Fava v Zaghloul

[2007] NZCA 498

IN THE COURT OF APPEAL OF NEW ZEALAND

CA568/07
[2007] NZCA 498

BETWEENPHILIP JOSEPH FAVA

Appellant

ANDEKHLAS ZAGHLOUL

ASB BANK LIMITED
BANK OF NEW ZEALAND
LION FINANCE LIMITED
Respondents

Counsel:Appellant in Person

N S Gedye for Respondents

Judgment:14 November 2007 

JUDGMENT OF ARNOLD J

Application to review the Registrar’s decision not to dispense with security for costs is allowed.  The requirement for the payment of security is dispensed with.

REASONS

[1]       This appeal, which was commenced by notice of appeal dated 14 September 2007, has been set down for hearing on 15 November 2007, as a matter of urgency.

[2]       Mr Yee, who has been acting for the appellant apparently on a pro bono basis, said in his correspondence to the Registrar that the appellant has been declared bankrupt and in the appeal seeks Court approval for a composition with his creditors.  If the composition is granted, the bankruptcy will be annulled and the appellant will be free to resume office as the director of certain companies which were plaintiffs in litigation with various defendants (not the respondents in this appeal).  The intention is that the companies will endeavour to continue the litigation.

[3]       On 24 September 2007 the appellant, through Mr Yee, applied on an informal basis to the Registrar for an order dispensing with the requirement that he provide security for costs (r 35(6) and (7)(a) of the Court of Appeal (Civil) Rules 2005).  On 25 October 2007 the Registrar advised Mr Yee that she would not dispense with the requirement but would reduce the amount required to $3,000.  No formal reasons were provided, although the Registrar did discuss the position with Mr Yee.  This decision was confirmed by letter dated 30 October 2007.

[4]       On 12 November 2007 the appellant applied under r 7(2) for a review of the Registrar’s decision by a Judge and filed an affidavit in support.  The matter was referred to me on 13 November 2007 for decision.

[5]       The material filed on the appellant’s behalf (by the appellant personally or by Mr Yee) indicates that the appellant is now acting for himself, has been declared bankrupt and is unable to pay the $3,000 from his own resources.  The appellant says that, if security is required, the appeal will not proceed.  Apparently the appellant has not applied for a grant of legal aid as he does not wish to be a burden on the New Zealand taxpayer.  If he had applied for and received a grant he would, of course, not be required to furnish security (r 36).  The appellant says that the respondents’ costs on this appeal are not being met by the respondents themselves but by the defendants in the proceedings referred to in [2] above.  (This is confirmed by other material before me.)

[6]       The respondents, through their counsel Mr Gedye, oppose the application.  Mr Gedye says that the appellant’s evidence in the High Court was that he had a source of funding available to him for the purpose of the proceedings.  Further, he points out that the terms of the proposed compromise indicate that the appellant has access to funds.  He says that unless the appellant is able to show that he has no access to funds, normal security should be paid, and notes that the appellant has not addressed his access to funds in his affidavit.  Mr Gedye submits that it is irrelevant that the respondents are protected as to their costs in the appeal, by analogy with the situation where a party has insurance.  He says that the respondents will be seeking costs if the appeal is unsuccessful and indicates that they wish to be protected at least to some extent.  He also submits that the delay between the appellant being advised of the Registrar’s decision and the filing of his application for review indicates that the appellant is attempting to “game” the system.

[7]       In the particular circumstances of this case I consider that the requirement for security should be dispensed with and order accordingly. 

[8]       It is not clear from the material before me precisely what the Registrar’s reasons were for refusing to dispense with security.  It seems from some of the material on file that she was influenced by the commentary in McGeehan, which states that the Registrar has never dispensed with security (unless the opposing party has consented) and no party has sought to review the Registrar’s decision (at CR35.03(a), (c) and (d)).  (The latter point is incorrect – see Cresser v The Official Assignee CA196/05 12 June 2006).  In these circumstances I propose to consider the matter afresh.

[9]       Impecuniosity does not necessarily justify waiving security.  Equally, the rules do allow for waiver, so it would not be right if there was an effective policy that a waiver will never be granted.  An assessment must be made in the circumstances of each individual case.  That said, dispensing with security is likely to be exceptional. 

[10]     In the present case the question of security has arisen at a late stage.  I do not accept that that is the result of “gaming” on the part of the appellant.  I am not able to resolve the question of the funding available to the appellant on the basis of the material before me, which it could have been explored further had there been more time.  Although I accept that there is some force in Mr Gedye’s point that the appellant should have been more forthcoming in his affidavit, it does seem clear that the appellant is not able to provide security himself and that the effect of requiring him to furnish security will be that his appeal will not proceed.  Given the stage that this matter has reached (both sides have filed their written submissions), considerable costs have already been incurred, unnecessarily if the appeal does not proceed.  While I am conscious of the interests of the respondents, I consider that they are diminished, at least to some extent, by the fact that the respondents are, in effect, being indemnified by the defendants in the other proceedings.  Overall, in the unusual circumstances of this case, in particular the stage the appeal has reached, I consider that the requirement for security should be waived and the appeal should proceed to a hearing.

Solicitors:

Murdoch Price, Auckland for Appellant