Should an order for security of costs be made?
40 A consideration of all relevant matters leads me to conclude that it would be just and reasonable to make an order for security of costs.
41 I turn first to the prospects of success of the appeal.
42 Rule 36.01(2)(c) of the Federal Court Rules 2011 (Cth) (formerly O 52 r 13(2)(b) of the Federal Court Rules 1979 (Cth)) requires that a notice of appeal state "briefly but specifically, the grounds relied on in support of the appeal". The rule applies to all litigants. While the task of drawing a notice of appeal may be harder for those who have not had legal assistance, as Flick J observed in SZJJC v Minister for Immigration and Citizenship [2008] FCA 614 at [15], "an unrepresented party has no licence to not comply…".
43 It is apparent that that the notice of appeal in the present case was drafted without the assistance of a lawyer. As the Commonwealth submitted, the grounds of appeal are difficult to understand. They lack the necessary specificity demanded by the rules. They read (without alteration):
1. failure to afford Dr Guy N Elston procedural fairness
2. the Judgment contains errors of fact
3. absence of ruling on common law exceptions to S55 of the Property Law Act (Qld), including unjust enrichment, trust and estoppel
4. absence of ruling on defamation
5. the judgment failed to consider the Shield of Crown Test
6. the judgment failed to consider the legislative intention of Parliament (Federal Test)
44 The first ground is ambiguous. It does not indicate who it was who failed to afford Dr Elston procedural fairness: the Commonwealth (as considered below), the primary judge, or both. During the hearing of the interlocutory application, however, Dr Elston made it clear that he was complaining that the primary judge had denied him procedural fairness and it appeared that he also took issue with his Honour's decision that the Commonwealth was not obliged to afford him procedural fairness.
45 Dr Elston voiced his disagreement with the primary judge's finding that the decision to suspend payments was made under the deed of agreement. In any case, he asserted that the deed of agreement contained "a requirement to apply natural justice". But his argument in support was undeveloped and unpersuasive.
46 The basis of his contention in relation to the primary judge is that his Honour restricted the trial to the four issues identified in the September orders and failed to consider submissions relating to the other issues which had been raised by the writ of summons. Dr Elston wishes to argue on the appeal that this was procedurally unfair because Logan J's orders did not state that the trial was to proceed "solely" on the four issues, and did not purport to confine the affidavit evidence to the four issues. Dr Elston also submitted that Logan J made other remarks at the hearing in September which gave the impression that Dr Elston would have the opportunity to present evidence going beyond the four issues. Dr Elston submitted that, despite the fact that all his statements of claim were struck out, pleadings dispensed with, and an order made that the matter proceed to trial in respect of the four issues, the writ remained on foot and that, although the statement of claim endorsed on the writ was struck out, there was still the matter of relief and the relief sought damages, amongst other things, for defamation.
47 I have some difficulties with these submissions, not least because any relief sought in the writ would relate to the causes of action pleaded in statement of claim and, once the statement of claim (in all its incarnations) was struck out, pleadings dispensed with and the four issues for trial identified, any relief could only be granted in relation to a cause of action established by one or more of those issues.
48 It is also difficult to see how Dr Elston could have formed the impression that the trial was not limited to the four issues.
49 Dr Elston drew attention, amongst other things, to Logan J's admonition to him:
[T]here's no need to address me at length about that today, as opposed to at a trial. You can take it that I'm at least persuaded that there's a case - an arguable case that is such that I shouldn't dismiss your whole proceeding summarily.
50 But these remarks were taken out of context.
51 In the same exchange his Honour indicated that he was minded to "order that the case proceed to trial on [the four] issues, but those alone, and otherwise just strike out the statement of claim so that there's no extra issues for trial than those four issues" (emphasis added). His Honour then outlined the four issues. At the conclusion of the hearing his Honour gave some brief oral reasons for his decision. He said he would elaborate on those reasons in the afternoon if the parties wanted him to but neither party made such a request. In those reasons his Honour said that he was not satisfied that the pleadings pleaded material facts giving rise to causes of action and damages in respect of any pleaded causes of action, contrary to the rules of Court. He went on to say:
I am further not persuaded that there is any real chance - any real prospect of success in respect of the cause of action in defamation if indeed one be pleaded at all in the further amended statement of claim or in respect of a breach of contract grounded upon an alleged breach of clause 10 in relation to a refusal to agree to a transfer of the award in question. I am also not persuaded that any of the other causes of action or matters pleaded - and any of the other matters pleaded give rise to a cause of action other than that which I have identified in the orders that I have pronounced, and I am also persuaded that the interests of justice are best served by having the matter proceed to trial on those issues rather than to impose upon Dr Elston the burden of drawing a statement of claim which I am not persuaded he would be able to do in a way that would be compliant.
(Emphasis added.)
52 Dr Elston did not apply for leave to appeal from Logan J's September orders and he made no complaint that Logan J denied him procedural fairness. On the contrary, his case is that Logan J's orders envisaged that he be able to litigate all his grievances.
53 For all these reasons the first ground appears weak at best.
54 As for the second ground, no error of fact is identified. At the hearing, Dr Elston said only that the "errors of fact" go to the question of whether the Commonwealth's decision to suspend was made under the deed of agreement. He said that there was an arguable case that it was made under the National Health and Medical Research Act 1992 (Cth) because the letter advising the university of the decision referred to provisions of a deed which did not apply to him.
55 Ground 3 is difficult to fathom. The primary judge did say that, even though s 55 of the Property Law Act did not apply, it was arguable that if the Commonwealth was obliged to afford Dr Elston natural justice under the deed of agreement such an obligation was enforceable under the principle in Trident General Insurance Co Limited v McNiece Bros Proprietary Limited (1997) 165 CLR 107, by which I understand him to mean at the suit of Dr Elston as a third party beneficiary of the agreement. Dr Elston submitted that his Honour cited Trident but did not apply it. Yet, whether or not it should be applied depended on whether there was an obligation in the first place. Once his Honour decided there was no such obligation, there was no occasion to apply the principle. In any event, his Honour found that, even if the principle in Trident applied, and even if the Commonwealth had failed to afford Dr Elston procedural fairness, he would not be entitled to damages; his only possible remedies would be an order for specific performance or an injunction.
56 Unless there is merit in the first ground, the fourth ground is bound to fail. Dr Elston maintains that defamation was a live issue at trial but, as the Commonwealth put it in its submissions, there was "no occasion to make any ruling on defamation" because it was not one of the issues that Logan J directed proceed to trial.
57 The fifth and sixth grounds are incomprehensible. Dr Elston did not offer any explanation either in his written or oral submissions.
58 I now turn to the other considerations.
59 Dr Elston does not deny the allegation that he is impecunious and the transcript of the directions hearing in April this year tends to bear out the Commonwealth's submission in this regard. The transcript also shows that Dr Elston was toying with the idea of filing for bankruptcy. On his own account he has not had a salary since September 2006 and he informed Logan J on 9 September 2013 that at that time he had no source of income and was reliant on "the good will of [his] friends and family". The evidence also shows that Dr Elston does not own any real estate in Queensland.
60 But the evidence in Dr Elston's most recent affidavit concerning the stop placed on his cheque account described this account as his only cheque account, not his only bank account, and there is no evidence about how much money is in the cheque account. Furthermore, there is no evidence to indicate that he does not own assets outside Queensland.
61 Still, there is at least a prima facie case that Dr Elston is impecunious and no evidence to indicate that Dr Elston has the capacity to meet any costs order that might be made against him on the appeal (whether from his own resources or otherwise). I am certainly persuaded that there is a substantial risk that an order for costs in the appeal will not be satisfied.
62 While in general "poverty is no bar to a litigant" (Cowell v Taylor (1885) 31 Ch D 34 at 38), it is well accepted that there is an exception in the case of appeals. Spender J explained in Tait v Bindal People [2002] FCA 322 at [3]-[4]:
3 …The difference is that, at the appellate (scil.) 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.
4 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 …
63 To paraphrase what Jagot J said in Clack v Collins (No 1) [2010] FCA 513 at [31], in circumstances where Dr Elston has already had his day in court and been wholly unsuccessful, it is intrinsically unfair that he be permitted to pursue his appeal while placing the Commonwealth at risk that any costs order it may recover will not ultimately be paid.
64 Having regard to the failure of the notice of appeal to identify with precision or particularity any arguable ground of appeal and my preliminary assessment of the merits of the first ground, I am satisfied that it would not be oppressive to require security. I do not consider at this point in time that the making of an order for security would stifle a reasonably arguable claim.
65 Despite Dr Elston's plea to the contrary, there is no reason to believe that Dr Elston's apparent impecuniosity arises out of the suspension of the award payments by the Commonwealth. Rather, his impecuniosity appears to have been caused entirely by the university's decision first, to suspend him, then to terminate his employment. Dr Elston intimated in his affidavit of 16 February 2012 filed in the High Court and read on this application that he had not received a salary since the Commonwealth suspended payments to the university. But the Commonwealth's decision to suspend the payment of the award monies followed the university's decision to suspend Dr Elston without pay, not vice versa.
66 Dr Elston also stated that before the Commonwealth's decision he had applied for and received more than $4 million in salary and research support to fund his various research projects (which he purportedly detailed in the affidavit) but that since that time he applied for more than $14 million in research funding and had received no support. These figures are lower than the figures mentioned in his letter to Clayton Utz of 13 June 2014 but nothing turns on this.
67 Yet, the primary judge found (at [49]-[61]) that there was no causal connection between the failure to obtain research funding and the Commonwealth's decision to suspend payments of the award. In particular, his Honour said at [61]:
The evidence does not establish that the NHMRC refused to recommend any of Dr Elston's applications for funding to the Minister on the basis of any belief that allegations of research misconduct had been made against Dr Elston. In addition, the evidence does not establish that the refusal of his applications for funding was connected with the suspension of payments to the University.
68 This finding is not challenged in the notice of appeal (at least not in terms) and Dr Elston did not directly submit that it was wrong.
69 There are no discretionary considerations weighing in Dr Elston's favour. Dr Elston made an eloquent plea that he had been the victim of a grave injustice, insinuating that the university's allegations of theft and misappropriation were trumped up as retribution for a formal complaint he had made to the pro vice-chancellor about the administration of Commonwealth funds under the NHMRC researcher scheme. He submitted that the Criminal and Misconduct Commission ("CMC") cleared him and found that he was acting in accordance with the terms of agreement but that the university ignored the CMC's findings, conducted its own internal investigation and found him guilty of misconduct. The problem with these submissions is that there was no evidence to support them, none of the behaviour involved the Commonwealth, and, in any event, it has nothing to do with the appeal.
70 As for the question of public interest considerations, Dr Elston referred to the importance of medical research but that is beside the point. Dr Elston also submitted that what happened to him could happen to another award recipient and asked rhetorically, "[w]ould it not be a matter of public interest that the National Health and Medical Research Council or the Commonwealth of Australia administer … complaints with due process affording natural justice …?". I have taken this into account but in my opinion it does not outweigh the various other considerations that tell in favour of a grant of security.
71 I am satisfied that it is in the interests of justice to make such an order.
72 I would add that I reject Dr Elston's complaint that the Commonwealth breaches its obligations as a model litigant by pursuing its application for security for costs. Nothing in the Legal Services Directions precludes the Commonwealth from doing so. The Commonwealth's status as a model litigant "influences the way in which the Commonwealth conducts litigation, it does not impinge the Commonwealth's ability to enforce its substantive rights": Wodrow v Commonwealth of Australia (2003) 129 FCR 182 at [42] (Stone J).