FEDERAL COURT OF AUSTRALIA

Ninan v St George Bank Ltd [2013] FCA 818

THE COURT ORDERS THAT:

1.    The applicants’ application for leave to appeal filed 11 April 2013 be refused.

2.    The applicants pay the second, fourth, fifth, sixth, seventh, eighth, ninth and tenth respondents’ costs of the application, as agreed or taxed.

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

REASONS FOR JUDGMENT

Introduction

1    This is an application for leave to appeal from the whole of the judgment of this Court given on 28 March 2013: Ninan v St George Bank Ltd (No 2) [2013] FCA 273 (“Dismissal Judgment”). On that occasion, the Court dismissed:

(1)    The applicants’ amended interlocutory application, filed on 7 February 2013, to vary orders made on 23 August 2012 that the applicants provide security for costs; and

(2)    the proceedings against the second, fourth, fifth, sixth, seventh, eighth, ninth and tenth respondents (referred to in the reasons for judgment, and hereinafter, as the “affected respondents”).

The application for leave was accompanied by:

(3)    An affidavit of George Ninan sworn 9 April 2013 in support of the application for leave; and

(4)    a draft notice of appeal.

2    The applicants’ application for leave stated that they sought to have it dealt with without any oral hearing and each of the affected respondents indicated in writing that he, she or it had no objection to that course. In consequence, on 8 May 2013 I made the following orders:

(1)    The applicants file and serve submissions and a list of all authorities intended to be relied upon on or before 24 May 2013.

(2)    The respondents file and serve their submissions and a list of all authorities intended to be relied upon on or before 7 June 2013.

(3)    The applicants file and serve any submissions in reply on or before 14 June 2013.

(4)    The submissions of the parties comply with Rule 35.19 of the Federal Court Rules 2011.

(5)    The submissions of the parties must not annex or attach any other document.

(6)    Submissions received outside the timetable stipulated in orders 1, 2 and 3 above will not be accepted by Registry without leave of this Court.

3    Submissions from all relevant parties were duly filed.

Background

4    The applicants commenced proceedings by way of an originating application and a statement of claim on 18 May 2012. The originating application sought an array of relief including (at para 15):

[A]n order for exemplary damages or general damages which is marked as a percentage of their total estimated illegal gains in years 2000–2012 from the organized illegal scheme ($138 billion)

a)    St. George Bank, the first respondent: $13.8 billion (10% of the estimated gains)

…

f)    Westpac Banking, the tenth respondent: $3 billion (2.5% of the estimated gains)

5    In July 2012 the affected respondents filed interlocutory applications seeking orders that the applicants provide security for costs. The first and third respondents have not played a role in the proceedings, as the first respondent transferred its business to the tenth respondent and has since been deregistered, and the third respondent is a corporation in administration.

6    On 11 July 2012 the applicants filed an interlocutory application seeking summary judgment against the respondents. The interlocutory application was returnable on 24 July 2012.

7    On 24 July 2012 the respondents:

(1)    Submitted that the respondents’ interlocutory applications for security for costs should be heard and determined before the applicants’ interlocutory application for summary judgment; and

(2)    foreshadowed bringing interlocutory applications to strike out the statement of claim and/or for summary dismissal of the proceedings if the respondents were not successful on their interlocutory applications for security for costs.

8    The Court listed the respondents’ interlocutory applications for security for costs for hearing on 21 August 2012 and deferred the hearing of the applicants’ application for summary judgment until after the security for costs issue was determined.

9    Judgment on the respondents’ application for security for costs was delivered on 23 August 2012: Ninan v St George Bank Ltd (2012) 294 ALR 190 (“Security Judgment”). The Court ordered the applicants to provide security for costs in the form of bank guarantees to be lodged with the Court by 31 December 2012. The proceedings against the respondents were stayed pending compliance with the Security Judgment.

10    The amount of security that the applicants were ordered to provide totalled $148,830, being the amount of costs the respondents were likely to incur up to and including the respondents’ foreshadowed applications to strike out the statement of claim or for summary dismissal of the proceedings (Security Judgment, [52]).

11    The Court declined to make self-executing orders dismissing the proceedings in the event that the applicants did not comply with the Security Judgment. In the event that there was non-compliance with the Security Judgment, the Court noted that the affected respondents could make applications to have the proceedings dismissed (Security Judgment, [53]).

12    The applicants did not file any application to appeal, or to seek leave to appeal, the Security Judgment.

13    The applicants did not provide any security by 31 December 2012, as required by the Security Judgment.

14    By interlocutory application filed on 20 December 2012, the applicants sought orders:

(1)    To reduce the total amount of security they were required to provide to $800;

(2)    to “suspend” the proceedings against all of the respondents, except the second respondent, with the amount of security being reduced to $1,000; and

(3)    to otherwise extend time for the applicants to provide any security.

15    On 24 December 2012 the applicants served an amended interlocutory application (which amended the interlocutory application filed on 20 December 2012). In addition to the orders seeking to vary or set aside the Security Judgment, the applicants’ amended interlocutory application sought leave to amend the originating application and statement of claim.

16    In January and February 2013, the respondents filed interlocutory applications seeking to dismiss the proceedings by reason of the applicants’ non-compliance with the Security Judgment.

17    On 7 February 2013, the applicants filed an amended interlocutory application which sought to vary the order for security for costs and provided several alternatives which were of varying quality and specificity.

18    The Court decided that the question of whether or not leave should be granted to amend the originating application and statement of claim would not be considered until after the following applications were determined:

(1)    The applicants’ amended interlocutory application of 7 February 2013 seeking to vary or set aside the Security Judgment; and

(2)    The respondents’ interlocutory applications seeking to dismiss the proceedings.

In making this decision, the primary judge noted that this was not to say that the “proposed amendments and the applicants’ conduct in relation thereto are irrelevant to particular aspects of the various interlocutory applications” (DismissalJudgment, [7]).

19    It was clear to the parties that the applicants’ interlocutory application seeking leave to amend the pleadings and the proposed amendments could be referred to during the hearing of:

(1)    The respondents’ interlocutory applications seeking to dismiss the proceedings; and

(2)    the applicants’ amended interlocutory application seeking to vary or set aside the Security Judgment.

20    On 28 March 2013 the primary judge gave his Dismissal Judgment, dismissing the applicants’ amended interlocutory application seeking to vary or set aside the Security Judgment, finding that no proper basis for variation had been established.

21    Dealing with the respondents’ interlocutory applications seeking to dismiss the proceedings, the Court noted that security had not been provided as ordered, and in view of the circumstances, ordered that dismissal of the proceedings against the affected respondents was warranted.

22    On 11 April 2013 the applicants sought leave to appeal the Dismissal Judgment.

The Present Application for Leave to Appeal

The Context

23    As noted in [12] above, the Security Judgment was not the subject of any application for leave to appeal and time to file any appeal has expired.

24    The matter has since proceeded on the basis that the Security Judgment remains undisturbed.

25    In the Dismissal Judgment, the primary judge accepted submissions made by the respondents that rather than seeking to demonstrate a basis for a variation of the orders, the submissions and material relied upon by the applicants took the form of a de facto appeal (Dismissal Judgment, [13]).

26    Neither the present application for leave to appeal nor the draft notice of appeal identify the Security Judgment as a judgment the subject of appeal. Indeed, I would not grant leave to appeal to the extent that the applicants seek to re-open, re-argue, or appeal the Security Judgment under the guise of the present application.

27    Accordingly, determination of the present application for leave to appeal is to be strictly confined to an assessment of whether the Dismissal Judgment is flawed and otherwise warrants a grant of leave to appeal.

The Proper Approach

28    The Dismissal Judgment is an interlocutory judgment; it does not finally determine the substantive rights of the parties. The dismissal of proceedings on grounds of non-compliance with the Court’s orders and the proposed variation of interlocutory orders are both interlocutory matters.

29    Leave to appeal is required to appeal any interlocutory judgment: Federal Court of Australia Act 1976 (Cth): s 24(1A).

30    Such leave should not be granted unless the judgment is attended with sufficient doubt to warrant its reconsideration and substantial injustice would result if the judgment was wrong and leave were refused: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398, 399.

31    Both matters dealt with in the Dismissal Judgment involved the exercise of the Court’s discretion. Where leave to appeal is sought with respect to the exercise of discretion, a grant of leave will not be warranted unless an error of principle or an error in terms of House v R (1936) 55 CLR 499 at 504, 505 is identified: Brambles Holdings Ltd v Trade Practices Commission (1979) 28 ALR 191 at 193 per Bowen CJ.

32    To identify that a different course to that taken by the primary judge is arguable, or indeed preferable, will not be sufficient to warrant leave or warrant disturbance of the orders made: Brambles Holdings at 193.

33    Further where the discretion relates to a matter of practice or procedure (being the case here) rather than an exercise of discretion involving substantive rights, the Court must exercise particular additional caution in reviewing the decision: Brambles Holdings at 193.

34    In light of these principles, and the particular caution required when dealing with leave to appeal discretionary decisions concerning practice and procedure, the respondents submitted that the applicants have not demonstrated any basis for leave to be granted in this case as the applicants have not identified any point of doubt with respect to the Dismissal Judgment, any errors of the kind identified in House v R, or any substantial injustice flowing from any error; accordingly should leave be refused.

No Injustice

35    It was not submitted by the applicants that either matter determined in the Dismissal Judgment finally determined the issues.Additionally, the dismissal on grounds ofnon-compliance has not been treated by the applicants as a dismissal with prejudice, in circumstances where the applicants have commenced fresh proceedings against a number of the respondents.

Refusal to Vary Security Judgment – No Error

36    The primary judge refused the application to vary the security for costs orders by applying a well-established line of authority which holds that an order for security for costs made after a contested hearing should not be varied unless there is:

(1)    A material change of circumstances since the original application was heard; or

(2)    new evidence to hand which could not reasonably have been adduced at the time of the hearing.

(Dismissal Judgment, [10], [13]).

37    The primary judge found that no material change in circumstances had arisen and that no new evidencehad been advanced by the applicants. Accordingly, there was no basis to warrant any variation of the security for costs orders (Dismissal Judgment , [13]).

38    The applicants argued that the line of authority relied upon (see Truth About Motorways Ply Limited v Macquarie Infrastructure Investment Management Limited per Hely J, [2001] FCA 1603 at [11] and other cases referred to at [11] of the primary judge’s reasons) should not have been followed, and the commencement of the new Federal Court Rules on 1August 2011 changed the manner in which judicial discretion should be exercised when considering a variation of interlocutory orders (including security for costs orders).

39    A comparison of the provisions relating to variation of interlocutory orders (including security for costs orders) in the Federal Court Rules applicable from 1 August 2011, and those in force prior to that date, suggest no altered jurisdiction or narrowing of the matters is to be considered by the Court when exercising its discretion.

40    Such a change would be a fundamental alteration to the parameters of exercise of judicial discretion and would fetter the Court’s capacity to control its own processes. It would leave it open to parties to re-agitate interlocutory questions previously decidedwithoutanyrelevantrestrictions:see Brimaud v Honeysett Instant Print Pty Ltd (1988) 6 ACLC 942.

41    The applicants failed to identify why such considerations would not apply to the new rules as they did to the old, and they also failed to identify any express provision effecting such a change.

No Change in Circumstances

42    The primary judge refused the application to vary the security for costs orders previously made as there was no basis to suggest that the circumstances warranting the previous orders for security for costs had changed (Dismissal Judgment,[14]). Those matters were:

(1)    The applicants’ impecuniosity.

(2)    The applicants being ordinarily resident outside of Australia and beyondreach of enforcement powers available by reason of the Foreign JudgmentsAct 1991 (Cth).

(3)    The serious deficiencies in the pleadings at the time the application for security for costs was heard which dislodged any presumption that the claim had reasonable prospects of success.

(4)    The inability of the applicants to discharge the evidentiary onus (as opposed to submissions or assertions) that their impecuniosity was solely attributable to the conduct of the respondents.

(5)    The absence of admissible material to suggest that matters of sufficient public interest arose,such as to warrant variation of the usual rules that apply to security for costs.

43    There was no suggestion of change with respect to the first matter.

44    The second matter (the Court’s finding as to non-residency) was challenged by a contention that the provisions of the Racial Discrimination Act 1975(Cth) preclude the imposition of security on the basis of nationality.

45    This contention amounts to an appeal from the Security Judgment (where the point was not raised) and must be disregarded.

46    In any event, the point must be rejected because the order for security in this case did not turn upon the applicants’ nationality, but rather, the fact that the applicants’ ordinary place of residence was outside Australia. That fact gave rise to risk and uncertainty as to the effective enforcement of any costs order and warranted the provision of a fund within the jurisdiction from which any costs order might be enforced.    

47    As to the balance of the considerations referred to in [42(3)–(5)] above it was submitted:

(1)    First, to the extent that the applicants referred to the circumstances at the time security for costs orders were made and seek to challenge the findings, those challenges amount to a de facto appeal from the Security Judgment and must be disregarded.

(2)    Secondly, the observations of the primary judge as to the obvious flaws and serious deficiencies in the pleadings are clearly correct.

48    The fundamental problems with the pleadings are manifest and examples were identified during argument on 27 March 2013 (Dismissal Judgment, [14(c)] and Security Judgment,[12]–[19]).

49    It is not for a respondent to draw pleadings for an applicant, or to provide drafting advice. The Security Judgment discloses, for example, that numerous and repeated allegations of serious fraud are not pleaded with material facts and proper particulars, that causes of action are not clearly identified and that the pleadings are repetitious. These problemshave not been corrected and no proposed amended pleading proposes to correct them.

50    The applicants suggestedthat the Court erred in deferring the part of their interlocutory application that sought leave to amend the pleadings. The deferral did not preclude the applicants putting such submissions about the proposed pleadings that were relevant to the hearing of the respondents’ applications seeking to dismiss the proceedings and the applicants’ application seeking to vary or set aside the orders for security for costs(Dismissal Judgment, [7]). The holding of the primary judge, that the proposed amended pleading contained many of the pleading deficiencies found in the filed pleadings (Dismissal Judgment, [31]–[36]), is clearly correct.

51     The primary judge did not err by identifying the obvious problems with the pleadings and declining to find that the applicants’ prima facie case disclosed a cause of action having reasonable prospects of success.

52    The consequence of the pleading issues was that little weight would be given to the applicants’ contentions (being unsupported by evidence in any event) that the sole cause of the applicants’ impecuniosity was the alleged conduct of the respondents, that an unjustifiable stultification of the proceedings would flow from orders for security for costs, and that the case raised matters of public interest, such that security should not be ordered.

53    Such contentions, logically, cannot greatly influence the overall exercise of discretion when no regular and proper cause of action with reasonable prospects of success can be identified in the pleadings.

Absence of Defences

54    No error is to be found in the manner the Court weighed (in the Security Judgment or the Dismissal Judgment) the absence of filed defences from some of the respondents.In any event, this contention amounts to an appeal from the Security Judgment and must be disregarded. Security for costs had been sought, pleading issues had been raised and the proceedings were subsequently stayed. The deferral is not evidence of selectiveapplication of the Rules,as suggested by the applicants.

Deferral of Applicants’ Summary Judgment Application

55    No error is disclosed in the determination to defer the applicants’ summary judgment application until after the respondents’ applications for security for costs had been determined. In any event, this contention amounts to an appeal from the Security Judgment and must be disregarded.

56    Given that the Court has declined to find that the applicants’ pleaded case is regular and prima facie discloses a cause of action having reasonable prospects of success, the applicants’ summary judgment application, should it have been heard,was doomed to fail, and the absence of filed defences from some of the respondents would nothave carried any weight in that determination.

57    No application for default judgment was made by the applicants but, in any event, in view of the pending security for costs applications and pleading problems, such an application would also have been doomed to fail.

Dismissal

58    No error is disclosed in the decision of the primary judge to dismiss the proceedings.

59    The applicants did not dispute that the ordered security had not been provided. They did not contend that it will be provided in future. The applicants were on notice of the likelihood that the respondents would move for dismissal if security was not provided.

60    The essence of the applicants’ application for leave to appeal from the order dismissing the proceedings is that security should not have been ordered in the first place.

61    The application for leave to appeal does not seek to disturb the Security Judgment and, in any event, no error or basis to disturb that judgment has been disclosed by the applicants.

Conclusion

62    The application for leave must be refused with costs.

Associate:

Dated:    15 August 2013