Stone v Farrow Mortgage Services

[1999] NSWCA 114

CITATION:	Stone v Farrow Mortgage Services [1999] NSWCA 114
FILE NUMBER(S):	CA 40353/97
HEARING DATE(S):	16-04-99
JUDGMENT DATE:	16 April 1999
PARTIES :	Farrow Mortgage Services Pty Limited (in liquidation) - claimant/respondent George Barry Everett Stone - opponent/appellant
JUDGMENT OF:	Registrar Jupp

LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S) :	50019/94
LOWER COURT JUDICIAL OFFICER:	Bainton J

COUNSEL:	Mr White - claimant Mr Stone (litigant in person) - opponent
SOLICITORS:	Clayton Utz - claimant unrepresented - opponent
CATCHWORDS:	Security for Costs
DECISION:	motion dismissed; costs of motion to be appellant's costs in the appeal

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

REGISTRAR JUPP

FRIDAY 16 APRIL 1999

040353/97 - GEORGE STONE -v- FARROW MORTGAGE SERVICES PTY LTD (IN LIQUIDATION)

JUDGMENT

1. REGISTRAR: By notice of motion filed 19 March 1999, the respondent, Farrow Mortgage Services Pty Ltd (In Liquidation) has sought an order that the appellant provide security for costs of the appeal. The amount sought in the notice of motion is $23,500.

2. The proceedings are an appeal against a decision of Bainton J of 23 May 1997. He entered a judgment against the appellant in the sum of $1,765,853 and dismissed a cross-claim brought by Mr Stone seeking damages against the respondent.

3. A notice of appeal without appointment was filed on 18 June 1997. A notice of appeal with appointment was filed on 16 September 1997. Certain supplementary notices of appeal and addendums to the appeal have subsequently been filed.

4. A notice of motion for a stay of the judgment brought by Mr Stone was heard by Beazley JA on 23 February 1998. The application was refused. The decision of Beazley JA was upheld by a Full Court of the Court of Appeal constituted by Mason P, Sheller JA and Powell JA on 27 April 1998.

5. After the application by Mr Stone for a stay had been dismissed, the respondent pursued bankruptcy proceedings in the Federal Court. The most recent decision of the Federal Court is a decision of Emmett J of 13 July 1998. In that judgment Emmett J effectively stayed the bankruptcy proceedings pending the determination of this appeal.

6. The application for security for costs is brought pursuant to Part 51 rule 16 of the Supreme Court Rules. That rule states that, where a notice of appeal with appointment has been filed, the Court of Appeal may, in special circumstances order that security for costs be provided. Mr White, who has appeared on behalf of the claimant/respondent today, has pointed to three matters which he asserts establish special circumstances.

7. The first point that Mr White has argued is that the prospects of the appeal being successful are relatively low. In support of that assertion he has directed me to the decision of Beazley JA and the decision of the Full Court upholding Beazley' JA’s decision refusing the stay. Beazley JA in her judgment noted: “It is difficult to see therefore that the appeal has much prospect of success and that is a very telling reason why a stay ought not be granted".

8. Beazley JA and the Full Court came to that determination based on a view that the appeal that Mr Stone was seeking to bring would have serious problems based on the principles enunciated by the High Court in the matter of Abalos v The Australian Postal Commission (1990) 171CLR 167 and Devries v Australian National Railways Commission (1993) 177 CLR 472.

9. The issues that a Court has to consider in an application for a stay or in respect of an application for security for costs and also in respect of an application for a stay of bankruptcy proceedings are similar. In each case the Court has to consider the prospects of the appeal.

10. In the decision of Emmett J of 13 July 1998, his Honour took the view that Mr Stone had demonstrated to him that at least some of the grounds of appeal were arguable in the Court of Appeal. As a result, Emmett J took the view that Mr Stone should be allowed to proceed with the appeal.

11. I have heard Mr Stone today make submissions in respect of the prospects of the appeal as he sees them. It appears to me, having regard to what Emmett J has found, that this is not a case where it can be said that the appeal is hopeless. I agree with Mr Stone's view that there are now arguable grounds of appeal. In the ordinary course, I cannot see why the appellant should be prevented from putting those arguments to the Court.

12. I have also noted that it may well be that the length of the appeal could be reduced if Mr Stone adopts the suggestions made by Emmett J and narrows the grounds of appeal that will be argued to those which he is most likely to be able to be successful on.

13. The second matter that Mr White has pointed out is the impecuniosity of the appellant. The impecuniosity of Mr Stone was conceded by Mr Stone in a letter to Ms Moon annexed to her affidavit. The result of Mr Stone's impecuniosity is that even if the respondent is successful in the appeal, it will have to bear its own costs. The impecuniosity of an appellant, by itself, does not constitute a special circumstance.

14. There have been cases where impecuniosity, together with some other factors, has allowed the Court as a matter of discretion to order security for costs. As I have found that this is not a hopeless case, the issue of the appellant’s impecuniosity does not, in my opinion, ground an order for security for costs.

15. The third matter that Mr White has argued is that the claimant/respondent company is a company in liquidation with a significant number of creditors who are owed various amounts of money. He has pointed out to me that the amount that is spent in defending this appeal is money that is not going to be available to be paid as dividends to the creditors of the respondent. This is certainly a matter which the Court has to take into account in respect of an application for security for costs.

16. However, the likely costs of this appeal and the amount of security that is being sought is a relatively small amount. In general, I do not feel that an order for security for costs is appropriate where it may have the result of preventing a bona fide appeal from proceeding. Farrow Mortgage Services was a lender of money and, as a lender, it took certain risks. In these proceedings it sold a property owned by Mr Stone at an amount which Mr Stone alleges was an undervalue. It did so knowing that there was a risk of litigation. Part 51 rule 16 requires that special circumstances are established before security for costs is ordered. One of the main aims of that rule is to prevent respondents from preventing bona fide appeals from proceeding. The appeal is really just a continuation of the litigation which Mr Stone was quite entitled to bring and defend in the Supreme Court.

17. Mr Stone, in submissions that are included in the affidavit that he has sworn in this motion, has noted that, in exercising my discretion as to whether an order for security for costs should be made or not, the delay in the making of the application should be taken into account. Mr White has argued that Mr Stone has not suffered any prejudice by the delay as he is a litigant in person and has not incurred any legal costs in prosecuting the appeal up to this time. In response Mr Stone has said that, at least, he incurred emotional cost and time and that is a matter that should be taken into account.

18. It appears to me relevant that this matter has now been fixed for hearing (on 27 July 1999) and that the application for security for costs was not made at an earlier time, even if it was only brought immediately after Emmett J’s 13 July 1999 decision was handed down.

19. For the above reasons, the appropriate order is that the motion filed by the respondent on 19 March 1999 be dismissed; I order that the costs of the motion be appellant's costs in the appeal.

certified correct
Steve Jupp 28/4/99