Mbuzi v Hall & Anor [2010] QSC 359

Judgment (144 paragraphs)

[1]

The applicant has failed to pay the assessed costs ordered by White J, has not obtained a stay in respect of the order requiring him to pay those costs and failed in his application before Alan Wilson J.

[2]

The applicant has failed to pay the costs ordered against him by the Court of Appeal on 24 December 2009 and by Chesterman JA on 19 February 2010. These costs have not been assessed under the rules, however, the solicitors for AAMI and the Directors provided a short-form of assessment to the applicant and asked him to accept the assessment. He made no response to that request.

[3]

The litigation in this proceeding has been conducted by him in a vexatious manner.

[4]

[55] The applicant submits that he does not fall into any of the categories for which security for costs can be ordered in the light of the prerequisites in r 671 and the discretionary factors in r 672. He denies that he has ever declared himself to be impecunious. He denies that there are any legitimately assessed costs that he has failed to pay.

[5]

[56] The second application for security for costs is made pursuant to r 772 and is in relation to the applicant's application for leave to appeal to the Court of Appeal (CA No. 5886 of 2010) against the interlocutory order of Alan Wilson J. This second application for security for costs raises similar issues and discretionary considerations as to whether the justice of the case requires an order for security for costs. An additional, relevant factor is that the applicant "has already had a day in court and lost".[39] Still, the Court has an unfettered discretion whether to order security for the prosecution of the proposed appeal, and if so, in what amount. I shall first address the principles that apply in relation to the application made pursuant to r 670, or alternatively pursuant to the Court's inherent power to order security for costs, in relation to the application for judicial review.

[6]

[57] A Court may order pursuant to r 670 a "plaintiff" to give the security the Court considers appropriate "for the defendant's costs of and incidental to the proceeding" only if the Court is satisfied of one or more of the matters stated in r 671. If the applicant is not a "plaintiff" for the purposes of r 670,[40] then the matters stated in r 671 and the discretionary considerations stated in r 672 provide guidance about matters which may be relevant to the exercise of the Court's inherent jurisdiction. However, these are not exhaustive of the factors that may be taken into account in deciding whether to order security for costs pursuant to either r 670 or the Court's inherent jurisdiction. In the present case, a relevant consideration is the operation of s 49 of the Judicial Review Act 1991 (Qld) concerning the awarding of costs in a judicial review proceeding. However, s 49 does not remove the Court's general discretion to order that costs should follow the event. If, for example, the application for judicial review is dismissed because it is found to lack merit, then it would be open to the Court to order that the applicant to pay AAMI's costs of and incidental to the application.

[7]

[58] In its application made pursuant to r 670, AAMI submits that the prerequisite for security for costs stated in r 671(h) is established, since the Court should be satisfied that "the justice of the case requires the making of the order." In determining the application under r 670 or the alternative application to exercise the Court's inherent jurisdiction, consideration of the justice of the case requires regard to well-established principles governing orders for security for costs. One such general principle is that, so far as natural persons are concerned, poverty should not bar their access to justice.[41] In Harpur v Ariadne Australia Limited[42] Connolly J referred to the long-standing principle that:

[8]

"... the door of the court should not be barred to a prospective plaintiff, resident within the realm, because he is impecunious. Thus as between residents within the jurisdiction, prosecuting what could properly be described as their own suits, the law required the defendant to accept the risk that the plaintiff might not be able to satisfy the order as to costs."

[9]

[59] The difficulties presented for a defendant by a plaintiff's impecuniosity have led to rules of court and statutory powers, and to the development of principles governing the exercise of the Court's inherent jurisdiction under which a party may be ordered to provide security for costs. In Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd[43] French CJ, Gummow, Hayne, Heydon and Crennan JJ stated:

[10]

"In general, the bare fact of impecuniosity is not of itself reason to order a plaintiff who is a natural person to provide security for costs. But a corporate plaintiff may be ordered to provide security where it is shown that it will not be able to meet the defendant's costs."

[11]

In that case, their Honours found that it was neither necessary nor appropriate to consider the extent to which those two general propositions should be elaborated or qualified.

[12]

"Mere impecuniosity is not an absolute barrier to ordering security for costs against a natural person, although it is a factor against doing so. In particular, there are instances additional to those listed in r 42.21(1)(a)-(c) and (e) where it can be done. They include the vexatious conduct of litigation by a plaintiff who had failed to set aside an earlier judgment, instances where the plaintiff has dissipated assets and/or not paid previous costs orders (particularly costs orders in favour of the defendant), instances where the plaintiff brings a weak case to harass the defendant and instances where the plaintiff brings a case for the benefit of others, but not solely for that benefit. Hence the supposed 'general principle ... that poverty is no bar to a litigant' is a severely qualified one. So is the 'overriding principle of open access to justice' (or, more realistically, at least access to the courts)."[44]

[13]

Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd[45] and Weger v Boola Boola Petroleum and Natural Gas Co (No Liability)[46] were cited in support of these propositions.

[14]

[61] In Green the New South Wales Court of Appeal considered the general rule that "a natural person who sues will not be ordered to give security for costs, however poor he is", and qualifications to it. The discussion arose in the context of an application for costs in proceedings brought by a company liquidator. I respectfully follow the Court's analysis of the general rule. The leading judgment of Hodgson JA, with whom Basten and Campbell JJA agreed on matters of principle, confirmed that it is clearly established that the Supreme Court has a discretion to order security for costs against a natural person in circumstances falling outside those set out in the rules of court.[47] Reference was made to exceptions to the general rule that "a natural person who sues will not be ordered to give security for costs, however poor he is", and to the statement of Young CJ in Melville v Craig Nowlan and Associates Pty Limited[48] that security would be ordered where not to do so would allow proceedings which would be vexatious or oppressive or an abuse of the court's process.

[15]

[62] Hodgson JA quoted the following proposition that was stated by Kirby J in Merribee Pastoral Industries Pty Limited v Australia & New Zealand Banking Group Limited:[49]

[16]

"There is therefore no absolute rule (applicable statute apart) that the impecuniosity of a party will entitle its opponent to an order for security for its costs. Where the power to so provide exists in uncontrolled terms, it would be to fetter the jurisdiction impermissibly to adopt such a rule or even a prima facie entitlement. By the same token, the inability of a party to meet the costs of an unsuccessful proceeding is not irrelevant to the exercise of the jurisdiction. Litigation is inevitably expensive and burdensome. To add to the burdens of a party successful in the outcome, those of paying its costs with little or no prospect of recovery under an order for costs may, in particular circumstances, be a reason for offering a measure of protection to that party by way of security for costs."

[17]

[63] After reviewing various authorities, Hodgson JA advanced guidelines in relation to applications concerning liquidators. These included the proposition that cases in which security for costs might be ordered against a natural person outside those provided for in the Court rules include cases where (in addition to proof that there is reason to believe the plaintiff will be unable to pay the defendant's costs):

[18]

"...the plaintiff has dissipated assets and/or has not paid previous costs orders (especially if those costs orders were in favour of the defendant) and/or brings a weak case to harass the defendant and/or brings a case for the benefit of others (albeit not solely for their benefit as apparently required by UCPR 42.21(1)(e))."[50]

[19]

"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 unable to collect costs ordered 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 vindication 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 (or even on the basis of fishing notices to produce) suggesting inability to pay costs, and to claim that security should be given unless the plaintiff can prove it would stultify the litigation."[51]

[20]

[64] In Melville v Craig Nowlan and Associates Pty Limited[52] Heydon JA considered authorities to the effect that there is a general rule that "poverty is no bar to a litigant",[53] or that there is a basic rule that "a natural person who sues will not be ordered to give security for costs, however poor he is".[54] Such a general rule, or basic rule, was a strict one, but subject to specific exceptions, and Heydon JA observed that it is possible that the "rule" is less absolute than certain formulations of it would suggest.

[21]

[65] Young CJ in Eq agreed with the reasons of Heydon JA in Melville. Young CJ in Eq had previously analysed in Morris v Hanley[55] the history of the "rule" that poverty is no bar to a litigant. In Melville Young CJ stated that "the underlying principle is that security will be ordered in cases where not to do so would allow proceedings which were vexatious or oppressive"[56] and observed:

[22]

"The so-called rule about poverty being no bar is merely one of the factors the court takes into account when making its final assessment as to whether the proceedings, without security for costs, would be an abuse of the court's process."[57]

[23]

[66] In Morris v Hanley Young J (as the Chief Judge then was) concluded that the leading cases show that the factors a Court must take into account when considering the general question as to whether the inherent power should be exercised to order security for costs include:

[24]

(a) whether the plaintiff's claim is bona fide and not a sham;

[25]

(b) whether the plaintiff has a reasonably good prospect of obtaining the orders he or she seeks;

[26]

[27]

(d) whether the plaintiff has a want of assets and how this was brought about;

[28]

(e) whether there is anyone standing behind the plaintiff who might benefit from the action but who is unwilling to contribute to the risk involved in the action; and

[29]

This list was said to be "a non-exhaustive list of guidelines" and Young J stated that one must not lose sight of the basic question as to whether "the action is harassing and vexatious".[58] I do not understand the reference to "harassing and vexatious" as relating only to proceedings which are brought by the claimant with the intention that they be harassing and vexatious. However, the fact that a defendant is harassed or vexed by the prospect that a claimant without substantial assets will be unable to pay a costs order which is made as a result of the successful defence of the proceeding would not seem to be sufficient to qualify the action as one that is "harassing and vexatious" in the sense referred to.

[30]

[67] The bare fact that a claimant may be unable (or even will be unable) to meet an adverse costs order after the trial of the proceeding does not mean that the commencement or further prosecution of the proceeding is an abuse of process.[59] The principles upon which security for costs are ordered under court rules and under the court's inherent jurisdiction permit, within limits, impecunious natural persons to litigate bona fide and viable claims with the prospect that the claimant will be unable to meet a costs order made in the event that the claim fails. There is no general rule that to prosecute proceedings without reasonable prospects of being able to meet an adverse costs order is an abuse of process.[60] Unless and until the principles governing security for costs are revisited, I would not regard the bare fact that a claimant may be unable (or even will be unable) to meet an adverse costs order after the trial of the proceeding as rendering the proceeding "harassing and vexatious" in the sense discussed by Young J.

[31]

[68] As a general rule, the law requires defendants to accept the risk that natural persons who litigate viable claims in good faith for their own benefit might not be able to satisfy an order for costs. However, a claimant who "has adopted a vexatious mode of conducting the litigation"[61] may fall outside the general rule. There may be other processes by which such vexation may be remedied, including a stay of proceedings. Still, where a party has adopted a vexatious mode of conducting the proceedings, the interests of justice in the case may justify an order for security for costs.

[32]

[69] The non-payment of existing costs orders may constitute vexation, particularly where the prior costs orders relate to a previous case involving similar disputes.[62] The core element of vexation may be readily identified since "allowing the second case to proceed risks increasing the financial burden upon the defendant, who has already suffered the detriment of unpaid costs orders".[63] The circumstances in which the previous costs orders were made, and the steps taken to have them quantified, assessed and enforced may be relevant. Naturally, any costs orders in favour of the claimant may need to be taken into account.

[33]

[70] The relevant principles for the purpose of determining whether security for costs should be ordered in respect of the applicant's judicial review proceeding include the following:

[34]

1. The principle that "the door of the court should not be barred to a prospective plaintiff, resident within the realm, because he is impecunious"[64] must be set against the object of protecting a defendant against the possibility that the plaintiff, if unsuccessful, will be unable to meet an order for costs. The bare fact that a plaintiff may be unable (or even will be unable) to meet an adverse costs order after the trial of the proceeding does not justify an order for security for costs. There is no general principle that defendants should be protected against being unable to collect costs ordered against plaintiffs unless this would stultify the litigation.

[35]

2. There should not be "undue inhibitions on less wealthy persons from seeking vindication of their rights against more wealthy persons, and ... 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."[65]

[36]

3. The exceptions to the basic rule that "a natural person who sues will not be ordered to give security for costs, however poor he is" include cases where the plaintiff has adopted a vexatious mode of conducting the litigation.

[37]

4. The unmeritorious conduct of interlocutory or related applications that result in unpaid costs orders may evidence a vexatious mode of conducting the litigation. The bare fact that unpaid interlocutory costs orders exist is not sufficient to conclude that a party has adopted a vexatious mode of conducting the litigation. An interlocutory application may have been brought or resisted on reasonable grounds by an impecunious litigant, and the determination of the application may have been finely balanced. In other cases, the unmeritorious prosecution or defence of interlocutory applications, resulting in unpaid costs orders, will evidence a vexatious mode of conducting the litigation.

[38]

5. Such conduct may breach the party's implied undertaking to the Court and to the other parties to proceed with expedition, and therefore warrant sanctions under r 5 of the UCPR. Depending on the circumstances, the sanctions may include a stay of the proceeding until the costs are paid, or in exceptional circumstances, dismissal of the proceeding.

[39]

6. The Court is obliged to apply the rules of civil procedure with "the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules". The purpose of the rules is to facilitate the just and expeditious resolution of the real issues in proceedings at a minimum of expense. The manner in which litigation is conducted by a party may satisfy the court that the justice of the case requires the making of an order for security for costs.[66]

[40]

7. The principle that ordinary citizens be permitted to litigate viable claims without being stymied by orders for security for costs requires a defendant to accept the risk that the plaintiff might not be able to satisfy an order as to costs if the plaintiff is unsuccessful. It does not require a defendant, wealthy or poor, to incur unnecessary costs in defending vexatious proceedings. In the case of the vexatious conduct of interlocutory proceedings by a claimant, resources that would be otherwise devoted by a defendant to the defence of a claim at trial are devoted to interlocutory battles. If the interlocutory costs orders in such a case are unpaid, the source of vexation is obvious. If, however, they are paid, the payment reduces the plaintiff's resources and may heighten the risk that the plaintiff will not be able to satisfy a costs order if the plaintiff is unsuccessful at trial.

[41]

8. The existence of an arguable claim in the principal proceeding (in the sense of one that survives an application for defendant's summary judgment) or even a claim with reasonable prospects provides no excuse to a claimant to adopt a vexatious mode of conducting the litigation. An order for security for costs may be warranted in such a case in the interests of justice.

[42]

[71] The applicant has failed to pay the costs ordered by White J, which have been assessed. There are other costs orders made in AAMI's favour. These include the costs ordered by the Court of Appeal on 24 December 2009, by Chesterman JA on 19 February 2010, by Alan Wilson J on 10 May 2010, and by P Lyons J on 30 July 2010. There is no evidence that these costs orders have been assessed. The protracted process by which the applicant has contested the assessment of costs ordered by White J would make a reluctance to be involved in too many similar contests over costs at the same time understandable. So does the applicant's apparent inability to meet the costs that have already been assessed. AAMI and the Directors have sought to resolve the assessment of costs in the Court of Appeal, without response from the applicant.

[43]

[72] No costs orders appear to have been made in the applicant's favour. Costs were reserved by Mullins J on 29 June 2009 and by Boddice J on 2 July 2010.

[44]

[73] The applicant denies that there are "any legitimate assessed costs submitted to me for which I have failed to pay". But this ignores the fact of the assessment of the costs ordered by White J, and the applicant's failure to overturn that assessment in proceedings determined by Alan Wilson J and P Lyons J. The applicant has not indicated a willingness or ability to pay the costs that have been assessed to date.

[45]

[74] The applicant explains his omission to refer to his residential family property in affidavits filed in relation to his means, as being based on guidance that a "residential family house jointly in my name and wife's name need not be included for purposes of means-testing". However, he provides no indication concerning the equity in his home. He submits that "only corporations can ordinarily be declared to be impecunious", but this is not so. The applicant had an opportunity to respond to reasonable inquiries made prior to the filing of the application concerning his net assets, and he has not disclosed them in an affidavit in response to the application for security for costs. He denies that he has ever declared himself to be "impecunious", but gives no reliable evidence to suppose that he has an ability to pay the costs orders that have already been made against him in these proceedings and related appeals, let alone the costs that may be ordered in the future.

[46]

[75] If the applicant fails to establish an entitlement to relief in the judicial review proceeding, then there is a reasonable prospect that the applicant will be ordered to pay AAMI's costs of and incidental to the proceedings, notwithstanding the provisions of s 49 of the Judicial Review Act in relation to costs.

[47]

[76] The material relied upon by AAMI and the absence of information from the applicant concerning his net assets lead me to conclude that there is reason to believe that the applicant will not be able to pay:

[48]

(a) existing cost orders made against him in favour of AAMI and its Directors;

[49]

(b) AAMI's costs of the judicial review proceeding if ordered to pay them.

[50]

[77] I turn to consider whether the applicant has adopted a vexatious mode of conducting the litigation, and more generally, whether it is in the interests of justice in this case for an on order for security for costs to be made.

[51]

[78] I have previously found that two applications brought by the applicant were vexatious. I extend appropriate latitude to the applicant's status as a self-represented litigant. I have regard to an affidavit filed by him after the conclusion of the hearing in which he purports to report complimentary things said about him by judicial officers on various occasions. The affidavit's contents extended beyond the subject matter on which I granted leave to file a further affidavit, namely comments made by a Magistrate in a traffic matter. Given the applicant's unreliable account to me of what was said by Wilson J on 30 August 2010, I have reservations about the reliability of his recollection of what other judges have said about him in the course of past litigation. But if the applicant's recollection of what was said by Judges in other cases is accurate, my concern remains with his conduct of this litigation, being the application for judicial review and related applications for leave to appeal against orders made in the course of the judicial review application.

[52]

[79] The applicant has conducted the litigation in a manner that has generated excessive and unnecessary costs for other parties, and wasted scarce public resources on arguments that are devoid of merit. The affidavits and submissions filed by the applicant contain irrelevant and scandalous assertions. He persists in arguments that have been determined against him. A simple example is the rule 378 argument that he argued and lost before Margaret Wilson J on 30 August, 2010 and attempted to re-argue before me the next day.

[53]

[80] A more serious example is his persistence in arguing that the Directors are still respondents to the judicial review proceedings. He argues, as I have already noted, that the Directors are still parties to the proceeding for judicial review "because there is no order to remove them as respondents to the review"[67]. But, of course, the application for judicial review against them was dismissed by White J, and the Court of Appeal did not vary that order. Despite this, the applicant seeks to argue that the Directors are necessary and required parties to the proceeding as they were parties to the decision sought to be reviewed. This ignores the fact that by the time the decisions of the first respondent that the applicant seeks to review were made, the Directors had been removed as parties before the Small Claims Tribunal. Whatever basis the applicant, or indeed any other party, once may have had to rely upon the formal orders of the Tribunal that indicated that the claim against each respondent had been dismissed, the fact is that the Directors were found in the proceeding before the Tribunal to be inappropriately joined and were removed from it. The transcript of the Tribunal's proceeding that was placed before the Court of Appeal recorded this fact.

[54]

[81] The applicant persists in asserting otherwise. In paragraphs 19-22 of his further submissions filed on 7 September 2010 he accuses counsel and solicitors for AAMI and the Directors of misleading courts by asserting that the Directors have been removed as parties. His attack on those lawyers is unfair and inaccurate. The Directors have been removed as parties to the judicial review proceeding. As P Lyons J explained on 30 August 2010, in a passage quoted by the applicant in supplementary submissions, the Directors were removed as parties by order of White J, but are parties that have the benefit of costs orders made in their favour, and therefore were proper parties to applications concerned with the order as to costs. The applicant is either unable or unwilling to face the fact that his application for judicial review was dismissed in respect of the Directors. Worse, he accuses the lawyers who refer to the effect of the order of White J as being "ignorant and dumb" and raising arguments that are "misconceived, vexatious, frivolous and meritless".

[55]

[82] The applicant submits that the Court of Appeal found that the lawyers for AAMI and the Directors "deliberately presented 'half truth' to the court". The fact is that the Court was critical of both parties for not placing the transcript of the Tribunal hearing before White J. Both the applicant and a supervisor from AAMI were present before the Tribunal, and both of these individuals should have known that the Directors had been removed from the proceedings in the Tribunal. This fact was not mentioned in the affidavits filed before White J. The Court of Appeal was particularly critical of the applicant:

[56]

"When Mr Mbuzi told White J that the directors had not succeeded in an attempt through her to have them removed, his statement was allowed to stand uncontradicted. That statement was a most misleading half truth. The facts on which it was based were subsequently set out in Mr Mbuzi's affidavit filed on 2 October. Neither in his affidavit nor in his written or oral submissions did Mr Mbuzi reveal the removal order which had been made by Ms Hall. I am prepared to give him the benefit of the doubt and assume that he was not attempting to mislead this court deliberately; but he was certainly reckless with his words."[68]

[57]

[83] Despite all of this and the order of the Court of Appeal not disturbing the order made by White J, the applicant persists in asserting that the Directors were not removed as parties, and that they remain as parties to the application for judicial review notwithstanding the orders of White J and the Court of Appeal. His persistence in misconceived arguments that have been rejected, and his accusations that lawyers have lied to the court about the status of the Directors in these proceedings, are vexatious.

[58]

[84] The applicant persists in submissions that the costs assessor failed to file the costs certificate, when the evidence and the Court's record show that he caused this to be done on 1 February 2010. The applicant simply does not engage with submissions concerning the circumstances under which a costs assessor must give reasons pursuant to rule 738. This includes AAMI's submission that even if he did not receive the costs certificate under cover of Mr Bloom's letter of 29 January 2009, he received it when he received Mr Bloom's affidavit, and that his request for reasons was too late. The application that was dismissed by Alan Wilson J was pursued in the face of correspondence that pointed out why it was misconceived. The applicant persists in submissions about rule 738 that have been determined against him, and which are without a proper basis.

[59]

[85] I conclude that the applicant has adopted a vexatious mode of conducting the litigation. This conclusion does not rest on his general lack of success in bringing or resisting interlocutory applications and associated applications for leave to appeal: his only success seemingly being not having the application for judicial review summarily dismissed against AAMI. It rests on the vexatious nature of the applications that he has brought, his advancing arguments that lack a proper foundation, his persistence in unfounded arguments that have been determined against him, his lodging of applications for leave to appeal that have no reasonable prospect of success and the inclusion in affidavits and submissions of scandalous allegations. This course of conduct has delayed the resolution of the judicial review proceeding, and generated substantial costs. It has been harassing and vexatious to the other parties to applications, not to mention their lawyers who have been the subject of many ill-founded accusations of having misled the court.

[60]

[86] My conclusion that the applicant has adopted a vexatious mode of conducting the litigation brings this case within an exception to the basic rule that a natural person who sues will not be ordered to give security for costs.

[61]

[87] I find it unnecessary to reach a conclusion about the motivation of the applicant in conducting the litigation in the manner that he has. He is an obviously intelligent man, with experience in litigation. I have regard to character references. His zeal in pursuing this litigation is obvious. However, his persistence in arguments that have been dismissed and which lack a proper foundation suggests that he simply will not accept decisions that do not accord with his views, and that his intent is to harass the other parties until they concede the correctness of his view. If the applicant does not know that his arguments are without merit, then he is reckless as to their lack of merit. Whatever the applicant's motivation in conducting the proceeding as he has, the proceeding has been conducted by him in an harassing and vexatious manner.

[62]

[88] The other parties have expended substantial costs in defending vexatious applications or in bringing applications to protect themselves from further vexation. The costs incurred by them may not be recovered. The likelihood is that they will not be. Resources that might have been devoted to defending a relatively simple judicial review application that focused on two aspects of the first respondent's conduct of a small claims proceeding have been spent on applications in this court and applications for leave to appeal from decisions that went against the applicant.

[63]

[89] The risk that the applicant might not be able to pay a cost order that was made against him at the conclusion of the judicial review proceeding was a risk that AAMI was required by the law to accept so that the applicant might have his day in court. But the applicant has had many days in court in these proceedings, without advancing the matter to a hearing of the substantive application. The principle of access to justice does not require AAMI to bear the costs of those many days in court. The applicant's vexatious conduct of the proceedings has required AAMI to expend resources that it should not have been required to incur. The costs orders made in its favour are unpaid.

[64]

[90] In the circumstances, I consider that the interests of justice and the justice of the case require the applicant to provide security for AAMI's costs in relation to the judicial review proceedings.

[65]

[91] The applicant did not disclose whether he has the capacity to borrow against equity in his home, or sources of credit. He denied that he had declared himself to be impecunious, but gave no indication of his capacity to meet an order for security.

[66]

[92] An experienced costs assessor, Mr Garrett, was asked by AAMI's solicitors to provide an estimate of its future costs in relation to the application for judicial review, assuming that the hearing of the application would occupy one day. Mr Garrett assessed AAMI's likely costs of opposing the judicial review application, commencing with the directions hearing on 15 September 2009, at $14,873.30. He also estimated AAMI's costs in relation to the application for leave to appeal against the orders of Alan Wilson J at $11,375.[69] Mr Garrett has previously provided a short form assessment of the orders for costs that were made on 24 December 2009 and 19 February 2010 in the amounts of $14,399.93 and $6,612.50 respectively.

[67]

[93] The applicant did not address the quantum of costs sought or address Mr Garrett's estimate of the expected costs of AAMI in respect of the future conduct of the judicial review application, or its costs in responding to the application for leave to appeal against the decision of Alan Wilson J. I accept Mr Garrett's evidence and consider that he has made a reasonable estimate of AAMI's expected costs, assessed on a standard basis.

[68]

[94] The applicant noted that under s 49 of the Judicial Review Act the court is required to consider the financial position of the parties.[70] He points to the resources of AAMI (which is assumed to have paid for the legal costs of the Directors) and asks:

[69]

"Should an individual be denied access to justice on (the) ground of having less money than a multi-million dollar corporate entity?"

[70]

[95] The making of an order for security for costs may have the effect of preventing the applicant from prosecuting his claim to a final hearing. If it does then that consequence will be due in part to the applicant's failure to make disclosure of his financial circumstances. It will also be due to the vexatious manner in which the applicant has conducted the litigation, and the need to protect the opposing party from the consequences of such vexation. The financial capacity of AAMI does not disentitle it to an order for security for costs. If AAMI is unable to recover existing and future costs orders from the applicant, then presumably these costs will be passed on to its consumers, namely policyholders in the form of increased premiums, or diminish the profits that are available for distribution to its shareholders as dividends.

[71]

[96] It should be recalled that AAMI, whilst protecting its own interests in respect of a small claims tribunal hearing in which it succeeded in resisting the applicant's claim for $3,276, is a party to the proceeding in which the first respondent, in accordance with normal practice, abides the order of the Court and plays no active role. AAMI is the party that acts as contradictor of the applicant's claims that the first respondent should have disqualified herself and granted an adjournment in the proceeding before the Tribunal. Whilst White J did not summarily dismiss the proceeding, her Honour did not have the benefit of the transcript of the hearing to ascertain whether the applicant's claims about the conduct of the proceeding were reflected in the transcript. I am not in a position to predict what further evidence might be put before a final hearing of the application for judicial review. As presently informed, there is a reasonable prospect that the applicant's judicial review proceeding will be dismissed, or no relief granted as a matter of discretion.[71]

[72]

[97] The transcript of the Small Claims Tribunal that is before me,[72] but which was not before White J, does not support the applicant's claim that the first respondent should have disqualified herself for apprehended bias on the ground that she knew two of the respondents.[73] The transcript records that the first respondent disclosed that she knew Mr Kriewaldt when each of them was a student "long ago", and had had no association with him or seen him since. The first respondent also mentioned that she recognized the name Cherrel Hirst, thought that she was "a director of a hospital or something" and did not know her. The first respondent declined the applicant's request to disqualify herself. Her long-past association with Mr Kriewaldt as a student and her lack of any association with any other director provided no proper basis to disqualify herself. On the material before me the applicant's prospects of succeeding in his judicial review application on the grounds of apprehended bias and conflict of interest are very poor.

[73]

[98] The transcript of the Small Claims Tribunal also records discussion about relevant policy wordings, and records that a copy of a policy wording relied upon by AAMI was shown to the applicant. Discussion followed about the policy documentation upon which the applicant relied. He asked for an adjournment to bring it to the hearing. The applicant was asked by the respondent to put his case, and he did so, describing his case as "very simple". The applicant and AAMI's representative presented their respective cases and the first respondent found in AAMI's favour. The material before me does not permit me to reach a conclusion about why (if this be the case) the applicant did not have at the tribunal hearing the policy documents upon which AAMI relied, whether in the circumstances he had a proper basis to seek an adjournment from the tribunal on 11 June 2009 to another day and what his prospects are of establishing a denial of natural justice or an error of law by the tribunal for not allowing him an adjournment. If the applicant fails to establish these grounds for judicial review, then he may be ordered to pay AAMI's costs on the principle that ordinarily costs should follow the event.[74]

[74]

[99] AAMI has a capacity to absorb costs that it is unable to recover from the applicant pursuant to costs orders made in its favour. But the fact that a respondent to a proceeding of the present kind has the financial capacity to meet unrecoverable costs is not a sufficient reason to decline an order for security for costs.

[75]

[100] Not all respondents to small claim proceedings are large corporations. An individual or business that succeeds in resisting such a claim may become the subject of a judicial review proceeding that alleges a denial of natural justice. The Small Claims Tribunal, like its successor, the Queensland Civil and Administrative Tribunal, must act in a way that is fair, economical, informal and quick. Some claimants may wrongly perceive that a tribunal has denied them natural justice when the tribunal has acted with the degree of expedition and informality that the law requires and which is appropriate to such a tribunal. Being made a respondent to a judicial review application brought in the Supreme Court by an aggrieved party before such a tribunal may be one of life's hazards, along with the risk that the applicant for judicial review might not be able to satisfy the Court's order as to costs. The principle of access to justice may require a respondent to such judicial review proceedings to carry that risk. The principle of access to justice does not require respondents to carry the additional risk of not being able to recover the additional costs that are generated by the vexatious conduct of proceedings. This applies to respondents both big and small.

[76]

[101] Persons of modest means, such as the applicant, should exercise care in the manner in which they bring and resist interlocutory applications and related applications for leave to appeal, lest adverse costs orders made as a result of the vexatious conduct of litigation bring the case within the exception to the general rule that a natural person who sues will not be ordered to give security for costs.

[77]

[102] If the applicant fails to establish an entitlement to relief in the judicial review proceeding, then there is a reasonable prospect that he will be ordered to pay AAMI's costs of and incidental to the proceedings, in addition to the costs that he already has been ordered to pay.

[78]

Conclusion - security for costs of judicial review applications

[79]

[103] The applicant has not conceded that he is impecunious. But I have found on the basis of the material concerning his financial circumstances that AAMI has filed that there is reason to believe that he will not be able to pay costs orders made against him. The applicant has conducted this litigation in a vexatious manner. In circumstances in which there is reason to believe that the applicant will not be able to pay costs orders made against him, and in which his vexatious conduct of the litigation has significantly increased AAMI's costs of responding to the proceeding, the interests of justice require an order for security for costs.

[80]

[104] The amount of security ordered should be in an amount that does not unnecessarily stultify the proceeding. Any prediction that the proceeding will be readied for final hearing and occupy a relatively short hearing involves the triumph of hope over experience. Still, I will determine the quantum of security on that assumption. I consider that an appropriate amount of security for costs in respect of the application for judicial review is in an amount that is approximately one half of the estimate of AAMI's standard costs. I will order that the applicant provide security for the costs of the second respondent in a form satisfactory to the Registrar in relation to the application for judicial review (No. 6243 of 2009) in the sum of $7,500.00.

[81]

Security for Costs of the pending application for leave to appeal

[82]

[105] Under r 772 an application for security for the costs of an appeal may be made to the Court of Appeal or the Court that made the decision appealed from. I respectfully adopt the principles stated by Wilson J in Jenkins v Martin[75] concerning the discretion to order security under the rule. Sub-rule 772(3) provides that the order must set the amount of security that must be given and the time within it must be given.

[83]

[106] The proceeding that the applicant has filed in the Court of Appeal is in respect of a decision in relation to the assessment of costs. The applicant lost his application on the merits, and I consider that he has poor prospects of success in his proposed appeal. In Natcraft Pty Ltd v Det Norske Veritas[76] Davies JA stated that:

[84]

"an impecunious plaintiff who has lost at trial on the merits will have greater difficulty in relying on apparent merits as a factor against the making of an order for security for costs the effect of which might stifle an appeal than would have been the case in respect of a similar reliance in opposition to an application for security for costs before trial."

[85]

A similar consideration arises in respect of the fact that the applicant lost the application on the merits. It is important that applications for security are not used as a means to strike out applications for leave to appeal that have poor prospects of success, or as the equivalent of an application for summary judgment.[77] I do not consider that this is the case in the present application for security for costs pursuant to r 772. The application for leave to appeal is consistent with the applicant's general conduct of the litigation in which he simply refuses to accept adverse decisions. There are reasons to believe that the respondents to that application will not be able to recover costs ordered in their favour in the event that the application is dismissed. I consider that the interests of justice in the case require him to provide security for costs in respect of an application for leave to appeal that has poor prospects.

[86]

[107] I adopt the approach that it is inappropriate for an impecunious appellant, or an appellant with limited means, to be required to provide a greater security than is absolutely necessary.[78] I accept Mr Garrett's estimate of $11,375 as a reasonable estimate of the costs of responding to the application for leave to appeal.

[87]

[108] I will order that the applicant provide security for costs in an amount that is slightly less one half of the estimate. I order that the applicant provide security for costs in the amount of $5,500. The security should be given within 21 days. Pending the provision of such security the application for leave to appeal should be stayed.

[88]

[109] Each application has succeeded. Costs should follow the event.

[89]

Pursuant to r 389A of the Uniform Civil Procedure Rules 1999, the applicant not file any further application in relation to the application for judicial review (No. 6243 of 2009), including an appeal in relation to the proceeding, without the leave of the Court, and in the case of an appeal from these orders, without the leave of the Court of Appeal.
The applicant provide security for the costs of the second respondent in relation to the application for judicial review (No. 6243 of 2009) in the sum of $7,500 in a form approved by the Registrar.
Such security be provided within 21 days of the date of this order.
Until the security is given a party to the proceeding not take a further step in the proceeding without the leave of the Court.
If the security is not given as required by paragraph 2 of this order, the proceeding be stayed so far as it concerns steps to be taken by the applicant.
If the security is not given as required by paragraph 2 of this order the second respondent may apply to dismiss all or part of the proceeding.
Pursuant to r 772 of the Uniform Civil Procedure Rules 1999 the applicant provide security for the prosecution of his application for leave to appeal to the Court of Appeal and of any appeal associated with a grant of leave (Court of Appeal No. 5886 of 2010) ("the appeal") in the sum of $5,500 in a form approved by the Registrar.
Such security be provided within 21 days of the date of this order.
Until the security is given a party to the appeal not take a further step in the proceeding without the leave of the Court of Appeal.
If the security is not given as required by paragraph 7 of this order, the appeal be stayed so far as it concerns steps to be taken by the applicant, unless the Court of Appeal otherwise orders.

[90]

[1] Mbuzi v Hall & Ors [2009] QCA 405 at [5] per Fryberg J, citing other litigation involving Mr Mbuzi.

[91]

[2] There are currently 81 documents on the Court File Index (CFI). Exhibits to an affidavit sworn by a solicitor for AAMI contain 614 pages of correspondence, court documents, transcript and other documents.

[92]

[3] Mbuzi v Hall & Ors [2009] QCA 405.

[93]

[4] Mbuzi v Hall & Ors [2010] QCA 5.

[94]

[5] Mbuzi v Hall & Ors [2010] QCA 23.

[95]

[6] Mbuzi v Hall & Ors [2010] QCA 23 at [2].

[96]

[8] Affidavit of Adam Bloom filed 14 May 2010, CFI document no. 39; further affidavit of Mr Bloom filed 30 June 2010, CFI document no. 47.

[97]

[10] CFI document no. 45, para 10 and 12.

[98]

[12] Submissions of the applicant filed by leave 31 August 2010, paragraph 14.

[99]

[13] Mbuzi v Hall & Ors [2009] QCA 405 at [23].

[100]

[17] Tomasevic v Travaglini (2007) 17 VR 100; [2007] VSC 337 at [141].

[101]

[21] [2003] EWCA Civ 1113; [2004] 1 WLR 88 at 93; followed in National Bank Ltd v Freeman [2006] QSC 086 at [26].

[102]

[22] Ng Yat Chi v Max Share Ltd [2005] HKCFA 9; [2005] 1 HKLRD 473; von Risefer v Permanent Trustee Co P/L [2005] QCA 109.

[103]

[24] [2002] QCA 546; [2003] 2 Qd R 271 at 283-4, [35]- [36]; 291-2 [59]-[62].

[104]

[25] Ibid at 291 [61], citing Deane J in Oceanic Sunline Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 at 247.

[105]

[26] Hambleton v Labaj [2010] QSC 124 at [11].

[106]

[27] [1992] HCA 40; (1992) 109 ALR 313 at 315, followed in Lohe v Tait [2002] QSC 399 at [21].

[107]

[29] Affidavit of Mr Van Reede Van Outshoorn filed 16 July 2010 ("Van Reede") paras 49(b), 50(a), 50(d).

[108]

[30] Mbuzi v Hall [2009] QCA 405 at [31]; Van Reede, Exhibit FVR 8 p23; transcript 1-3 line 15.

[109]

[32] Transcript 31.8.10; T 1-39 ll 45-50.

[110]

[33] Transcript 31.8.10, T1-3l, 41 T1-7, ll, 14-18.

[111]

[35] Transcript 31.8.10; T 1-58 - 1-59.

[112]

[36] CFI document no. 74; CA 9275/10.

[113]

[37] As to the Court's inherent jurisdiction to make orders for security for costs see Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] 2 Qd R 187 at 190 [12]; Rajski v Computer Manufacture and Design Pty Ltd [1982] 2 NSWLR 443; Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148.

[114]

[39] Jenkins v Martin [2004] QSC 417 at [3]; Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 at [3] and [9].

[115]

[40] A point not argued before me, and see the definition of "plaintiff" in Schedule 4 to the Rules.

[116]

[41] Robson v Robson [2008] QCA 36 at [34] per Muir JA.

[117]

[42] [1984] 2 Qd R 523 at 530.

[118]

[43] [2009] HCA 43; (2009) 239 CLR 75 at [38]; [2009] HCA 43 (footnotes omitted).

[119]

[44] Ibid at [91] (footnotes omitted).

[120]

[45] (2008) 67 ACSR 105; [2008] NSWCA 148.

[121]

[46] [1923] VicLawRp 71; [1923] VLR 570.

[122]

[48] [2002] NSWCA 32; (2002) 54 NSWLR 82 at [135]- [138].

[123]

[49] [1998] HCA 41; (1998) 193 CLR 502 at [26].

[124]

[50] Ibid at [45] (3) (emphasis added).

[125]

[51] Ibid at [46] (emphasis added).

[126]

[53] Cowell v Taylor (1886) 31 Ch D 34 at 38 per Bowen LJ.

[127]

[54] Pearson v Naydler [1977] 3 All ER 531 at 533 per Megarry V-C.

[128]

[55] [2000] NSWLR 957.

[129]

[56] Supra at [136] citing McHenry v Lewis (1883) 22 Ch D 397 at 408.

[130]

[58] Morris v Hanley (supra) at [23]-[24].

[131]

[61] Weger v Boola Boola Petroleum and Natural Gas Co NL [1923] VicLawRp 71; [1923] VLR 570 at 572.

[132]

[63] Sywak v Visnic (No 2) [2010] NSWCS 374 at [10].

[133]

[64] Harpur v Ariadne Limited (supra) per Connolly J at 530.

[134]

[65] Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (supra) at [46].

[135]

[67] Applicant's Outline of Submissions filed 31 August 2010, para 14.

[136]

[68] Mbuzi v Hall & ors [2009] QCA 405 at [46].

[137]

[69] Garrett affidavit Court File Index 63.

[138]

[70] No costs application has been made by the applicant pursuant to s 49 of the Act, cf Anghel v Minister for Transport (No. 2) [1994] QCA 232; [1995] 2 Qd R 454, and see UCPR r 578.

[139]

[71] Cf UCPR r 672(b) and Morris v Hanley (supra) concerning the relevance of the prospects of success.

[140]

[73] Affidavit of the applicant filed 12 June 2009, CFI document no. 2, paras 4 and 5.

[141]

[74] UCPR 681(1); cf Judicial Review Act, s 49(4).

[142]

[75] [2004] QSC 417.

[143]

[77] Henderson v Taylor, Information Commissioner of Queensland [2006] QCA 267 at [7].

[144]

[78] Natcraft Pty Ltd (supra) at [9].

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (144 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (29)