FEDERAL COURT OF AUSTRALIA

Ninan v St George Bank Ltd (No 2) [2013] FCA 273

THE COURT ORDERS THAT:

1.    The applicants’ amended interlocutory application filed on 7 February 2013 be dismissed.

2.    The applicants pay the costs of the second, fourth, fifth, sixth, seventh, eighth, ninth and tenth respondents of both the applicants’ interlocutory application filed on 20 December 2012 and the applicants’ amended interlocutory application filed on 7 February 2013.

3.    The proceedings against the second, fourth, fifth, sixth, seventh, eighth, ninth and tenth respondents be dismissed.

4.    The applicants pay the costs of the proceedings of the second, fourth, fifth, sixth, seventh, eighth, ninth and tenth respondents, including the costs of their interlocutory applications for dismissal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1    The matters for determination are whether the Court should vary orders made on 23 August 2012 concerning security for costs and/or whether proceedings against certain individual respondents should be dismissed on the basis of the applicants’ failure to comply with those previous orders.

2    On 23 August 2012 I ordered the applicants to pay security in different amounts in respect of the costs of the second, fourth and fifth, sixth, seventh and eighth, ninth and tenth respondents (see Ninan v St George Bank Ltd (2012) 294 ALR 190, in which the background facts are broadly stated and need not be repeated here). The first and third respondents did not seek security for costs. The business of the first respondent (St George Bank Limited) has been transferred to the tenth respondent (Westpac Banking Corporation) and as noted in [2] of the previous judgment, the third respondent has not participated in the proceedings and appears to be in administration. I ordered that security be paid in the form of a bank guarantee in respect of each of the affected respondents and be lodged with the District Registrar by 31 December 2012. The proceedings were stayed as against those affected respondents until the relevant security for costs had been provided in respect of that respondent in accordance with the Court’s orders.

3    Security was not provided in accordance with the orders made on 23 August 2012 and, by interlocutory applications filed on various dates in January and February 2013, each of the affected respondents now seeks an order dismissing the proceedings against them individually.

4    The applicants did not seek leave to appeal the orders made on 23 August 2012. Rather, on or around 20 December 2012, they filed an interlocutory application seeking to vary the security for costs orders. The applicants also filed an affidavit dated 18 December 2012 by George Ninan (one of the applicants) in support of their interlocutory application. On 7 February 2013 the applicants filed an amended interlocutory application seeking inter alia to vary the orders dated 23 August 2012 concerning security for costs. They also filed an additional affidavit dated 2 March 2013 by Mr Ninan in support of that amended application.

5    The variations sought by the applicants are expressed in alternative ways. The first is that the applicants should only be required to provide security for costs in the total amount of $800 in respect of all affected respondents (except for the third respondent) and given 30 days to provide that security. Alternatively, a variation is sought that security for costs in the amount of $1000 should be ordered in respect of the Valuer General and the proceedings be “suspended” against all the other respondents. In a further alternative, the applicants seek an extension of time until 31 December 2013 to comply with the orders made on 23 August 2012. In the final alternative, the applicants seek a variation which would extend the time for compliance with the 23 August 2012 orders until a date six months after finalisation of the applicants’ then pending proceedings in the State Administrative Tribunal in Western Australia (SAT) (see [21] of the previous judgment and also see further below concerning the outcome of those proceedings).

6    The applicants have filed various written submissions, including a document described as “Essential Submission prior to the Hearing on 5 February 2013”, attached to which is a proposed amended originating application and statement of claim. The applicants have also filed other written submissions in respect of their amended interlocutory application, which also address the various interlocutory applications filed by the affected respondents seeking to have the proceedings dismissed. They include a document titled “Summary Information to narrow or settle the issues” dated 9 February 2013. The applicants’ most recent written submissions were filed on 25 March 2013 and were provided in three separate volumes totalling in excess of 300 pages. They were titled “Basis for Application for Varying the Order”.

7    The applicants’ amended interlocutory application also contains an order seeking leave to amend the originating application and statement of claim. I made directions on 5 February 2013 that this part of the amended interlocutory application not be listed for determination on 27 March 2013. I also ordered the applicants to provide the respondents within three days an electronic copy of their proposed amendments to their originating application and statement of claim. I indicated at that time that the question whether the applicants should be granted leave to make their proposed amendments should await the outcome of the balance of the applicants’ amended interlocutory application and the relevant respondents’ interlocutory application seeking to have the proceedings dismissed. That is not to say, however, that the proposed amendments and the applicants’ conduct in relation thereto are irrelevant to particular aspects of the various interlocutory applications.

8    It is convenient to deal first with the applicants’ interlocutory application seeking a variation of the orders concerning security for costs before dealing with the respondents’ interlocutory applications.

Amended interlocutory application seeking to vary orders concerning security for costs

9    It is not disputed that the Court has power in an appropriate case to vary existing orders concerning security for costs. That power is to be found in s 56(3) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Reference should also be made to (a) r 1.32 of the Federal Court Rules 2011 (the 2011 FCRs), which empowers the Court to make any order that the Court considers appropriate in the interests of justice; and (b) r 39.05(c) which empowers the Court to vary or set aside an order after it has been entered if it is interlocutory.

10    While it is plain that the Court has a discretion in the matter, it is relatively well established that an order for security of costs made after a contested hearing will generally not be made unless there is a material change of circumstances since the original application was heard or new evidence emerges which could not reasonably have been adduced at the time of the hearing of the original application. The relevant principles are conveniently set out in the following passage from Hely J’s reasons for judgement in Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2001] FCA 1603 at [11]:

It is clear from the terms of Order 28 rule 5(2) that the Court has power to set aside or vary the original security for costs order. The Court retains jurisdiction, because of the very nature of an interlocutory order, to set aside, vary or discharge it up to the time of the final disposition of the proceedings. However, as McLelland J recognised in Brimaud v Honeysett Instant Print Pty Ltd (1988) 6 ACLC 942, it would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will. Hence the ordinary practice is that an application to set aside, vary or discharge an order of a substantive nature made after a contested hearing in contemplation that it would operate until a final disposition of the proceedings, must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. That principle was applied by a Full Court of this Court in Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd (unreported, Beaumont, Carr, Sackville JJ, 17 May 1996) to an order for the provision of security for costs. The Full Court set aside an order varying an order for the provision of security upon the basis that there had been no material change in circumstances established so as to warrant a variation of the original order.

11    A similar approach has been taken in other cases, such as Capital Webworks Pty Limited v Adultshop.com.Ltd [2002] FCA 1420 at [4] per R D Nicholson J; Gurtler v Finance Now Pty Ltd [2009] FCA 631 at [12] per Gilmour J and Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 7) [2010] FCA 626 at [16]-[18] per Mansfield J. Although all those decisions were made under the former Federal Court Rules (which included an express power under O 28 r 5(2)to set aside or vary any order for security for costs), I consider that they also provide general guidance in relation to the current relevant sources of power, which plainly confer a discretion.

12    For the following reasons, I consider the applicants have not established either an appropriate or sufficient basis to vary the orders made on 23 August 2012.

13    First, they have not identified any material change in their circumstances subsequent to 21 August 2012, when the various applications for security for costs were heard. Nor have they identified any relevant new evidence that was not previously available. In my view, the applicants’ evidence and submissions largely repeat the material placed before the Court previously. Mr Ninan’s first affidavit substantially comprises arguments as to why he considers that the orders made on 23 August 2012 were unjustified or otherwise wrong. I accept the submission made on behalf of the fourth and fifth respondents to the effect that the material is largely in the nature of a de facto appeal which rehashes the submissions and references to past facts previously raised by the applicants leading up to the making of the orders on 23 August 2012. Indeed, that point seems to be acknowledged by Mr Ninan who, in his second affidavit, states that the applicants rely on “only a repetition of all the claims & evidences (sic) we have already made or provided earlier except for a few new exhibits”. The “new exhibits” are all old documents which do not bear upon any alleged change in circumstances since August 2012. Nor has any evidence been led to establish that the documents were not available at the time of the hearing in August 2012.

14    Secondly, and more broadly, I do not consider that the applicants have demonstrated that there has been any relevant change in any of the five primary bases underpinning the making of the orders on 23 August 2012. Those matters are set out in [43] to [50] of my earlier reasons for judgment. Taking each of those five matters in turn, I make the following observations:

(a)    it remains common ground that the applicants are both impecunious and ordinarily resident outside Australia and cannot pay the respondents’ costs if the applicants’ proceedings were unsuccessful;

(b)    the applicants are natural persons who are not ordinarily resident in Australia and their country of residence is not covered by the Foreign Judgments Act 1991 (Cth). That position remains unchanged;

(c)    the applicants’ then pleadings suffered from a range of serious deficiencies, such that I previously found that there was no room to apply a normal presumption that their claims had reasonable prospects of success. The applicants have foreshadowed various proposed amendments to those pleadings if leave is granted. This is not the appropriate time to determine whether or not such leave should be granted but, as the fourth and fifth respondents pointed out, the proposed amended statement of claim served by email on 5 February 2013 continues the form of a rambling narrative which singularly fails to comply with the relevant pleading requirements and is highly repetitious (containing both a “condensed version” of the applicants’ claims, as well as an “expanded version”). The proposed pleading contains numerous allegations of fraud and dishonest conduct which are substantially unparticularised and are largely incomprehensible (see further below). The proposed amendments plainly do not comply with usual pleading requirements and it appears that they would be liable to be struck out. They do not provide any support for the applicants’ application to vary the security for costs orders made in August 2012. Indeed, they serve to highlight the applicants’ continuing failure to grasp what is required under basic pleading rules. During the hearing of the applicants’ interlocutory application on 27 March 2013, Mr Ninan referred to the proposed amended pleadings and said: “that’s the best we can do”;

(d)    as previously indicated in [48] of the earlier judgment, the applicants carry the onus of making good their claim by way of admissible evidence that their impecuniousity is totally attributable to the respondents’ conduct. In [30] of his second affidavit, Mr Ninan deposes as follows:

Since we (my wife & I) now live on borrowed money due to the actions of the Respondents, there is no basis for us to provide security for costs to defend the deceptions of the Respondents… .

That “evidence”, which is in the form of a submission or assertion, was not developed any further by way of admissible evidence to provide a foundation for any finding of fact favourable to the applicants on this issue; and

(e)    the applicants have not adduced any admissible material which provides any basis for changing my previous finding that their case, as currently pleaded or as proposed to be pleaded if leave were granted, does not raise any matters of sufficient public interest to warrant a variation.

15    Accordingly, for these reasons, having reconsidered the matter, I consider that the orders made on 23 August 2012 remain appropriate in the light of all the materials which have been brought forward by the applicants. No proper basis has been demonstrated upon which those orders should be varied in any of the alternative ways sought by the applicants.

16    In reaching this conclusion, I have also taken into account some further matters. The first is that the applicants have adduced no evidence to suggest that, given more time, they would be able to arrange the security previously ordered. Indeed, the applicants’ evidence suggests that their impecuniousity continues.

17    Secondly, it is evident that the applicants are in substance seeking to appeal the orders made on 23 August 2012 without having to obtain leave to appeal within the prescribed time. That is an impermissible course.

18    Thirdly, the applicants’ suggestion under one of their proposed alternative orders that security for costs be confined to the Valuer General and the proceedings “be suspended” against all other respondents is entirely impracticable and inappropriate. That is especially so in circumstances where the applicants’ fundamental complaint, as I understand it, is that all the respondents engaged in a premeditated and complex plan to sell to the applicants and finance various land in Western Australia between 2002 and 2006 at a total price of approximately $3 million, when the applicants say that the true value was about $100,000.

19    Fourthly, for completeness, it might be noted that the applicants’ proceedings in the SAT were dismissed on 28 December 2012 (see Ninan v Valuer General [2012] WASAT 248). In the course of dismissing those merits review proceedings, the Senior Member of the SAT (Mr McNab) made the following findings at [72], some of which echo features of the applicants’ conduct in the proceedings in this Court:

I have found that the applicants have advanced in these reviews a 'legally hopeless' case, one that was misconceived and outside of the Tribunal's jurisdiction. The Tribunal's statutory jurisdiction has no relevance whatever to resolving the serious misconduct, conspiracy, damages and corruption claims of the applicants that have been made against various individuals and organisations (including the respondent). Further, such irrelevant, serious and unfounded allegations amount to 'scandalous' allegations in the legal and procedural sense of that word. The additional epithet 'fraudulent' directed by the applicants against any party who they apparently disagree with is likewise procedurally improper. All of this has been compounded by the applicants' confusing, repetitive and unrestrained torrent of overlong submissions and documents, most of which have been filed in direct contravention of the orders of the Tribunal, and notwithstanding the repeated warnings of the Tribunal not to do so. The applicants' conduct therefore amounts to an abuse of process.

Respondents’ interlocutory applications seeking dismissal

20    The applicants do not dispute that they have failed to comply with the relevant orders made on 23 August 2012 concerning security for costs.

21    In seeking to have the proceedings dismissed in respect of each individual affected respondents, the respondents generally rely upon the Court’s powers under s 56(4) of the FCA Act and r 5.23(1)(b)(i) of the 2011 FCRs. That rule relevantly provides: “If an applicant is in default, a respondent may apply to the Court for an order that… (b) the proceeding be stayed or dismissed for the whole or any part of the relief claimed by the applicant: (i) immediately...”.

22    The issue is whether, having refused to vary the orders made in August 2012, those orders should continue to operate to stay the proceedings or whether the proceedings should be dismissed in relation to each of the affected respondents.

23    Some guidance concerning the exercise of the discretion to dismiss the proceedings where there is non-compliance with orders for security for costs is provided in the following statement of the Full Court in Microbio Resources Inc v Betatene Ltd (unreported, Black CJ, Sheppard and Einfeld JJ, 8 October 1993):

The Court is careful to see that orders for security for costs do not work injustice to parties against whom such orders are made, but if those parties do not comply with the orders and give no evidence or explanation as to why they have not complied with them, they cannot be heard to complain of injustice if, after a considerable length of time, and extensions of time, the ultimate sanction of dismissal is applied. It is incumbent upon parties in such circumstances to provide evidence of their position.

24    The considerations which may be relevant to the question whether the proceedings should be dismissed were also helpfully summarised by the Court of Appeal of New South Wales in Idoport Pty Ltd v National Australia Bank [2002] NSWCA 271 at [28]. They include the following five non-exhaustive factors:

(a)    the period that has elapsed since security was ordered;

(b)    the fact that the affected party has been on notice of the application for dismissal;

(c)    the seeming inability of the affected party to further fund the primary proceeding;

(d)    the prejudice to the respondents in the litigation; and

(e)    the position of the Court.

25    Dealing with each of those matters in turn, I make the following observations and findings.

26    First, the applicants have had since 23 August 2012 to arrange the relevant security to be provided and have failed to do so over that seven month period. There is no reason to believe that they would be able to do so if they were given more time.

27    Secondly, the applicants have been on notice for some time that the proceedings could be dismissed if they did not comply with the security for costs orders. Two of the interlocutory applications for dismissal were served on the applicants in early February 2013, and the balance were served around 20 February 2013. Furthermore, the possibility of the proceedings being dismissed for non-compliance was brought to the applicants’ attention in [53] of my earlier reasons for judgment dated 23 August 2012.

28    Thirdly, there is no contest between the parties that the applicants do not have the funds to provide the required security and there is no evidence to suggest that that is likely to change.

29    Fourthly, each of the affected respondents is prejudiced by the maintenance of the litigation not the least in terms of the costs and resources needed to deal with the applicants’ interlocutory applications and, at times, voluminous and embarrassing supporting materials, some of which have been put forward by the applicants otherwise than in accordance with the Court’s orders made on 5 February 2013. The point is well illustrated by the tranches of proposed amendments which the applicants have provided after the 5 February 2013 hearing. One tranche was supplied within the specified three days, but two further tranches have also been put forward outside that timetable, including the latest tranche of proposed amendments which were filed and served only two days before the hearing. The applicants have also failed to provide the respondents (or the Court) with tracked versions of their proposed amendments notwithstanding that this difficulty was specifically raised at the directions hearing held on 5 February 2013. That omission has necessarily created costs and considerable inconvenience to the other parties. In the overall scheme of things, the applicants’ failure to abide by the orders for serving electronic copies of their proposed amendments does not loom large in my judgment. Of greater concern is the fact that despite the applicants numerous attempts to produce a pleaded case which complies with basic pleading rules and requirements they have failed conspicuously.

30    Fifthly, as some of the respondents point out, the proceedings involve serious allegations of fraud and conspiracy (substantially unparticularised), which has an ongoing deleterious effect on their business and personal reputations.

31    Sixthly, although the applicants have taken steps in the proposed amended pleadings to remove some of the scandalous allegations, it is readily apparent that the foreshadowed amendments suffer from many of the pleading deficiencies highlighted in the previous judgment. The applicants have had an ample opportunity to comply with basic pleading requirements. They have failed to do so.

32    The serious pleading deficiencies in the applicants’ foreshadowed amended pleadings as contained in the document titled “Essential Submission prior to the Hearing on 5 February 2013” are illustrated by the following examples involving allegations against the second respondent (the Valuer General of Western Australia), the fourth and fifth respondents (who are both licensed valuers) and the ninth respondent (National Australia Bank).

33    As to the Valuer General, the following extracts from pages 10 and 11 of the foreshadowed amended pleading are reasonably representative of the applicants’ pleadings generally:

Valuer General violates his Code of Conduct in every UV & GRV sets

This dispute essentially originates for only one singular reason. Valuer General (Second Respondent) did not make a studied & detailed report on every valuation (UV or GRV) he makes as & when he makes it (after visiting the land & confirming that he had visited the land in the report), as demanded of him by his Code of Conduct with no excuse whatsoever.

This matter has arisen (brought to our attention only recently) after the proceedings have started. As per rule # 16.51(4) FC Rules, we are entitled to make this amendment to our pleadings without leave or consent from anybody.

This is an important issue leading to the fact that Valuer General (Second Respondent) has no defence against our claims of causes of action against him. As earlier pleaded, he had made the Interim Valuations on our lots & subdivisions disregarding s 24 of VLA 1978. He has set two values at Interim Valuations on our lots & subdivisions instead of setting one value (UV) disregarding s 23 of VLA 1978. Further he had determined the valuations deceptively as he based them on evidences not available to him at the time he valued them (Deceptive per FCAFC 31-2012). To top them all, he had violated his Code of Conduct in a significant way by not preparing a report. He did that only to circumvent the rules & enable him to deceive us.

Even after all our obligations to the valuations, he had refused to make any report against UV $380,000 (DR 477 in SAT) on our lot 124 Lawrencia Loop, Kalbarri & against UV $480,000 on our lot 276 in Surf View until to-day. He had refused to do his solemn duty & obligation even ignoring SAT orders to him (ordered many times) to do so on these two valuations in particular. He knew that it was impossible for him to defend his deceptions on these two valuations without resorting to even more deceptions by his power to amend valuations retrospectively.

34    As to applicants’ allegations against the fourth and fifth respondents, the following matters set out on pages 12, 18, 20 and 34 of the proposed amended statement of claim are typical of the foreshadowed proposed amendments:

On the same day, 1 August, 2006 Ms. Deborah Andrews & Mr. Colin Dymond issued a valuation report certifying that this land was valued $567,500, an amount exactly equal to our purchase price. They did so knowing that if they valued any amount less than that, the sale might not go through due to a purchase condition.

…

These were causes of action for us to claim damages under the various provisions including TPA 1974, s 236 of C & C Act, 2010, FTA 2010, VLA 1978 among others.

These causes of action fall under deceptive & misleading conducts; deceptive & misleading representations; misleading promises of future; violations of code of conduct, etc coming under these Acts.

…

Collusion of all parties is essential

In order to manage property sales at inflated values, it is essential that all parties involved in the sale should act in collusion.

No single party, in isolation, individually can manage to sell land at significantly above true market price (above 15%-20%) without the active participation of all other parties involved in that sale. This is a significant aspect which compels the Applicants to claim damages from all parties instead of claiming them from one party in isolation.

…

The falsifications of valuation of this lot by Valuer General & Ms. Andrews/ Mr. Dymond as an amount very close to or the same as the false price set by the developers in August 2006 is to be noted. It is like claiming that price of a kg of tomatoes is $20 certified by valuer, master valuer and trader when the true price is only $1. We should assume that they deliberated together & agreed on the value of $567,500.

35    As to the applicants’ allegations against the ninth respondent (NAB), the following extracts from pages 49 and 50 exemplify the applicants’ approach to pleading:

I should state my position on these matters & why these matters are related to the rest of the claims. In short, it is part of the “Cheat & Win” scheme because:

A)    Colluding with Valuer General & developers, Port Bouvard, NAB was part of inflating land values at Port Bouvard by extending these loans to us based on wrong prices.

B)    They knew that property prices would decline as prices were artificially inflated.

C)    So any fall in price in property market in future is attributable to NAB & the Respondents.

D)    In 2009, they knew that I lacked funds to service the loans other than the remaining loan amount.

E)    They prematurely terminated my loan to starve me & use any remaining funds to recover the premiums in advance. This is an important point. The unpaid $6,570 amount was sucked into NAB accounts as May end/future premiums instead of paying the contractors on 5 May 2009.

F)    So the strategy of the banks is this “Heat up the property market illegally, extend big loans & when prices collapse, choke the loan holders”.

G)    By offering three loans, they/NAB were heating up the property market in collusion.

H)    NAB, Westpac & St George banks knew or ought to have known that rural land just converted to residential land in rural Dawesville did not command land values of $795,000 and $895,000. They knew that Valuer General was disregarding the limitations placed on him by the Western Australian Parliament by decreeing s 23/s 24 of VLA 1978.

I)    But they knew that it was of enormous benefits to them and all the Respondents. All these matters are further causes of action for us to claim damages against NAB (Ninth Respondents).

36    These examples which are typical of the applicants’ general pleadings, serve to highlight the fundamental deficiencies in the applicants’ pleaded case, even in circumstances where the applicants have sought to address some of the difficulties presented by the original pleadings. The examples set out above also appear in substantially the same form in the latest tranche of proposed amendments filed and served by the applicants on 25 March 2013. In all the circumstances, there is no reason to believe that the applicants could overcome the numerous serious flaws in their case either as presently pleaded or as proposed by them in any of the tranches of the foreshadowed amendments.

37    I am mindful of the fact that it is a serious step to terminate proceedings without a hearing on the merits but in my view the history of this matter, together with the other considerations set out above, serve to underline the importance of proceedings being conducted in conformity with both the Court’s orders and basic pleading requirements.

38    Accordingly, for all these reasons, I consider that orders should be made dismissing the applicants’ proceedings against each of the affected respondents and the applicants ordered to pay the affected respondents’ costs of their unsuccessful interlocutory application, the affected respondents’ successful interlocutory applications and the proceedings generally.

Associate:

Dated:    28 March 2013