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[2012] TASSC 51
General information, not legal advice.
Supreme Court of Tasmania
2012-08-08
Blow J
Original judgment source is linked above.
CITATION: Gunns Limited v Tasmanian Conservation Trust Inc [2012] TASSC 51
APPEALED FROM: Tasmanian Conservation Trust Inc v Gunns Limited
Procedure - Costs - Security for costs - Poverty - Lack of means - Incorporated association - Appeal from exercise of discretion.
Green v CGU Insurance Ltd (2008) 26 ACLR 323; Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105; Maritime Services Board of New South Wales v Citizens Airport Environment Association Inc (1992) 83 LGERA 107; Byron Shire Businesses for the Future Inc v Byron Shire Council (1994) 83 LGERA 59, referred to.
Respondent/Plaintiff: S P Estcourt QC and R J Meredith
Appellant/Defendant:: Shaun McElwaine + Associates
Judgment Number: [2012] TASSC 51
GUNNS LIMITED v TASMANIAN CONSERVATION TRUST INC
1 This is an appeal pursuant to the Supreme Court Civil Procedure Act 1932, s191B, from an order of Holt AsJ dismissing an application for security for costs: Tasmanian Conservation Trust Inc v Gunns Limited [2012] TASSC 18. The appellant, Gunns Limited, proposes to build a pulp mill at an estimated cost of about $2.3 billion. A special Act of Parliament, the Pulp Mill Assessment Act 2007, was passed in relation to the proposed development. On 30 August 2007 a permit called the Pulp Mill Permit came into effect as a result of resolutions of each House of Parliament. That permit authorised Gunns to develop and operate the proposed pulp mill. The respondent to this appeal, Tasmanian Conservation Trust Inc ("TCT Inc"), has commenced an action seeking declaratory relief, hoping to establish that the proposed development cannot lawfully proceed.
2 By its statement of claim, it is seeking relief in the following terms:
"A a declaration that the Pulp Mill Permit which came into effect pursuant to s8(1)(a) of the Pulp Mill Assessment Act 2007 has lapsed as the Project was not substantially commenced before midnight on 30 August 2011 being the end of the period of 4 years commencing on the date on which the Pulp Mill Permit came into force.
For present purposes, I see no need to discuss the legislation referred to in those paragraphs. If declarations are made in the terms sought, it seems that the development will not be able to proceed without new permits and/or new legislation.
3 On 8 February 2012 Gunns applied for an order in the following terms:
"That the plaintiff be required to give security for costs in this proceeding in a sum and within a time to be determined by this Honourable Court and in the event that such security is not given, that this action be stayed."
As far as I know, no submissions were made to the Associate Judge as to the manner, amount or timing of the proposed provision of security for costs.
4 The Associate Judge heard that application in March 2012. On 20 April 2012 he dismissed it, and published written reasons for his decision. Gunns has appealed. Under the Supreme Court Civil Procedure Act, s191B(4), a judge hearing such an appeal has the same jurisdiction and powers as the Full Court. Since the Associate Judge had a discretion to make or refuse the order appealed from, the bases upon which such an appeal can succeed are restricted by the Supreme Court Civil Procedure Act, s45(1). That subsection reads as follows:
"(1) A Full Court, on the hearing of any appeal from any judgment, order, or other determination (whether final or otherwise) of a judge, shall not reverse or vary any adjudication of the judge which is, or purports to be, only the exercise of a discretion which the judge was entitled by law to exercise, unless it appears to the Full Court that -
(a) the judge has, in fact, declined or failed to exercise the discretion;
(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact;
(c) the adjudication is founded wholly or in part on an erroneous finding of fact or an erroneous determination in point of law; or
(d) by reason of further evidence received by the Full Court in exercise of the powers conferred by section 48, or some special circumstance, the adjudication should be reversed or varied."
5 The Associate Judge had the power to order the provision of security for costs both pursuant to the Supreme Court Rules 2000, r828, and in the exercise of an inherent power of the Court: J H Billington Ltd v Billington [1907] 2 KB 106; Merribee Pastoral Industries Pty Ltd v Australian and New Zealand Banking Group Limited [1998] HCA 41; (1998) 193 CLR 502. Rule 828(1)(b) provides as follows:
"(1) The Court or a judge, on the application of a party to proceedings, may order an opposite party to give security for the costs of the party applying for security and that the proceedings against the party applying for security be stayed subject to the provision of security if the opposite party from whom security is sought is a plaintiff, applicant, defendant pursuing a counterclaim or respondent pursuing a cross application and if -
6 TCT Inc is an incorporated association. It was incorporated under the Associations Incorporation Act 1964. It is a corporation for the purposes of r828. If the proceedings commenced by TCT Inc are unsuccessful, it is highly likely that it will be ordered to pay Gunns' costs of those proceedings on a party and party basis: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. The Associate Judge made a finding, not challenged in this appeal, that there was reason to believe that those costs would be in the order of $300,000 to $400,000. His Honour made another finding, also unchallenged, that there was reason to believe that TCT Inc would be unable to pay those costs if unsuccessful. It is common ground that, even if TCT Inc went into liquidation, Gunns would be able to recover part of its costs. However it is likely that, even if TCT Inc did not go into liquidation, Gunns would be unable to recover a substantial part of its costs. The power to order corporations to provide security for costs exists in order that defendants may be protected from that sort of risk when justice so requires.
7 The matters that the Associate Judge took into account in deciding whether or not to make an order for the provision for security for costs included the following:
8 His Honour took the view that the fact that there was reason to believe that TCT Inc would be unable to pay Gunns' costs was a factor to be taken into account, but did not result in a predisposition to order security for costs. He relied on Weily's Quarries v Devine Shipping Pty Ltd [1994] TASSC 76; (1994) 14 ACSR 186, a decision of Zeeman J as to that.
9 The Associate Judge undertook a balancing exercise, weighing up the competing interests of the two parties. The last two paragraphs of his reasons read as follows:
"49 Whether or not security for costs should be ordered, and if so the amount of the security, involves a balancing exercise. I refer to National Institute for Truth Verification v Computer Voice Stress Analyser Pty Ltd [2007] FCA 736, where French J said at [16]:
'Orders requiring the provision of security for costs involve a balancing of the legitimate interests of the applicant, to pursue its claimed entitlement to remedies against wrongs allegedly done to it and the legitimate interests of the respondents that they not be exposed to irrecoverable loss by reason of proceedings which cause them to incur substantial expense but are ultimately unsuccessful against them. It is because the award of security involves a balancing of contending legitimate interests that the amount of the security to be provided is generally not the full amount of estimated costs.'
Purpose of ordering security for costs (ground 1)
10 Ground 1 of the amended grounds of appeal asserts that the Associate Judge "proceeded upon a wrong principle in that he failed to exercise his discretion by reference to the purpose of a security for costs order".
11 In relation to this ground, counsel for Gunns made submissions to me to the effect that his Honour erred in failing to have regard to the fact that the purpose of an order for security for costs was to avoid, to the extent possible, a situation where a party's success in obtaining a costs order is pyrrhic; and also in failing to take into account the fact that TCT Inc did not contend that the making of an order for security for costs would prevent it from pursuing the litigation. He relied on some principles formulated by Einstein J in Green v CGU Insurance Ltd (2008) 26 ACLR 323 at par[12], particularly the following:
"3 The purpose of a security for costs order is protective, so as to ensure that the primary purpose of an award of costs (that is, indemnification of the successful party: Oshlack v Richmond River Council [1998] HCA 11; (1988) 193 CLR 72 at 97 [67], per McHugh J and the cases therein cited) is achieved. As stated in Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 744 at [33]:
'The jurisdiction to award security for costs should thus be seen as protecting the efficacy of the exercise of the jurisdiction to award costs. The discretion should be exercised with the same rationales in mind, namely that, to the extent it can be avoided, the court should not permit a situation to arise where a party's success is pyrrhic.'
12 That case went to the New South Wales Court of Appeal: Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105. The two principles quoted above were not in controversy in that appeal. They were reproduced in the judgment of Hodgson JA, with whom Campbell JA agreed, at par[7], without any indication of disapproval.
13 In my view the purpose for which orders are made for the provision of security for costs is so well known that there was no need for the Associate Judge to state it. There is nothing in his reasons to suggest that he was not aware of, or did not take into account, the purpose for which such orders are made. It is significant that in par[49] of his reasons, reproduced above, he quoted a passage from a judgment of French J (as he then was) that included reference to "the legitimate interests of the respondents [the respondents to a first instance application in the Federal Court] that they not be exposed to irrecoverable loss by reason of proceedings which caused them to incur substantial expense but are ultimately unsuccessful against them".
14 It is true that TCT Inc has not contended that an order for security for costs would prevent it from continuing the litigation. The evidence did not establish that an order would have that effect. Obviously an order for the provision of the sum held in the Dreaper Reserve would not. It may well be that TCT Inc is unable to predict what funds might be made available by its members and supporters if it were ordered to provide a very substantial amount by way of security. If the effect of ordering security would be to shut a plaintiff out of the proceedings, that of course is a factor that must be taken into account. But if, as in this case, the evidence does not establish that that is the situation, there is no need for a judicial officer dealing with an application for security for costs to say so. It is necessary only to evaluate and weigh up the relevant considerations, not to record the considerations that do not apply in the particular case.
15 I am not persuaded that the Associate Judge failed to exercise his discretion by reference to the purpose of a security for costs order. His quote, at par[49], from the judgment of French J in National Institute for Truth Verification v Computer Voice Stress Analyser Pty Ltd [2007] FCA 736 indicates that he did have the relevant purpose in mind. Ground 1 must fail.
16 This ground asserts that the Associate Judge erred in that he "determined that the effect of the plaintiff's undertaking in respect of the Dreaper Reserve is that the defendant, if successful, will recover at least some of its costs without analysing why this is so and then proceeded upon a wrong assumption as to the character of the reserve and the effect of the undertaking without engaging his powers under rules 828, 829 or 833."
17 The submissions made by counsel for Gunns in relation to this ground focussed on the character of the Dreaper Reserve, the effect of the undertaking given in relation to it, and possible alternatives to that undertaking.
18 The evidence as to the Dreaper Reserve came from an affidavit of a director of TCT Inc named Peter McGlone. In that affidavit he referred to the February 2012 balance sheet showing members' funds of $44,341.52 and the Dreaper Reserve of $75,800, and continued:
"These total $120,101.52, which is money available to satisfy any costs order. TCT has maintained a reserve of this size for approximately 10 years. The Dreaper Reserve was a bequest left to TCT in 1995, and it is specifically held as a reserve for payment of TCT's debts. It has never been drawn against."
19 Mr McGlone was cross-examined about the finances of TCT Inc, but not about the Dreaper Reserve. His evidence about that reserve was unchallenged and uncontradicted. There was no reason for that evidence not to be accepted.
20 On the hearing of this appeal, counsel for Gunns submitted that the Associate Judge did not make any finding about the terms of the 1995 bequest, particularly as to whether the terms of any trust limited access to the reserve by unsecured creditors in the event of TCT Inc going into liquidation. He submitted that it might be holding the money upon trust, and that the terms of the trust might restrict TCT Inc in relation to the disbursement of the trust money, or limit its creditors from obtaining access to that money.
21 It is true that the Associate Judge made no findings as to the terms of the 1995 bequest, nor as to a possibility that the Dreaper Reserve was held upon a trust. He proceeded as if the funds in the Dreaper Reserve were part of the general funds of TCT Inc. In my view that was entirely appropriate. In the light of Mr McGlone's evidence that the reserve funds were part of the money held by the association that was "available to satisfy any costs order", and the fact that that assertion was neither challenged nor contradicted nor implausible, it was appropriate to treat that money as a part of the association's general funds, and not to mention the terms of the bequest or a possibility of a trust.
22 In par[45] of his reasons, the Associate Judge made the following finding:
"In the light of the plaintiff's undertaking not to disburse the sum of $75,800 held in its Dreaper Reserve, and the pledges which the plaintiff has obtained to cover the defendant's costs, the defendant, if successful, will recover at least some of its costs."
23 If Gunns were successful in the litigation, and obtained an order for its party and party costs, the worst case scenario would involve TCT Inc using all its available funds to pay part of the costs, a very substantial shortfall even after the calling in of pledges and appealing for donations, and the insolvency and liquidation of the association. There is no suggestion that it had any secured creditors. Apart from liabilities for tax and superannuation, it had no unsecured creditors according to its balance sheet as at 29 February 2012. According to that balance sheet, it was then holding $36,113 in a "Grants Reserve", apparently representing the unspent proceeds of grants that it had received for specific projects. In the event of its liquidation, it may be that some or all such moneys would not be available for the payment of unsecured creditors as a result of them being held on trust. A liquidator's fees would take priority over unsecured creditors. Having regard to the assets and liabilities of TCT Inc as at February 2012, and the evidence as to its financial affairs, there can be no doubt that, in the event of it going into liquidation as a result of inability to satisfy a costs order in favour of Gunns, its unsecured creditors would receive a dividend.
24 The possibility of it going into liquidation was mentioned by the Associate Judge during Mr McGlone's cross-examination, but not referred to in his reasons for his decision. In my view, having regard to the evidence, liquidation would be a possibility, but no more than a possibility. There was evidence that TCT Inc is not presently involved in any other litigation. There was evidence that it has been involved in a lot of litigation over the years, but has satisfied every order for costs made against it. If an order for costs resulted in a situation where it needed to raise hundreds of thousands of dollars in order to survive, there is a chance that its members and supporters would contribute the necessary funds.
25 If TCT Inc does not go into liquidation or become insolvent, it is appropriate to assume that the Dreaper Reserve will be available for the partial satisfaction of any costs order in favour of Gunns. It is also reasonable to assume that TCT Inc and its officers will honour the undertaking given to the Court. To breach that undertaking, or to be a party to its breach, would amount to contempt of court.
26 In my view the Associate Judge sufficiently analysed the reasons why Gunns will recover at least some of its costs if it is successful in the litigation. In par[45] of his reasons he referred to the possibility of a shortfall of about $300,000. There was no need to go into detail as to the imponderables that might have an impact on the size of such a shortfall.
27 This ground includes an assertion that the Associate Judge proceeded upon a wrong assumption as to the effect of the undertaking. The effect of the undertaking was simply that TCT Inc became obliged not to spend any money from the Dreaper Reserve. That was so obvious that it went without saying. There is nothing in his Honour's reasons to suggest that he made a wrong assumption as to the effect of the undertaking.
28 Ground 2 specifically refers to rr828, 829 and 833. Rule 828 is the rule that permits the court to order security for costs in certain situations. The relevant parts of that rule are quoted at par[5] above. Rule 829(1) gives the Court or a judge a discretion as to the amount, timing, manner and form of the security. The rest of r829 deals with the giving of security by written instruments, and the execution of similar instruments by sureties. Rule 833 empowers a party, if directed to give security, to give it by paying money into court. If security were given by paying money into court, and if TCT Inc went into liquidation, Gunns would have priority as a secured creditor in respect of the money in court: Re Gordon; Ex parte Navalchand [1897] 2 QB 516; In re Ford [1900] 2 QB 211; W A Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] QB 1038; Commercial Banking Company of Sydney Ltd v Colonial Financiers of Australia Pty Ltd [1972] VicRp 80; [1972] VR 702; Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) [2006] VSCA 123 at par[22]. If security were given by means of written instruments under r829, and an order for costs were made, judgments could be signed against TCT Inc and its sureties: r829(2)(c). Any such judgment could be enforced in the usual ways, ie by the seizure and sale of property, or by garnishee proceedings. Since a contempt is punishable by imprisonment, fine or sequestration, it is likely that instruments executed pursuant to r829 would give Gunns less protection than the undertaking that has been given.
29 Ground 2 asserts the Associate Judge erred by not "engaging" his powers under rr828, 829 or 833. Rule 833 did not confer any power on him. That rule simply allows a litigant who has been ordered to give security for costs to elect to give that security by making a payment into court. The reference to rr828 and 829 in the closing words of ground 2 amounts to no more than an assertion that the Associate Judge should have made an order for security for costs. Those words do not raise any additional contention as to error on the part of the Associate Judge.
30 There is no reason to think that the Associate Judge made an erroneous finding of fact when he determined that Gunns, if successful, would recover at least some of its costs. He gave adequate reasons for that finding. Given the evidence of Mr McGlone, there is no reason to think that he made a wrong assumption as to the character of the Dreaper Reserve. There is no reason to think that he was mistaken as to the effect of the undertaking. Ground 2 must therefore fail.
31 This ground asserts that the Associate Judge erred in that he "determined that the effect of the litigation pledges obtained by the plaintiff is that the defendant if successful will recover at least some of its costs, without analysing why this is so and then proceeded upon a wrong assumption as to the character of the pledges and their effect upon the exercise of his discretion without engaging his powers under rules 828, 829 or 833".
32 This ground refers to the same finding that ground 2 refers to - the finding in par[45] of the reasons of the Associate Judge, quoted above, to the effect that Gunns, if successful, will recover at least some of its costs. That finding was based not just on the evidence as to the pledges, but also on the undertaking as to the money in the Dreaper Reserve.
33 There was evidence of 19 pledges. The pledges were in a standard form. Copies of 18 of them were tendered before the Associate Judge. The donor who gave the other pledge, which was in the sum of $20,000, wished to remain anonymous, but his name was revealed to the Associate Judge. It is reasonable to infer that he signed a pledge in the standard form. Each pledge took the form of a deed by which the donor covenanted to indemnify TCT Inc to the extent of a specified sum for any legal costs it might incur if it commenced proceedings in this Court to obtain declarations in the terms that now appear in the statement of claim. In the event that Gunns is successful in the litigation, and obtains an order for costs, there is a possibility that one or more donors might be unable or unwilling to pay the money pledged. To the extent that the promised money was not paid, TCT Inc or its liquidator would only have the remedies of an unsecured creditor.
34 The Associate Judge referred, at par[36] of his reasons, to the fact that there was "no evidence as to the capacity to pay of those persons who have provided litigation cost pledges". He undertook a rough calculation, based on an assumption that all of the pledges were honoured, but made it clear that he was doing no more than making an assumption. There is no reason to think that he overlooked the possibility of pledges not being honoured.
35 The pledges provide some measure of protection for Gunns, subject to uncertainties as to the inability and/or unwillingness of donors to pay. Obviously the pledges provide less protection than a payment into court of the total amount pledged. There is no reason to think that the Associate Judge was not conscious of that fact.
36 None of his Honour's findings of fact about the pledges were erroneous. He gave adequate reasons for his findings relating to them. He made no mistake as to their character or their effect. He did not act on a wrong principle in relation to them. No error has been identified in relation to them. Ground 3 must fail.
37 This ground asserts that the Associate Judge erred in that he "accepted the plaintiff's undertaking as to the Dreaper Reserve and ... made findings about the effect of the pledges obtained by the plaintiff, apparently in the exercise of his discretion in substitution for the making of an order for security for costs, without considering whether the undertaking and/or the pledges would, as a matter of law, provide the defendant with a security interest in the event that it is successful and an order for costs is made in its favour".
38 The introductory words of this paragraph do not contain any assertions of error. They merely recite that his Honour accepted the undertaking, made findings about the effect of the pledges, and took into account the undertaking and the pledges when deciding not to make an order for security for costs. The gravamen of this ground is the assertion that his Honour did not consider whether the undertaking and/or the pledges would provide Gunns with a "security interest".
39 As I have said, an order for TCT Inc to give security for costs by paying money into court would result in Gunns becoming a secured creditor of TCT Inc, to the extent of the amount paid in, and to have the rights of a secured creditor if the association went into liquidation. The Associate Judge did not mention that consequence of a payment into court. In the event of a liquidation, neither the undertaking nor the pledges would give Gunns the status of a secured creditor.
40 Since his Honour did not mention that a payment into court would make Gunns a secured creditor, it is reasonable to infer that he did not take that consideration into account. Essentially this ground asserts that his Honour failed to take into account a relevant consideration which he was obliged to take into account.
41 However there is no suggestion that counsel for Gunns asked the Associate Judge to make an order requiring a payment into court, nor that any submissions were made to his Honour about the fact that a payment into court would make Gunns a secured creditor. In par25 of his written outline of submissions on this appeal, senior counsel for TCT Inc said:
"There was no submission made by the defendant to the learned associate judge that the amount of the Dreaper Reserve or the amount of the pledges should be ordered as security for costs or paid into court."
That assertion was not challenged. I therefore accept it to be correct.
42 There is no reason to think that the Associate Judge made any error about the nature of the Dreaper Reserve, the nature of the pledges, or the fact that orders could have been made giving Gunns greater protection. The fact that his Honour did not mention that a payment into court would give Gunns the status of a secured creditor, in the absence of any suggestion that he was asked to order a payment into court or that a submission was made as to a payment into court having that effect, does not warrant a conclusion that he "failed to consider any material fact" within the meaning of s45(1)(b).
43 In his submissions relating to this ground, counsel for Gunns submitted that the Associate Judge was obliged to order that the amount of the Dreaper Reserve plus the total amount of the pledges be paid into court. That submission was not supported by principled argument. The Associate Judge had a discretion. This ground has not identified any error in the exercise of that discretion. It cannot be said that, because a payment into court would have made Gunns a secured creditor, the refusal to order a payment into court was "unreasonable or plainly unjust": House v R [1936] HCA 40; (1936) 55 CLR 499 at 505. Ground 4 must fail.
Public interest and the stultification of litigation argument (ground 5)
44 This ground asserts that the Associate Judge erred in that he "determined that the plaintiff is pursuing the case in the public interest and not for the financial benefit of itself or others as [sic] a reason not to order security for costs but failed to determine whether the making of a security for costs order would have prevented the plaintiff from so pursuing the case".
45 It was not submitted to me that the Associate Judge made any error in determining that TCT Inc was pursuing its case in the public interest, nor in determining that it was not pursuing its case for the financial benefit of itself or others. Gunns contends that those unchallenged findings should not have resulted in a decision not to order security for costs unless a finding was made that the ordering of security for costs would have stultified the litigation.
46 As I observed in par[14] above, TCT Inc did not contend that an order for security for costs would prevent it from continuing the litigation; the evidence did not establish that an order would have that effect; and the Associate Judge was not obliged to mention a consideration that did not apply.
47 In his written submissions, counsel for Gunns said this:
"It is not axiomatic that the conduct of litigation, in the public interest or which raises a matter of general public importance, immunises a plaintiff from an obligation to provide security for costs where, as in this case, there is a finding that it is likely the plaintiff will be unable to pay the costs if it is unsuccessful. Prejudice, in the sense that a plaintiff may be unreasonably shut out of its litigation, is the balancing factor: Devenish v George Jewel Food Stores Pty Ltd (1990) 64 ALR 533, Merribee Pastoral v ANZ Banking Group [(1998) [1998] HCA 41; 193 CLR 502]."
48 It is true that conducting litigation in the public interest does not immunise a plaintiff against an order for security for costs. The Associate Judge made no error as to that point. He simply took into account as one factor favourable to TCT Inc the fact that it was pursuing the case in furtherance of the public interest. He was entitled to do that.
49 The suggestion that the stultification of litigation is a critical or balancing factor, absent which an order for security for costs must be paid, is wrong, and is not supported by the two High Court cases relied on by counsel for Gunns in the paragraph quoted above. In Devenish Mason CJ rejected an application for security for costs. There is no mention in his judgment as to whether the order sought would or would not have resulted in the case not proceeding. At most, that case is authority for the proposition that the public importance of a case is a factor that weighs against ordering security for costs. In Merribee Pastoral, Kirby J dismissed an application for security for costs. At 515, at the end of a list of considerations which have been held relevant to the grant or refusal of an order for security for costs, he included the following:
"That if an order were made it would effectively shut a party out of relief according to law in circumstances where that party's impecuniosity is itself a matter which the litigation may help to cure."
There was no other reference to shutting out in that case.
50 In the New South Wales Court of Appeal in Green v CGU Insurance (above) at par[46], Hodgson JA, with whom Campbell JA agreed, said the following:
"In my opinion, it would be an oversimplification to say that underlying these guidelines is a broader principle that defendants should be protected against being able to collect costs order against plaintiffs unless this would stultify the litigation. Certainly, these are relevant considerations; but in my opinion also relevant are the considerations that there should not be undue inhibitions on less wealthy persons from seeking vindications of their rights against more wealthy persons, and that there could be such inhibitions if it was in every case open to defendants to apply for security for costs on the basis of some evidence ... suggesting inability to pay costs, and to claim that security should be given unless the plaintiff can prove it would stultify the litigation."
51 In my view those comments apply just as much to public interest litigation as they do to litigation to enforce individuals' rights. The ordering of security for costs is discretionary. There is no reason to treat evidence that an order would shut a plaintiff out of a case as a prerequisite for the refusal of such an order in any particular circumstances. Ground 5 must fail.
52 This ground asserts that the Associate Judge erred in that he "took into account a principle of proportionality which, if relevant in this case, could only have been relevant to the exercise of the discretion if he had found that the making of an order for security for costs would have prevented the plaintiff from pursuing its case".
53 The estimated cost of the pulp mill was about $2.3 billion. The Associate Judge made a finding that there was reason to believe that Gunns' party and party costs of the litigation would be in the order of $300,000 to $400,000. The proposition that such costs are very small in proportion to the overall cost of the project is not challenged. However Gunns contends that that fact could only have been relevant if a finding was made that an order for costs would have prevented TCT Inc from pursuing the litigation.
54 Counsel for Gunns relied on a comment by Pearlman J in Byron Shire Businesses for the Future Inc v Byron Shire Council (1994) 83 LGERA 59. In that case a council and a developer sought orders for security for costs against an incorporated association in litigation concerning the proposed development of a Club Med resort at Byron Bay. Her Honour referred to the decision of Kirby P (as he then was) in Maritime Services Board of New South Wales v Citizens Airport Environment Association Inc (1992) 83 LGERA 107, and said, at 64:
"In Citizens Airport, Kirby P (at 112-113) looked at the comparison between the amount of the costs estimated to be incurred and the overall cost of the development under challenge. This approach balances the risk that an order for security for costs may put a halt to the litigation against the risk of the possible inability to recover an amount of costs which in that case was marginal in relation to the total cost of the development."
55 In both Citizens Airport and Byron Shire Businesses, there was a risk, as distinct from a certainty, that ordering security would result in the discontinuance of the litigation. There is nothing in those cases to suggest that proportionality cannot be a relevant factor in a case where there is no risk, or no finding of a risk, that an order for security will result in discontinuance. There is no reason why proportionality should ever be an irrelevant consideration.
56 If Gunns' party and party costs of this litigation amount to $400,000, that will be less than 0.018% of the estimated overall cost of the project. In my view proportionality was a relevant consideration that the Associate Judge was entitled to take into account, even in the absence of a finding that the making of an order for security for costs might result in the litigation not proceeding. Ground 6 must fail.
Gunns Limited
Tasmanian Conservation Trust Inc [2012] TASSC 51
(1992) 83 LGERA 107
(1994) 83 LGERA 59
(1998) 193 CLR 502
(1998) 193 CLR 72
(1988) 193 CLR 72
(1936) 55 CLR 499
(1990) 64 ALR 533