Levy v Bablis [2012] NSWCA 77

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Levy v Bablis [2012] NSWCA 77 Hearing dates: 28 February 2012; 2 April 2012 Decision date: 05 April 2012 Before: Young JA Decision: Dismiss notice of motion with costs. [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.] Legislation Cited: Supreme Court Act 1970, ss 26, 75A Uniform Civil Procedure Rules 2005, Pt 51.58 Cases Cited: Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 Programmed Solutions Pty Ltd v Dectar Pty Ltd [2007] QCA 385 Republic of Kazakhstan v Istil Group Inc [2006] 1 WLR 596 Streetscape Projects (Australia) Pty Ltd v The City of Sydney [2012] NSWCA 63 Category: Interlocutory applications Parties: Julian Emmanuel Levy (Appellant) Peter Bablis (Respondent) Representation: Counsel:

P Menzies QC and B K Nolan (Appellant) M Condon (Respondent) Solicitors:

Tsolakis Solicitors (Appellant) Minter Ellison (Respondent) File Number(s): CA 2006/260173

Judgment 1HIS HONOUR: This is a notice of motion seeking variation of one of my orders made 28 February 2012 and seeking to relieve the appellant from providing further security for costs. 2The appeal is from a judgment of Slattery J delivered on 19 May 2011: [2011] NSWSC 461. That judgment concerned an "investment" made by the appellant of $1,000,000 which was lost. The appellant alleged breach of fiduciary duty and misleading and deceptive conduct against the respondent and a company, United Producers and Associates Pty Ltd (referred to as UPA). UPA was a company controlled by a Mr O'Dowd. 3There seems little doubt that UPA and/or O'Dowd lost the appellant's money. The respondent was involved in securing the making of the "investment". However, after a 17 day hearing concluding in April 2010, the primary judge found that the respondent was a mere conduit and not liable to the appellant. 4The appellant lodged an appeal. The sole ground was that fresh evidence should be considered which would reverse the crucial finding of fact made by the primary judge. 5The respondent sought to have the appeal dismissed or, as a lesser alternative, sought security for costs. 6This application was decided by Giles JA on 12 December 2011: [2011] NSWCA 411. His Honour ruled that the application for dismissal was premature, but that security for costs should be granted. It is convenient to set out the vital parts of the judgment: [9] The 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. [10] The 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. [11] It 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. [12] Unchallenged 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. [13] 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. 7The $30, 000 tranche of the security was duly provided. 8I dealt with some interlocutory questions relating to getting the appeal ready for hearing on 28 February. I dismissed the notice of motion of 17 November and gave directions including the following order: 2. The appellant pay $95,000 into Court as security for the respondent's costs pursuant to his Honour Justice Giles' orders on 12 December 20112 on or before 2 April, 2012. If not paid by that date or such other date fixed by this Court by order made on or before 2 April 2012, the appeal shall stand dismissed with costs and the subsequent directions herein shall be vacated. 9I heard the motion referred to above on 2 April. I reserved my decision until today and, for caution, extended the date "2 April" to "10 April 2012". 10Mr P Menzies QC and Ms B Nolan appeared for the appellant and Mr M Condon appeared for the respondent. 11Evidence was presented by the appellant in which he stated that he could not raise the $95,000 and that his lawyers had obtained statements and statutory declarations from various people, mainly from Queensland, to the effect that the respondent had been involved with obtaining "investments" from other persons in similar circumstances. The argument appears to be that this similar fact evidence would make it more probable than not that the respondent was not a mere conduit. 12The evidence was not very detailed. Mr Condon objected to the evidence which merely said, "I have exhausted all other avenues for funding. I have no assets that can be sold to raise funds." I admitted the evidence despite it having the appearance of bare assertion as the remaining paragraphs of his affidavit of 30 March 2012 gave a fuller picture of a person who is now a disability pensioner having lost his whole fortune through unwise investments. Mr Condon did not seek to cross-examine the appellant on his affidavit. 13It is clear that a person seeking to convince a court that he or she cannot put up security for costs must show complete candour in disclosing his or her finances and that failure to do so will usually mean the dismissal of any application for relief: Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065; Streetscape Projects (Australia) Pty Ltd v The City of Sydney [2012] NSWCA 63. 14Mr Condon's principal objection was that it was not competent for me to make the orders sought on the appellant's notice of motion. He submitted that Giles JA had made an order and that it was not competent for a single judge to discharge that order. The only method of setting aside that order was for a review by a court of three judges. 15Mr Menzies sought to outflank that submission by applying under Part 51.58 of the UCPR for review of Giles JA's decision. That application is out of time as the application for review must be made within 14 days unless the Court otherwise orders. Mr Menzies applied to me to extend the time. However, "Court" in UCPR 51.58 means the Full Court of Appeal unless s 46 of the Supreme Court Act 1970 permits a single judge to exercise the power of the Court of Appeal. That section does not cover the instant situation. Thus, I have no jurisdiction to consider the application for extension of time. 16I thus return to the submission that I cannot set aside Giles JA's Order. It is common ground that I can vary my order of 28 February by, for instance, extending the time for compliance or probably allowing the $95,000 to be paid in smaller instalments over a longer period. Mr Menzies suggested that this latter would extend to allowing the $95,000 to be paid by instalments of $1 per week. My view is that my power would not extend that far so as virtually to negate Giles JA's order. 17If I accept Mr Levy's evidence, it is clear that he is in no position to put up the $95,000 in the foreseeable future. Thus, there is not point in extending the time for a short period for providing the second tranche 18 Mr Menzies then puts that the order of Giles JA was an interlocutory order and that, generally speaking, interlocutory orders may be varied at any time. 19It seems to be accepted that an order for security for costs is an interlocutory order. However, it is also accepted that such an order should only be varied if there is a material change of circumstances; see eg Republic of Kazakhstan v Istil Group Inc [2006] 1 WLR 596 at 604 [32]. The rationale is that reviews of interlocutory orders must be limited as a matter of judicial policy: Programmed Solutions Pty Ltd v Dectar Pty Ltd [2007] QCA 385 [12]. 20What then are the material changes in circumstances since Giles JA made his order last December? 21Mr Menzies puts that the changes have been: (1) that last December Mr Levy thought there was a possibility that he could raise the necessary security from others: this has now been proved not to be feasible; and (2) the material to show a strong case for the admission of fresh evidence has considerably strengthened. 22I do not consider that the first matter is one of changed circumstances. A litigant is expected to put forward at the first hearing of an application all the material that is relevant for the judge to rule on the application. At [10], Giles JA observed that the appellant had not put forward any evidence to speak of as to his financial circumstances or the unlikelihood of getting assistance from others. Even now, there is nothing to show whether, had Mr Levy made all proper enquiries last December, he would not have found out that there was little chance of others assisting with providing security. It does not appear to me that circumstances here have changed since Giles JA made his order, merely that if the appellant had a belief last December that belief was held on inadequate grounds. 23As to the second, Giles JA said he considered at [9] that one of the factors that made for special circumstances was the likely weakness of the appeal. There is now an affidavit from Mr Tsolakis, solicitor, which annexes a number of statutory declarations almost all of which were declared in the months of August and September 2011, though one bears date 11 December 2011. 24Mt Tsolakis swears that this material came to light as a result of a newspaper article in October 2012. This must be a typo, probably for 2011 as the article is said to be after Slattery J's judgment. (Other evidence refers to the Sydney Sun Herald of 1 October, though the year is not stated). If "2012" should read "2011", this does not fit well with statutory declarations made in August and September. However, this is a minor point. Mr Tsolakis says that "I am informed and verily believed [sic] that this information was not made available to (Mr Levy) when the matter last came before the court". However, the Court is not informed by Mr Levy just how much he did know. 25The onus was on the applicant last December to put all the relevant material before the Court. Even now, I am in the unsatisfactory position of not being told by Mr Levy just what he knew about the matters now revealed in the statutory declarations when the matter was before Giles JA. One would have expected that if some journalist had written an article on the subject suggesting that Slattery J had got it wrong, there would be material there to make a reasonable person pursue it before the motion was considered by the Court. Yet we are not enlightened. 26The statutory declarations are in quite inadmissible form and display considerable personal anger against the respondent. That not only weakens their credibility, but also raises considerable material for cross- examination in due course. They also contain a considerable amount of hearsay and the feelings that the maker had about various issues. 27Mr Condon submits that at least one of the declarations was available to be used before Giles JA as he (Condon) was served with a copy on the morning of the hearing. 28Mr Condon also notes that a great deal of the material was actually before Giles JA. He submits that the appellant made the forensic decision to relegate the material to peripheral status and to concentrate on financial matters and should not be permitted to change tack. 29I have not had time to trace through the accuracy of these submissions, but they appear to have some force. 30As the appellant needs to convince the Court of Appeal that special grounds exist for the reception of fresh evidence under s 75A(8) of the Supreme Court Act 1970, it would not seem to me that the statutory declarations advance the strength of the case much above the state it was in when Giles JA made his decision. 31It must be remembered too that the evidence that is to be relied on as fresh evidence is factual material which appears to have been in existence at the time of the trial. To date there has not been much consideration as to whether, if the case had been properly prepared, this material could not have been presented to Giles JA. 32Mr Menzies says that by 16 April the material will be put in properly admissible form and he puts (as a last resort back up submission) that if he loses this application on all other points, I should at least extend the drop dead date in my order of 28 February (as amended) to a few days after 16 April when the final form of the new material will be before the Court. 33The criticism could ordinarily be made that the appellant has had plenty of time already to put the new material into proper form. However, I'm told that his current lawyers are acting on conditional fee basis (though Mr Levy has sworn he already owes his current solicitors and counsel $60,000) so there is some excuse for investigations to take longer than might be expected. 34Mr Condon opposes this. He says that his client has spent considerable moneys in connection with this appeal already and that there is little hope of recovering these from Mr Levy. The longer the interlocutory issues are kept alive, the worse it is financially for the respondent. I consider this a very strong submission. 35I sympathize with that submission. However, I need to balance interests. It is a very serious matter to stifle an appeal which has some prospects of success and there is nothing in Giles JA's judgment to suggest that he had this in mind. 36Mr Condon also puts that this is really just a second application to have a new decision on the application that was before Giles JA supported by material the majority of which was or should have been before Giles JA. 37There is considerable force in that submission. 38Although it is a tough call, it seems to me that the appellant's failure to put his best case to Giles JA, my preliminary assessment that much of the material in the statutory declarations would not be admissible no matter how skilful the drafter of an affidavit was and the fact that the basal reason for the security for costs order was the lack of material to show that the order would stultify the appeal means that I should not accede to Mr Menzies' request. 39Whilst it is not a completely accurate statement, my summary of this application is that it is based not so much on changed circumstances since Giles JA's decision, but on material not wholly disclosed to Giles JA. 40Accordingly, I will dismiss the notice of motion with costs. Thus, if the second tranche of the security is not furnished on or before April 10, the appeal will stand dismissed.