Concerned Citizens of Canberra Inc v Chief Planning Executive

5. In her Honour's previous interlocutory decision, Sidis AJ dealt with a number of different interlocutory issues: see Concerned Citizens of Canberra Inc v Chief Planning Executive [2013] ACTSC 50. One of the issues was security for costs. The defendant, at that stage, estimated the costs of the action to be $39,000 and sought security of $25,000. The evidence disclosed at that stage that the applicant had a membership of six persons and assets of approximately $2,000. Her Honour relied upon the categorisation of Young JA in Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; [2010] 172 LGERA 157 at [33]- [34]. Her Honour did not consider that the plaintiff's claim to be acting in the public interest was sufficiently strong to deny the defendant an order for security for costs in circumstances where it was otherwise appropriate.

6. As I have said, the security was paid and, subsequently, on 23 August 2013, the proceedings were listed for hearing. They were listed for hearing on 3 March 2014, notwithstanding that there were substantially earlier dates in 2013 where the matter might have been heard and determined. It is notable that the case might have been heard, if not decided, prior to the date when the defendant chose to reagitate the issue of security for costs by its letter on 5 December 2013, had it not been for the collective desire of the parties to have the matter listed on a date where both of their preferred counsel were available. In the context of a case for judicial review, which had been commenced in August 2012, I found this approach somewhat surprising.

7. In my view, judicial review proceedings should be prepared promptly and heard and decided by the Court as soon as possible. The somewhat leisurely approach that has been taken or acquiesced in by the parties in this case should not be understood as an example of how judicial review applications should proceed. It is not clear on the material before me whether the unnecessary delay in having the matter listed for hearing has increased the overall cost of the litigation.

8. The evidence in support of the current application is an affidavit of Pamela Mathie. That affidavit annexes a copy of the letter dated 5 December 2013, which made the request for additional security. The letter seeks from the plaintiff a further $45,000 in security, which represents, when combined with the $25,000 already paid into court, approximately 60 per cent of the defendant's estimated actual and anticipated costs of the proceedings.

9. The affidavit also provides a breakdown of how the past and estimated future costs have been assessed for the purposes of the request for additional security. Notwithstanding the terms of the letter, the oral evidence which I allowed to be led from Ms Mathie discloses that the estimate was of total costs rather than costs recoverable on a party and party basis. It is only by means of the application being in effect, for 60 per cent of that total, that the difference between total costs and costs recoverable on a party and party basis is taken into account.

10. The affidavit of Mr Ross, the president of the plaintiff, dated 10 February 2014, indicates that the plaintiff is a not-for-profit organisation with 10 members and a bank balance of $3,389 and no other substantive assets. The affidavit states his opinion that the most likely effect of making the further security of costs, as sought by the defendant, would be that the plaintiff would be forced to discontinue the present litigation, the hearing date would be abandoned and the plaintiff would have wasted its efforts and legal costs.

11. As to its legal costs, the evidence was that the plaintiff has been billed $45,000 on 11 August 2013 and has incurred approximately another $30,000 as work in progress by the plaintiff's solicitor and disbursements. The affidavit also includes a paragraph which was not read by counsel for the plaintiff but tendered by counsel for the defendant, that indicates that if, despite the plaintiff's submissions to the contrary, the Court does order for the provision of further security, he could provide an undertaking to pay the amount and he discloses that he has net assets of approximately $336,000.

12. The submission of the defendant was that the threshold for making a further order has been met and that it is appropriate as a matter of discretion to make such an order because:

(a) the defendant's initial estimate was modest and based on the best case scenario;

(b) the conduct of the proceedings has necessarily required significant additional costs beyond those which were estimated for the purposes of the earlier application; and

(c) the total sought is still a reasonably modest amount for proceedings of this scale and duration.

13. The defendant submits that its written submissions made it clear that the estimate of costs would need to be revised upwards if expert evidence was put on and that the issue of a possible revision upwards of its costs was also raised before Sidis AJ. The defendant points to the expert evidence that has been filed, namely three affidavits of expert witnesses, which have required the defendant to brief an expert to prepare evidence in response. For a variety of obvious reasons, the expert material increases the amount of preparation that is necessary in the length and complexity of the hearing.

14. The defendant also points to a number of mentions or directions hearings which were not accommodated in the original estimate. The defendant points to the procedural history of the proceedings, which certainly indicate, to me, that so far as the plaintiff is concerned, it has not prosecuted this matter with the degree of discipline which should be expected of litigants in this Court.

15. The defendant submits, as a consequence of those matters, that the order for increased security is reasonable. The plaintiff's submission, on the other hand, emphasises the fact that the plaintiff has incurred very substantial legal costs subsequent to the provision of the security on 30 April 2013 and was not on notice until 5 December 2013 that additional security would be sought. In those circumstances, the plaintiff submits it would be unfair and inappropriate to make a substantial order for security for costs so close to the hearing date.

16. Although written submissions provided prior to the hearing made an alternative submission that further security could be provided by Mr Ross, no such submission was made at the hearing.

17. In my view, the defendant has clearly established the threshold for making of an order for security costs, namely the impecuniosity of the plaintiff. The issue is, therefore, one of discretion whether or not such an order should be made. It is not possible for me to assess, based on my present understanding of the case, whether or not the plaintiff's application appears strong or weak. The grounds of challenge appear to be relatively orthodox but expressed at a degree of vagueness and generality, which is unhelpful to the defendant in an application such as this.

18. Unfortunately, notwithstanding the orders of the Court, the plaintiff has failed to file its written submissions for the substantive hearing. Had those written submissions been filed, I would have been in a better position to understand the nature of the case brought by the plaintiff and would have taken that into account on the security for costs application. The generality of the pleadings, the failure to comply with the direction about the filing of written submissions and the procedural history of the matter tend to undermine my confidence in the manner in which the matter has been prosecuted and weaken any claim that the plaintiff has to acting in the public interest.

19. In my view, the key factor relevant to the present application is the fact that, between April and December 2013, the plaintiff incurred substantial additional costs which were committed to the conduct of the litigation without knowledge that the defendant would be seeking additional security for costs beyond the security which had already been provided.

20. I do not accept the submission that, by reason of the content of the written or oral submissions made to Sidis AJ, but without any further formal notice, the plaintiff was presumed to be preparing the case on the basis that, at any moment up to the commencement of the trial, the defendant might make another application for substantial additional security, which, if not satisfied, might lead to the proceedings being stayed or dismissed.

21. The authorities are clear that the capacity to seek security for costs from an impecunious plaintiff is a powerful tool which must be exercised promptly and in a manner which does not cause the affected party the injustice of investing substantial resources in the prosecution of a matter in relation to which security is subsequently sought. The authorities generally deal with initial applications for security but, in my view, the principles are equally applicable to a subsequent application for security which is not very clearly flagged at the time of the initial application or is not very clearly raised immediately after the initial security has been provided.

22. In Buckley v Bennell Design & Constructions Pty Limited (1974) 1 ACLR 301 at 309, President Moffitt expressed it in this way:

The right to seek security for costs and to stay proceedings, with the possible result that a claim for damages is frustrated, is a powerful weapon. Therefore, the litigant who seeks to use it against his opponent is at risk of not having it available, unless the application is made and persevered with in circumstances involving the least oppression of his opponent. The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money toward litigating its claim.

The decision in Buckley was applied by Black J in Re Colorado Products Pty Ltd (in prov liq) [2013] NSWSC 1590.

23. In Smail v Burton; Re Insurance Associates Pty Ltd (In Liquidation) [1975] VicRp 76; [1975] VR 776 at 777, Gillard J, with whom Newton J agreed, said:

it is well established that an application for security of costs should be made promptly. If an appellant has expended sums of money preparing the appeal for hearing and all the matters necessary to be performed have already been performed and the appeal is ready for hearing, it would be patently unjust to permit a respondent who stood by and allowed that work to be done to come to court and to ask for security after such expenses have been incurred. Accordingly, it is well established by authority that applications for security of costs should be made promptly and before considerable expense is incurred by the appellant.

Master Newnes made comments to similar effect in Ratcliffe v Ratcliffe [2003] WASC 79.

24. In the recent decision of Farmwide Pty Ltd v Commonwealth of Australia [2013] ACTSC 74, Master Harper dealt with an application for security for costs. He said at paragraph 36:

36. There is ample authority for the longstanding principle that applications for security for costs must be brought promptly. A number of authorities for the proposition were set out by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189 at 197. Bollen J in Commonwealth v Cable Water Skiing (Aust) Ltd (1994) 14 ACSR 760 at 763 quoted with approval from the judgment of Prior J at first instance a passage to the effect that such applications must be made promptly. Costs incurred during the passage of time must not be overlooked. It is a matter of significance if a party incurs costs that would not have been incurred if the application had been made sooner. A question always arises on such applications whether having regard to the length of the delay and the nature of acts done during the interval, a party has been affected so as to cause a balance of justice or injustice in taking one course or another with respect to security for costs. The order of Prior J at first instance to refuse to order security because of delay was upheld on appeal.

25. His Honour referred to decisions expressing similar sentiments in paragraphs 37, 38, 39 of his decision. He continued at paragraph 40:

40. There is some authority for the proposition that a factor militating against ordering security is that the defendant is a large, well-resourced and amply-funded body such as a State, council or major corporation: see for example Jazabas [(2007) [2007] NSWCA 291; 65 ACSR 276] at [75] per McClellan CJ at Common Law; Top Stuff 4 Business Holdings Pty Ltd v Vodafone Pty Ltd (No 2) [2012] FCA 645 at [8] per Rares J, where his Honour suggested that it might be relevant that the quantum of costs would be a relatively insignificant amount for the respondent or defendant. That must be seen as the case here, where the defendant is the Commonwealth.

26. These authorities could be distinguished on the basis that the present case involves an application for further security, rather than a late application for the provision of security. However, just as there is a potential for injustice in permitting an entity to invest time and resources in preparing a case without notice of the requirement to provide security, so too is there potential for injustice where modest security has been ordered and provided, and a late application for security is made shortly prior to the hearing where, following the initial provision of security, time and resources have been devoted by the plaintiff to preparing a matter without being put clearly on notice of the intention of the defendant to seek further security.

27. I also consider that, leaving aside whether or not one embarks on the sort of taxonomy provided by Young JA's decision, it is relevant to take into account the fact that the proceedings are public law proceedings involving a challenge to a town planning decision. While the precise motivations of the plaintiff in the present case have been left, in my view, deliberately obscure in the evidence and the corporate objects of the plaintiff are so general as to give no real indication of what the purpose of the organisation is, it is important to recognise that town planning decisions in the Canberra context are decisions which are, more than in other jurisdictions, matters of public concern and this is not a case where the plaintiff entity has any clear financial motivation in pursuing the challenge to the defendant's decisions.

28. In the context of town planning decisions in the Australian Capital Territory, it is relevant in the exercise of discretion to have regard to those matters and the remarks of Fox J in Kent v Cavanagh (1973) 1 ACTR 43 concerning the importance of ensuring that cost issues do not have an inhibiting effect which hinders access to justice for responsible citizens. In that case, dealing with the question of costs of a substantial interlocutory application, his Honour said:

It seems to me undesirable that responsible citizens with a reasonable grievance who wish to challenge Government action should only be able to do so at risk of paying costs to the Government if they fail. They find themselves opposed to parties who are not personally at risk as to costs and have available to them almost unlimited public funds. The inhibiting effect of the risk of paying costs is excessive and not in the public interest. Once, not so long ago, litigation was more of a luxury than it now is and for the most part only wealthy people could engage in it.

29. Having said that, the evidence does not clearly disclose a number of matters about the way in which the plaintiff has funded the action or any sufficient material about the resources of even the members of the plaintiff or those who stand behind it. The evidence, which was ultimately tendered by the defendant, of Mr Ross's willingness to provide security is, in that regard, significant. Notwithstanding the various factors that tend against an order for further security, the very limited information which is available about the assets of those who stand behind the plaintiff, its clear impecuniosity, the manner in which it has conducted the proceedings and the suspicion that the plaintiff entity was only incorporated as a means of avoiding personal liability for costs are all matters which, on balance, persuade me that some form of additional security should be provided.

30. I consider that the appropriate order is that:

1. The plaintiff provide further security for costs on or before 20 February 2014, procuring an enforceable undertaking by Mr Irwin Ross to the defendant that in the event that a costs order is made in favour of the defendant and against the plaintiff in the proceedings, Mr Ross will pay to the defendant an amount of up to $10,000 of the defendant's costs as agreed or assessed that is not satisfied from the payments made into Court by the plaintiff or otherwise paid by the plaintiff within 40 days of agreement or assessment.

2. In relation to costs, I propose to reserve the question of costs. I do that because, in my view, it will only be possible to determine the appropriate costs order in the light of an assessment of the case as it runs at hearing and as it is determined.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Mossop.

Solicitors for the plaintiff: Snedden Hall & Gallop

Solicitors for the defendant: ACT Government Solicitor