Evans v Cleveland Investment Global Ltd

EX TEMPORE Judgment 1Before the Court are two notices of motion. The first is that of the appellant, Mr Peter Evans, filed 13 May 2013. He seeks "an immediate stay of enforcement of the judgments until the Appeal process has been finalised which is currently before the NSW Supreme Court, Court of Appeal." 2The second is a notice of motion filed on 22 May 2013 by the first and second respondents to the appeal seeking security of costs for the appeal, a stay until such security is given and an order that, in default of such security being given, within twenty-eight days the appeal be dismissed with costs without further order. 3Both motions were heard together, which was an appropriate course because the factual material and legal submissions relating to each are interrelated. In support of Mr Evans' motion he read, without objection, his affidavit sworn 13 May 2013 and tendered four documents which were exhibit A on the application. In support of the security for costs motion three affidavits were read, that of Tean Kerr affirmed 9 July 2013, Harry Snow affirmed 20 May 2013 and Ian Tremback sworn 6 March 2013. 4Both sides provided helpful and extensive written submissions in support of their motions and in opposition to those of their opponent. I should note that Mr Evans who is, I apprehend, a qualified accountant, made his submissions, both in writing and orally, clearly and concisely for which he is to be commended. 5The judgment, the subject of the appeal, was heard before Lindsay J over four days in December 2012. The subject matter of the appeal essentially is some $267,000 comprising two components. The first is a component of $200,000 remitted by Cleveland Investment Global Limited, the first respondent ("Cleveland") to Ficaro Pty Ltd, a company then controlled by Mr Evans. That $200,000 was said by Cleveland to have been wrongfully retained by Mr Evans, save for some $5,000 which is reflected in his Honour's reasons and order 1 made by his Honour on 7 December 2012. Cleveland also maintains that a further sum of some $67,000 was wrongfully taken by Mr Evans. 6In response, Mr Evans maintains that he was entitled to the whole of those amounts, either by way of director's fees or by way of agreed fees for accounting services he provided to the company over the period, I think, of some six years previously. He filed a cross-claim before the primary judge for the repayment of those fees, which was addressed by Lindsay J at paragraphs [25] - [28] of his Honour's reasons recorded at [2012] NSWSC 1529. His Honour concluded that the "invoices" prepared by Mr Evans were a sham. His Honour rejected Mr Evans' cross-claim. 7His Honour also made findings that Mr Evans forged a series of cheques in the following manner. Mr Evans, according to the findings of the primary judge, had custody of Ficaro's cheque book but was not an authorised signatory on the account. Mr Evans caused, according to paragraph [34] of the reasons of the primary judge, the payees of particular cheques to be deleted and replaced by references to his accounting firm. He initialled the alternations "SF", that being a reference to Mr Simon Fletcher. There was, as I apprehended, a large debate between the parties as to whether Mr Evans was entitled to do that. In short, the primary judge considered that he was not and hence ordered judgment against Mr Evans. 8In opposing Mr Evans' application for a stay of execution Mr Anderson, who appeared for the respondents to the appeal, referred to what Campbell J described in Vaughan v Dawson [2008] NSWCA 169 at [16] as the "unexceptional principle that a successful party is prima facie entitled to the fruits of his judgment." 9That said, as this Court said in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694, it is not necessary for Mr Evans to demonstrate special or exceptional circumstances, instead it is sufficient for an applicant to demonstrate a reason or an appropriate case to warrant the exercise of the discretion in his of her favour. However, the onus is on an applicant to demonstrate a proper basis for a stay that will be fair to all parties and the Court will weigh considerations such as the balance of convenience and the competing rights of the parties. 10Importantly, it was not said by Mr Evans that granting a stay of execution would stultify the appeal. To be precise, there was nothing in Mr Evans' affidavit or the documents tendered by him to support the proposition that a stay of execution would make it impossible for him to prosecute his appeal. In address, and if I may say so without intending any disrespect, Mr Evans said merely that it would be "somewhat difficult" to pay the judgment debt and prosecute the appeal, but expressly did not say that it would be impossible to do so. 11Submissions were advanced by Cleveland to the effect that the underlying merits of the appeal are weak. I do not express a view one way or the other on that issue. It may be that Cleveland perceives it has a relatively strong position, especially on the evidence that was admitted on appeal. On the other hand, at the forefront of Mr Evan's appeal is a claim that he was denied procedural fairness and that material probative and favourable to him was excluded from the trial. It is not possible for me to express a view one way or the other on that and the merits of the appeal are not something that I have had regard to in exercising the discretion I am called upon to exercise. 12I also place no regard on what was said on behalf of the respondents based on other proceedings in this Court reported as case name Evans v Deputy Commissioner of Taxation [2012] NSWCA 396, to the effect that the process of serving late affidavits on the morning of a hearing is something that is familiar to Mr Evans. As I said, Mr Evans is unrepresented and there is nothing that would enable me to find other than that he is doing the best he can to prosecute the legal proceedings he is confronted with. 13Nevertheless, it remains the case that it is for Mr Evans to persuade the Court that he is entitled to a stay of execution, which has the effect of depriving the successful plaintiff after a four day final hearing of the fruits of its victory. It may be that Mr Evans will succeed on appeal. There is nothing before me to suggest that in that event it will not be possible for the respondent to the appeal to pay over the judgment debt which one judge, after a four day hearing in this Court, has found it to be entitled to. 14For those reasons I would dismiss the application for a stay. 15I turn to Cleveland's application for security for costs, which is in the amount of $33,686. Cleveland correctly submits that it shoulders the onus arising under Pt 51.50 of the UCPR for it to establish "special circumstances", the appellant Mr Evans being a natural person such that s 1335 of the Corporations Act is not available: see Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344 at [22]. 16Helpfully Mr Anderson's submissions draw attention to the decision of this Court in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 where the principles governing applications of this nature are reproduced. There, Basten JA applied and approved the unfettered discretion 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] FCA 76; (1995) 56 FCR 189 at 197-198. 17Justice Basten further said in Preston at [18] that : "(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." 18Those principles were recently collected and applied by Gleeson JA in Swift v McCleary [2013] NSWCA 173 at [28] - [30]. His Honour there noted that: "It is necessary to keep in mind that the weight to be given to any circumstance depends not only on its own intrinsic persuasiveness, but upon the impact of the other circumstances which have to be weighed." 19In support of its application for security for costs Cleveland contended that the appeal amounted to an abuse of process. It said it was "simply a further attempt to delay the repayment of money" (submissions at paragraph 16). I am not minded to make such a finding, especially given the heightened standard of proof that is required to make a finding of abuse of process: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 529. 20It is also said that one of the contributing factors to the cost of an appeal is Mr Evans' application, which was flagged before me, to adduce substantial further evidence beyond that which was admitted at trial. Indeed that is an essential aspect of something at the forefront of the appeal, namely the alleged denial to accord him natural justice by the primary judge. 21I put those difficulties also to one side. I do not think that the fact that the appellant wishes to adduce fresh evidence, given the grounds that have been advanced in his notice of appeal, amounts to exceptional circumstances. But for one thing I would have found no exceptional circumstances and would have dismissed the application for security for costs. 22The one thing arose by reason of evidence adduced by Cleveland as to orders in the nature of Mareva freezing orders made by this Court in May and June 2009, I infer, at around the time that the proceedings were commenced and Cleveland discovered what it perceived to be the misappropriation of funds by Mr Evans. 23The order made on 3 June 2009, which was, based on the materials before me, not made ex parte for it was a continuation of an earlier order, referred in particular to a bank account whose last five digits are xxxxx. I infer that the effect of the order, the full terms of which are not in evidence before me, was to prevent unauthorised dissipation of funds in that account. It appears from correspondence dated 30 September 2011 and 7 October 2001 between the solicitors then acting for Mr Evans, and Mr Ian Tremback, the lawyer acting for Cleveland, that those orders continued in place. 24Some funds in the order of $48,000 were withdrawn from the account on 21 April and 4 May 2011. The solicitors then acting for Mr Evans responded that they were instructed that the withdrawals of funds from that account were as a result of Local Court garnishee orders. Indeed before me that was common ground at the bar table. However, in a series of transactions between 10 and 23 April 2012, almost a year later, approximately $17,600 was withdrawn from that account and transferred to two accounts, both of which were in the names of Mr Evans. Before me are the bank statements for the account the subject of the Mareva orders, which shows each of ten withdrawals, and the relevant pages of the two bank accounts in Mr Evans' name, which shows the corresponding deposits. 25Mr Evans did not provide any evidence by way of response to what was put against him, namely, seemingly a breach of the orders of this Court. He gave an explanation from the bar table. Against the possibility that anything in that explanation might constitute evidence (for example, by way of an admission) that explanation was given subject to a certificate under s 128 of the Evidence Act. 26Mr Evans, having been told of his entitlement to apply for such a certificate, pursuant to s 132 of the Evidence Act, made such an application and that application was not opposed by Mr Anderson appearing for Cleveland. 27The gravamen of the explanation was that ANZ plainly regarded itself as free for funds to be withdrawn from the bank account, and so the amounts withdrawn in April 2012 were withdrawn to protect Cleveland. 28The matters that I have just described may suggest that there has been a breach of the orders. Nothing I have said amounts to a finding that there has been a breach, let alone a finding that there has been a breach to the requisite criminal standard necessary to amount to a contempt. Nor before me is there sufficient evidentiary basis to conclude, even on the civil standard, that there has been a contemptuous breach of the orders. As Mr Evans said, and as Mr Anderson fairly acknowledged, there may have been a difficulty in notifying the bank of the terms of the orders. Certainly, all the elements of any contempt have not been established on the evidence before me. 29However, the evidence before me practically admits of only two possibilities. One is that Mr Evans has caused to be withdrawn funds contrary to the Court's order, those funds having been put in place in order to protect the asset position of Cleveland. That is, after all, the point of seeking Mareva type relief. Alternatively, as Mr Evans says, the funds have been withdrawn to protect them from other claimants to Cleveland's assets. 30It is not necessary for me to choose between those two possibilities. The reason that it is not necessary is that either way these present what are, in my view, special circumstances answering the description of what is required by r 51.50. 31The substance of the matter is that Cleveland was entitled to be in a position where, to the extent that there were funds in the frozen ANZ Bank account, it was a secured creditor. Through his own actions, I would infer, on the basis of the evidence before me at this interlocutory hearing, Mr Evans has obtained the benefit of that some $17,600. There is nothing to suggest that the provision of security in an amount considerably less than the unchallenged evidence of Mr Snow as to the costs of this appeal would stultify it. 32As I have said before, Mr Evans, both by way of his evidence and his written submissions and oral submissions, did not maintain that either enforcement of the judgment debt or the provision of security would stultify the appeal. He did maintain, and I do not with respect disagree, that it would impose some difficulties upon him. In that respect, Gleeson JA in Swift v McLeary said at [60], "The fact that the appellant is relatively impecunious does not of itself show that the appeal would be stultified if security were ordered", and it is to be remembered that what the respondents seek is not an order for the payment of funds, but merely an order so that they may obtain some security for a costs entitlement which they will enjoy if, but only if, they ultimately obtain a favourable costs order. If, as Mr Evans contends, his appeal has strong prospects of success, then the security may never be called upon. 33For those reasons I am minded to make an order for security of the appeal, not in the amount of $33,686 as the respondents seek, but instead in an amount of $15,000 reflecting the lion's share of the amounts, the subject of withdrawals from the ANZ Bank account in April 2012. 34The respondents also seek an order that in default of such security being given, within twenty-eight days the appeal be dismissed with costs without further order. I am not minded to make such an order. 35The order I propose to make on your motion, Mr Evans, is simply to dismiss your notice of motion filed 13 May 2013 with costs. 36On Mr Anderson's motion I propose to make these orders: (1)An order that pursuant to r 42.21 and r 51.50 of the Uniform Civil Procedure Rules 2005 (NSW) the appellant provide security for the costs of the first and second respondents within twenty-eight days of today in the amount of $15,000 by way of an unconditional bank guarantee from an Australian trading bank. (2)An order that until such security is given these proceedings be stayed. (3)An order that the appellant pay the costs of the first and second respondents of and incidental to this motion. [Discussion as to orders] 37The orders will be as I have indicated. Those orders may be entered forthwith.