Ezekiel-Hart v Reis

2. BACKGROUND 8 This matter arises in the context of extensive litigation between the appellant and the Council. On 23 November 2023, the respondents filed a creditor's petition seeking a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) against the appellant's estate. By an application electronically lodged at 7.24pm on 26 May 2023 and accepted for filing on 30 May 2023 the appellant sought an order that the bankruptcy notice, upon which the creditor's petition relied, be set aside (the set aside application). 9 On 1 November 2023, the set aside application was heard. On 15 February 2024, a judge of the Federal Circuit and Family Court of Australia (Division 2) (the Circuit Court) dismissed the application: Ezekiel-Hart v Reis [2024] FedCFamC2G 121. The primary judge held that the Circuit Court lacked jurisdiction to consider the appellant's application to set aside the bankruptcy notice because the appellant had failed to apply to set aside the notice after the fixed time for compliance had expired and the Court had no power to extend the time for compliance (applying Derek George Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76 at [48] and Lamb v Sherman [2023] FCAFC 85). Further and in any event, the primary judge stated in obiter that he would have dismissed the application even if it had been filed within the requisite timeframe, finding that all six grounds argued by the appellant would have failed.

3. LEGAL FRAMEWORK 10 Section 56 of the FCA Act relevantly provides that: (1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. … (4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed. 11 Rule 36.09(1) of the FCA Rules provides that: (1) A party may apply to the Court for an order that: (a) the appellant give security for the costs of the appeal, and for the manner, time and terms for the security; and (b) the appeal be stayed until security is given; and (c) if the appellant fails to comply with the order to provide security within the time specified in the order - the appeal be stayed or dismissed. 12 The question whether an order for security for costs either at trial or on appeal should be made turns upon an exercise of discretion having regard to the particular circumstances of the particular case: Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 at [11] (Tamberlain J). In other words, as the appellant submits, that there is no automatic entitlement to an order for security for costs. 13 The principles relevant to the exercise of discretion to award security for costs were recently summarised by Rofe J in Chawk v Callan [2024] 92 at [12]-[13]: The provisions set out above [s 56 of the FCA Act and r 36.09(1) of the FCA Rules] create a broad and unfettered discretion: Lim v Comcare [2016] FCA 1346 at [18] (per Wigney J). The principles applicable to the exercise of this discretion were summarised by O'Bryan J in Mathews v All Options Pty Ltd [2019] FCA 1972 at [13], recently followed in Nugawela v Dudley (Trustee) [2023] FCA 1603 at [13]-[14] (per Jackson J). Relevant matters to be considered include: (a) the prospects of success of the appeal; (b) the likelihood that a costs order will not be satisfied; (c) whether the making of the order would be oppressive in that it would stifle a reasonably arguable appeal; (d) whether the appellant's impecuniosity arises out of the respondent's conduct; and (e) whether there are aspects of public interest which weigh against the making of the order. The central rationale emerging from the cases was encapsulated by Emmett J at [27] in Dye v Commonwealth Securities Ltd [2012] FCA 992: As a general rule, in relation to proceedings at first instance, impecuniosity, and even insolvency, does not mandate that an order for the provision of security for costs should be made. However, that principle does not necessarily apply in relation to an appeal, where the appellant has had the benefit of a decision of a court at first instance. An insolvent party will not be excluded from an appeal, but if he cannot find security, he may be prevented from taking his opponent from one court to another. The feature of an appeal that marks it out from a proceeding at first instance is that there has already been a decision given by the court that heard the matter at first instance. That is to say, the appellant has had his or her day in court and has had an opportunity to present his or her case, and has had a ruling that must be presumed to be correct. Security may not necessarily be ordered if an appeal is brought in good faith and raises substantial questions of law. However, the position will be different where the appeal turns largely on questions of fact and it does not give rise to any important question of law. 14 Another relevant factor to weigh in the balance is whether the application for security for costs has been made promptly: see, eg, Quach v MLC Limited [2022] FCA 586 at [29] and [34] (Cheeseman J). 15 However, as the respondents submit, the general hesitancy to order that an impecunious litigant pay security for costs which might stymie an arguable claim, does not necessarily apply in relation to an appeal where the appellant has already "had their day in court" and has the benefit of a decision at first instance. As Tamberlain J also explained in Cooper at [11]: In relation to an appeal, Courts have given weight to the injustice that might be caused to a successful litigant if the litigant is compelled to contest the matter for a second time without the probability of obtaining the costs if ultimately successful: Cowell v Taylor (1885) 31 Ch D 34 at 38. 16 Finally, in exercising the discretion as to whether or not to make an order for security for costs and associated orders sought by the respondents, the Court is required to have regard to the overarching principle in s 37M of the FCA Act. That section relevantly provides that: (1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible. (2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

4.1 Is this an appropriate case in which to make an order for security for costs? 17 In my view, this is an appropriate case in which to grant an order for security for costs. 18 First, the application for security for costs was made promptly. The notice of appeal was accepted for filing on 23 February 2024. On 29 February 2024, the respondents' solicitors wrote to the appellant requesting his consent to an order that he pay $20,000.00 into Court as security for the payment of costs which may be awarded against him. The letter explained that the respondents considered that it was appropriate for the appellant to provide security for the costs of the appeal for reasons which in due course were largely repeated in their submissions in support of this application. There was no response from the appellant to the letter. On 26 March 2024, the respondents filed their interlocutory application seeking security for costs in the same sum as foreshadowed in the letter. As this timeline demonstrates, it cannot be said that the respondents did not act in a timely manner or that the appellant had been "lulled" into incurring costs on the appeal in ignorance of the present application. 19 Secondly, I agree that the prospects of the appeal succeeding are low. The primary judge held at [17]-[18] that: Mr Ezekiel-Hart did not purport to lodge for filing his application to set aside the bankruptcy notice in a proceeding that had already been commenced. That means that Mr Ezekiel-Hart was required to apply to set aside the bankruptcy notice by "filing" with the Court an application in accordance with Form B2. Mr Ezekiel-Hart, however, did not lodge his application by 4:30 pm on 26 May 2023, being the last day by which he was required to comply with the bankruptcy notice, but at 7:24 pm on that day. That means that, under r 2.05(4)(b) of the [Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules)], the application to set aside the bankruptcy notice Mr Ezekiel-Hart electronically lodged at 7:24 pm on 26 May 2023 is to be taken to have been filed on the next day the (Canberra) Registry was open for business. That day was Tuesday 30 May 2023 because 26 May 2023 was a Friday, and Monday 29 May 2023 was a public holiday in the Australian Capital Territory. It follows, therefore, that Mr Ezekiel-Hart did not apply to the Court to set aside the bankruptcy notice by 26 May 2023, being the last day by which Mr Ezekiel-Hart was required to comply with the bankruptcy notice. This Court, therefore, does not have jurisdiction to extend the time for compliance with the bankruptcy notice and, consequently, does not have jurisdiction to set it aside. For these reasons, Mr Ezekiel-Hart's application to set aside the bankruptcy notice must be dismissed. 20 In determining that the effect of r 2.05(4)(b) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) was that the appellant's set aside application was taken to have been filed out of time, the primary judge applied the decision of the Full Court in Lamb, as his Honour was bound to do. The correctness of that decision is not challenged by the appellant on the appeal. Nor does the notice of appeal challenge any of the factual findings underpinning that finding, including that the appellant was served with the bankruptcy notice on 5 May 2023 and electronically lodged the set aside application for filing at 7:24pm on 26 May 2024. 21 Further, the fact that the construction of r 2.05(4)(b) of the GFL Rules adopted by the Full Court in Lamb might seem harsh from the perspective of a person in the appellant's position does not mean that it leads to arbitrary results which might cast doubt on the correctness of that construction if Lamb were in fact challenged. While also acknowledging that the result may seem harsh, the Full Court in Lamb explained that the rationale for the strict 4.30pm deadline at [39] and [42] was that: The effect of r 2.25 is to put a person who lodges a document electronically in the same position as one who does so physically. That is, lodgement will only be effective during business hours when there is an officer of the Court with authority to accept the document, and, if the officer accepts it, filing occurs in accordance with the deeming provisions in the rule, unless the Rules otherwise provide or the Court orders. For example, ordinarily if a person attends the Registry to present an originating application or a bankruptcy petition for filing, he or she physically hands the document to an officer of the Registry who must accept it and put it on the court file, unless rr 2.26 or 2.27 apply. Those acts are usually synchronous. However, if the person arrives after the Registry has closed for business, the person must either apply to reopen it or must apply to a person, such as a registrar or a judge, with the authority to waive compliance with the Rules for lodging or filing documents, if the person wants to initiate a proceeding in the Court or lodge a document for filing on that day. . . . One reason for this, particularly in bankruptcy matters or where a limitation period is about to expire, is that people need certainty as to whether or not a proceeding has been commenced or, in the language of s 41(6A) of the Bankruptcy Act, "an application has been made to the Court". Applications to the Court are not made in the air. They are made to the Court to invoke regularly its jurisdiction in accordance with the requirements of a statute and relevant rules of Court. It would be absurd to suggest, in the example we have given earlier, that standing outside a closed Registry after business hours is enough to "make" an application to the Court. That is because nobody was at the Registry to receive and accept it or to file it. Hence, the Rules are structured in the way they are, to allow an officer in the Registry to consider whether or not a document lodged electronically or physically should be put on the Court's file or be used to create a Court file to commence a proceeding and thus invoke the jurisdiction of the Court. 22 Also bearing on the merits of the appeal, I have taken into account that orders 4 and 5 of the prayer for relief in the notice of appeal seek orders that the Court make certain findings. Yet, there is no power for the Court to make orders of this kind. Nor could this Court make an order in terms of order 6 of the notice of appeal to set aside a vexatious litigant order made by the ACT Supreme Court. 23 Thirdly, there is no evidence as to the appellant's financial position. In particular, there is no evidence as to whether he is impecunious and would be precluded from pursuing the appeal if the security for costs order sought were made. For example, the appellant did not provide any bank statements, or evidence of employment or lack thereof. The highest that the appellant's material went was merely to assert in his oral outline that: (1) he sought to challenge a decision of the Council relating to him holding a practising certificate as a precondition to him earning an income as a lawyer and not being impecunious; (2) this was consistent with him having no other source of significant income; and (3) he had been bankrupt between 2013 and 2017. 24 Indeed, in his outline of oral submissions, the appellant submitted only that "[t]he awarding of security for costs will have the effect of stifling the proceedings because he is unlikely to be able to meet the requirement for security". The appellant did not submit that he would be unable to meet an order for security for costs in the sum sought. 25 Related to this, while the appellant suggests that the respondents' conduct has led to his financial position, the conduct in question relates to issues about which the appellant has brought a multitude of proceedings in other proceedings. There is no suggestion in the appellant's evidence that the respondents' conduct in serving the bankruptcy notice and defending the set aside application has left the applicant in an impecunious position. As such, the evidence is irrelevant. 26 Fourthly, the evidence of Mr Harper establishes that there is a significant risk that any costs awarded against the appellant will not be satisfied. Specifically, as the respondents submit: During the period 17 March 2009 to the present, Ezekiel-Hart commenced at least 33 proceedings in which one or more of the Council, Reis and the Law Society of the ACT were named as defendants (the Proceedings): Ezekiel-Hart v The Council of the Law Society of the ACT (No 7) [2024] ACTSC 12 (Ezekiel-Hart No. 7), [104]-[319]. Each of the Proceedings has been dismissed: Harper affidavit, [20] - [22]; Ezekiel-Hart (No 7), [104]-[319]. At least 16 costs orders were made against Ezekiel-Hart in the Proceedings (Costs Orders): Harper affidavit, [22]. The respondents have caused some of these Costs Orders to be assessed: Harper affidavit, [23]. The total amount of costs assessed is $246,929.70: Harper affidavit, [23]. No payments have been made by Ezekiel-Hart in reduction of the amount owing under the Costs Orders: Harper affidavit, [24]. 27 In the fifth place, while the grounds of appeal are difficult to understand, they appear only to raise questions of fact, rather than substantive questions of law. There is no compelling public interest in the appeal which might weigh against the making of an order for security for costs. 28 Sixthly, the application for security for costs is made in the context of an appeal by Mr Ezekiel-Hart. As such, the appellant has already had "his day in court" at the trial. Further, the appellant has the benefit of a comprehensive decision by the primary judge, which not only dismissed his application on the jurisdictional ground; it also addressed in the alternative each of the grounds on the basis of which the appellant contended that the bankruptcy notice should be set aside, finding that none of those grounds had any merit. 29 Finally, as the respondents submit, if the matters raised in the Ezekiel-Hart affidavit and his submissions are relevant to the question of whether a sequestration order should be made against Ezekiel-Hart and admissible evidence in support of them is led, then those matters may be raised at the hearing of the Creditor's Petition. 30 Taking all of these matters into account, in my view this is a clear case where it is appropriate to make an order requiring the appellant to pay security for costs.

4.2 Is the amount sought by way of security for costs appropriate? 31 I am satisfied on the basis of the Hill affidavit that the quantum of security sought is fair and appropriate. Mr Hill has 22 years post-admission experience as a solicitor and has been actively involved in the day-to-day running of numerous litigation matters, including appeals. As an aspect of this, he has also regularly provided estimates of costs which his clients are likely to incur in an appeal. 32 Mr Hill estimated a total of $42,500.00 costs likely to be expended in defending the appeal, of which $35,687.50 were estimated as likely to be recoverable on assessment. In reaching his opinion as to likely costs, Mr Hill took into account the fact that because the appellant was unrepresented, some of the tasks which would ordinarily fall to the appellant to undertake would have to be undertaken by the respondent. That is a reasonable assumption. 33 It follows, in my view, that the amount of security sought, namely $20,000.00, is reasonable compared to the costs likely to be incurred by the respondents. It strikes a balance by ensuring that, in the event that the respondents successfully defend the appeal, a significant proportion of their costs could be met in circumstances where it is highly unlikely that a costs order against the appellant would otherwise be met, without requiring payment of a sum by way of security for costs which would be oppressive.

4.3 Ancilliary orders sought 34 With respect to the ancillary orders sought (as set out at [3] above), I clearly have power to stay the appeal pending the provision of security for costs under s 56(4) of the FCA Act and r 36.09(1)(c) of the FCA Rules. I also have power as a single judge to make orders dismissing the appeal for failure to comply with orders requiring payment for security for costs, including by way of a self-executing order as sought by the respondents: Du Bray v ACW [2021] FCAFC 103 at [19] (Jagot, Yates and Colvin JJ). 35 The respondents submit that a self-executing order dismissing the appeal in the event of non-compliance with the order for security for costs after a period of two months is appropriate in this case in order to avoid the need to bring the parties back before the Court and thereby incur further costs. I consider that this is an appropriate case in which to make self-executing orders of the kind sought. I also consider that a period of 28 days within which the appellant is to give security for costs and two months before the self-executing orders dismissing the appeal apply is reasonable in circumstances where the appellant has been on notice that orders in these terms are sought since March this year. In my view, self-executing orders in the terms sought will promote the overarching purpose in s 37M of the FCA Act by minimising further costs in an appeal which is not complex and has low prospects of success. They ensure that the proceedings are disposed of in a timely manner in the event that the order for security for costs is not complied with. 36 Finally, the appellant should pay the respondents' costs of the interlocutory application seeking the orders for security for costs given that he has been wholly unsuccessful in opposing the interlocutory application and was given the opportunity to consent to orders to the effect now granted in February 2024, before the interlocutory application was made. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perry.