Meaning of 'special circumstances'
20 "Special circumstances" is a notion which is found in many legislative contexts and must therefore take its meaning from the particular context in which it appears. As Spigelman CJ said in relation to a different statutory context in R v Simpson [2001] NWCCA 534, they are words of "indeterminate reference and will always take their colour from their surroundings." But in whatever context the phrase appears, the circumstances must be "special," that is, "out of the ordinary", "unusual": R v Baker [2002] NSWCCA 184, although the specialness must be adjudged in the particular circumstances under consideration. In Simpson, Spigelman CJ further pointed out at [60] that:
"Statutory words of such generality usually lead courts to refuse to identify in advance a list of matters capable of satisfying the statutory formulation. Whilst certain considerations might not often be sufficiently 'special', so that an exceptional justification is required for them to attain the requisite statutory quality, nevertheless there may always be circumstances in which such a factor is of sufficient strength, either alone or in combination with other factors, to justify a conclusion that 'special circumstances' are made out on the facts of a particular case. It will be comparatively rare for an issue to arise in terms of a proposition that a particular circumstance is incapable, as a matter of law, of ever constituting a 'special circumstance'."
21 The question of what constitutes special circumstances for the purposes of Pt.51 r.16 has been considered by a number of cases in this Court. In Kennedy v. McGeechan, (16 September 1974 Moffitt P, Hutley and Samuels JJA reported at (1978) 1 NSWLR 315(N)) the Court said that whilst reported decisions on the rule might be of assistance, "each case must be judged on its own merits as to whether special circumstances exist". The Court considered that the impecuniosity of an appellant might constitute special circumstances
"[i]n that it is a circumstance which may deprive or delay a respondent receiving his costs of appeal, if the appeal fails, which costs a successful respondent can usually expect he will actually receive."
22 In this regard, the Court considered that it was relevant that on the appeal, the respondent already had a favourable judgment, which was "presumably correct". That of course is not the case at first instance, where there has been no adjudication on the claim. To that extent, the Court considered that an applicant for security for the costs of an appeal was in a stronger position. This explains the approach of the English courts as set out in Cowell v Taylor. The Court in McGeechan said however that "impecuniosity may not conclude the matter". The Court had a wide discretion and impecuniosity was not to be looked at in isolation. Other factors might be relevant. One such factor was the possibility that a genuine appeal might be frustrated if security was ordered. Another possible relevant circumstance was where the liberty of the subject was involved, which was the case in McGeechan.
23 In McGeechan, the Court also considered that the availability of legal assistance, in the sense of the provision of State funded legal aid, should be taken into account. The relevance of the availability of such assistance was that, under the legislation governing its provision, there had to be a certification by a barrister as to the merits of the appeal. That matter is not relevant here.
24 The other circumstance which was relevant to the Court in McGeechan was the importance of the subject matter of the appeal. The Court considered that the subject matter of the litigation was, from the respondent's point of view, "quite trifling". Their Honours considered that, given the combined effect of the respondent's impecuniosity and the extraordinarily trifling nature of the appeal, it was an appropriate case in which to order security.
25 The meaning of special circumstances was again considered by the Court in Lall v. 53-55 Hall Street Pty. Ltd. [1978] 1 NSWLR 310. There the Court was constituted by Moffitt P, Reynolds and Glass JJA. The case involved a litigant in person who had brought numerous applications in the Court against the respondent. The Court had regard to McGeechan, as well as to the Court's further decision in Hunters Hill Municipal Council v. Pedlar (unreported Court of Appeal 9 May 1978). Their Honours considered it was unnecessary to traverse the ground those decisions covered. They stated however, (at 312) that, it followed from the principles stated in those cases that on an application for security where special circumstances needed to be established, regard ought to be had to the nature of the appeal and any other relevant circumstance.
26 In the case with which the Court was dealing in Lall, namely that of a litigant in person, the Court observed that it had been the frequent experience of the Court that the other party to the proceedings was subjected to numerous applications surrounding both the original and appellate aspects of the proceedings. The Court observed that the ordering of security where that has occurred could thereby "provide the appropriate procedure to protect a litigant from unreasonable and harassing appeals" (at 313). The ordering of security in such cases would serve to prevent the untrammelled pursuit of rights by such a person becoming an "instrument of grave injustice" to the opponent. The Court was of the view that justice to the respondent, in what the Court categorised as "the special class of case to which we have referred" called for the making of an order. Their Honours concluded:
"An appeal of the type and in the type of circumstances referred to may provide 'special circumstances' … to exercise the discretion to make an order for security."
27 Neither of these decisions, in our opinion, provide support for the existence of a general practice or for a principle that impecuniosity of itself, may constitute special circumstances. However, a review of both old and more recent case law on the subject indicates that there appears to be a conflict as to whether impecuniosity alone is sufficient to amount to "special circumstances" for the purposes of Pt.51 r.16 (or rule in the same or similar terms).
28 The following are cases where it has been held that, normally at least, impecuniosity is not sufficient of itself: Abdurahman v. Field (unreported NSWCA 4 March 1986: Kirby P, Glass and Samuels JJA); Maritime Services Board & Anor. v. Citizens Airport Environment Association Inc. (unreported NSWCA 23 December 1992 per Kirby P.); Uptown Sydney Development Corporation Pty. Ltd. & Ors. v. Bank of New Zealand (No. 1) (1993) 11 ACSR 300 per Kirby P; Saba v. National Australia Bank Ltd [1999] NSWCA 93 per Sheller JA; McWilliam v. Penthouse Publications (unreported NSWCA 21 January 1999 per Registrar Jupp).
29 Cases in which it has been held that impecuniosity alone may amount to "special circumstances" are: Scerri v. Northam Holdings Pty. Ltd. (1967) VR 674 per Winnecke CJ (Little and Gowans JJ agreeing; in that case, the Chief Justice referred to the "long and well-established practice of this Court" of holding that an appellant's inability to pay the costs of the appeal constituted special circumstances); Ciappina v. Ciappina (1983) 70 FLR 287 per Neave J; his Honour relied upon Harlock v. Ashberry (1881) 19 Ch D 84 and Kardynal v. Dodek [1978] VR 414 as establishing the proposition; Strata Consolidated (Aust) Pty. Limited v. Bradshaw [2000] NSWCA 114 (per Registrar Jupp); and Citicorp Australia Ltd. v. Cirillo & Anor. [2003] SASC 204 (per Sulan J). It is interesting to observe however, that in these cases, with the exception of Ciappina, there were other circumstances which the Court took into account, in addition to the appellant's impecuniosity, in determining to order security. It is also to be noted that none of those decisions is a decision of a judge of this Court.
30 These and other cases were reviewed by Hodgson JA sitting alone, in Porter v. Gordian Runoff Ltd. & Anor. [2004] NSWCA 69. His Honour considered that the weight of authority in New South Wales supported the view "that impecuniosity" can of itself amount to special circumstances within Pt.51 r.16(1). His Honour qualified this view by saying "I also accept that orders would not normally be made simply because an appellant is impecunious."
31 We would not state the conclusion to be drawn from the cases in the same terms as did Hodgson JA. If anything, the weight of authority is to the effect that something more is usually required. It may be however, that our view may involve no more than looking through a different edge of the prism of this line of authority.
32 In this regard we consider that the approach of Sheller JA in Saba v. National Australia Bank Ltd demonstrates how the provisions of r.16 operate. In his judgment his Honour first referred to the comment of Kirby P in Uptown Sydney Development Corp. v. Bank of New Zealand at p.301 that it was not enough for the purposes of Pt.51 r.16(1) "that the balance of justice or convenience favours the making of an order …" His Honour next had regard to the concern expressed by the Court in Kennedy v. McGeechan that a genuine appeal involving a substantial sum of money could be frustrated if an order for security was made. Sheller JA then concluded:
"12. It is one thing if an appeal is shown to be hopeless or to be unreasonable or of an harassing nature; it is one thing if an appellant has adopted a procedure of which an appeal is part, to press a hopeless claim through endless litigation. However, in the present case I am not persuaded that this is not a perfectly genuine appeal.
…
13. … I am not prepared to frustrate the opponent's prima facie right to pursue it simply because he may be in an impecunious situation with the consequence that an order for security may bring the appeal to an end."
33 In our opinion, "special circumstances", being the requirement of the Supreme Court Rules for ordering security for the costs of an appeal cannot be predicated upon a "general rule" of practice. To do so runs the danger of inverting the requirements of Pt.15 r.16 so as to make the exception provided for in sub-section (1) the general practice whereas sub-section (2) requires the opposite. If an application or security for costs of an appeal is made in this jurisdiction, it is necessary to have regard to the circumstances of each case.
34 There is no doubt that when a Court is invested with a discretion over a period of time, principles and matters emerge which guide that discretion. That does not, and cannot as a matter of law, transpose itself into a general rule of practice. A circumstance which may emerge in a series of cases as being relevant must be weighed with other circumstances relevant to the case before the Court.
35 In our opinion, his Honour by applying a general practice that the respondent was entitled to be protected and that impecuniosity was sufficient for that purpose, did not apply the provisions of Pt.51 r.16 according to their terms. In that circumstance, this Court is entitled to be re-exercise the discretion vested in the Court under Pt.51 r.16.
36 In this case, there was considerable focus upon the appellants' impecuniosity. As the cases to which reference has been made demonstrate, impecuniosity is a relevant matter to take into account in determining whether there are "special circumstances". This case however was not like those to which we have referred where security was ordered. The appellants have not brought multiple proceedings in the Court or any oppressive series of applications. They were defendants to a claim brought by the respondent and unsuccessfully defended that claim, although not all claims made by the respondent were successful. In particular, only one out of four representations relied upon under s.52 were found to have been established. The appellants have an appeal as of right in this Court which they have sought to exercise. The Court has not been prepared to find that the appeal is without merit. The subject matter of the appeal is not trifling. It represents a substantial damages claim to the respondent who was successful in its claim at first instance. The reverse side of the coin of the plaintiff's success is that it represents a substantial financial burden to the appellants, to the extent that their financial survival is at stake. In the end result, the burden may be more apparent than real in the sense that in their present circumstances neither appellant is in a position to pay that claim. However, there are other considerations relevant to the appellants. In particular, there is no other basis, so far as the Court is presently aware, upon which the first appellant could be wound up or the second appellant could be made bankrupt other than as a result of enforcement of the judgment in this case. Liquidation or bankruptcy are themselves significant deficits. Further, the appellants unchallenged evidence was that they do not themselves have, nor do they have recourse to, funds to provide the security. Their appeal therefore would be frustrated if the order for security remained in place.
37 As the impecuniosity of the appellants was the only matter said to constitute "special circumstances", and given the matters to which we have referred we are not persuaded that this is an appropriate case for the making of an order for security.
38 Accordingly we make the following Orders: