Citation : WESTPAC BANKING CORPORATION -v- NINAN [2014] WASC 456

Practice and procedure - Security for costs of appeal - Appellants residing overseas - Relevant principles - Turns on own facts

Supreme Court (Court of Appeal) Rules 2005 (WA), r 44(1)

Alfaro v Brokesova [2013] WASCA 38

Brundza v Robbie & Co [No 2] [1952] HCA 49; (1952) 88 CLR 171

Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1

Mann v Dabelstein [2006] WASCA 176

Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507

MTI v SUL [No 2] [2012] WASCA 87

Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241

Ninan v National Australia Bank [2015] WASCA 10

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

1 NEWNES JA: There are two interim applications before the court. The respondent has filed an application for security for its costs of the appeal. The appellants have filed an application seeking discovery by the respondent, under O 26 r 7 of the Rules of the Supreme Court 1971 (WA), of certain categories of accounting and other documents which the appellants say they require for their defence and counterclaim. They also seek an order that the respondent's application for security for costs not be heard until discovery is provided, as they say the documents sought are also relevant to that application.

2 The appellants do not have legal representation and on the hearing of the applications the first-named appellant appeared for them both by telephone from Thailand.

3 The appellants are the registered proprietors of a property in Sanctuary Circuit, Dawesville (the property).

4 By an agreement dated 7 June 2007, the respondent agreed to lend to the appellants the sum of $1,140,000. To secure the loan, the appellants mortgaged the property to the respondent pursuant to a mortgage which was registered at Landgate on 9 August 2007.

5 The appellants defaulted under the loan agreement and the mortgage and the respondent made demand for the total amount said to then be owing by the appellants. The appellants did not comply with the demand. The respondent issued proceedings for possession of the property and payment of the outstanding debt, and applied for summary judgment.

6 The appellants advanced eight grounds of defence (described by the appellants as 'eight pillars') in opposition to the summary judgment application. It is unnecessary to describe the grounds in any detail. They included allegations of: a lack of jurisdiction of the court; deceptive valuations by valuers and developers in relation to the property and two other properties; breach of the Sale of Land Act 1970 (WA); the improper addition of legal fees to the mortgage debt; the existence of defences under the Australian Consumer Law; and the fraudulent sale of another property. The appellants also relied upon the respondent's failure to adduce evidence rebutting the appellants' allegations. All of the alleged defences were considered and rejected by the primary judge, for reasons which he gave.

7 The primary judge found that the appellants had no defence to the claim and gave summary judgment for the respondent.

8 The appellants have appealed from his Honour's decision. It is unnecessary to set out the (lengthy) grounds of appeal. Suffice it to say that there are 13 grounds in all, challenging, in effect, each of the material adverse findings made by the primary judge.

Disposition of the appellants' application for discovery

9 This application can be dealt with very briefly. It is entirely misconceived. The procedure of discovery under O 26 r 7 is directed to the trial process and has no part to play in the appeal. The application must be dismissed.

10 Accordingly, there is no reason why the respondent's application for security for costs should not be determined immediately.

The respondent's application for security for costs

11 The principles to be applied on an application of this kind are well-established. Under r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA), the court has a very wide discretion to make an order for security for the costs of an appeal: Mann v Dabelstein [2006] WASCA 176 [16].

12 The purpose of an order for security for costs is protective, so as to ensure that the primary purpose of an award of costs (that is, indemnification of the successful party) is achieved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67]. There is an obvious injustice to a respondent who, having been successful on the merits at first instance, is compelled to contest the matter for a second time without a probability of obtaining their costs if ultimately successful. In exercising the discretion to make an order for security for costs, however, the court seeks to achieve a balance between ensuring that adequate and fair protection is provided to the respondent, and avoiding injustice to an impecunious appellant by unnecessarily shutting them out of the appeal.

13 The factors which are relevant on an application by a respondent for security for the costs of an appeal cannot be stated exhaustively but will ordinarily include:

(a) whether the appellant is likely to be able to satisfy an order for costs if the appeal is unsuccessful;

(b) the appellant's prospects of success on the appeal;

(c) the fact the appellant has already lost at first instance on the merits, that being a circumstance which favours the exercise of the discretion in favour of an order for security for costs;

(d) whether the appellant would be shut out of the appeal if security for costs were ordered; and

(e) whether there has been any delay in the respondent filing the application for security for costs.

14 Where a party resident out of the jurisdiction has no assets within the jurisdiction that will ordinarily be a factor weighing heavily in favour of an order for security for costs: see Alfaro v Brokesova [2013] WASCA 38.

15 Where an order for security for costs is made, the amount of the security to be provided by an appellant must be related to the costs likely to be incurred by the respondent on the appeal, but the court does not endeavour to give a complete and certain indemnity to the respondent: Brundza v Robbie & Co [No 2] [1952] HCA 49; (1952) 88 CLR 171, 175. If the appellant is impecunious, the security ordered should not be greater than is absolutely necessary: Commonwealth Bank of Australia v Eise (1991) 6 ACSR 1, 3 - 4; Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 [9].

Disposition of the application for security for costs

16 It was not in dispute that the appellants are not resident in Australia. It appears that they now reside in Thailand. I also understood it was not in dispute that (subject to what is said below in relation to a counterclaim) the appellants do not have any assets in the jurisdiction that would be available to satisfy an order for costs if the appeal were unsuccessful.

17 In any event, their inability to meet an order for costs sufficiently appears from the evidence on the application.

18 In an affidavit in support of the present application, the respondent's solicitor says that a search of the records of Landgate has revealed that the property is the only land registered in the appellants' name in Western Australia. The respondent's solicitor also says that, on or about 20 January 2015, the respondent obtained a valuation of the property by a valuer who assessed its current market value at $725,000. It was not in dispute that the appellants have not made any payments in reduction of the judgment debt of $1,552,630.27, on which interest continues to accrue. On the evidence, the amount of the judgment debt therefore greatly exceeds the value of the property. In addition, in the appeal the appellants have applied for, and obtained, a waiver of the filing fee on their appeal notice and appellants' case respectively, on the grounds of financial hardship.

19 The appellants contend that ample security is available as they have a counterclaim for damages against the respondent which will substantially exceed the amount of the judgment debt. That counterclaim, which was filed on 3 November 2014, is based on allegations of a conspiracy (described by the first-named appellant as a conspiracy 'too complex to comprehend') by land developers, the respondent (and another bank), and valuers (including the Valuer-General) to defraud the appellants. No steps have been taken to prosecute the counterclaim beyond the filing of an amended counterclaim on 24 November 2014 and its merits would appear to be dubious. I do not consider it a factor of any significant weight in this application.

20 Most of the contents of the five affidavits filed by the appellants in opposition to this application, and of their written submissions, were devoted to an attempt to establish that their case on appeal is unimpeachable and that the respondent can have no possible answer to it. I am certainly not persuaded of that, but for the purposes of this application I will assume that the appeal is reasonably arguable.

21 I am satisfied there has been no undue delay by the respondent in making this application. The appeal notice was filed on 16 January 2015 and the appellants' case on 18 February 2015. The respondent's application for security for costs was filed on 12 March 2015.

22 While the appellants submitted that an order for security for costs would stifle the appeal, there is no evidence as to whether they have the ability to obtain funds, by loan or otherwise, to prosecute the appeal. In any event, whether the appeal would be stifled if an order for security for costs were made is only one of the factors to be weighed in the balance.

23 It was also alleged by the appellants that this application was being used by the respondent as 'a tool of oppression', which I take to mean that it was made by the respondent solely for the purpose of thwarting the appeal. There was, however, no evidence which was capable of making out such an allegation. Nor was there any evidence capable of making out the appellants' allegation that their impecuniosity was caused by the respondent. That allegation appeared to be based on the conspiracy allegation referred to above.

24 In the circumstances, I am satisfied that the appellants should be ordered to provide security for the respondent's costs.

25 The remaining question is the amount of the security that should be ordered. The respondent seeks the sum of $44,649.00, as detailed in a draft bill of costs. In my opinion, that amount is much too high. Given the nature and scope of the appeal, I consider an appropriate sum by way of security would be $16,000.

26 There is one further matter. At the outset of the hearing of these applications on 23 April 2015, the first-named appellant made an oral application that I recuse myself on the ground of actual bias. The grounds the first-named appellant gave for the application were that:

(a) a registrar was colluding with me 'to serve injustice' to the appellants; and

(b) I had dismissed the appellants' appeal in Ninan v National Australia Bank [2015] WASCA 10 (Newnes & Murphy JJA), which demonstrated that I was biased against the appellants. (In a letter to the court, the appellants expressed the complaint in somewhat more robust terms.)

27 I refused the application and said I would publish reasons for my decision later. The reasons are as follows.

28 Where a party alleges that actual bias exists, the party must show that the mind of the decision-maker is so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented: Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 [72]. Such an allegation must be 'distinctly made and clearly proved': Jia Legeng [69].

29 I simply do not understand the fanciful allegation that I was colluding with a registrar to cause injustice to the appellants. The allegation seemed, however, to have some link to the appellants' contention that my bias is evident from the dismissal of the appellants' appeal in Ninan v National Australia Bank, apparently on the basis that the outcome in that case could have no other explanation. That contention is manifestly groundless. The reasons the appeal was dismissed are set out in the judgment in that case. The mere fact that a judge has previously decided a case adverse to a party does not provide a basis for a claim of actual bias. Nor does it provide a basis for a claim of a reasonable apprehension of bias: MTI v SUL [No 2] [2012] WASCA 87 [14]. Nothing capable of establishing actual or reasonably apprehended bias was advanced by the appellants. The application was entirely without merit and accordingly I dismissed it.

1. On or before a date which I will fix the appellants provide security for costs in the sum of $16,000 by payment of that sum into court;
2. If the appellants fail to comply with the order in par 1, the appeal do stand dismissed and the appellants are to pay the respondent's costs of the appeal, including any reserved costs, to be taxed;
3. Pending compliance by the appellants with the order in par 1, the appeal is stayed;
4. The appellants' application for discovery of documents is dismissed.