Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434 Hearing dates: 10 December 2012 Decision date: 18 December 2012 Before: Ward JA Decision: Orders made for provision of security for costs of the appeal in favour of the respective respondents. [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.] Catchwords: PRACTICE AND PROCEDURE - application for security of costs - whether special circumstances exist for grant of security - where hearing below was substantial in length - where appellant seeks to agitate almost all legal and factual issues raised at first instance - where estimated costs of the appeal will be significant - where appellant impecunious and there is a risk that the applicants may have difficulty enforcing a costs judgment in their favour against appellant - whether security for costs should be granted on a staged basis Legislation Cited: Civil Procedure Act 2005 (NSW) Limitation Act NSW 1969 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 Idoport Pty Limited v National Australia Bank Limited; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited [35] [2001] NSWSC 744 Lall v 53-55 Hall Street Pty Ltd [1978] 1 NSWLR 310 Levy v Bablis [2011] NSWSCA 411 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 Tait v Bindal People [2002] FCA 332 Weldon v Maples, Tyeesdale & Co (1887) 20 QBD 331 Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 Texts Cited: Ritchie's Uniform Civil Procedure NSW Category: Interlocutory applications Parties: David Ballard (Appellant/Respondent on motions) Brookfield Australia Investments Ltd (First Respondent/Applicant on motion) Multiplex Corporate Agency Ltd (Second Respondent/Applicant on motion) Construction Forestry Mining and Energy Union (Third Respondent/Applicant on motion) Construction Forestry Mining and Energy Union (New South Wales Branch) (Fourth Respondent/Applicant on motion) Andrew Ferguson (Fifth Respondent/Applicant on motion) Representation: Counsel: R W Tregenza (Appellant/Respondent on motions) A S Bell SC (First & Second Respondents/Applicants on motion) J H Pearce (Third, Fourth & Fifth Respondents/Applicants on motion) Solicitors: Sagacious Legal Pty Ltd (Appellant) Clayton Utz (First & Second Respondents) Taylor & Scott Lawyers (Third, Fourth & Fifth Respondents) File Number(s): CA 12/169375 Decision under appeal Citation: [2011] NSWSC 426 Date of Decision: 2012-05-03 00:00:00 Before: McDougall J File Number(s): 07/266587 Judgment 1HER HONOUR: Before me in the referrals list on 10 December 2012 were two applications for security for costs in relation to the conduct of appeal proceedings brought by Mr Ballard (the respondent to the present applications) in respect of a decision by McDougall J in May this year ([2011] NSWSC 426). His Honour dismissed conspiracy claims brought by Mr Ballard against the respective applicants on the present motions (to whom I will refer as the Brookfield/Multiplex parties on the one hand - the first and second respondents to the appeal - and the CFMEU parties on the other hand - the third to fifth respondents on the appeal). 2The Brookfield/Multiplex parties' application is by Notice of Motion dated 19 September 2012. They seek orders for security for costs in the sum of $440,514.25 and that the appeal be stayed pending the provision of such security. The CFMEU parties' application is by Notice of Motion dated 2 October 2012. They seek security in the sum of $262,294.00 and a similar stay pending the provision of security. Background 3Prior to November 1996, Mr Ballard worked as a demolition contractor. Through a company (Stoneglow), said to be his corporate alter ego, he entered into a subcontract for the provision of demolition services in relation to a construction project in which the Brookfield/Multiplex parties were involved. The Stoneglow contract was terminated by the Brookfield/Stoneglow parties (in reliance on a termination clause triggered by an insolvency event as defined). The claim made by Mr Ballard in the proceedings at first instance a claim that he had been forced out of the demolition industry as a result of a conspiracy between the Brookfield/Multiplex parties and the CFMEU parties. Mr Ballard claimed substantial damages for loss of his livelihood and for psychological harm allegedly suffered by him. It is fair to say that Mr Ballard's claim failed in all relevant respects. 4Relevantly (in light of some of the submissions now put), the hearing of the proceedings commenced before another judge (Smart AJ). His Honour heard the proceedings (including the oral evidence) over a period of 81 days (the matter initially having been listed with an estimate of 3-4 weeks). At the conclusion of the evidence there was an adjournment for the purposes of the preparation of written submissions. Unfortunately, his Honour was not able to resume the hearing. With the consent of the parties, the hearing before his Honour was terminated and the matter then proceeded before McDougall J on the basis that (with one exception, noted in his Honour's reasons, in relation to an application to reopen Mr Ballard's case to tender two additional documents) the evidence in the proceedings would be limited to that taken before Smart AJ. The application to reopen was rejected by McDougall J. Therefore, for present purposes it is relevant to note that his Honour was in the position of an appellate court in that he did not have the benefit of having seen the demeanour of the witnesses as they gave oral evidence. 5It must have been understood by all of the parties, when the hearing before Smart AJ was terminated and McDougall J assumed the conduct of the hearing that, insofar as his Honour would be required to make findings of fact (and this was largely a fact based case) that turned on the credibility of witnesses, his Honour would be doing so without the advantage ordinarily open to a trial judge of observing the witnesses in the witness box. Any disadvantage by reason of this was one that must have been suffered equally by the respective parties. 6It seems not to be disputed that the case turned almost entirely on the relevant findings of fact, namely whether the respondents did conspire together, as alleged, for the predominant purpose of forcing Mr Ballard out of the demolition industry by the use of either lawful or unlawful means; whether they or any of them performed overt acts in execution of any such conspiracy; whether Mr Ballard suffered loss as a result of the performance of such overt acts and, if so, how he should be compensated therefor. 7McDougall J focussed in his reasons on what he considered to be the crucial events. Those included the alleged conspiracy meeting. His Honour did not accept that the meeting at which the alleged conspiracy was said to have been agreed in fact occurred (see [478] of his Honour's judgment). 8The principal unlawful act alleged by Mr Ballard to have been carried out in performance of the alleged conspiracy was the termination of Stoneglow's subcontract. McDougall J held that the Brookfield/Multiplex parties were entitled to terminate the Stoneglow subcontract when they did ([501], [574]-[577]). His Honour further held that Stoneglow (the vehicle through which it was contended that Mr Ballard would have continued to trade had there been no wrongful conduct) was insolvent on the date of termination of the subcontract ([602]). 9It was (or seems to have been) common ground that Mr Ballard's cause of action arose, at the latest, in early 1997 (and thus expired in early 2003). Mr Ballard relied on s 55(1) of the Limitation Act 1969 (NSW) as extending the time within which the time for commencing proceedings for conspiracy was to run (referred to in submissions as his fraudulent concealment defence). 10His Honour held that even if Mr Ballard did have a cause of action against the respondents, he had failed to discharge his onus of establishing the fraudulent concealment defence (and hence the limitation defence pleaded by the respondents would have operated to extinguish that cause of action) ([719]). 11Furthermore, McDougall J did not accept that the factual basis for Mr Ballard's claim for damages had been made good and concluded that the way damages for loss of earnings had been calculated was fundamentally flawed ([724]). In particular, his Honour considered that there was a fundamental problem with the methodology that had been used by the expert called by Mr Ballard ([789]), even apart from the difficulty that a number of the assumptions on which that report relied had not been made good ([802], [806]). McDougall J did not accept that the expert report put forward in support of the claimed economic loss provided any basis for making an assessment of the damages claim or any guidance on which the court could rely in attempting to calculate damages for the loss of opportunity to earn income (if, contrary to his Honour's conclusions on liability, it was necessary to perform that assessment ([811])). 12Therefore, on each of the critical elements of the claim made by Mr Ballard he failed. The evidence of the witnesses on which Mr Ballard's claim depended, including his own evidence, was the subject of adverse comment by his Honour. Relevantly, his Honour considered that certain of Mr Ballard's evidence was not honest; that his memory had been shown to be faulty and that various aspects of the evidence were unacceptable. His Honour concluded that he should not accept Mr Ballard's evidence unless it was supported by other credible witnesses or contemporaneous documents or unless it was consistent with objectively ascertainable probabilities ([149]). His Honour found that the evidence given by the only witness to give express evidence of the alleged conspiracy (Mr Bates) was fabricated and utterly implausible. The evidence of Mr Widdup (a former director of Multiplex) relating to various events was found by his Honour to be at best faulty and at worst fabricated. Legal Principles 13There was no dispute as to the applicable principles on an application for security for costs of an appeal (in respect of which, unlike the position at first instance, there is not an unfettered discretion). Special circumstances must be shown before an order for security for the costs of an appeal can be made under Rule 51.50 of the Uniform Civil Procedure Rules 2005 (NSW). 14In Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247, at [18], Basten JA noted that the principles governing applications for security that had been set out by Beazley J (as her Honour then was) in the Federal Court in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 (at 197-198) in the context of an unfettered discretion remain relevant in assessing "special circumstances" for the purposes of the rules applicable when considering security for the costs of an appeal. 15As set out in KP Cable v Meltglow, the factors generally to be taken into account on applications for security for costs include the following: the promptness with which the application is brought; the strength and bona fides of the case (including whether a costs order is likely to be made at the conclusion of the litigation); whether the impecuniosity of the relevant party (there the plaintiff) has been caused by the other party's conduct the subject of the claim; whether the application for security is being used to deny an impecunious party the right to litigate; whether there are any persons standing behind the party bringing the proceedings who are likely to benefit and who are willing to provide security; whether the persons standing behind the party bringing the proceedings have offered any undertaking for the costs; whether the party bringing the proceedings is in substance a plaintiff; and the public interest, if any, in the litigation. Her Honour noted that one does not approach an application for security for costs with any predisposition in favour of the award of security. 16In Preston (at [18]), Basten JA went on to say: ...The considerations engaged by the concept of "special circumstances" in relation to security for costs were considered by this Court in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143 (Beazley, Santow and Ipp JJA), and in Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Bryson JA, Sheller and Giles JJA agreeing). The following principles were identified: (1) no order for security should be made in the absence of "special circumstances"; (2) consideration of what may constitute special circumstances should not be fettered by some general rule of practice; (3) impecuniosity, without more, will usually be insufficient; (4) an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; (5) where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made, and (6) the subject matter of the appeal, including an issue as to the liberty of the individual, or a public interest may provide a reason for not imposing a security order which would stifle the continuation of the appeal. 17In the present case, the fundamental issue in dispute between the parties was as the question whether there had been established to be special circumstances so as to enliven the power to make an order for security as sought by the respective applicants. As noted in Ritchie's Uniform Civil Procedure NSW, cases where special circumstances have been found to exist include where the appeal is manifestly groundless or where there is a risk that the appeal will involve unnecessary costs (Lall v 53-55 Hall Street Pty Ltd [1978] 1 NSWLR 310); where the appeal involves an apparent abuse of process (Weldon v Maples, Tyeesdale & Co (1887) 20 QBD 331); and where there has been unexplained non-compliance with procedural directions (at least where the appeal prospects lacked apparent substance) (Levy v Bablis [2011] NSWSCA 411). 18In Tait v Bindal People [2002] FCA 332, at [3], Spender J noted the difference in principle in relation to orders for security for costs at first instance and that at the appellate level, that being that at the latter stage there has already been a determination adverse to the person against whom security for costs is ordered and that it would be clearly unjust if there were a substantial risk that, even if successful, the respondent to the appeal would be deprived of costs. Special circumstances 19Essentially, the basis on which the respective applicants contend that special circumstances for an order for security for costs exist in the present case relates to the manner in which the hearing at first instance was conducted (and the concern that the same approach - evocatively described as the "kitchen sink" approach - appears to be being adopted on the appeal) and the serious allegations of corruption, impropriety and misconduct (above and beyond the central conspiracy claim) that were raised. (Reference was made to the comment by McDougall J at [21] to the effect that the number of issues raised in the proceedings seemed to reflect the resolve of Mr Ballard to treat the proceedings as another Royal Commission of Inquiry into the building and construction industry.) 20It was noted that the hearing below occupied 93 days (plus a five day reference out) at considerable cost to the defendants (in the order of $4.5 million for the Brookfield/Multiplex parties and more than $2.2 million for the CFMEU parties) and that Mr Ballard had raised serious allegations of conspiracy and put in issue numerous factual matters (on which he had been almost wholly unsuccessful). The applicants point to the fact that Mr Ballard appears now to be raising (and this was not disputed), apparently seriatim, all of those same factual and legal issues on appeal (there being no apparent attempt to narrow the ambit of the issues in the appeal). (The appeal grounds include contains a list of findings which it is said should not have been made and the particular findings that it is said should have been made. No explanation was proffered in submissions on the present application or otherwise as to why it is that certain findings should or should not have been made. Mr Ballard's appeal in this regard was acknowledged by his Counsel to be adopting an "in globo" approach.) 21The solicitor for the Brookfield/Multiplex parties (Mr Cowling) has sworn an affidavit to which is annexed a newspaper article in which Mr Ballard is quoted as saying that he has no hope of meeting the costs orders made against him and faces bankruptcy. (While limited weight can be placed on the report of such statements in the press, I note that there was no evidence by Mr Ballard to suggest that he had been misquoted on this issue or that he would be in a position to pay the costs ordered against him at first instance.) 22I was informed that the appeal has been provisionally listed for two weeks in June 2013. The length of the appeal can to some extent be gauged from the fact that Campbell JA has permitted the parties to file written submissions of up to 80 pages. As at the time the applications for security for costs were heard by me, Mr Ballard had been in default of earlier orders for the provision of written submissions but had been granted an extension; it being expected that his submissions would be served shortly thereafter. Written submissions by the applicants (the respondents to the appeal) are due by the end of March next year. 23Estimates of the costs likely to be incurred on the appeal by the respective applicants have been provided (broken down by reference to the particular tasks to be performed and the relevant charge-out rates of the legal practitioners). In aggregate the likely costs to be incurred by the applicants on the appeal are in excess of $700,000. 24It is submitted for the respective applicants that in these circumstances it is intrinsically unfair that they should be exposed to the clear prospect of being unable to recover (if ultimately successful) the costs of what will be a lengthy and expensive appeal. 25Counsel for Mr Ballard (Mr Tregenza) points to the unusual circumstances of the hearing below (in effect, the bifurcation of the hearing as between two judicial officers) as the explanation for the scope of the issues raised in the appeal. Mr Tregenza argues that the Notice of Appeal principally relies on a small number of general grounds for appeal (presumably there referring to grounds 1-7 and 29-30) and that, insofar as there are many findings of fact that are challenged, submits that his Honour should have determined findings of fact by considering the whole of the evidence on an "in globo" basis (and that if this is accepted then the entirety of the findings of fact would be overturned). 26In that regard, Mr Tregenza's submission seems to be that the approach of seeking a review of all (or almost all) of the findings of McDougall J is a necessary or inevitable consequence of the fact that his Honour determined the matter without hearing or seeing the evidence of the witnesses in court; in other words that the fact that McDougall J did not have the advantage that a trial judge ordinarily has of seeing or hearing the witnesses means that there is a "right to appeal basically the entirety of the decision ... in order to allow justice to take its course". 27That proposition is by no means self-evident (and might be thought to be inconsistent not only with the course that was adopted by consent at the time that McDougall J commenced hearing the case but also with the statutory objectives imposed by ss 56-59 of the Civil Procedure Act 2005 (NSW)). However, it is not necessary to come to any concluded view on this point because what it does clearly confirm is that Mr Ballard is seeking a rehearing on almost all the issues thrown up in the first instance hearing and hence the scope of the appeal will be extensive. Whether or not, as a matter of justice, Mr Ballard has a right to appeal "basically the entirety of the decision", the fact that he is choosing to do so is something that in my view (having regard to the objective prospects of such an appeal and the enormous cost that has been incurred to date and will be incurred on the appeal) brings the present case squarely within the notion of "special circumstances". 28The scope of the appeal that Mr Ballard intends to bring is such that there must be a very real risk that costs will be unnecessarily incurred by the respondents to the appeal (in the sense that if the appeal were confined to more narrow grounds of appeal those costs would be minimised). There are obvious difficulties for Mr Ballard (and I say this without commenting on the merits of the appeal) in overturning the primary judgment since that will require him to succeed not only on the factual issues as to conspiracy but also as to the damages and the findings that led to the respondents succeeding on the limitations defence. All of those findings must be overturned for Mr Ballard to obtain a judgment in his favour for any substantial amount on appeal. Financial position 29As to Mr Ballard's financial position, it is submitted by Mr Tregenza that even if (which is not accepted) impecuniosity has been established (noting that impecuniosity alone is not sufficient to constitute special circumstances), where (as here) it is alleged that the decrease in Mr Ballard's earning power has been directly caused by the conduct of the respondents this factor should not be given weight in the determination of security for costs. It is further submitted by Mr Tregenza (though there was no evidence as to this) that an award of security for costs against Mr Ballard would have the ability to stifle the appeal. 30Senior Counsel for the Brookfield/Multiplex parties, Dr Bell SC, referred to the evidence adduced at the hearing below to the effect that Mr Ballard had largely been unemployed since 1996 (with only some modest earnings from his small farm) and pointed out that Mr Ballard's claim for damages was premised on the claim that he was depressed for most of the period between 1996 to 2011 and unemployable in the building industry in that period. There was also evidence as to the low level of income disclosed in Mr Ballard's taxation returns (in Ms Merlino's affidavit filed in Court). 31Properties owned by Mr Ballard are subject to mortgages (to an entity that appears, from the material to which I refer below, to have provided funds for the conduct of the proceedings below). Caveats have recently been filed on the title of two properties owned by Mr Ballard, recording that the amount charged on the land by the unregistered mortgage is $4,337,431. 32Insofar as an inference was sought to be drawn by the respective applicants that the charge recorded on the title to these properties related to outstanding moneys owed by Mr Ballard to a company which effectively funded the trial, the position in the submissions filed for Mr Ballard was that he conceded that mortgages were granted in favour of a third party over particular properties owned by him (the existence of the mortgages being something that appears on the certificates of title in question in any event) but not that this provided any available inference that the litigation (and I assume this is a reference to the litigation below) was funded by the third party. 33In evidence on the present application was a copy of a Funding and Priority Deed dated February 2012 (produced in answer to a Notice to Produce and over which a claim of legal professional privilege was made but not upheld). The terms of this Deed record that an external funder (by the same name as that on the relevant caveat) has paid part of the legal costs in connection with the proceedings below; that the funder has agreed to provide a stipulated amount by way of further funding (but that this is to be used to pay certain outstanding accounts); and that particular mortgages had been granted in favour of the funder to secure all amounts owed pursuant to a loan agreement and the Deed (including the Existing Funding and, once advanced, the Further Funding). The Deed contains an acknowledgement that the funder is not under any obligation to pay any additional funding. 34Thus, it appears from the Deed that Mr Ballard has funded at least a substantial portion of the costs of the proceedings below by way of borrowings secured by way of mortgage over his properties (and the mortgagee has priority over any judgment in his favour for the repayment of the borrowings). 35It also appears from the Deed that the solicitor retained on the appeal has agreed not to charge Mr Ballard for any legal costs incurred by the solicitor in connection with the appeal and to pay (and not charge Mr Ballard for) all expenses and disbursements connected with any appeal including the costs of counsel retained for any appeal. It has been agreed that Mr Ballard will only be liable for the legal costs, expenses and disbursements of the solicitor connected with any appeal to the extent that those costs, expenses and disbursements can be met from any surplus of the defined "Result Sum" after the funder has been repaid the funding in full in connection with the Deed. There is no doubt, at least by reference to the terms of this Deed, that Mr Ballard is not himself funding the costs or expenses of the present appeal proceedings. 36Pausing there, if any amount now ordered to be provided by way of security for costs were to be construed as an expense connected with the appeal, then in the face of the above provision it would seem unlikely that that such an order would stifle any appeal. However, the position of Mr Ballard's solicitor as to the operation of this clause is not known. 37In the Idoport proceedings (Idoport Pty Limited v National Australia Bank Limited; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited [35] [2001] NSWSC 744), Einstein J noted that the possibility of stultification of proceedings is a powerful factor to be taken into account in exercising its discretion as to whether an order is appropriate (citing KP Cable and also Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542). However, his Honour also noted the observation of Clarke J (as his Honour then was) in Yandil that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff's claim nor does it lead to the automatic refusal of an order (referring also to cases where the financial position of those standing behind the plaintiff was taken into account). 38In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, McHugh J said at 97 that: [T]he jurisdiction to award security for costs should thus be seen as protecting the efficacy of the exercise of the jurisdiction to award costs. The discretion should be exercised with the same rationales in mind, namely that, to the extent it can be avoided, the court should not permit a situation to arise where a party's success is pyrrhic. 39At [52] in Idoport, Einstein J said: The purpose of a security for costs order is therefore a protective jurisdiction to ensure that the primary purposes for having costs orders themselves, can be achieved. A defendant is protected against the risk that a costs order obtained at the end of the day may turn out to be of no value by reason of the impecuniosity of the plaintiff. The jurisdiction therefore assists both the compensation purpose as well as the public interest objective. 40The evidence as to Mr Ballard's income and as to the liabilities secured on his properties (as against what is suggested to be the value of the properties) warrants an inference that he is unlikely to be in a position to meet the costs of the orders made against him at first instance (even leaving aside his reported comments to that effect) and hence can be said to be impecunious. There is nothing to suggest that any funding has been obtained to secure the existing costs order or any adverse costs order that might be made against Mr Ballard in respect of the appeal. I am satisfied that Mr Ballard's financial position is such that the respective applicants may well have difficulty in enforcing a costs judgment in their favour on the appeal (particularly given the already existing liability of Mr Ballard to a considerable sum by way of the costs of the hearing below). 41I am not satisfied that the making of an order for security for costs will necessarily stifle the appeal. I say that for the reason that Mr Ballard has been able not only to procure funding for the litigation below but, and more relevantly, has been able to secure an arrangement with his solicitor for the appeal to be carried out at the solicitor's cost. There is nothing to suggest that Mr Ballard would be unable to secure additional funding if required to provide security for costs (or that his solicitor, who would appear from the Deed to have some personal interest in the maintenance of the appeal, would not be in a position to provide such security). (In KP Cable, the ability of those standing behind a litigant to provide security for the litigation was a factor to be taken into account.) Prospects of appeal 42As to the prospects of appeal, Dr Bell (whose submissions were largely adopted by the CFMEU parties) submitted that the appeal was a hopeless appeal, without any real prospects of success. This was put on the basis that, at first instance, Mr Ballard had failed on both liability and damages (and had failed to make out the fraudulent concealment defence to overcome the respondents' limitation defence). It is submitted by Dr Bell (and I accept) that in order to succeed in the appeal and to obtain a substantial outcome in his favour, Mr Ballard would need to overturn almost every (if not indeed every) substantive finding made by his Honour (not simply his Honour's finding as to the non-occurrence of the alleged conspiracy meeting or the subsidiary corruption allegations), including findings that by his Honour that turned in part on his view as to Mr Ballard's own credit. 43In that regard, Dr Bell notes that not only McDougall J made adverse findings as to Mr Ballard and his key witnesses (some of which I have referred to earlier) and preferred the evidence of the witnesses for the respondents, but that his Honour made actual findings of dishonesty in respect of Mr Ballard (and expressed grave doubts as to the evidence of Mr Bates and Mr Widdup). 44True it is that his Honour did so without the benefit of having seen the witnesses in the witness box. However, his Honour was acutely conscious of the difficulties he faced in that regard and even a cursory review of his Honour's reasons indicates that his Honour carefully reviewed the contemporaneous documents in coming to the view he did as to the lay witnesses' evidence and set out clearly the basis of his credibility findings. 45Mr Tregenza seemed to submit that there had been some error arising from the fact that the submissions prepared for Mr Ballard at the hearing below had not been revised to take into account the fact that the evidence of the witnesses would necessarily be assessed without his Honour having seen them give that evidence in the witness box. Mr Tregenza submitted that "a fresh approach had not been adopted by the Appellant to address the substantial difficulty confronting the judge who was forced to determine the matter on the transcript of evidence". It is not apparent that this was alleged to be due to any denial of procedural fairness on the part of his Honour and it does not appear as a separate appeal ground. 46Thus, even if it cannot be said that this appeal is frivolous or manifestly groundless, it is clear that there are substantial obstacles to be overcome if Mr Ballard's appeal is to succeed. His Honour's factual findings as to the credibility of the witnesses are just some of those obstacles. In those circumstances, I think it not an overstatement to describe the prospects of appeal as slim. 47Mr Tregenza submits that the fact that McDougall J rejected an application for indemnity costs is relevant insofar as it suggests that the case was not considered by his Honour to be without merit or so hopeless that the Court should award indemnity costs. (Mr Tregenza noted that the respondents had served offers of compromise at the close of Mr Ballard's evidence and submitting that they had improved upon those offers in the final determination of the matter). His Honour's reasons for judgment on the indemnity security costs application were before me. It does not appear that the claim for indemnity costs was put or considered on a Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 basis; rather it involved a determination as to the reasonableness of rejection of the relevant offer in light of the time available for its acceptance (having regard to the other matters to be attended to during that time) and where it was said that the offer in essence amounted to a capitulation by Mr Ballard. I do not consider that the view taken by his Honour on that application assists in the assessment for present purposes of the prospects of appeal. Bona fides of the appeal 48Mr Tregenza submits that there was no real attempt by the applicants to establish that this was not a bona fide appeal. While I accept that there was no submission to this effect, I note that reliance might perhaps be placed on the observations of the primary judge as to Mr Ballard's obsession with the case to suggest that he might not be in a position objectively and rationally to make decisions as to the conduct of the appeal (a matter that might not unreasonably lead to an apprehension that unnecessary costs might be incurred in defending the appeal). Nevertheless, I make no finding as to any lack of bona fides in the bringing of the appeal. For the purposes of this application I assume that the appeal is brought bona fide by Mr Ballard. Compliance with procedural directions 49Reliance was placed by the Brookfield/Multiplex parties (and by extension the CFMEU parties) on the fact that Mr Ballard had not complied with the order of the Court to the effect that he file his submissions on the appeal within the initial time frame (and had not filed submissions as to security for costs by 2 November 2012 as ordered). As to the former, an extension of time was granted for the filing of those submissions. It does not seem to me that this is non-compliance of a kind that would count against Mr Ballard when determining whether security for costs of the appeal should be granted. Conclusion 50I am satisfied that there are special circumstances in the present case for an order for security for costs to be made in respect of the appeal. I am conscious that Mr Ballard is an individual and that lack of finances should not operate as a bar to litigation in this Court. However, Mr Ballard's current financial position must be taken into account along with the extensive nature of the factual issues sought to be litigated in the appeal (in effect, the entirety of the matters determined by McDougall J is sought to be revisited by reference to the "in globo" approach to the appeal). The respective applicants have been put to considerable expense defending very serious allegations which Mr Ballard comprehensively failed to make out. There is a very real risk that they will now be exposed to a relatively lengthy and expensive appeal and that, if successful, they will encounter delay and difficulty in recovering their costs (whether or not, as Mr Ballard is reported to have said, Mr Ballard will face bankruptcy if he has to meet the costs already ordered against him). Further, I am not satisfied that an order for security for costs will necessarily stifle the appeal and Mr Ballard did not put on any evidence to suggest that that would be the case. 51Therefore, I consider that there should be an order for security for costs. There was no criticism made of the basis on which the costs of the appeal had been estimated by the respective applicants' solicitors. Both Mr Cowling (for the Brookfield/Multiplex parties) and Mr Riches (for the CFMEU parties) have deposed to the estimated appeal costs by reference to five stages in the preparation and conduct of the appeal: (i) The costs of reviewing the Notice of Appeal, advising their clients and preparing a Notice of Contention ($55,017.50 and $24,800 respectively); (ii) The costs of reviewing submissions, appellant's chronology and list of authorities, preparation of appeal books and instructions at directions hearings ($23,876.25 and $39,980 respectively); (iii) The costs of preparation for the hearing of the appeal ($189,690 and $93,040 respectively); (iv) The costs of attendance at the appeal (with a 10 day estimate) ($218,940 and $122,500 respectively); and (v) The costs of transcript ($5,000 each). 52Based on their experience in the conduct of litigation, Mr Cowling estimates that on an assessment of costs, 60% of his solicitor client costs would be recoverable and Mr Riches estimates a higher recovery of 70% (perhaps reflecting the different base rates). Both parties estimate that 100% of Counsel's fees and disbursements would be recoverable. While the amount allowed for Counsel's fees is, as I understand it, within the discretion of the costs assessor, the complexity and scope of the issues in the appeal would no doubt be a matter tending towards recovery of a high proportion, if not all, of those fees. In any event, there was no basis put forward to doubt those estimates. 53I am of the view that it is appropriate for the security to be provided in stages (even though there is a relatively short time to the hearing of the appeal). Dr Bell did not oppose such a suggestion (although submitted that the appropriate staging would be for provision of 50% of the security now and 50% by the time that the respondents' written submissions are due to be filed at the end of March 2013, on the basis that there will be significant preparation costs in advance of the hearing to be incurred after that time). I consider that the stages should reflect the timing of the work or costs reflected in the solicitors' estimates and, to that end, I have prepared a time line for the purposes of the payment of security in tranches. I have adopted in each case the assessment by the solicitors as to the portion of costs they consider would be likely to be recovered on an assessment of party/party costs. Orders 54For the reasons set out above, I make the following orders: 1. Pursuant to rule 51.50 of the Uniform Civil Procedure Rules, the Appellant provide security for costs to the First and Second Respondents and to the Third to Fifth Respondents, respectively, in the sums set out in order 2 below at the times specified in order 2 below for the costs of the respective respondents up to the date of the making of this order and to be incurred up to and including the hearing of this appeal. 2. Order that the security ordered in 1 above to be provided by the respective respondents for the costs falling within the categories of work set out in [51] above be paid in the amount and on or before the dates specified in the table below. Amount to be Paid Category of costs (per [51]) Date 1st & 2nd Respondents 3rd, 4th & 5th Respondents (i) 15/1/13 $49,410.50 $23,600.00 (ii) 15/1/13 $20,925.75 $39,266.00 (iii) 28/2/13 $86,907.00 $42,464.00 31/3/13 $86,907.00 $42,464.00 (iv) 3 weeks before commencement of hearing of appeal $191,364.00 $116,500.00 (v) Start of week before commencement of hearing of appeal $5,000.00 $5,000.00 Total $440,5144.25 $269,294.00 3. Order that the security to be provided pursuant to these orders be in the form of: (a) money paid into Court; or (b) an unconditional bank guarantee from an Australian owned bank (as recognised by the Australian Prudential Regulation Authority) in favour of the Principal Registrar of the Supreme Court of New South Wales, Court of Appeal to be held by the Principal Registrar of the Supreme Court of New South Wales, Court of Appeal; or (c) such other form of security as may be agreed between the respective Respondents and the Appellant in advance of the date for provision of that security. 4. Until the provision of security for the first of the amounts referred to in order 2, the proceedings be stayed. If any sum ordered by way of security for any later stage is not provided on the date specified, then the proceedings shall be stayed until such sum is provided. 5. The respective Respondents to have liberty to apply to increase the amount of the security referred to in order 2, should that amount prove inadequate, and liberty to apply in relation to any orders sought for the ongoing conduct of the proceedings if any one or more of the amounts ordered by security is paid at a later date than provided for in order 2. 6. The Appellant pay the Respondents' costs of their respective Notices of Motion. ********** 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: 18 December 2012