IN THE Court of appeal OF new Zealand

I TE KŌTI PĪRA O AOTEAROA	
 CA85/2018
 [2018] NZCA 451

	
BETWEEN	
ELLIOT DANIEL SGARGETTA
Appellant	
	
AND	
ASB BANK LIMITED
Respondent	

Counsel:	
Appellant in person
A E Simkiss and J J K Spring for Respondent	

Judgment:
(On the papers)	
25 October 2018 at 11 am	

JUDGMENT OF GILBERT J

A	The application for review of the Registrar’s decision is granted.
B	Security for costs is reduced to $1,000.  This sum is to be paid within 20 working days of the date of this judgment.
___________________________________________________________________

REASONS
[1]	Mr Sgargetta appeals against a summary judgment entered against him by Woodhouse J on 13 December 2017.  The Judge found Mr Sgargetta liable as guarantor to pay the sum of $598,340.15 to ASB Bank Ltd.  This was the balance outstanding under loans made by ASB to Sleep Overs Ltd and two associated companies, Evergreen Lodge Ltd and Remarkables Lodge Ltd.  Mr Sgargetta was a director of each of these companies.  The Judge was satisfied that Mr Sgargetta had no arguable defence to ASB’s claim.  
[2]	Mr Sgargetta, who lives in Victoria, Australia, applied for legal aid for his appeal but this was declined.  Mr Sgargetta sought reconsideration of that decision but this was unsuccessful.  He then applied to the Legal Aid Tribunal.  Mr Sgargetta received notification from the Tribunal on 30 July 2018 that his application had been refused.  
[3]	Mr Sgargetta then applied to the Registrar for an order dispensing with security for costs or reducing the amount of security.  This application was declined by the Registrar in a decision given on 19 September 2018.  The Registrar proceeded on the assumption that Mr Sgargetta is impecunious.  However, she concluded that the appeal had little merit and accordingly it would not be right to require ASB to defend the judgment under appeal without the usual protection provided by security for costs. 
[4]	Mr Sgargetta now applies for a review of this decision under r 7(2) of the Court of Appeal (Civil) Rules 2005.  A single judge of the Court of Appeal may review the decision in exercise of the powers conferred under s 49(6) of the Senior Courts Act 2016.  The principles to be applied were set out by the Supreme Court in Reekie v Attorney‑General.  Access to the Court of Appeal by an impecunious appellant should be preserved where the appeal is one that a solvent appellant would reasonably wish to prosecute.  
[5]	Mr Sgargetta’s companies are in liquidation and the secured properties have now been sold by ASB.  Mr Sgargetta says that he borrowed against his family home and personal assets to fund these companies and underwrite the secured properties that have now been sold.  He says he has no remaining avenues available to raise the money required for security for costs.  Mr Sgargetta, who is in poor health, says he has no income other than what he receives as a sickness beneficiary.  I proceed on the basis that Mr Sgargetta is impecunious but could afford to pay a modest sum by way of security (he has proposed $1,000).  
[6]	The amount in issue is clearly not disproportionate to the costs of pursuing the appeal and Mr Sgargetta faces the prospect of bankruptcy if the judgment is not overturned.  I consider that a reasonable and solvent appellant would pursue the appeal subject only to it having a reasonable prospect of success.  
[7]	The decisive factor is therefore whether the appeal has any realistic prospect of succeeding.  A cautious approach is required when carrying out this assessment at this preliminary stage, before the case on appeal or any submissions are filed.  The difficulty is compounded in this case because Mr Sgargetta was unrepresented in the High Court and remains unrepresented in this Court.  This creates the risk that an arguable basis of defence may have been overlooked in a poorly and inexpertly constructed response to the application for summary judgment.  I note that Mr Sgargetta’s legal aid application was supported by an opinion provided by an experienced barrister who considers that there are proper grounds of appeal.  
[8]	Mr Sgargetta was directed by Brown J to file a notice of appeal identifying the specific grounds of his appeal.  In a further notice of appeal filed on 22 June 2018, Mr Sgargetta specified the following three grounds of appeal:
(a)	There were substantial material disputes of fact that could not be resolved on affidavit evidence.  The case was not suitable for summary disposal.
(b)	The appellant’s claims of misrepresentation or breach of contract provide grounds for cancellation of the contract between the appellant and the respondent.
(c)	The appellant has a substantial counterclaim against the respondent sounding in damages.  That claim is sufficiently closely related to the respondent’s claim to amount to an equitable set-off.
[9]	Despite the lack of specificity in these grounds, the essence of Mr Sgargetta’s defence or counterclaim is summarised in the judgment under appeal.  His primary contention appears to be that ASB agreed to permit, or represented that it would permit, sales of the secured properties, Evergreen Lodge and Remarkables Lodge, through a syndication process enabling investors to acquire partial interests in them.  Mr Sgargetta claims that ASB subsequently departed from this agreement and refused to provide partial releases of its mortgage to facilitate syndicated sales to investors.  This prevented repayments of the loans being made.  Mr Sgargetta claims that he has arguable defences by way of set-off or counterclaims based on breach of contract, misrepresentation or breach of the Fair Trading Act 1986.  Mr Sgargetta also claims that ASB breached duties owed to him when realising its securities, resulting in these being sold at a significant undervalue.  
[10]	I accept that the appeal is genuinely pursued and is not vexatious.  While Mr Sgargetta may face formidable challenges in showing that he has an arguable defence to the claim, I am conscious that the case on appeal has not yet been filed, nor any submissions.  I do not have adequate information to be able to exclude with confidence the possibility that there may be some meritorious basis for the appeal.  I consider it would be to risk an injustice to deny Mr Sgargetta access to the Court to pursue his appeal by setting security for costs at a level he cannot pay.  However, I do not consider that security should be dispensed with altogether.  Mr Sgargetta has proposed paying $1,000 if security is not dispensed with.  
Result
[11]	The application for review of the Registrar’s decision is granted.
[12]	Security for costs is reduced to $1,000.  This sum is to be paid within 20 working days of the date of this judgment.

Solicitors: 
MinterEllisonRuddWatts, Auckland for Respondent