FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE – application for stay of orders pending hearing of appeal in Full Federal Court of Australia – principles for granting stay – whether special circumstances need be shown before stay granted –– procedural fairness – balance of convenience.

COSTS – application for security for respondent’s anticipated costs - order that appeal be stayed until security is provided – exercise of judicial discretion – prospect of success – whether party required to provide security would be shut out – whether impecuniosity arises out of breaches alleged against other side – public interest – degree of risk that party cannot satisfy order for costs.

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules O 52 r 17(1)

Powerflex Services Pty Ltd v Data Access Corporation (1996) 137 ALR, followed

Henderson v Amadio Pty Limited (No 4) (1996) 136 ALR, cited

James v ANZ Banking Group Ltd (No 1) (1955) 9 FCR 442, cited

Equity Access Limited v Westpac Banking Corporation (1989) 80 ATPR 40-972, at 50635, cited

GLENN ROBERT JARRETT AND DEBORAH ALISON JARRETT v

WESTPAC BANKING CORPORATION

NG 829 OF 1998

TAMBERLIN J

SYDNEY

25 SEPTEMBER 1998

THE COURT ORDERS THAT:

1.         The motion for a stay pending final determination of the appeal is granted.

2.         The motion for security for costs brought by Westpac Banking Corporation is dismissed.

3.         Westpac Banking Corporation pay the costs of Mr and Mrs Jarrett on each of the motions.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Before the Court are two Notices of Motion. The first was filed by Mr and Mrs Jarrett (“the Jarretts”) on 14 August 1998, seeking an order that there be a stay of orders made on 30 July 1998 by O’Connor J (“the primary judge”) in proceedings number NG 256 of 1996, pending the hearing of the appeal, which has been lodged to the Full Federal Court of Australia.

The second Notice of Motion, filed by Westpac Banking Corporation (“Westpac”) on 7 September 1998, seeks security for the respondent’s anticipated costs in the appeal in the sum of $12,000 and that the appeal be stayed until such security is provided.

In relation to the Jarrett’s motion in respect of a stay, O 52 r 17(1) of the Federal Court Rules (“the FCR”) provides that an appeal to the Court shall not operate as a stay of execution or of proceedings under the judgment appealed from except so far as the Court or a Judge may direct.  The starting point, therefore, is that the Court must be persuaded that there are grounds on which it is appropriate to grant a stay.

The relevant principles concerning the grant of a stay were recently considered by the Full Federal Court in Powerflex Services Pty Ltd v Data Access Corporation (1996) 137 ALR 498.  In that case, the Court re-affirmed that “special circumstances” did not have to be shown and that the determination did not involve the application of rigid principle.  The test is whether an appropriate case has been demonstrated having regard to the particular circumstances before the Court.  The situation must not be left in a state of speculation or of mere argument and due weight must be given to the fact that the judgment below has been in favour of the other party: see also Henderson v Amadio Pty Limited (No 4) (1996) 136 ALR 593.  In addition, due attention must be directed to the balance of convenience.

The circumstances of the present case are somewhat unusual having regard to the position in which the Jarretts found themselves; namely, that they were without legal representation at a very late stage in the preparation for hearing of a complex matter.  There was, in addition, some uncertainty as to which of the three matters were to proceed, at least in the perception of the Jarretts.

The primary ground on which the Jarretts base the stay application is that they were denied an adjournment by the primary judge in a complex and difficult proceeding without the benefit of legal representation.  It is submitted that this constituted a failure to provide procedural fairness.

The hearing took place over five days.  Judgment was reserved by her Honour and on 30 July 1998 she made an order for possession of the home of the Jarretts at 8 Bataan Street, Kings Park.  She ordered that Westpac have leave to issue a writ of possession forthwith and that the Jarretts pay $158,973.09 to Westpac together with costs.

The Jarretts have also raised, in their notice of appeal, an allegation that the primary judge erred in her finding as to the conduct of Mr Peter Rodd.  It seems to me that the allegation is largely one of fact and there is insufficient material before me to indicate whether there is any substance in this ground.  A similar comment can be made in relation to the remainder of the grounds referred to in the notice of appeal to the Full Court.

In response to the submissions of the Jarretts, Westpac refers to a detailed chronology of the matter.  This indicates that in or about late 1997 or early 1998 the present proceedings for hearing by the Court and a related matter were set down to commence on 1 May 1998.  On that day the solicitors for the Jarretts moved to have the hearing dates vacated because more time was required to finalise their evidence.  Her Honour adjourned the matter until 6 May 1998.  On or about 4 May 1998, the solicitor representing the Jarretts ceased to act for them in relation to the proceedings.  This appears to have arisen from inability to meet the anticipated legal costs.  On 6 May 1998, the Jarretts sought a further adjournment on the basis that they no longer had legal representation.  Her Honour adjourned the proceedings to 11 May 1998.  On that date a further application was made by the Jarretts seeking an adjournment of the hearing dates based on their lack of success in obtaining legal representation.  On 12 May 1998, the primary judge refused to vacate the hearing and made orders adjourning the Westpac proceeding to 25 May 1998.  Her honour adjourned the associated proceedings to a date to be fixed.

On 25 to 29 May 1998, her Honour heard the Westpac proceeding.  This is the relevant proceeding for present purposes.

It is submitted for Westpac that the matters involved in the hearing were not overly complex and the number of witnesses was not large.  In the course of the hearing, the Jarretts were given an opportunity to cross-examine witnesses called by Westpac and in fact did so.

In addition to relying on the above history to establish that there was no lack of procedural fairness by reason of a failure to grant an adjournment, Westpac also submitted that there was no substance in the other grounds of appeal.  Without a thorough examination of the hearing before her Honour, I am unable to make any assessment of the strength of the other grounds of appeal.

In relation to the question of procedural fairness it seems to me that given the lack of representation, the complexity of the matter and the uncertainty concerning its relationship to two other matters, which were originally ordered to be heard together, there is an arguable case.  I am not persuaded that it is a strong case.  However, on the limited material presently before me, I am not in a position to say that there is no substance in the appeal insofar as it raises questions of procedural fairness.

A second matter for consideration is the balance of convenience.  In my opinion, the balance of convenience falls in favour of the Jarretts.  The effect of the order sought, if not stayed, is that they must leave the home in which they have lived for a number of years. This will inevitably cause some disruption and hardship to them, which must be calculated in monetary terms.  On the other hand, the Bank points out that it has expended a large amount of time and money in order to obtain judgment and that it should not lightly be deprived of the fruit of the determination by the primary judge in its favour.  It is said that, given the value of the house and the amount owed by the Jarretts, together with interest and costs, the Bank stands to lose a considerable amount of money if a stay is granted.

I am not satisfied that there is any evidence, as opposed to mere assertion, as to the value of the house and in those circumstances it is not possible to say with any accuracy what it would be likely to realise if sold.  The “assessment” of value relied on is unsatisfactory in a number of important respects, which were specifically adverted to in the course of submissions.

Having regard to the above matters, I am of the view that this is a case in which a stay of her Honour’s orders should be granted.

The relevant matters for consideration where an application is made for security for costs are well-settled.  Under s 56(1) of the Federal Court of Australia Act 1976 (Cth), a Judge may order an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him or her.  Some important matters which may be taken into account in exercise of the discretion are the prospects of success; whether an order for security would shut out the applicant from pursuing its claim; whether impecuniosity arises out of the breaches alleged against the respondent; the public interest, and the degree of risk that the applicant may not be able to satisfy an order for costs.  The Court is not called on to investigate and consider in detail the likelihood or otherwise of the success of any action.  The mere fact of impecuniosity is not decisive or controlling: see James v ANZ Banking Group Ltd (No 1) (1955) 9 FCR 442 at 445.  These principles on the payment of security for costs were applied by Hill J in Equity Access Limited v Westpac Banking Corporation (1989) 80 ATPR 40-972, at 50635.

I have given consideration to the above matters in the present case.

I am of the view, on the limited material presently before me, that this is not an appropriate case in which to require security. As stated above, I consider that the Jarretts have an arguable case.   I also consider that there is before me no reliable evaluation as to the worth of the house.  In these circumstances, I am not satisfied that the Bank will not obtain sufficient funds from the assets of the Jarretts to cover its costs if it is successful on the appeal.

The orders of the Court, therefore, are that:

1.         The motion for a stay pending final determination of the appeal is granted.

2.         The application for security for costs is dismissed.

3.         Westpac Banking Corporation is to pay the costs of Mr and Mrs Jarrett on each of the motions before the Court today.

Associate:

Dated:              25 September 1998