Singh v De Castro; Dhaliwal v De Castro; Brar v De Castro

Court of Appeal (NSW)|2017-05-29|Before: Macfarlan JA

2016/285497 G Foster (Dhaliwal - Apellant) J Knackstredt (De Castro - Respondents)

2016/287642 B Dean (Brar - Appellant) J Knackstredt (De Castro - Respondents)

Solicitors: 2016/277163 Michael Vassili Barristers & Solicitors Pty Ltd (Singh - Appellants) McLachlan Thorpe Partners (De Castro - Respondents)

2016/285497 Harish Prasad & Associates (Dhaliwal - Appellant) McLachlan Thorpe Partners (De Castro - Respondents)

2016/287642 Burston Cole & Associates (Brar - Appellant) McLachlan Thorpe Partners (De Castro - Respondents) File Number(s): 2016/2771632016/2854972016/287642

[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.]

Judgment

HIS HONOUR: This is a motion brought by Mr and Mrs De Castro, respondents to three appeals, for dismissal of those appeals. The appeals are brought from a judgment of Montgomery DCJ of 1 September 2016 (Ignacio and Leticia De Castro v New Ridge Property Group Pty Ltd [2016] NSWDC 246). The order for dismissal is sought on the basis that the appeals were filed or served out of time and that there were subsequent non-compliances with procedural directions. Alternatively, Mr and Mrs De Castro seek security for their costs of the appeals.
Mr and Mrs De Castro brought the proceedings in the court below to enforce a loan agreement which they alleged contained guarantees of the borrower's obligations given by the appellants. For ease of reference, and without intending any disrespect, when it is necessary to refer to the appellants individually I shall refer to them by their first names. The first appeal is brought by Harjit, Moninderjit and Mandhir, the second appeal by Sukhdev and the third by Gurmeet.
The primary judge found that the appellants gave the alleged guarantees to Mr and Mrs De Castro by affixing their signatures to the final page of a five page document dated 11 September 2006 which was entitled Loan Agreement. The signatures appear only on the fifth page of the document. There is no reference to a guarantee on that page. Some, but not all, of the appellants accept that their signatures appear on the page. All appellants contend however that they would have signed, if at all, only as directors of the borrowing company, and not as guarantors. Thus, they contend that they did not sign any guarantee and that, if they did sign the fifth page of the Loan Agreement, they did not do so when the previous four pages (which contained words of guarantee) were attached.
There was no direct evidence before the primary judge of the appellants signing that page, or of what was attached to it at the time. Neither Mr and Mrs De Castro, nor anyone representing them, was present when the pages were signed because the alleged guarantees were procured for them by the appellants' then associate and co-director of the borrower company, Mr Kulwant Singh. However the primary judge examined the circumstantial evidence and concluded that the appellants signed the document as a five page guarantee. In so concluding, he rejected the evidence of Harjit, Moninderjit and Mandhir. Sukhdev and Gurmeet did not give evidence.
As it is relevant to both the dismissal and security for costs applications, I record that, although I consider that it will be difficult for the appellants to succeed on their appeals, the appeals cannot be characterised as hopeless. Due to the absence of direct evidence to attest to the circumstances surrounding the signing of the documents, this is not a simple word against word case to which the high barrier to appellate intervention identified in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 is applicable.

Dismissal of the appeals

The principal bases upon which it is contended that the proceedings should be dismissed are as follows. First, that Harjit, Moninderjit and Mandhir's notice of appeal, although filed within time, was served 12 days late. Secondly, although Sukhdev filed a notice of intention to appeal within time, he filed his notice of appeal 13 days late and served it 15 days late. Thirdly, Gurmeet did not file a notice of intention to appeal (although he had in correspondence indicated that he proposed to appeal), and only filed and served a notice of appeal on the same dates that Sukhdev did so.
Although the appellants are to be admonished for their failure to comply with relevant time limits, in my view the non-compliances are not of such magnitude as to warrant dismissal of the appeals. Nor do the subsequent limited departures from court requirements concerning the progress of the appeals justify that course. As a result, an order should be made extending the time for the filing and serving of the appellants' notices of appeal to the dates upon which those steps occurred.

Security for costs

Rule 51.50 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") gives this Court power in "special circumstances" to order that security be given for the costs of an appeal. That rule does not affect this Court's power under r 42.21 UCPR to order security for the costs of proceedings in the Supreme Court generally (r 51.50(3)). Under r 42.21, the circumstances in which an order can be made are limited to six identified categories, none of which is applicable to the present case.
Rule 42.21(1B) UCPR states that "[i]f the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity". In contrast, an order for the provision of security may be made under s 1335 of the Corporations Act 2001 (Cth) against a corporate plaintiff on the basis that there is reason to believe that it will not be able to pay a successful defendant's costs.
In Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18], Basten JA made the following observations in relation to the requirement in r 51.50 that there be a finding of "special circumstances" before an order for security for the costs of an appeal is made. " …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."
Mr and Mrs De Castro allege that there are special circumstances in the present case, these being that: there is reason to believe that the appellants will, if unsuccessful, be unable to pay Mr and Mrs De Castro's costs; that the appeals are without any real merit; and that the appellants have adopted a derisory attitude to court orders both in this Court and the court below.
In support of the proposition that there is reason to believe that the appellants will not be able to pay costs if they are unsuccessful, Mr and Mrs De Castro assert that the appellants have failed to pay the judgment below voluntarily, have failed to respond to correspondence, have a history of being involved in failed companies, have very little property, have taken steps to divest themselves of property by giving it to their spouses, have failed to provide adequate documentation in response to notices to produce information concerning their financial position, have made a number of changes to their legal representatives, and have failed to pay the fees of one of their former counsel.
On the other hand, the appellants submit that the evidence shows that they have property which would ultimately be available to satisfy a costs order.
It is not necessary to resolve this difference between the parties as, even if Mr and Mrs De Castro were found to be correct in asserting that there is real doubt about the appellants' ability to meet costs orders, I would not regard that as sufficient to persuade me that a security order should be made. At least ordinarily, impecuniosity of an appellant is insufficient to constitute special circumstances under r 51.50 (see [10] above). Indeed, impecuniosity of a litigant is a commonplace circumstance in a security for costs application. Further, there is no reason to think that the jurisdiction under r 51.50 to order security for the costs of an appeal is intended to be broader in this respect than that applicable to proceedings in the Supreme Court generally. As referred to in [9] above, r 42.21(1B) expressly directs that, in proceedings in the Supreme Court, the impecuniosity of a natural person is not to be the basis for making an order for security for costs.
The other matters that Mr and Mrs De Castro rely upon, whether taken alone or together, do not in my view amount to special circumstances. The appellants' failure to cooperate with the respondents is of limited significance and, at least to a large extent, was within their rights. Furthermore, it is relevant that the judgments against them are not the subject of stays and therefore remain open to enforcement.
As a result, I am not satisfied that there are special circumstances that warrant the making of an order for security for costs.

Orders

For these reasons, I make the following orders: 1. Dismiss the Amended Notice of Motion filed on behalf of Mr and Mrs De Castro; 2. Order that the parties' costs of the motion be costs in the appeal; 3. Order that the time for the appellants to file and serve their notices of appeal be extended to the dates upon which those steps occurred.

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: 07 June 2017

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