SABA v NATIONAL AUSTRALIA BANK LIMITED [1999] NSWCA 93

New South Wales Court of Appeal CITATION : SABA v NATIONAL AUSTRALIA BANK LIMITED [1999] NSWCA 93 FILE NUMBER(S) : CA 40817/98 HEARING DATE(S) : 29 March 1999 JUDGMENT DATE : 29 March 1999

PARTIES : National Australia Bank Limited - Cl Sam Saba - Opp JUDGMENT OF : Sheller JA

LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S) : 10195/94 LOWER COURT JUDICIAL OFFICER : Sully J

COUNSEL : D L Williams - Cl J M Ireland QC - Opp SOLICITORS : Dibbs Crowther & Osborne - Cl Eddy & Maloney - Opp CATCHWORDS : PRACTICE & PROCEDURE - APPLICATION FOR SECURITY FOR COSTS - CIRCUMSTANCES WHERE APPROPRIATE - EVIDENCE OF LIKELY SUCCESS OF APPEAL CASES CITED: Uptown Sydney Development Corporation Pty Ltd v Bank of New Zealand (No 1) (1993) 11 ACSR 300 at 301 Kennedy v McGeechan (1978) 1 NSWLR 315 DECISION : Application for security for costs refused with costs

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40817/98 CL 10195/94

SHELLER JA

Monday, 29 March 1999

SABA v NATIONAL AUSTRALIA BANK LIMITED JUDGMENT

1 SHELLER JA: This is an application by National Australia Bank Limited that the opponent, Sam Saba, provide interim security for costs in the sum of $24,774 as a condition of proceeding with his appeal in this Court. 2 The appeal is from a decision of Sully J which was given on 25 September 1998. On 26 October 1998 I refused an application for a stay of execution of the judgment and orders that Sully J had made. In my reasons for judgment on that application I said that the factual background to the case was a complicated one. In the course of those reasons, I set out in summary various matters that had been dealt with in Sully J's reasons for judgment. Having read through the grounds of appeal and listened to the arguments that were put on that application, I said that I was not persuaded that any grounds other than the principal one that was then argued had any real chance of succeeding on the appeal. 3 Earlier in those reasons I said that on what seemed to be the principal matter at issue I regarded the chances of success of the defendant's appeal as slim. 4 This application by the bank, which was a successful plaintiff before Sully J, is made under Pt 51 r 16 of the Supreme Court Rules which provides: "Where a notice of appeal with appointment has been filed, the Court may in special circumstances order that such security as the Court thinks fit be given for the costs of the appeal." 5 I have had the assistance of written outlines of argument from both parties. The claimant relies on special circumstances constituted by the opponent's alleged impecuniosity and/or the nature of the appeal including its prospects. Since the matter was before me on the stay application, the notice of appeal has been amended. The claimant submits that the amendments make no difference in the sense that what I regarded as the slim prospects of success had been made no weightier. 6 In support of the submission of impecuniosity, the claimant points out that after the sale of the property, the subject of the security in question in these proceedings, there was an unsecured short fall of debt owing by the opponent to the claimant of some $307,000. There is material to suggest that the opponent is not employed and is in receipt of an invalid pension. In his appeal the opponent has challenged the judgment, has briefed counsel and has taken steps to have the appeal heard. 7 Submissions have been put on the opponent's behalf by Mr Ireland QC, who submits that his appeal is arguable. It is pointed out that as the result of the sale of the secured property the bank has received an amount of about $410,000. The gist of the submission is to raise the question of whether the bank acted legitimately when obtaining from the opponent and his wife security over two properties to support guarantees of existing debts of a company called Tanamond Pty Limited. There is a dispute as to the nature of the relationship between the opponent and that company at the time those debts were incurred. 8 Mr Ireland took me to a number of documents to make the point that, without challenging Sully J's findings of fact, his Honour should have found that the relevant securities and guarantees were obtained as the result of a misrepresentation by a bank officer. It is submitted that the bank had, through misrepresentation, deceptive conduct and unconscionable dealing, obtained guarantees and security over a pre-existing debt of the company in circumstances where a bank officer had stipulated that no further facilities would be extended. 9 I have been referred to decisions of this Court in which the operation of Pt 51 r 16 has been discussed. The power under that rule to order security depends upon special circumstances being shown, as the former President of the Court said in Uptown Sydney Development Corporation Pty Limited v Bank of New Zealand (No 1) (1993) 11 ACSR 300 at 301: "...it is not simply enough that the balance of justice or convenience favours the making of an order..." 10 In Kennedy v McGeechan (1978) 1 NSWLR 315 the court referred to the frustration of a genuine appeal about a considerable amount of money, because the appellant is impecunious, as a consequence of an order for security. 11 In the present case the claimant has pointed out that the opponent has not demonstrated by evidence that some other source apart from himself would not be available to fund the appeal. There is some suggestion in the material that either his estranged wife or his two sons may be able to provide assistance. 12 It is one thing if an appeal is shown to be hopeless or to be unreasonable or of an harassing nature; it is one thing if an appellant has adopted a procedure of which an appeal is part, to press a hopeless claim through endless litigation. However, in the present case I am not persuaded that this is not a perfectly genuine appeal. I expressed views about its chances of success on the stay application but that was on the material before me. 13 I have now heard argument from senior counsel. I express no further view one way or another about the chances of success of the appeal but, as I say, I am not persuaded that it is not a genuine appeal and I am not prepared to frustrate the opponent's prima facie right to pursue it simply because he may be in an impecunious situation with the consequence that an order for security may bring the appeal to an end. 14 This means in terms of the rules that I am not persuaded that in this case special circumstances have been demonstrated and, accordingly, the application for security is refused with costs. Those will be the orders of the Court. 15 (Mr Williams sought costs in the appeal). 16 Counsel for the claimant asks that I make the costs on this application costs of the appeal. I see no reason why in this case the ordinary rule should not prevail that costs follow the outcome of the application. Accordingly, I reiterate that the claimant should pay the opponent's costs of the application. *******