Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Tory v Megna [2012] NSWCA 41
• Hearing dates: 12 March 2012
• Decision date: 12 March 2012
• Before: Young JA

Decision

(1) Order that the submitting appearance filed by Mr Tory on 8 July 2011 may be withdrawn and a contested appearance filed in lieu.

(2) Order (1) subject to conditions 1 to 5 in Mr Molomby's document, varying condition 3 to make it 21 days and the amount $62,000.

(3) Grant liberty to apply to the Registrar of the Court of Appeal as to what should happen if that security is not provided within the 21 days.

(4) Order that the parties may have liberty to approach the Registrar with respect to fixing a date for the hearing of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PROCEDURE- applicant filed motion seeking leave to withdraw a submitting appearance- applicant originally filed submitting appearance when appellant, who was in the same interest, was represented- applicant filed motion to withdraw submitting appearance when appellant's solicitors ceased to act- granting leave to withdraw a submitting appearance is a discretionary decision of the court- generally, leave should be granted where an appearance was entered by mistake or accident but not when a deliberate choice was made- other considerations include whether the applicant has an arguable case, whether there is real prejudice and whether there has been any material change of case- although no exact precedent, in accordance with principle, it is appropriate to grant leave- leave granted.
• Legislation Cited: Civil Procedure Act 2005, s 56; Uniform Civil Procedure Rules 2005, r 6.11
• Cases Cited: Evergreen Tours Pty Ltd v Mclaren [2010] NSWSC 1362; Garsec v His Majesty, The Sultan of Brunei [2007] NSWSC 882; Somportex Ltd v Philadelphia Chewing Gum Corporation [1986] 3 All ER 26
• Category: Interlocutory applications
• Parties: David John Marshall (Appellant); Richard Martin Tory (Applicant/Third Respondent); Michael Megna (First Respondent); Russell James Lloyd (Second Respondent)
• Representation: Counsel: Appellant in person; D Bricknell (Applicant/Third Respondent); T Molomby QC and R Rasmussen (First and Second Respondents); Solicitors: Appellant self represented; Bricknell Legal (Applicant/Third Respondent); Etheringtons Solicitors (First and Second Respondents)
• File Number(s): CA 2004/181254

Judgment

1 HIS HONOUR: This is a notice of motion seeking leave to withdraw a submitting appearance. The appeal involves a Supreme Court judgment against Messrs Marshall and Tory over a defamation of Mr Megna with respect to local government politics in the Drummoyne area. The applicant, Mr Richard Tory, is the third respondent in the appeal and the second cross-respondent in the cross-appeal, and I'll call him the applicant. The appellant, Mr David Marshall, who is the first cross-respondent in the cross-appeal does not oppose the application. This is understandable as they are really in the same interest.

2 The application is opposed by the first and second respondents (the first and second cross-appellants), Messrs Michael Megna and Russell Lloyd, and I will refer to them as the respondents. In the event that leave is granted, the respondents seek certain conditions regarding security for costs and limitations on amendments to the notice of appeal and submissions.

3 The applicant filed a submitting appearance on 8 July 2011. The appeal and cross-appeal were listed for hearing on 20 February 2012. In January 2012 the solicitors for Mr Marshall ceased to act and on 6 February, Mr Marshall and the applicant attended a directions hearing where the applicant advised the court he wishes to be represented. The directions hearing was adjourned by the Registrar to 10 February, a date which was subsequently vacated by the Court. The hearing date of 20 February was also vacated. The notice of motion seeking leave to withdraw the submitting appearance was filed on 22 February 2012.

4 That motion first came before the Court on 27 February. Mr D Bricknell, solicitor, appeared for the applicant, Mr T Molomby QC with Mr Rasmussen, appeared for the respondents and Mr Marshall appeared in person. After some discussion I stood the matter over until today. The reason for the adjournment is that, after hearing initial submissions, it seemed to me that the probable just result was to allow the submitting appearance to be withdrawn if appropriate conditions could be imposed. Mr Molomby noted that there were three sets of conditions which needed to be imposed in his view, namely (A) that the appeal proceed only on the existing issues; (B) that the applicant pay the costs of andt occasioned by the change of position; and (C) that the applicant provide security for costs of the appeal.

5 Mr Bricknell was without counsel and needed to consider these suggestions and I thought in the circumstances I should give him some time to do so. Thus, I requested Mr Molomby to put in writing precisely what he sought by way of conditions and stood the matter over for Mr Bricknell to consider his client's attitude to them and hopefully to be able to secure counsel, that is the counsel who has been in the matter for some time previously and who expected to be available today.

6 Mr Molomby submitted a document containing the conditions he sought in final form and these were as follows:

1. that the appeal be conducted on the grounds and submissions already filed.

2. that the third respondent/second cross-respondent file within a week a Notice of Appearance and Notice of Appeal.

3. that within 21 days, the third respondent/second cross-respondent provide as security for costs the sum of $62,000.

4. that the third respondent/second cross-respondent pay the costs of the first and second respondents/cross-appellants thrown away by his application for leave to withdraw his submitting appearance, and consequential on that application, such costs to include the costs thrown away by the vacation of the hearing date on 20 February 2012, and the listings of the matter on 27 February and 12 March 2012.

5. that the third respondent/second cross-respondent pay any costs incurred by the first and second respondents/cross-appellants as a result of his withdrawal of his submitting appearance.

l will refer to the conditions by the number that is in Mr Molomby's document.

7 So then, the key questions are whether leave should be granted to withdraw the submitting appearance and what, if any, conditions should be placed upon the grant of that leave if it is granted.

8 Submitting appearances are covered by the rule 6.11.2 of the UCPR. That sub-rule reads as follows:

(2) Except by leave of the court, a defendant who has filed a notice of appearance containing a statement referred to in subrule (1) may not file a defence or affidavit or take any other step in the proceedings.

9 So that, whilst the submitting appearance is in force, Mr Tory is virtually unable to take an active part in the appeal.

10 Giving leave to withdraw an appearance is a discretionary decision of the court. It is a broad discretion and should not be constrained by statements of principle found in dicta in decisions on similar facts: Garsec v His Majesty, The Sultan of Brunei [2007] NSWSC 882 at [50]; Evergreen Tours Pty Limited v Mclaren [2010] NSWSC 1362 at [19]. However, the authorities do provide some helpful guidelines. Justice Tamberlin observed in Evergreen at [17] that "As a general principle the interests of justice require that a defendant with an arguable case should not be shut out from presenting a case unless there are substantial countervailing considerations."

11 It is generally accepted that leave should be granted where an appearance has been entered by mistake or accident but not when a deliberate choice was made, particularly one taking into account the risks involved after receiving competent legal advice: Somportex Ltd v Philadelphia Chewing Gum Corporation [1968] 3 All ER 26 at 29 per Lord Denning MR; Garsec v The Sultan of Brunei at [48]; Evergreen at [19].

12 There are a number of other considerations that may influence the Court's decision. These include whether the applicant has an arguable case, whether there is real prejudice to the other parties and whether there has been any material change of case, Evergreen at [25] to [26]; Garsec at [56].

13 It is clear there was no mistake in this case. The decision of the applicant to file a submitting appearance was deliberate and according to the advice of his legal representation. However, Mr Bricknell puts that his client's initial actions in filing the appearance were reasonable considering Mr Marshall's legal representation at that time and the overriding obligation in s 56 of the Civil Procedure Act to facilitate the "just, quick and cheap resolution of the real issues in the dispute or proceedings", and his application to withdraw the appearance is also reasonable as Mr Marshall no longer has legal representation. Allowing the applicant's submitting appearance to be withdrawn will enable the case to be properly contested.

14 Mr Molomby, on the other hand, argues that the applicant's appearance was a conscious, advised, deliberate decision which aimed to protect him from exposure to costs. In addition, giving leave for the appearance to be withdrawn will cause further delay, increase the length of the hearing and mean that a number of costs incurred will have to be thrown away.

15 I do not consider these factors are enough to prevent the applicant being given the opportunity to contest the appeal now that the circumstances have changed. The hearing date in February has already been vacated. Whether or not leave is granted, the next hearing date available is unlikely to be before June and the length of the hearing will not be substantially increased by counsel appearing for the applicant as opposed to Mr Marshall appearing in person.

16 In relation to costs, leave is normally granted on the basis that the applicant pay the costs that have been thrown away by his or her previous attitude and that I think deals with most of the potential prejudice on that front.

17 Although the applicant's appearance was a deliberate decision, the change in representation of Mr Marshall is a significant factor and is not outweighed by other considerations.

18 There has been no exact precedent for the decision I am making but I consider that, in accordance with principle, it is appropriate to grant leave for the applicant to withdraw the submitting appearance. But what are the conditions that should be imposed? Mr Marshall says that in all the circumstances there should be no conditions, however, I reject that view. The deliberate decision was made by Mr Tory. That decision was understandable and was made in his interests. He now wishes to change his position. I think in the circumstances that is reasonable but it is only reasonable if most of the prejudice that has been caused by that change of decision is compensated for. Accordingly, in my view, there should be conditions imposed.

19 As to Mr Molomby's conditions, 1 and 2 are consented to, 4 and 5 Mr Bricknell says that the costs associated with Mr Tory's application should be reserved and that 5 is really included in 4. As to the former submission, as I have mentioned earlier, the normal order when one seeks a boon, and the other side has incurred expense, is that one must pay the costs occasioned by the change in position. Accordingly, it seems to me, that 4 should be made and 5 is complementary to 4. Accordingly, the debate is over condition 3.

20 There is evidence from the solicitor for the Megna interests that the total appeal costs are estimated at $160,120. However, the breakdown shows that that includes various costs of the present motion and the past. My calculation shows that there is approximately $62,000 estimated for the costs of the appeal. There is no material to show that the figures used by the solicitor in her affidavit are wide of the mark and accordingly it seems to me that $62,000 is the appropriate amount of security, if security is to be ordered. The question then is, should security be ordered? There is a freezing order in place in respect of Mr Tory's assets and not only Mr Tory but also some members of his family because there was evidence before a judge that he had been, to use a loose expression, moving assets around between members of his family and his company so that technically he himself has no assets.

21 That moving around of assets involved over a million dollars but whether, when one takes into account debts owed, that is the amount he has control of or not, I am unable to say one way or the other. However, the evidence is not strong enough to show that if an order for security for $62,000 is made that will stymie the appeal.

22 It may be that in order to provide security that some order will have to be made varying the freezing order and that can be made to the Common Law Division, where the order was originally made. Accordingly, I think that I should extend condition 3 to twenty-one days.

23 Thus, I make an order that the submitting appearance filed by Mr Tory on 8 July 2011 may be withdrawn and a contested appearance filed in lieu. I make that order subject to conditions 1 to 5 in Mr Molomby's document, varying condition 3 to make it twenty-one days and the amount $62,000 and I grant liberty to apply to the Registrar of the Court of Appeal as to what should happen if that security is not provided within the twenty-one days.

24 I should also make an order that the parties may have liberty to approach the Registrar with respect to fixing a date for hearing of the appeal.

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Decision last updated: 17 March 2012