Goo v Kim

1. The respondent's interlocutory application for security for costs dated 24 October 2022 be dismissed (interlocutory application).
2. Subject to the filing and service by either party of an application for a special or alternative costs order by 4.30 pm on Friday, 27 January 2023, the respondent pay the costs of the appellant of and incidental to the hearing of the interlocutory application on Monday, 12 December 2022.
3. The matter be listed for a case management hearing at 9.30 am on Friday 3 February 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 By an interlocutory application dated 24 October 2022, the respondent, Mr Jay Koo Kim, seeks an order for security for costs against the appellant, Mr Seoung Jin Goo in the sum of $60,000. 2 The appellant is an undischarged bankrupt. He has filed a notice of appeal against a sequestration order made on 12 August 2022 by the primary judge in the Federal Circuit and Family Court of Australia (Division 2) against the estate of the appellant. 3 The application for security for costs is supported by an affidavit of Mr Stefan Psaltis, the solicitor for the respondent, sworn on 24 October 2022. Mr Psaltis annexes to his affidavit a copy of an estimate that he has made of the future costs that the respondent will incur in the appeal. His estimate is that the future costs of the respondent in the appeal would be $67,650. 4 The appellant relies on an affidavit that he swore on 22 November 2022 in opposition to the application for security for costs. The appellant annexes copies of correspondence between the parties' solicitors and draft submissions for the appeal that he intends to rely upon. 5 The principles governing an application for security for costs are well established and not in dispute. The Court has power pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) to make an order for the provision of security for costs and to stay proceedings until the security is provided. Rule 36.09 of the Federal Court Rules 2011 (Cth) also provides for applications for security for costs. The Court's discretion is unfettered but must be exercised judicially, and each case will depend on its particular circumstances: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1, 3-4 (Sheppard, Morling and Neaves JJ). 6 The relevant considerations that are to be taken into account in a security for costs application were stated by Emmett J in Dye v Commonwealth Securities Ltd [2012] FCA 992 (Dye) at [26] to include the following matters: (a) the prospects of success for the appeals; (b) the risk that an order for costs will not be satisfied; (c) whether the making of an order for security would be oppressive insofar as it would stifle a reasonably arguable claim; (d) whether impecuniosity of an appellant arises out of the conduct that is the subject of complaint in the relevant proceeding; (e) whether there are any aspects of public interest that weigh in the balance against granting security; and (f) whether there are any other particular discretionary matters peculiar to the circumstances of the case. 7 The stultification of proceedings brought by an individual litigant is a relevant consideration weighing against an order requiring the provision of security for costs, but is not determinative, particularly in the context of an application for security for costs of an appeal: Moore v Macks [2007] FCA 509 at [20] (Mansfield J); Dye at [27]-[28] (Emmett J); Nyoni v Pharmacy Board of Australia [2018] FCA 1313 (Nyoni) at [22], [25] (White J). 8 In Dye, Emmett J provided the following explanation of the approach generally taken to applications for the security for costs of an appeal (at [27]): 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. 9 The prospects of success may be particularly relevant to an application for security for the costs of an appeal: McCardle v Lyons [2019] FCA 1554 (McCardle) at [37] (Wheelahan J) citing Singh v Secretary, Department of Employment and Workplace Relations [2007] FCA 90 at [12] (Sundberg J). 10 In Nyoni, the Court ordered a bankrupt appellant to provide security for costs where it determined that it should proceed on the basis that it was not able to conclude that the appeal had no prospects of success, nor that the appeal had strong prospects of success (at [19]), and it was satisfied that an order for security would stultify the appeal (at [21]). The Court concluded that an order for security for costs was appropriate given the "present uncertainty" concerning the appellant's prospects of success on the appeal, the fact that it could not be satisfied that the appellant's impecuniosity was attributable to the respondents and the extent to which the appellant had brought proceedings in the Courts in an unmeritorious way and seemingly without satisfying adverse costs orders made against him (at [39]). 11 Security for costs have also been ordered against impecunious appellants in circumstances where the Court has concluded that the grounds of appeal are little more than a re-ventilation of matters that have been raised before a primary judge and already decided: Beames v Rigby [2002] FCA 1095 at [4] (Dowsett J); Mead v Mead [2010] FCA 288 at [10] (Jacobson J). 12 In McCardle, the Court declined to order that a bankrupt appellant provide security for costs for an application for leave to appeal even in the absence of any direct evidence that an order for security for costs would stultify the appeal (at [45]). The Court did not accept that the prospects for success of an appeal were poor and was satisfied that the primary judge had not properly considered evidence on which the appellant had relied (at [38]). The view that the Court took of the merits of the appeal and the fact that the appellant did not have a hearing of her claim in the Federal Circuit Court because the primary judge dismissed the proceedings upon an application by the respondents for summary judgment, ultimately outweighed any countervailing considerations (at [45]). 13 In Allison v Murphy [2021] FCA 1551 (Downes J), the Court dismissed an application for security for costs against a bankrupt appellant where it was satisfied that there was a real risk that the proceedings would be stultified (at [27]), it did not accept the respondent's submission that the appellant's prospects for success were "hopeless" (at [32] and it considered that there was at least a reasonable prospect that an absence of evidence finding by the primary judge was an error (at [34]) and a ground of appeal raised a substantive point of law (at [36]).