasons 1. After hearing lengthy argument on 4 April 2022 (the transcript totalled 56 pages) concerning the two notices of motion filed by Westpac and Ms Cox seeking security for costs (and having had the benefit of lengthy pre-hearing outlines of written submissions from all the active parties) the primary judge delivered an ex tempore judgment. His Honour's reasons are commendably succinct (a matter which is criticised by the applicants). It is convenient to set out those reasons in their entirety: 1 The view that I have formed is that there should be an order for security but it should be far more modest than what is sought by the applicants in their respective motions. 2 The jurisdictional foundation of the applications in relation to the second plaintiff is said to be in rule 42.2 [sic] sub-rule (1) para (e) of the Uniform Civil Procedure Rules. 3 In my view that is technically invoked and established because of the trustee's capacity in which the second plaintiff sues. However, I do not think, when one comes to the question of discretion, that it really makes a great deal of difference to the outcome of the applications, because in essence, as I see it, the two notices of motion really turn on an exercise of the Court's inherent jurisdiction, which has been confirmed in Green v CGU Insurance Ltd [2008] NSWCA 148, reported at 67 ACSR 105, and the essence of the applicants' claim is that the amended statement of claim on which the plaintiffs now sue is lacking in that clarity that might be expected of such a pleading, with a consequence that costs are likely to be incurred beyond those that would be incurred if there was a proper pleading. 4 I am not in a position, I think, to say that the plaintiffs' case is non-existent, although I apprehend that there will be difficulties in proving the case, particularly against the first defendant, by reason of the first defendant's registration as a first mortgagee and the fact that it advanced money, albeit that there is a dispute about where the money that was advanced went and who was ultimately entitled to it. 5 There is undoubtedly a great degree of complexity at least in the plaintiffs' presentation of their case which perhaps counsels caution against an expression of strong views about the merits of their case, but that pleading I will not say is vexatious, but I think it is oppressive in the way the plaintiffs' case is put. 6 So the net effect of that - and I should say I have taken into account considerations of delay, so far as there may be, but the notices of motion have been on foot for some time. The third defendant's notice of motion was filed on 29 June 2021 (sic), the first defendant's amended notice of motion was filed on 19 October 2021, and the amended statement of claim upon which the plaintiffs rely was filed only on 31 May 2021. I am not satisfied that any delay on the part of the defendants warrants a refusal to order that security be made. 7 I have given consideration also to the fact that the first defendant has a cross-claim and might ultimately look to the security that it has against the two properties the subject of the proceedings in the event that it succeeds, but I take the point that that security might ultimately fall short, and the cross-claims are really an articulation of what I think is in substance an agreement between the first defendant and the third defendant to the effect that the first defendant, in the submission of the third defendant, is entitled to the first registered mortgage over the two properties and therefore is entitled to sell. The cross-claim in a sense is defensive against the claims of third parties, namely, the plaintiffs. 8 I have given consideration to the possibility that the proceedings might be stultified by an order for security. I am not satisfied that they will be stultified in circumstances in which there has not been a complete disclosure of the financial position of the parties, for whatever reason. In respect of the second plaintiff it might be because of the difficulty of tracing through the entitlements of beneficiaries in the trust. In the case of the first plaintiff it might be because of a failure or inability to provide evidence of what might be a substantial inheritance from a deceased estate. 9 I do not apprehend, certainly in relation to the first defendant, that it could be said that any impecuniosity that the plaintiffs are suffering is the result of the conduct of the first defendant. 10 Taking all things into account, there should be an order for security made against the plaintiffs jointly for the lesser of the sums that have been mentioned. The first defendant should have an order for security in the sum of $150,000 and the third defendant should have an order for security in the sum of $125,000 and I will hear submissions about the timing of any payment. 1. As this Court pointed out during the oral hearing on appeal, [10] of the primary judge's reasons for judgment indicates that the primary judge had taken "all things into account". There is no good reason to limit this statement to matters referred to elsewhere in his Honour's reasons. The phrase should fairly be read as referring to all matters which were raised by the parties and were the subject of oral or written submissions below. It is appropriate to adopt this beneficial reading of the reasons, having regard to the fact that they were given ex tempore and after a lengthy interlocutory hearing below (see further [38] and [39] below). Summons seeking leave to appeal 1. By their summons dated 30 June 2022, the applicants seek an extension of time and leave to appeal. The draft notice of appeal sets out no less than 17 separate grounds of appeal, some of which contain multiple particulars which are in the nature of additional supplementary grounds of appeal. The draft notice of appeal displays many of the same difficulties presented by the amended statement of claim. 2. It is unnecessary to dwell upon the reasons why the applicants contended that leave to appeal should be granted having regard to the Court's qualified acceptance of the respondents' position (at least initially) that leave should be granted in the interests of achieving finality in this litigation. 3. For completeness, it should also be noted that the applicants do not need an extension of time to maintain the present proceeding. 4. Before turning to address the multiple grounds of appeal it is convenient first to address some relevant principles concerning security for costs. Some relevant principles guiding security for costs 1. It is desirable to say something at the outset regarding alternative sources for the Court's jurisdiction to order security for costs. One source of jurisdiction is r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (Rules). Another source is the Court's inherent jurisdiction. The order that the plaintiffs pay security for costs in the proceeding below was made in the exercise of the Court's inherent jurisdiction. By ground 4 of the notice of appeal, the applicants contend that this involved error because the Rules, where they apply, displace the inherent jurisdiction. I will return to deal with this claim below (see [44]ff). 2. It is well-established that the non-exclusive list of matters which are relevant in determining an application under r 42.21 of the Rules (as set out in sub-rule (1A) thereof) provide guidance in the exercise of the inherent jurisdiction concerning security for costs (see, for example, Mohareb v Harbour Radio Pty Ltd [2020] NSWCA 231 at [14] per the Court). That non-exhaustive list is as follows: (1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant— (a) the prospects of success or merits of the proceedings, (b) the genuineness of the proceedings, (c) the impecuniosity of the plaintiff, (d) whether the plaintiff's impecuniosity is attributable to the defendant's conduct, (e) whether the plaintiff is effectively in the position of a defendant, (f) whether an order for security for costs would stifle the proceedings, (g) whether the proceedings involves a matter of public importance, (h) whether there has been an admission or payment in court, (i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant, (j) the costs of the proceedings, (k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute, (l) the timing of the application for security for costs, (m) whether an order for costs made against the plaintiff would be enforceable within Australia, (n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff. 1. It is also well-recognised that, generally speaking, there is a reluctance to make security for costs orders against litigants who are natural persons (see Mohareb at [15]). That is not to say, however, that security for costs can never be ordered against an impecunious natural person. Such orders have been made in multiple cases where some sufficient factor in addition to impecuniosity has been present (see the list of cases cited in Ninan v St George Bank Ltd [2012] FCA 905; (2012) 294 ALR 190 at [33]). For example, in Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82; [2002] NSWCA 32 at [132] security for costs was ordered where there was impecuniosity and the applicant failed to show that the order would stultify the proceedings and the amount of the security was not oppressive. 2. Where a party opposes an order for security for costs on the basis that he or she is impecunious and the order will stultify the claim, there is an obligation on the person to provide candid evidence of the person's precise financial circumstances and of any person or corporation which stands behind them. As the Court observed in Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [90]: Candour in a case such as this involves the impecunious claimant which seeks to avoid an order for security for costs presenting evidence of those persons who stand to benefit from the litigation and their own capacity to fund it including by meeting any adverse costs orders. The obligation is not satisfied by providing a limited account in an affidavit, and leaving it to the cross-examiner to elicit details (if indeed cross-examination is sought and is permitted). One work states that if it is said that an order will stultify a claim, "the precise financial circumstances of the litigant and of those behind it will need to be set out": J Delany, Security for Costs (Law Book Company Ltd 1989, p 118). Although the primary judge erred in statements as to the absence of evidence, there was no error in the conclusion insofar as it was based upon a finding that LBH had failed candidly to identify those standing behind it and their assets. 1. As is made clear in the list of relevant matters in sub-rule (1A), one relevant matter is the strength of a party's case. It is well-settled that it may be difficult in an interlocutory proceeding concerning security for costs to express a meaningful view as to the strength of a case. Much will depend on how far the proceeding has progressed. That includes the history of the pleadings, including their coherence. For example, in Live Board Holdings, the Court described the history of the pleadings in that case as "quite unsatisfactory" (see at [102]). This observation was made in circumstances where the plaintiff had "continued to propound claims, including claims of dishonesty, notwithstanding criticism from the respondents and from the court, in ways that are deficient". Similar considerations arise here. Consideration and determination 1. It is desirable to say something more about the Federal Court bankruptcy proceedings, to which reference was made at [8] above. On 29 July 2022, Burley J published his reasons for dismissing Mr Mahommed's application to have Mr Dixon's estate administered in bankruptcy pursuant to s 244 of the Bankruptcy Act 1966 (Cth) (see Mahommed FC). Mr Mahommed had presented a creditor's petition in respect of Mr Dixon's estate, in which Mr Mahommed claimed to be owed a total of $5,845,545. The administratrix (Ms Cox) opposed the grant of the petition on the following four grounds: 1. Mr Mahommed was not a creditor; 2. the purported debts did not exist and they were shams and barred by limitations legislation; 3. the petition was an abuse of process because Mr Mahommed had commenced and maintained proceedings in the Supreme Court; and 4. alternatively, if there was a contested dispute whether Mr Mahommed is a creditor, the petition ought to have been adjourned until the Supreme Court proceedings have been determined. 1. Mr Mahommed's application was ultimately dismissed, primarily because of the overlapping proceedings pending in the Supreme Court (see Mahommed FC at [55]–[60]). 2. This Court was informed by Mr Smits (a solicitor, who appeared on behalf of the applicants in both the proceedings below and in this Court) that an appeal from Burley J's decision is listed to be heard in the May 2023 sittings of the Full Court of the Federal Court. 3. Before addressing each of the applicants' grounds of appeal it is important to emphasise that the primary judge's decision to order security for costs was a decision made in the exercise of his Honour's discretionary judgment. Necessarily, therefore, with one possible exception, to succeed in the appeal the applicants needed to demonstrate an error within the meaning of House v The King (1936) 55 CLR 499; [1936] HCA 40. As was made clear there at 504­–505, it is insufficient that the appeal court considers that, if it had been in the primary judge's position, there would have been a different outcome. As Heydon JA said in Morris v Hanley [2001] NSWCA 374 at [14] in the context of an appeal against an order for security for costs: The primary judge's judgment was a discretionary judgment. The appeal must demonstrate an error of fact, an error of principle, a failure to take some material matter into account, the taking of an immaterial matter into account, or a result which is so unjust as to suggest that one of the foregoing errors must have been committed, even though it is not apparent. 1. As will shortly emerge, it is apparent from the applicants' written and oral submissions in the appeal that many of the grounds of appeal erroneously invite the Court to re-exercise the primary judge's discretion without demonstrating any House error. 2. The exception relates to ground 4 and the applicants' claim that the primary judge erred in determining the matter on the basis of the Court's inherent jurisdiction and not under the Rules. As will shortly emerge, that ground must also fail for reasons which are unrelated to House. Ground 1 1. This ground, which Mr Smits (who appeared for the applicants both below and on appeal) described as a "generic ground", complains that the outcome below was "unreasonable, plainly unjust or unfairly prejudicial" and causative of a substantial injustice against each applicant. This generic ground was based on the other grounds in the notice of appeal. The applicants relied on the same evidence and submissions in support of this ground as for the other grounds of appeal. Accordingly, since none of those grounds succeeds, ground 1 must necessarily fail. 2. It is convenient, however, to address a submission which was repeatedly made by Mr Smits in relation to several of the grounds of appeal, namely that the primary judge had not appreciated the nature of the separate claims made by the first and second applicants. In particular, Mr Smits submitted that the primary judge seemed to view the case as simply raising an allegation of fraud. 3. That claim has no foundation. During the lengthy hearing the primary judge was taken at some length by all the parties to many parts of the amended statement of claim and the defences, as well as Westpac's cross-claim and Ms Cox' cross-defence. Moreover, it is significant that his Honour made an express ruling (without having to determine voluminous objections to evidence by the respondents), that the applicants' affidavits in the proceeding below were read "for the purpose of showing the nature of the case that the plaintiffs seek to make" (see transcript below at 16). There is no basis for inferring that his Honour did not read those affidavits on that stated basis. Moreover, his Honour was taken to many parts of that material in addresses, including by Mr Smits. Ground 2 1. Ground 2 simply asserts that the primary judge had made errors as described elsewhere in the notice of appeal and that those errors were of the kind described in House. The applicants relied on the same evidence and submissions in support of this ground as for the other grounds of appeal. Accordingly, as with ground 1, this ground must necessarily fail as the applicants do not establish any House error in their other relevant grounds of appeal. Ground 3 1. This ground appears to have two limbs. First, there is a complaint that the primary judge's reasons for judgment are inadequate. Secondly, the applicants complain that the primary judge failed to "identify, characterize, particularize or segregate or collate any 'oppressive' elements for any individual or multiple causes of action". This second limb appears to be directed to the primary judge's finding of "oppression" at [5] of his reasons for judgment. 2. As to the first limb, it is well-established that, in determining the adequacy of the primary judge's reasons, it is relevant to take into account the fact that his Honour was dealing with an interlocutory application and also that he provided ex tempore reasons for his decision. As Heydon JA stated in Morris at [22]: The duty of judges to give reasons for the directions and orders they make must be lower where interlocutory orders affecting matters of practice and procedure are involved than they are where orders are made after a trial. That must be so if for no other reason than that litigation would clog up to the point of stagnation if full reasons had to be given for the tens or hundreds of interlocutory orders which many primary judges make in a week in busy trial courts. However, though applications for security for costs are matters of practice and procedure, they can have a significant impact on the substantive rights of plaintiffs, because if the order is made, the plaintiff may not be able to provide security for costs where one of the grounds for the application is that plaintiff's lack of funds. If so, that will prevent the plaintiff being able to have a judicial examination of the complaints made on the merits. Accordingly it would not be right to hold that there is no duty, or only a very exiguous duty, on a primary judge to give reasons for making an order as to security for costs. 1. It should also be noted that in Morris at [24], Heydon JA stated that in some cases where otherwise it might be said that there is deficiency in the reasons of a primary judge, this "can be compensated for by a clear explanation in the course of argument by the primary judge for the outcome", referring to the transcript of the hearing before the primary judge. Mr Smits did not question any of these matters. Indeed, he expressly accepted their correctness. 2. Multiple particulars were provided in the notice of appeal in support of the alleged deficiencies and omissions in the primary judge's reasons. As emerged during the course of oral address before this Court, many of the matters complained of were not raised by the applicants in either their written or oral submissions below. Accordingly, the primary judge's failure to address such matters in either his reasons for judgment or in the course of the hearing cannot give rise to appellable error. As Sackville AJA correctly observed (Beazley ACJ and McColl JA agreeing) in Townsend v O'Donnell [2016] NSWCA 288; (2016) 78 MVR 283 at [39]: … Indeed, so far as the transcript reveals, no submission was made to the primary Judge on the appellant's behalf that the respondent's estimate of speed should not be accepted. It is hardly a legitimate basis for criticism of a Judge that he or she has not taken into account evidence that neither party suggested was relevant to the particular factual issue in dispute. 1. To similar effect, Beazley JA noted (Allsop P and Hoeben JA agreeing) in Marshall v Megna [2013] NSWCA 30 at [155]: … As this matter was raised in the Court below, albeit in an alarmingly non-specific way, it is appropriate to express my views on the proposition now advanced. I say alarming, because it is inappropriate and indeed unfair, that a trial judge should have been led into determining a matter without having been advised of the precise way the argument was being put and without the benefit of submissions relevant to the argument being advanced. 1. Nor is there any basis for the second limb of this ground of appeal. The primary judge described at [5] the applicants' presentation of their case (which included but was not limited to the prolixity of the amended statement of claim) as oppressive. True it is that his Honour did not descend into detail in his ex tempore reasons in arriving at that conclusion. But it is evident from the lengthy transcript below that the parties went to considerable lengths in addressing the question whether the proceedings were either vexatious or oppressive (see, for example, the transcript below at 32–36, 39 and also the general observation at [17] above). Significantly, the primary judge stated that many of the problems in the case lay in the amended statement of claim, which he described as "almost impenetrable" (at 48 of the transcript). This statement was made after his Honour had been addressed by all the parties in respect of the pleadings and evidence adduced below. 2. For these reasons, both limbs of ground 3 are rejected. Ground 4 1. As noted above, although the primary judge accepted that there was a jurisdictional foundation for the security for costs applications in relation to the second plaintiff (Mr Mahommed) under r 42.21(1)(e) of the Rules (because of his status as a trustee of the Lovedale Ranch Unit Trust), his Honour proceeded to determine both notices of motion on the basis of the Court's inherent jurisdiction (citing Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105). The applicants contend that the primary judge erred in adopting this approach. They claim that the Court's inherent jurisdiction has effectively been displaced by the Rules because the Rules are "exclusive" where they apply. In support of that submission, they cite Basten J's decision in Greenhills Securities at [18]: Apparently against the possibility that the pleading might be read as the plaintiff making a claim as assignee, the defendant made two further submissions. One was that, even as assignee, he was not bringing the proceedings in his own interest, but on behalf of others, so that r 42.21(1)(e) was nevertheless engaged. In the alternative, counsel relied upon the inherent jurisdiction of the Court. As I do not read the second further amended statement of claim as pleading a case against the defendant on the basis of a pleaded assignment of the debt, such alternative bases need not be pursued. However, had it been necessary to rely upon the inherent jurisdiction of the court, applying the considerations relevantly identified in r 42.21(1A), I would have reached the same conclusion as to the appropriate orders, being those set out below. 1. Greenhills Securities involved an application for security for costs against Mr Mahommed (ie the second applicant in the present proceeding), who was then also represented by Mr Smits. The facts in Greenhills Securities overlap to an extent with those in the present proceeding. An issue arose as to whether Mr Mahommed was suing in his personal capacity as opposed to in his capacity as trustee of the Lovedale Ranch Unit Trust. The distinction may have been relevant to whether r 42.21(1)(e) was engaged for the purposes of determining whether or not there should an order for security for costs. Justice Basten described the claim made on behalf of Mr Mahommed that the proceedings were brought in his personal capacity and not as trustee as both "disingenuous" and "futile" (see at [17]). Paragraph [18] of Greenhill Securities is to be read in this context. It does not provide any support for Mr Smits' submission in the present proceeding that the Rules are exclusive. 2. The applicants' submission on jurisdiction is also contrary to authority, including Green at [33]–[35] per Hodgson JA (with whom Campbell JA agreed, and see also Basten JA at [70]); Mohareb at [11] per the Court; and Mitchell v Transport for NSW [2022] NSWCA 141 at [6] per Meagher and Mitchelmore JJA. The applicants did not challenge the correctness of these decisions. They should be applied in the circumstances here. 3. Moreover, the primary judge did not err in proceeding under the inherent jurisdiction where security for costs was sought against both applicants and, even if sub-rule 42.21(1)(e) applied to the second applicant, it was not suggested that the first applicant fell within that or any of the other sub-rules in r 42.21. Ground 5 1. Ground 5 claims error by the primary judge in "allowing extraneous and irrelevant matters, including vacuous submissions and reasons why no prior curial action was taken by the second respondent under the UCPR or the CPA with respect to alleged oppressiveness of defective pleadings, in order to guide or affect the decision". During the course of oral address, Mr Smits informed the Court that the applicants did not press that aspect of ground 5 which relates to alleged "vacuous submissions". 2. The reference in ground 5 to "no prior curial action" being taken refers to the fact that neither Westpac nor Ms Cox sought to have the amended statement of claim struck out, nor took any other interlocutory step relating to its deficiencies. It is true that this subject was not explicitly addressed in the primary judge's reasons for judgment. But the transcript below makes clear that the matter was raised by his Honour with counsel for the second respondent (Mr Allen) (see transcript below at 49–50 and see also the general observation at [17] above). Mr Allen explained that his client's view was that the best way to approach the problems presented by the pleadings was to lodge a security for costs application to avoid the time and expense involved in making an application to hold the plaintiffs responsible for amending the pleading. He also explained that he had no faith that a fresh pleading would overcome the deficiencies in the amended statement of claim (see transcript below at 48). There is no error in proceeding on that basis. 3. In oral address, Mr Smits complained that the primary judge erred in not providing guidance on how the pleading could be amended. Plainly, the judicial function does not extend to providing judicial advice on matters of that kind. 4. For these reasons, ground 5 is rejected. Ground 6 1. This ground claims that the primary judge "erred as to or omitted reference to any material facts, pleadings, affidavits, rules and principles or guidelines" about various matters, including the background to the filing of the applicants' pleadings and the difficulties encountered by the applicants in obtaining material concerning the alleged fraud and forgeries. 2. Mr Smits acknowledged in oral address that sub-paragraphs (6)(a)–(d) and (f) (to the extent not otherwise dealt with by ground 9) all related to the complaint of inadequacy of reasons. Those claims should be rejected for the reasons given above in respect of ground 3. 3. Sub-paragraph (6)(e) is a claim that the primary judge erred in failing to consider or apply matters specified in r 42.21(1A)(a), (b), (d), (f), (g), (j) and (k) of the Rules (these sub-rules are set out at [23] above). None of these complaints has any substance. 4. As to (a) (prospects of success), this matter was addressed by the primary judge at [4]–[5] of the reasons for judgment. 5. As to (b) (impecuniosity of the plaintiffs), the primary judge directly addressed this matter at [9] of his reasons for judgment. 6. As to (d) (whether the plaintiffs' impecuniosity is attributable to defendants' conduct), the primary judge directly addressed this matter at [9] of his reasons for judgment insofar as it related to Westpac. Furthermore, Mr Smits was unable to point to any oral or written submission below to the effect that Ms Cox was the source of the impecuniosity of either applicant. 7. As to (f) (stultification of proceedings), this matter was directly addressed at [8] of the reasons for judgment, as well as at some length in the transcript (in respect of which see the general observation at [17] above). Significantly, the primary judge expressly found at [8] that there had not been complete disclosure of the financial position of the applicants "for whatever reason". His Honour then proffered some possible explanations for the lack of complete disclosure. As noted above at [25], a person who resists security for costs must provide candid evidence of their precise financial circumstances. The inadequacy of the applicants' evidence in this regard was raised by the primary judge below (see transcript at 46–47). Mr Smits was effectively invited to obtain further instructions on that matter. He highlighted the practical difficulties in doing so and then, perhaps more significantly, failed to make an application for an adjournment to pursue the matter. No appellable error has been established. 8. As to (g) (whether the proceedings raise a matter of public importance), Mr Smits was unable to point to any oral or written submission made by the applicants below in relation to this matter. 9. As to (j) (costs of the proceedings), it is plain from the transcript that the primary judge did take this matter into account (in respect of which see the general observation at [17] above), not the least because it provided the basis for his decision to award the lesser of the sums sought by way of security for costs, as reflected at [10] of the reasons for judgment. 10. As to (k) (proportionality), again this matter was addressed: see [10] of the reasons for judgment and at 50 of the transcript below (and see the general observation at [17] above). Ground 7 1. This ground also raises claims of various matters not having been taken into account. Those matters are all the matters raised in grounds 9 and 17, the effects of admissions made by Ms Cox in her cross-defence, costs incurred by Mr Mahommed due to the alleged refusal of Westpac to engage in mediation and the failure to order that some issues be determined by way of separate questions. 2. As to the claims regarding Ms Cox, the primary judge addressed that matter at [7] of the reasons for judgment and it was also discussed during the hearing below. 3. As to the claim concerning Westpac's alleged refusal to engage in mediation, Mr Smits was unable to point to any oral or written submission made below in respect of this matter. 4. As to the failure to use separate questions, Mr Smits candidly acknowledged that this matter had not been raised by the applicants below. 5. Accordingly, ground 7 is rejected. Ground 8 1. This ground alleges that the primary judge failed to address various alleged deficiencies in the respondents' defences and it is claimed that neither defence disclosed a reasonable or arguable defence. These matters were raised by Mr Smits in the Court below. In an interlocutory proceeding of this sort, however, it was sufficient for the primary judge to proceed as he did on the basis that the applicants' case, while oppressive, presented at least an arguable case, as is reflected at [5] of the reasons for judgment. Ground 9 1. The applicants claim that the primary judge erred in not considering that the Federal Court had exclusive jurisdiction in respect of the matters in dispute between Mr Mahommed and Ms Cox. The primary judge was plainly aware of those proceedings (see transcript below at 42–43). There is no substance in this complaint. Significantly, the applicants failed to make any application to have the substantive proceedings in the Supreme Court transferred to the Federal Court. Moreover, Mr Smits was again unable to point to any oral or written submission made below which specifically addressed this topic (a submission made below that Ms Cox's involvement in the Supreme Court was "futile" does not squarely address the matter). Ground 10 1. This ground relates to the question whether the impecuniosity of either applicant was caused by the conduct of either respondent. The primary judge found at [9] that there was no basis for any such claim, at least insofar as Westpac's conduct is concerned. As noted above at [57], Mr Smits was unable to point to any oral or written submission below to the effect that Ms Cox was the source of the impecuniosity of either applicant. 2. In their written submissions on the appeal, the applicants claimed that the primary judge failed to consider or attach adequate weight to Westpac's alleged failure to resolve or mediate the claims. As noted above, Mr Smits was unable to point to any written or oral submission made below on this matter. 3. The applicants also claim that the primary judge failed to consider that Ms Cox had allegedly engaged in "misleading and deceptive conduct as to ownership of the said Properties since JUL 2020". But the primary judge was not required to determine that allegation for the purposes of resolving the motions for security for costs. 4. This ground is rejected. Ground 11 1. This ground raises a claim that, but for Westpac's alleged wrongful retention of the first registered mortgage over the Lovedale property, Mr Ward would have been able to enforce Lovedale mortgage debt and use the net proceeds of sale to pay Mr Dixon's guaranteed debt to Mr Mahommed. Again, it was unnecessary for the primary judge to determine the merits of this claim in the interlocutory proceeding below. Indeed, it is notable that in the submissions below filed on behalf of the plaintiffs, Mr Smits said: It is not necessary, at this stage, for the Court to engage in any extensive review of evidence or facts, which are stated prima facie in the ASoC and re-iterated in the Statement of Facts … 1. This ground is rejected. Ground 12 1. This ground overlaps with ground 11, subject only to the fact that it relates to Westpac's alleged wrongful retention of the first registered mortgage over the Maitland property, and should be rejected for the same reasons. Ground 13 1. This ground raises claims regarding Ms Cox and her administration of Mr Dixon's estate, which the applicants claim have caused them substantial losses. This ground should be rejected for similar reasons to those given above in respect of grounds 11 and 12. Ground 14 1. This ground effectively repeats other grounds concerning the primary judge's alleged failure to take into consideration matters such as the applicants' impecuniosity, stultification and prejudice. None of those claims has any substance, for reasons given above in respect of each of those claims. Ground 15 1. The applicants claim that the primary judge erred in failing to find that Ms Cox had no interest in the proceedings (the consequence being that security for costs should not have been ordered in her favour). The claim was primarily directed to the fact that Ms Cox had, in her cross-defence to Westpac's cross-claim, acceded to that claim. 2. This ground is rejected. Independently of Westpac's cross-claim against her, Ms Cox was entitled to defend her interests vis a vis the claims made against her by the plaintiffs. This is reinforced by the fact that Ms Cox was joined as the third defendant in the proceeding below at the behest of the plaintiffs when they filed the amended statement of claim. Furthermore, it was not incumbent upon the primary judge to reach a final determination on the nature and extent of Ms Cox's interest in an interlocutory application for security for costs. Ground 16 1. Ground 16 claims that the primary judge erred in making no finding as to the merits or prospects of any claim or defence that would assist this Court. This ground is rejected. It is inconsistent with a long line of authority which admonishes against the making of a final determination as to the merits of a claim or a defence in an interlocutory matter of this kind. It was entirely appropriate for the primary judge to proceed on the basis that, having regard to all the material which was before the Court below, and notwithstanding that the plaintiffs' presentation of the case was "oppressive", their case was at least sufficiently arguable so as to warrant consideration being given to other relevant matters guiding the discretion whether or not to order security for costs. 2. This ground is rejected. Ground 17 1. This ground, which has eight sub-paragraphs, claims that the primary judge gave inadequate reasons and erred in ordering that the applicants were jointly liable to pay the respective sums by way of security for costs. The applicants also claim that this order was made without procedural fairness to them. 2. None of these claims has any substance. As to the claim of procedural unfairness, Westpac's amended notice of motion filed on 19 October 2021 made plain on its face that security for costs was sought against the applicants jointly. The same may be said in respect of the notice of motion filed on 12 July 2021 on behalf of Ms Cox. Furthermore, the applicants were put on further notice in the hearing below that the Court was being asked to treat the applicants jointly and not severally (see the transcript below at 35). 3. Nor have the applicants established any substantive error in the making of orders for security against them jointly. Significantly, notwithstanding that the applicants were on notice that a joint order was sought (for the reasons given immediately above), Mr Smits acknowledged in the appeal that no oral or written submission was made in the proceeding below in opposition to that course. 4. Mr Smits also submitted several times on the appeal that, in making the applicants jointly liable, the primary judge erred in not appreciating or giving effect to the fact that Mr Ward's case was relatively narrow and confined, in comparison with that of Mr Mahommed. Consequently, he submitted that it was unfair and unjust to make them jointly liable to pay security for costs. 5. For the following additional reasons, this claim should be rejected. First, contrary to Mr Smits' submission, the amended statement of claim contains far more than 3 paragraphs in relation to Mr Ward's case, including numerous prayers for relief, most of which refer to both applicants, while others refer to Mr Ward alone. 6. Secondly, as noted above, the transcript indicates that the Court below was taken to various parts of the pleadings and the evidence relating to the nature and scope of the claims being made by both the applicants. There is simply no basis to conclude that the primary judge failed to understand the fundamental elements of the case (see further at [35] above). 7. Thirdly, part of ground 17 turns on the applicants' contention that the primary judge erred because there is a principle that security for costs orders should not be made where there are multiple plaintiffs and where one of those plaintiffs does not have to provide security. This contention is rejected, not the least because its premise in inapplicable to the circumstances here where the applicants have failed to establish that this is a case where one of them ought not to have been ordered to pay security for costs. In particular, no appellable error has been established in relation to the primary judge's conclusion that Mr Ward should pay security for costs even though, as was acknowledged in the applicants' written submissions on the appeal, he made no claim in any trustee or representative capacity. Conclusion 1. For these reasons, leave to appeal should be granted, but the appeal will be dismissed, with costs. ********** 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. Decision last updated: 15 February 2023