MANN v WESTPAC BANKING CORPORATION LIMITED SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P 22 August 1988, 22 August 1988 [1988] NSWCA 89 PRACTICE — appeal — stay of execution — security for costs — appropriateness to review apparent prospects of success on appeal in a preliminary way — dispute about guarantee to Bank — dispute in evidence about what was said when guarantee was signed — trial judge prefers evidence of Bank officers — whether impediment to success on appeal — evidence of serious shortfall of appellants' assets against liabilities — held: (1) "Special circumstances" established to warrant order for security for costs of appeal — such orders not limited to cases of abuse of process, gross delay or where appeal manifestly hopeless. Abdurahman v Field, unreported, CA, 4 March 1986; (1986) NSWJB 30 distinguished. (2) Stay of execution should be granted, conditional upon deposit of security for costs. Supreme Court Rules, Pt51 Rule 11. ORDERS 1. Order a stay of the execution of the orders and judgment of Campbell J dated 15 March 1988, upon condition that the appellants, Christopher Peter Mann and Christine Estelle Mann, provide security to the reasonable satisfaction of the Registrar of the Court of Appeal, and in a form ordered by him in an amount of $7,500. 2. Order that, in default of the provision of such security within twenty-eight days of this date, the matter be relisted before the Court for the purpose of considering the dismissal of the appeal for want of the provision of the security. 3. Order that the costs of the application be the Respondent's costs in the appeal. Kirby P Christopher Mann and Christine Mann have appealed to this Court from ajudgment and orders of Campbell J. Judgment was delivered on 15 March 1988. By that judgment, his Honour held Mr and Mrs Mann personally liable to Westpac Banking Corporation (the Bank) under a guarantee dated 3 May 1983. His Honour held that, by the guarantee, they jointly and severally guaranteed certain advances and accommodations given by the Bank to Western Medical Services Pty Limited, a company in which Mrs Mann had an interest. Three questions are before me. The first is whether security for costs should be ordered. The second is whether a stay of execution upon the judgment of Campbell J should be ordered and, if so, on what terms. The third, a matter which has not been fully argued, is the adequacy of the notice of appeal filed on behalf of Mr and Mrs Mann. The nature of the dispute between Mr and Mrs Mann and the Bank and the grounds of their resistance of the claim upon the guarantee by the Bank are set out in the judgment of Campbell J. I will not here review the defences which they unsuccessfully raised to answer the Bank's claim. One of the important issues which will be raised on the appeal is clearly the acceptability of the evidence given by Mr and Mrs Mann concerning the arrangements which they made with the Bank at the time the guarantee was entered by them. upon that question the Bank called two officers, Mr Challoner and Mr Lancuba. Mr and Mrs Mann gave evidence in their own case. 2 UNREPORTED JUDGMENTS Campbell J, working to his conclusion, did not expressly state that he disbelieved Mr and Mrs Mann. Accordingly, it would appear to be open to them, on the appeal, to argue that this Court should, subject to the established authority of the Court and of the High Court of Australia, prefer their evidence about the arrangements to that of Mr Challoner and Mr Lancuba. However, consistent with the authority of the High Court in Brunskill & Anor v Sovereign Marine and General Insurance Co Limited & Ors (1985) 59 ALJR 842, most recently restated in Baumgartner v Baumgartner (1987) 62 ALJR 29, 32-3 this Court would have to pause before it substituted its opinion on the credibility of the witnesses for that reached by Campbell J. It is appropriate to mention that his Honour specifically stated that he found Mr Lancuba "a particularly impressive witness" and that he "accepted what he said as to that matter". What he said related to the circumstances and terms of the conversation between Mr Challoner and Mr and Mrs Mann, and the explanation given by the former to the latter concerning the debt and interest guarantee which Mr and Mrs Mann signed. As well, his Honour stated that he thought the evidence of Mr Challoner was "more impressive than that of either of the defendants". He went on to refer to what he took to be "a significant measure of conflict" between "the evidence of Mr and Mrs Mann" - or Mrs Mann, as IJ take his Honour to have meant - and Mr Mann. His Honour went on: "No doubt that conflict would not be fatal, but taken together with the manner of giving the evidence of the two of them, in particular Mr Mann, it certainly raised considerable doubt in my mind as to the accuracy of the account they were giving." Counsel for Mr and Mrs Mann rightly drew attention to the decision of the Court in Chambers v Jobling (1986) 7 NSWLR 1. That decision makes it plain that, consistent with the authority of Brunskill and Baumgartner, the Court must still discharge its appellate function. However, that function will, in this case, require Mr and Mrs Mann to tread carefully between the statements of expression which are set out in Campbell J's judgment and those which (although not stated) are integral to his Honour's conclusion. The Rules of the Court, pt5 r 11 provide that the Court of Appeal may, in special circumstances, order that such security as the Court of appeal thinks fit, be given for the costs of an appeal to the Court of Appeal. The Court has always approached orders for security for costs with caution. It does so notwithstanding the provision for security in the Rules because, in some cases, an order for security will effectively terminate the appellant's opportunity of appellate review because the obligation to find security places such a barrier in the way of access to the Court as, in truth, to deprive the appellant of the opportunity of having an appeal heard on the merits. So much was said by the Court in Abdurahman v Field, unreported, CA, 4 March 1986; (1986) NSWJB 30. Indeed in that case, in a joint judgment of the Court (which Comprised Glass and Samuels JJA and myself) this was said: Generally speaking, the Rule, and its English equivalent, have been limited in application to cases where there is established a prima facie abuse of process, a gross delay in the prosecution of the appeal, or where it is shown that the appeal is manifestly misconceived and hopeless. I would certainly not describe the appeal of Mr and Mrs Mann as fitting within any of these categories. However, judgments are not to be read as statutes. They are not set in stone. The observations in Abdurahman about the categories which URJ MANN v WESTPAC BANKING CORPORATION LIMITED (Kirby P) 3 enliven the jurisdiction under the Rule were preceded by the qualifying phrase, "generally speaking". They were illustrations not delimitations of the operation of the Rule. In the end, the duty of the Court is to attend to the words of the Rule. It is a misunderstanding of the nature of judicial discretion to take words used in decisions of a Court, dealing with other circumstances, as binding the approach of the Court in the exercise of its discretion in another case. On the contrary, in every case the Court must exercise its discretion afresh. It may be guided by principles which have been stated before. But it must pay close attention to the circumstances of the particular case before it. See Norbis v Norbis (1986) 161 CLR 513 and the general discussion in The Pambula District Hospital v Herriman, unreported, CA, 5 August 1988. This is the approach that I take to the discretion which I must now exercise. The matter which attracts the possible application of the order for security is the proof, from the affidavit evidence of Mr Mann and from affidavit and oral evidence given by Mrs Mann concerning the financial position in which they now find themselves. According to Mr Mann's affidavit their joint assets are limited to a house in Glenorie, a defamation action brought by Mrs Mann in Australia (and, apparently, by Mr Mann in England) and certain clothes, furniture and personal effects which would be of relevantly little value. Mr Mann acknowledges in his affidavit an accumulated debt to the ANZ Bank and AGC Limited of $500,000. He claims that his house in Glenorie was, in 1986, valued at $200,000. He estimates that its present value would not exceed $300,000. Accordingly, the total indebtedness of Mr and Mrs Mann exceeds their assets by, at the least, $200,000. The defamation action which was the subject of oral evidence by Mrs Mann relates to a publication in an English medical journal of a reported complaint of a medical practitioner from the United Kingdom who visited Australia, Dr John Eccott. According to Mrs Mann the statements of Dr Eccott in the journal "World Medicine", published 16 March 1981, bring her into ridicule and contempt, and occasioned the failure of the company, Western Medical Services Pty Limited, with which she was associated. I will not go into the details of the alleged defamation, although the Court has had placed before it the amended statement of claim filed by Mrs Mann in the Supreme Court. The oral evidence of Mrs Mann indicated that she was not entirely aware of the progress which was being made in the defamation suit. I note it was commenced in 1985. It appears that judgment has been entered against Dr Eccott. The other defendants, including the company which publishes the medical journal and its overseas representative, have appeared within the jurisdiction to defend the action. I was told by counsel, the matter being agreed, that the proceedings are to be relisted in the defamation list on a date suitable to the Court, and as soon as possible. But this indication hardly evinces an energetic pursuit of the defamation claim by Mrs Mann. Perhaps it was considered appropriate to pursue Mr Mann's action in England first. I have no evidence about that action or its progress in the English courts. The Bank relies principally on the apparent weakness of the substance of the appeal and the further expenses it will incur in defending it These expenses are shown to be of the order of $7,000. The Bank also relies on the very considerable indebtedness of Mr and Mrs Mann for which the defamation action, even were it to succeed, would appear to provide an insubstantial make weight. 4 UNREPORTED JUDGMENTS In the end, it seems to me that Mr and Mrs Mann should have the stay of execution of the judgment. But they should have it upon condition that security for costs of the Bank is provided. I am of the opinion that there are special circumstances in this case. They derive from my assessment, necessarily circumspect and provisional, concerning the prospects of success of Mr and Mrs Mann on the appeal, the costs which the Bank will incur and the prospect in the present circumstances on their evidence that, were they to fail, the Bank would not secure recovery from them for the costs of the appeal. Obviously it is impossible at this standpoint and with only a preliminary view of the case from the judgment of Campbell J to foreshadow the way in which the appeal will go when fully argued. However, enough has been said to show that Mr and Mrs Mann have difficulties, particularly in the light of the passages to which I have referred in his Honour's judgment, I would therefore conclude that though a stay should be given to protect the utility of the appeal, it should be given upon terms that protect the Bank against further costs. The costs of the proceedings to date are already substantial. Should the appeal fail, there would appear to be little prospect of the Bank's recovering its costs. The orders which I would therefore make are: 1. Order a stay of the execution of the orders and judgment of Campbell J dated 15 March 1988, upon condition that the appellants, Christopher Peter Mann and Christine Estelle Mann, provide security to the reasonable satisfaction of the Registrar of the Court of Appeal, and in a form ordered by him in an amount of $7,500. 2. Order that, in default of the provision of such security Within twenty-eight days of this date, the matter be relisted before the Court for the purpose of considering the dismissal of the appeal for want of the provision of the security. 3. Order that the costs of the application be the Respondent's costs in the appeal. The final matter to be dealt with is the matter of the notice of appeal. I agree with the observations of counsel for the despondent that an amended notice of appeal which has been filed is still defective. However, as this matter has not been fully argued and as the defects appear to have been acknowledged by counsel for the appellants it seems preferable to me that there should be, at least in the first instance, discussions between counsel and no order concerning the notice of appeal. In the event that, for the want of the provision of security, the appeal is dismissed, the necessity for a further amended statement of grounds of appeal will be obviated. In the event that the appeal goes ahead it will be necessary for further consideration to be given to the amended notice of appeal. That question may be relisted before the Court on two days notice to the other party so that appropriate orders can be made thereafter.