Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Levy v Bablis [2011] NSWCA 411 Hearing dates: 12 December 2011 Decision date: 12 December 2011 Before: Giles JA Decision: I order that the appellant provide security for the costs of the respondent in the sum of $125,000 in the manner following. The security is to be paid into court or such other manner as the Registrar may direct on application to abide the further order of the Court. $30,000 is to be paid into court in the first instance. Forthwith upon the disposal of the respondent's application strikeout application pursuant to the notice of motion filed on 17 November 2011 the balance of $95,000 is to be paid. The appeal is stayed pending payment into court of the first amount of $30,000, and in the event that the disposal of the respondent's dismissal application is such that the appeal continues is thereafter to be stayed pending payment of the remaining $95,000. I adjourn the dismissal application pursuant to the said notice of motion to 30 January 2012 before the Registrar. [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 Court146s 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.] Catchwords: APPEAL - security for costs - unresolved application for summary dismissal - impecunious appellant - weak appeal - other costs unpaid - non-compliance with directions - special circumstances (UCPR 51.50) - not shown appeal would be stultified - security ordered - initial amount pending resolution of summary dismissal application - further amount thereafter. Cases Cited: Hastings v Hastings [2009] NSWCA 294; Piras v Egan [2007] NSWCA 26. Category: Procedural and other rulings Parties: Julian Emanuel Levy - Appellant Peter Bablis - Respondent Representation: P Menzies QC & B Nolan - Appellant/Respondent on motion M Condon - Respondent/Applicant on motion McLachlan Thorpe Partners - Appellant Minter Ellison - Repondent File Number(s): 2006/260173 Decision under appeal Citation: Levy v Bablis [2011] NSWSC 461 Date of Decision: 2011-05-19 00:00:00 Before: Slattery J File Number(s): 2006/260173 Judgment 1HIS HONOUR: This is an application by the respondent, the defendant at trial, for an order that the appeal be dismissed pursuant to Pt 13 r 1 of the UCPR and, depending upon what happens to that application, for an order that the appellant provide security for the costs of the appeal. 2The appellant brought proceedings against the respondent on a claim in debt, for breach of fiduciary duty and for misleading conduct. Essentially he alleged that he had "invested" about $1,000,000 in a socalled private placement to which he was introduced by or through the respondent. The money was lost. 3The trial took about sixteen days with extensive factual dispute. The trial judge did not find either the appellant or the respondent a satisfactory witness, but he decided in favour of the respondent. One matter material to his Honour's decision was that in what the respondent told the appellant about private placements the respondent spoke in terms of what he had been told by others. His Honour said that there was no evidence that he had invested with a Mr O'Dowd, the person to whom it seems the $1,000,000 ultimately went, and that the respondent did not appear to him to have sufficient expertise to deal with in depth questioning on behalf of the appellant about private placements. 4That is the area of intended challenge on appeal. The sole ground of appeal turns on what is described as fresh evidence. The appellant wishes to put before the Court on appeal evidence that the respondent did in fact have expertise in investment in private placements, and had in fact himself invested in 2002 in what the appellant says was a version of a private placement. 5The appellant relies, at least in the first instance, on what is set out in his affidavit sworn on 18 August 2011 in which he recounts conversations with a Mr Colett. According to the affidavit Mr Colett told the appellant that the Sherwood Group, referring to a company in which the respondent was a director, did not invest in a gas line in Eastern Europe but rather in something which the affidavit describes as a private placement. The point of the reference to a gas line in Eastern Europe is, it seems, that that was how the respondent described his earlier investment experience. What the appellant wishes to do, through evidence which he hopes to obtain through subpoenas addressed to the Sherwood company or some solicitors in Brisbane, MacGillivrays, is to establish that the respondent had been involved in something in the nature of a private placement at an earlier time, that he was not telling the truth in his evidence, and that the inference should be drawn that the respondent was himself involved in the "investment" made by the appellant. 6The dismissal application is made prior to the appellant obtaining either the production of documents by the Sherwood company or inspection of the documents produced by MacGillivrays. The application is made on the basis that the hurdles for reception of evidence to the effect above described cannot be surmounted by the appellant. It is recognised that the test for summary dismissal is a stringent one, variously expressed but to the effect that it must appear on the application that reception of evidence of the kind I have indicated on appeal and its bringing a result either of a different decision or more probably a new trial cannot succeed. In particular, it is submitted that the appellant has not shown that the materials going to the respondent's experience in investments and his involvement in the prior investment through the Sherwood company was not available upon the exercise of reasonable diligence at the time of the trial. Reference is made to the statement in the appellant's affidavit that he was aware of Mr Colett's telephone number from discovered and subpoenaed documents in the trial proceedings, and to subpoenas which had been issued on his behalf in those proceedings apt to make available to him materials of the kind in question. 7All this may turn out to be true. The prospects of leave to adduce the fresh evidence, or perhaps it may turn out that it should properly be described as further evidence, are not great. However, it seems to me that it is premature to decide the dismissal application at this point, because if it is to be determined adversely to the appellant on the stringent test that I have mentioned the appellant should have the opportunity of filling out what he wants to rely on by having available to him, if he can, whatever is produced in answer to the subpoenas to the Sherwood company and MacGillivrays. It seems to me that the dismissal application was brought on prematurely. I consider that it should be adjourned, and it can be brought on again once the dealings with the subpoenas, which involve at the least a claim to privilege concerning the MacGillivrays documents, have been resolved. 8That leaves the application for security for costs. The strength of the appeal is a material consideration in deciding whether or not there are special circumstances within Pt 51 r 50 of the UCPR. 9The appellant is impecunious. There is evidence that he has not paid an amount of costs ordered in favour of a third party in the course of the trial, and that monies are outstanding to the solicitors acting for him at trial. Mere impecuniosity will ordinarily not constitute special circumstances so as to justify an order for security for costs, but as well as these additional factors to his financial position there is evidence that the appellant has not complied with a number of directions previously given in the appeal. The non-compliance is not explained by the difficulty he has encountered in obtaining through the subpoenad documents which might enable him to put before the Court the evidence he wishes to have admitted on appeal. Given the view I take of the likely weakness of the appeal and these further matters, it seems to me that there are special circumstances. 10The appellant's response was that to order security would be to stultify the appeal. However, there is no evidence from the appellant himself as to his ability to continue with the appeal if security be ordered, or indeed any evidence to speak of from the appellant as to his financial circumstances. As was the case in Piras v Egan [2007] NSWCA 26 at [27], it appears that the appellant can find resources to conduct the appeal. The fact that he is impecunious does not of itself show that the appeal would be stultified if security were ordered; see Hastings v Hastings [2009] NSWCA 294 at [14] where that proposition is stated and it is pointed out that the possibility remains in many cases that there are others such as litigation funders, family or associates who may step in to assist. 11It seems to me that these are circumstances where security should be ordered but it should be ordered in two tranches: first, until the disposal of the dismissal application and secondly if the matter survives, thereafter. This is not to order security for the respondent's application, but rather to remove the immediate burden for the appellant of having to find the full amount of the security which I propose. 12Unchallenged evidence of Mr Michael Raine, the respondent's solicitor, provides an estimate of the respondent's appeal costs at a little over $200,000. From the explanation in Mr Raine's affidavit that seems to be rather generous, and the application is for security of $150,000. I propose to order security all told of $125,000, with the security in the first tranche $30,000. I will just break off from the reasons for the moment. The notice of motion asks for that sum to be paid into court. Is that as good a way as any? CONDON: Yes your Honour. 13HIS HONOUR: I order that the appellant provide security for the costs of the respondent in the sum of $125,000 in the manner following. The security is to be paid into court to abide the further order of the Court. $30,000 is to be paid into court in the first instance. Forthwith upon the disposal of the respondent's dismissal application pursuant to the notice of motion filed on 17 November 2011 the balance of $95,000 is to be paid. The appeal is stayed pending payment into court of the first amount of $30,000, and in the event that the disposal of the respondent's strikeout application is such that the appeal continues is thereafter to be stayed pending payment of the remaining $95,000. I adjourn the dismissal application pursuant to the said notice of motion to 31 January 2012 before the Registrar. Anything else gentlemen, apart from costs? CONDON: I do seek costs, I make two enquiries. Can your Honour clarify when the second tranche is payable. HIS HONOUR: Forthwith after the disposal of the strikeout application. I thought I said that, that was my correction to put the word 'forthwith' at the front. CONDON: Thankyou your Honour. I rise, I hope this is not controversial, but a stay on the order, does that apply to the calling upon the subpoenas as well? HIS HONOUR: I think it would have to wouldn't it? That's part of the appeal. CONDON: That's my application, yes your Honour. HIS HONOUR: I regard that as extending to calling upon the subpoenas, it's doing anything in the appeal. If Mr Menzies wishes to say otherwise he'd better say so. MENZIES: I did not intend to say otherwise your Honour, I considered it and as I was sitting here it seemed to me that it must follow as the night the day. HIS HONOUR: Yes. CONDON: Thankyou your Honour. I seek costs of today your Honour. HIS HONOUR: Just before we get to that, my associate is telling me I may have done something wrong. 30 January not the 31st, that will be corrected thankyou. CONDON: I seek costs. HIS HONOUR: Yes, what do you want to say Mr Menzies? MENZIES: Before I say anything about costs your Honour may I just revisit your orders, and I don't wish to thereby create further problems but it may be for example Mr Levy was able to find some other method of providing security such as someone who was prepared to provide a registered first mortgage or something of that nature, one would have thought that ought to be able to be accommodated without having to seek at the moment complex orders as to what alternative might happen other than payment of money into court. I just simply raise that; it could be dealt with if it arose, presumably the next time the matter came up before the registrar. HIS HONOUR: What I could do is to add in the orders after the words 'paid into court', "or provide in such other manner as the Registrar may direct on application". CONDON: I consent to that. MENZIES: That would be completely satisfactory your Honour. HIS HONOUR: Yes, well let's add those words. MENZIES: Now on costs? HIS HONOUR: Yes. MENZIES: The respondent failed on the primary claim for strikeout, succeeded on security. One would have thought an appropriate way to deal with it would be either costs be reserved or alternatively there be no order as to costs for today. HIS HONOUR: The respondent hasn't failed yet on the strikeout. MENZIES: No, well then costs should be reserved awaiting the final resolution of those issues. HIS HONOUR: The only complication is that the strikeout part of the motion is still up in the air. How do you suggest I should cope with that Mr Condon? CONDON: Your Honour, my client should have the costs of the motion and of the day to date because the matters upon which I rely to seek security - sorry, on the strikeout, were germane to the issue of security and no time was wasted in substance because your Honour had to receive submissions about the nature of the fresh evidence and its relevance to the appeal. Can I remind your Honour respectfully that on 26 August, about eight days after the appeal was lodged, those instructing me sought the fresh evidence and it was only on 7 December that we got the first bits of it. Your Honour can well understand, I don't of course cavil and I can't cavil, with your Honour's characterisation of that part of the application as premature. Your Honour has made that characterisation now the evidence is before him, having only been served last week. Before that was served there was noncompliance with the rules about bringing the application. HIS HONOUR: I would have thought you were justified in bringing the strikeout application at the time. The question is what if anything I should do because your promoting it today has not brought a conclusion. CONDON: But no time was wasted and as I've submitted already the submissions were germane to the issue of security and your Honour can rest assured that if my client wishes to pursue this strikeout application and is unsuccessful in light of your Honour's finding about the application being premature there'd be a costs order no doubt sought for by the appellant on that occasion. That's when the chickens will come home to roost your Honour. HIS HONOUR: Yes. Mr Menzies. MENZIES: I don't wish to add anything further your Honour. HIS HONOUR: I think Mr Condon is correct. I think what I was taken to was all material to the security for costs and it would be appropriate to order that the appellant pay the respondent's costs of the application for security for costs including the costs of today. Whether that will leave some minor bit for later on out of the strikeout application is something you can take up with whoever has the pleasure of this on the next occasion. MENZIES: If your Honour pleases. CONDON: May it please your Honours. HIS HONOUR: So that will be the order. Thankyou very much gentlemen. I will adjourn. ********** 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: 20 December 2011