McWilliam v Penthouse Publications

The affidavit evidence in support of the application was an affidavit of Elissa Dai Baxter sworn 7 October 1998. This notes in paragraph 5 that the notice of appeal does not include the residential addresses of the appellants. This is in breach of the rules to the extent that the prescribed form requires the disclosure of a residential address. The affidavit appears to be slightly confused in paragraphs 4 and 6 in that it refers to the wrong appellant brother. Bruce (Jnr) and Peter appear to have been transposed. In any event Mr Graham conceded that Peter Bruce McWilliam was not a resident of Australia and that he resided in Honolulu, Hawaii. So far as Bruce Scott McWilliam is concerned no evidence was led that he was not a resident of New South Wales. Mr Graham advised me that his instructions were that Bruce Scott McWilliam lived at 2/52 Mona Road Darling Point, this being the same address nominated as the address for service. This advice was not contested. That address is the home address of the widow of Bruce McWilliam (senior). Although I have no sworn evidence that Bruce (junior) lives at that address, Mr Graham also advised me that Bruce (junior) gave evidence that that was his residential address in the proceedings before Maconachie AJ. Other than the apparent oversight in not including the residential addresses of the appellants in the notice of appeal, there does not appear to me to be any evidence to raise a doubt that Bruce (junior) does not reside with his mother at Darling Point.
Although there are 2 appellants in this case, provided they are jointly represented at the hearing of the appeal, the time taken to conduct the appeal and the costs of the appeal ought to be the same as if only one of the appellants was pursuing the appeal. If the appeal is unsuccessful both appellants will be jointly and severally liable for the costs of the appeal. There does not appear to me to be any justification for making an order for security for costs, which would essentially be an order against both appellants, because one of the appellants resides outside the jurisdiction. The appellant that resides within the jurisdiction should not be placed in a worse position, vis a vis a security for costs application, simply because a co-appellant resides outside the jurisdiction. To the extent that there are 2 appellants rather than one, a successful respondent has the advantage of being able to pursue both or either of the appellants for its costs. See Uptown Sydney developments Corp Pty Ltd v Bank of New Zealand (no1) (1993) 11 ACSR 300
The evidence suggests that both appellants are impecunious and will have difficulties in meeting a costs order against them if the appeal fails. I note that Mr Graham conceded that a case had been made out that both appellants were impecunious.
So far as the prospects of the appeal are concerned, the evidence of Elissa Dai Baxter is that the solicitors and senior and junior counsel of the 2nd and 3rd respondents have formed a view that the appellants "have little chance of succeeding on the appeal." Ms Oakley submitted that Judgment in this case was largely determined on findings of fact and that the grounds of appeal largely challenge those findings of fact. She also submitted that to the extent that those findings of fact were based on adverse findings as to the credit of Bruce Scott McWilliam, the appeal is unlikely to succeed. It was also noted by Ms Oakley that the trial Judge had found (albeit briefly) that the appellants did not have standing to sue. She asserted that this also constituted a special circumstance which should be taken into account.
Mr Graham made submissions that despite the apparent difficulty of the appeal, this was a bona fide arguable appeal. I agree with this assessment. I have read Maconachie AJ's judgment and considered the grounds of appeal. Although Maconachie AJ has made findings of fact which are partly based on the rejection of the evidence of Bruce Scott McWilliam, this appears to be a case where there was documentary evidence which had to be considered and reconciled against the version of events put by the parties. Although Maconachie AJ found that none of the documentary evidence corroborated the version of events put by Bruce Scott McWilliam, this finding of itself does not necessarily mean that the appeal is hopeless. It seems to me that the status of the "demand" made on 20 January 1982 is open to argument. If that "demand" was not an effective demand pursuant to the agreement between the parties, then the notice served on 30 August 1982 would not have been effective and the agreement would not have been terminated. Under those circumstances the seizure of the goods on 30 August 1982 would have been illegal and the possibility of a conspiracy is made out. It seems unlikely to me that the finding that the agreement was not varied as a result of the June 1980 London meeting will be overturned. It also appears a difficult task to establish that there was an intention to harm the plaintiff/appellants rather than ADM.
Ground 20 of the Notice of Appeal asserts that certain documents should have been admitted into evidence and Ground 21 argues that the trial judge should have given a higher weight to the failure of any of the defendants/respondents to give evidence in the proceedings. In proceedings that ran 15 days, and without seeing the documents that the appellants say should have been admitted, it is difficult to assess how likely these grounds are to be successful, however these grounds appear to be very arguable.
The standing of the appellants to sue, also appears to me to be arguable. Maconachie AJ deals with this issue in 4 lines of his judgment (page 61). The fact that the matter was not disposed of summarily, suggests to me that the standing of the appellants was and remains an open issue. It is difficult to assess how valid that finding is without knowing the basis the appellants argued that they had standing to sue. I note that Maconachie AJ refers to the submissions put by Mr Hodgekiss that the plaintiffs were harmed in their interests as directors, shareholder, creditors and guarantors of ADM. Mr Graham stated that it was also put that the plaintiffs were harmed as beneficiaries of a trust and that Maconachie AJ's Judgment does not deal with this argument.
Security for costs for appeals in the Court of Appeal is only ordered in special circumstances. (Part 51 rule 16 SCR). The question then is whether the combination of factors in this case constitutes special circumstances. As I have noted above the places of residence of the appellants does not appear to justify an order for security for costs. The issue then is reduced to whether the impecuniosity of the appellants together with the low prospects of the appeal succeeding and the finding of no standing, constitute special circumstances.
While I would agree with the claimant that this will be an appeal that will be difficult to win, I do not classify this as an appeal that is manifestly misconceived and hopeless (Lall v 53-55 Hall Street Pty Limited [1978] 1 NSWLR 310). There has been no delay in bringing the appeal and the grounds of appeal are properly drawn and arguable. As I have noted above the standing of the appellants to sue is a ground of appeal, and in light of the brief consideration of this issue in the judgment, it appears to be an open issue.
That leaves the issue of the impecuniosity of the appellants. No evidence to contradict the apparent impecuniosity was led. There appears to be a concession that both the appellants are impecunious. As has been noted in Abdurahaman v Field (unreported NSW Court of Appeal 4 March 1986) and Lall v 53-55 Hall Street Pty Limited impecuniosity is not usually of itself sufficient to establish special circumstances. This policy is followed for obvious reasons. Many appellants are not wealthy and appeals often follow lengthy and expensive hearings for which appellants are liable to pay costs. If orders for security for costs were made in each of these cases, the ultimate result would be a frustration of many genuine appeals. The Court, so far as possible, attempts to ensure that there is equal access to justice. The Court is cautious to ensure that genuine appeals are not frustrated by the impecuniosity of potential litigants. There is nothing to suggest that this appeal should not be determined on its merits. The appellants, if they can succeed on the appeal, and on any remitted hearing, would be entitled to substantial damages. If an order for security for costs was to be made in this case it would very likely have the result that the appeal would not proceed. There is no evidence that either of the appellants would be able to provide security for costs from some source other than their own assets. Under those circumstances it appears to me to be an appropriate case to refuse the order for security for costs. (see Kennedy v McGeechan (1978) 1 NSWLR 314 at 315)
The question that I must now consider is what order for costs is appropriate. The claimants were successful on the first part of the motion to the extent that Bruce McWilliam Snr has been removed from the proceedings, but have been unsuccessful in so far as they sought security for costs. It may well have been that the motion would not have been brought if Bruce McWilliam senior had not been improperly joined as a party and the other appellants had indicated proper residential addresses and an address for service. These were issues that were properly brought to the Court's attention. The motion also brought to the remaining appellants' attention the necessity to be jointly represented on the appeal. The motion did not proceed as smoothly as it should have because the appellants were not originally in a position to accept joint representation. Nevertheless the substantive part of the motion, which ultimately took most of the time was the application for security for costs. But for events which occurred during the hearing of the motion, the outcome of the motion for security may have been different. I am also mindful that the appeal will probably be unsuccessful. It appears appropriate that the costs of this motion should at least in part abide the outcome of the appeal. On balance I think the most appropriate order to make is that 1/3 of the costs of the motion be claimants' (2nd and 3rd respondents) costs of the appeal, recoverable if they obtain an order for costs of the appeal in their favour and that 2/3 of the costs of the motion be appellants' costs of the appeal, recoverable if the appeal is successful and an order for costs is made in favour of the appellants..
The formal orders that I make then are: a) that the motion filed by the 2nd and 3rd respondents on 14 August 1998, in so far as it seeks security for costs be dismissed; and b) 1/3 of the costs of the motion be claimants' (2nd and 3rd respondents) costs of the appeal, and 2/3 of the costs of the motion be appellants' costs of the appeal.

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Judgment (9 paragraphs)

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Cases Cited (3)