REASONS FOR JUDGMENT
1 This is a notice of motion by the respondent to an appeal for an order that the appellant give security for the respondent's costs of and incidental to the appeal. The basis for the respondent's application is that, according to the respondent, the appellant is impecunious so that there is a real risk that any costs order made in favour of the respondent, should he succeed in defending the appeal, will not be paid. For his part, the appellant denies impecuniosity.
2 The main proceeding is an appeal from a decision of the Federal Magistrates Court dismissing the appellant's application under s 46PO of the Australian Human Rights Commission Act 1986 (Cth) alleging unlawful discrimination under the Disability Discrimination Act 1992 (Cth): Clack v Command Recruitment Group Pty Ltd [2010] FMCA 42.
3 The appellant, Darren Clack, was employed by Command Recruitment Group Pty Ltd from June 2005 to March 2007. During this time the respondent, Michael Collins, was the managing director and sole proprietor of Command Recruitment. Command Recruitment has since been wound up. Mr Clack was diagnosed with type 1 diabetes in January 2007. In the proceeding below Mr Clack claimed that various events after this diagnosis and the subsequent termination of his employment constituted unlawful discrimination. The Federal Magistrate, however, found that the acts the subject of these claims did not constitute unlawful discrimination. Accordingly, Mr Clack's proceeding before the Federal Magistrates Court was dismissed.
4 The Federal Magistrates Court, in addition, ordered Mr Clack to pay the costs of the proceeding before that court: Clack v Command Recruitment Group Pty Ltd (No 2) [2010] FMCA 198. Those costs have not been taxed as yet. The untaxed costs incurred by the successful respondent to the proceeding below have been estimated to be in the order of some $103,000. In this regard it should be noted that the proceeding below before the Federal Magistrates Court involved a five day hearing, and apparently extensive written submissions on both liability and costs.
5 The court has a wide power under s 56 of the Federal Court of Australia Act 1976 (Cth) to order security for costs. The discretion to order security to be provided, as noted in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1, is broad and unfettered but must be exercised judicially.
6 The respondent to the appeal, being the applicant on the notice of motion seeking security, acknowledged that O 52 r 20 of the Federal Court Rules provides that no security for costs is required unless a Court or a Judge so directs. In Paton v Campbell Capital Limited [1993] FCA 449 this was described as placing "something of an onus" on the party seeking the order to satisfy the court that such an order should properly be made. Accordingly, the respondent to the appeal accepted that it was his task to satisfy me that the discretion would be exercised properly if an order for security were to be made.
7 There was no dispute between the parties about the relevant principles. The parties agreed that the question of security in relation to an appeal is to be determined differently from such an application at first instance. The respondent identified a series of decisions, with which the appellant did not take issue, making this difference in approach clear.
8 In Moore v Macks [2007] FCA 509 at [20] Mansfield J referred with approval to the decision in Cowell v Taylor (1885) 31 Ch D 34 at 38. In that case, Bowen LJ said:
The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's courts, and so an insolvent party is not excluded from the courts, but only prevented, if he cannot find security, from dragging his opponent from one court to another.
9 Mansfield J also referred to the decision of Spender J in Skyring v Sweeney [1999] FCA 61 at [6] to the effect that:
Impecuniosity is a factor which can be taken into account as justifying the grant of security. Impecuniosity ought not to be a bar to a person prosecuting at first instance a claim, but the position on appeal seems to me to be fundamentally different. In effect, in the absence of an order for security for costs in the circumstances of this case, Mr Skyring, in effect, is given a free hit, and that seems to me to be intrinsically unfair.
10 In Singh v Secretary, Department of Employment and Workplace Relations [2007] FCA 90, Sundberg J at [11] also cited with approval the decision in Cowell v Taylor and at [12] emphasised that the question of prospects of success on the appeal are especially relevant in the case of an appeal where "the appellant has had his day in court." At [13] and [14] Sundberg J referred to a relevant consideration being the fact that the appellant had not paid any of the costs in the proceeding below, although in the case of Singh those costs had already been taxed.
11 In Tait v Bindal People [2002] FCA 322, Spender J again emphasised that there is a difference in principle in relation to ordering security for costs in a first instance matter and on appeal. At [3] his Honour said that:
The difference is that, at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust.
12 At [4] Spender J said:
In a sense, it would be giving to a person who has been on the receiving end so to speak of a determination by the courts a free hit at great cost to the other party in the appeal proceedings.
13 In Soh v Commonwealth of Australia [2008] FCA 1524, at [10], Moore J identified six factors relevant to the decision whether or not security for costs should be awarded, namely (i) the prospects of success, (ii) the quantum of risk that a costs order will not be satisfied, (iii) whether the making of a costs order would be oppressive in that it would stifle a reasonably arguable claim, (iv) whether any impecuniosity of the party from whom security is sought arises out of the conduct complained of, (v) whether there are aspects of public interest which weigh in the balance against such an order, and (vi) whether there are any particular discretionary matters peculiar to the circumstances of the case. Consistent with the decisions to which I have referred, at [11] in Soh, Moore J also referred to the observations of Spender J in Tait v Bindal People.
14 As I have said, there is no dispute that those are the relevant principles which I should apply in this case. As between the parties the real question turns on the proper characterisation of the facts.
15 In respect of the facts I have two affidavits. First, an affidavit from Christine Louise Perry, the solicitor for the respondent. Second, an affidavit from the appellant, Darren Clack.
16 Ms Perry's affidavit discloses the following facts of relevance: - (i) the appellant is in Australia on what is known as a 457 temporary business visa, (ii) property searches disclose that the appellant does not hold title to any real estate, at least in the states of New South Wales, Queensland and Western Australia (and, in this regard I should note that there is no suggestion in Mr clack's affidavit of ownership of real estate in Australia), (iii) the estimate of the cost of the proceeding before the Federal Magistrates Court is in the order of some $103,000, and (iv) the estimate of the costs of this appeal is in the order of $45,265, this forming the basis of the respondent's claim for security in the sum of $33,000.
17 Mr Clack, in his affidavit, denied that he was impecunious and unable to cover the respondent's reasonable final costs if ordered to do so. In his evidence, about which he was not cross-examined, Mr Clack said that he has a current savings account in Australia with a balance as at 11 May 2010 of some $15,000. Mr Clack also said that he is a 50 per cent owner of a property in the United Kingdom, which is currently valued at about $765,000. He has a long-term savings account, which I infer to be in the United Kingdom, with a balance of approximately $27,500 plus a minor share portfolio worth about $6000. He is employed and sponsored by Entity Solutions Pty Limited. He says his only personal debt is a credit card debt of approximately $7800. As to matters concerning a debt of a company with which he is involved, Mr Clack says that the repayment obligation is that of the company and not his own personal repayment obligation. He says he has been ordinarily resident in Australia for approximately 10 years and is living in premises under a long-term residential lease.
18 The respondent said that the appellant appears to be impecunious, in the sense that he owns no real estate and has no assets of substance in the jurisdiction. The respondent pointed out that the appellant in fact says in a paragraph of his affidavit that to pay the cost below would cause him significant financial hardship, although no claim is made that the making of an order for security would stifle the appeal. Further, the respondent noted that the appellant is a temporary resident. He lives in rented accommodation. He has given evidence of a single day's bank balance, which does not "show current ability to meet a costs order, let alone prospective ability to do so" (see ABB Service v Piermont Light Rail [2006] NSWSC 187 at [17]). The respondent said that Mr Clack has not provided a bank statement over any period longer than one day. Additionally, although Mr Clack refers to his assets in the United Kingdom, there is no primary source document supporting that material. Again, the respondent noted that Mr Clack has not brought evidence of payslips, tax returns, group certificates and, indeed, nothing but the one day bank balance.
19 According to the respondent, even if Mr Clack has at his disposal the funds to which he refers, he would nevertheless be unable on those figures - that is leaving aside the United Kingdom property - to meet what must be his own costs of his lawyer's below, let alone the respondent's costs of below, let alone his own costs of an appeal and the respondent's costs of an appeal.
20 The respondent said that insofar as Mr Clack has given evidence of his assets, they consist of real property outside the jurisdiction. The respondent referred to the risk that, if subject to an adverse costs order, the appellant may return to the United Kingdom; further, that the respondent ought not to be put to the costs of seeking to register a costs judgment in the United Kingdom where apparently the bulk of the appellant's assets lie.
21 For these reasons the respondent submitted that I should have no confidence that the appellant has any financial substance, at least in Australia, and therefore in practical terms he is impecunious.
22 In terms of the six factors referred to by Moore J in Soh, the appellant submitted that four in particular are relevant.
23 As to prospects of success, grounds of appeal 6, 7 and 13 raise questions of the application of the correct legal test. The appellant also noted that insofar as the appeal involves factual findings, this Court is in as good a position as the trial court.
24 It seems to me that the authorities suggest that there is a relatively low threshold of arguability in relation to prospects of success (see Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2008] FCA 1867 at [40] per Greenwood J). I am not in a position to conclude that the appeal has such poor prospects of success that this should be a material factor weighing in favour of the respondent seeking an order for security.
25 As noted, the appellant acknowledged that he did not claim that the making of an order for security would stifle the proceedings. The appellant, however, did refer to the circumstances of the case arising in the human rights jurisdiction of the Federal Magistrates Court. Given the protective nature of this jurisdiction, the appellant submitted, costs do not always follow the event and, accordingly, that circumstance should be taken into account.
26 The real issue on which the appellant focussed, in addition to these matters, is the second factor referred to by Moore J in [10] of Soh. Namely, the quantum of risk that a costs order will not be satisfied. The appellant emphasised that the onus was on the respondent to establish that risk. The appellant is ordinarily resident in Australia. He has been so resident for 10 years. He is living in Australia in rented accommodation under a long-term residential lease. The appellant said it could not be concluded that he is any form of a flight risk. In the circumstances of the evidence in this case, the question the appellant posed, in effect, was this: why would it not be more likely that the appellant would access his assets in the United Kingdom in the event of an adverse costs order, rather than seek to avoid the payment of costs? In substance the appellant submitted that I would not be satisfied that he is impecunious, or that there is a real risk that he would be unable to meet the costs of the appeal, albeit accepting that I can take into account the fact that the costs of the five day hearing below remain unpaid.
27 Insofar as the respondent relied on Mr Collins (the respondent) being an individual and not a corporation I accept the appellant's position that I should not give any weight to that factor.
28 Otherwise, in this case, it seems to me that I should give weight to the principle that the position on appeal is different from a proceeding at first instance. Mr Clack, the appellant, has had the benefit of a full hearing before the Federal Magistrates Court. He was unsuccessful in respect of all grounds. A costs order was made against him. Those unpaid costs remain untaxed, but are nevertheless, having regard to the fact that there was a five day hearing before the Federal Magistrates Court, likely to be substantial. Mr Clack now seeks to appeal to this court, which is his right. However, in so doing, the respondent has said that Mr Clack has no substantial assets in Australia. Mr Clack's evidence in response discloses that this, in fact, the case. He has produced a one day record of a savings account in Australia showing a balance of some $15,000 and acknowledged a personal credit card debt of about $7800. Even though he is employed in Australia, those two figures seem to represent the balance of his assets in Australia.
29 True it is that Mr Clack has, or refers to, assets in the United Kingdom. However, the evidence of these assets is not particularly persuasive, in the sense that it is not supported by any primary documentary material. Nor, other than the bald statement that these assets exist, is any information provided, in Mr Clack's affidavit or otherwise, as to what steps he might be or would be willing to take to ensure that those assets would be available for satisfaction of a costs order should one be made in respect of the appeal. Nor, indeed, is there any information of the steps, time or cost that would be incurred by the respondent if the respondent wished to register a judgment and enforce a costs order on the appeal against Mr Clack in the United Kingdom.
30 The information in Ms Perry's affidavit is thus sufficient to discharge the onus to which the respondent was subject. In my view the information in Mr Clack's affidavit does nothing more than confirm that there is a substantial risk that if a costs order is made in favour of the respondent on the appeal, Mr Clack will not be in a position to meet that costs order.
31 In circumstances where Mr Clack has already had his day in court and been wholly unsuccessful, it is intrinsically unfair that he be permitted to pursue the appeal while placing the respondent at risk that any costs order will not ultimately be paid. This is a clear example of the "free hit" to which Spender J referred in Tait v Bindal People, which weighs in favour of the making of an order for security for costs.
32 I do not think that the circumstances to which the appellant has referred, having regard to the nature of the Federal Magistrates Court's jurisdiction, or otherwise, can lead to any different conclusion on the evidence before me in this case. Accordingly, I am satisfied that the interests of justice require the making of an order for security in the respondent's favour. The question is then one of quantum.
33 Ms Perry's estimate is of total costs of about $45,265 leading to the seeking of security in the sum of $33,000.
34 The appellant pointed out that the estimate of cost provided to the respondent himself involved a range of between about 31,000 to $41,000 with the consequence that the estimate of $45,000 is outside the highest end of the range identified. I accept that point and having regard to the estimate of costs I consider that the quantum of security should be slightly less than that which is sought, namely, $30,000. Accordingly, I propose to so order.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.