Costs - Security for costs - Jurisdiction to make order against Legal Aid Commission. Legal Aid Commission Act 1990. Rajski and Another v Computer Manufacture and Design Pty Ltd (1983) 2 NSWLR 122; Rajski and Another v Computer Manufacture and Design Pty Ltd and Others (1982) 2 NSWLR 443 at 446-448, followed.

Counsel for the Respondent: D. Porter (for O'Neills);

L. Neasy (Legal Aid Commission)

Solicitors for the Respondent: Michael Longbottom

GREEN CJ The plaintiffs have commenced an action against the defendant claiming damages for breach of a contract to provide domestic care for the defendant. The defendant has delivered a defence in which she denies the principal allegations of fact made in the statement of claim and alleges that any arrangement which was made between the parties was not intended to create legal relations and alleges - I assume in the alternative - that a condition of the contract has not been satisfied.

2. This is an application by the defendant for an order that the plaintiffs and the Legal Aid Commission provide security for the defendant's costs. In view of the terms of the relief sought the Legal Aid Commission of Tasmania has been joined as a respondent to this application.

3. The acting director of the Commission has deposed that the plaintiffs were initially granted legal aid for the purpose of conducting negotiations and obtaining counsel's opinion and that this initial grant of aid has been twice extended to include the preparation of a statement of claim and the obtaining of a further opinion as to "merit and quantum". The acting director has deposed further that:

"At this point in time no grant of aid has been made for

this matter to proceed to hearing and a grant of aid will

only be made in circumstances where the Commission has

satisfied itself that there is merit in so proceeding."

4. Other materials before me indicate that the plaintiffs are impecunious and would not be able to proceed with the action if they were required to provide security for costs and that it is unlikely that the plaintiffs would be able to satisfy or satisfy in full an order to pay the defendant's costs. The materials before me also show that the defendant is aged 84 years and in receipt of a pension and that she has some modest savings and investments which would probably be totally absorbed by the costs she would incur in defending the action. An application for legal aid made by the defendant was refused because of the assets she owns.

5. If I were to leave out of account the fact that the plaintiffs are in receipt of legal aid I would not be satisfied that they should be ordered to provide security for costs. They are natural persons who reside in the jurisdiction, the materials before me are not such as to justify a finding that the action is vexatious or unmeritorious and I am not satisfied that the mere fact of the plaintiff's impecuniosity is sufficient to justify the making of such an order.

6. I hold that the fact that the plaintiffs are in receipt of legal aid is capable of being relevant to the exercise of the discretion to require security for costs: Rajski and Another v Computer Manufacture and Design Pty Ltd (1983) 2 NSWLR 122. However I am not satisfied that the addition of that factor to the considerations to which I have just referred would be sufficient to justify an order requiring the plaintiffs to provide security for costs. If an order were made against the plaintiffs the Commission would not only have no obligation to assist the plaintiffs to provide such security but it is doubtful whether the Commission would have any power to do so. By virtue of the Legal Aid Commission Act 1990, s3 and s15 the aid which the Commission is empowered to provide to parties to litigation comprises arranging for the provision of the services by a legal practitioner and paying the costs of those services. The payment of an amount by way of security for costs is not a payment for the provision of legal services but is simply a payment made to satisfy the order of a court and thus does not fall within the authority conferred by those provisions. In these circumstances I cannot see that the mere fact that the plaintiffs are in receipt of legal aid would make it just and reasonable to require them to provide security when I could not otherwise be satisfied that such an order would be justified.

7. I turn to the application for an order against the Commission. The applicant submits that one source of the court's jurisdiction to make an order against the Commission is to be found in Rules of the Supreme Court, O80, r18. But the power conferred by that rule to order that security for costs be provided is only exercisable against a "party to any cause or matter" which in this case means a course a party to the action not merely a party to the application for security. The Legal Aid Commission is not a party to the action but the applicant submits that the Commission should be deemed to be a party by virtue of the following provisions of the Legal Aid Commission Act 19900:

"25 ...

(6) If an assisted person is entitled to recover an amount

by way of costs in respect of any matter in which legal

aid is given, the Director may, by notice in writing,

direct that the assisted person, within 28 days after

receipt of the notice, assign to the Commission his or her

rights to recover the amount.

(7) An assisted person who fails to comply with a

direction under subsection (6) is deemed to have assigned

to the Commission any right to recover an amount at the

end of the period referred to in that subsection.

(8) Where an assisted person is deemed to have assigned to

the Commission any right to recover an amount, the

Commission, for the purposes of recovering the amount -

(a) shall stand in the place of the assisted person; and

(b) may use any of the remedies available to the assisted

person; and

(c) may use the name of the assisted person."

8. Those provisions do no more than empower the Commission to exercise any right which an assisted person has to enforce an order for costs made in any proceeding but they do not have the effect of putting the Commission in the place of an assisted person for the purposes of the whole proceeding. I am not satisfied that the Legal Aid Commission should be deemed to be a party for the purposes of Rules of the Supreme Court, O80, r18.

9. The applicant submits in the alternative that the court also has the power to order that the Commission provide security for costs by virtue of the court's inherent jurisdiction. I accept that the court's inherent jurisdiction does include the power to order security for costs: Rajski and Another v Computer Manufacture and Design Pty Ltd and Others (1982) 2 NSWLR 443 at 446-448 and Rajski and Another v Computer Manufacture and Design Pty Ltd (supra). Given the ambit of the court's inherent jurisdiction and the rationale for its existence I am not persuaded that there is any justification for limiting to the parties to the litigation the power to order that security for costs be provided certainly at least in cases in which the person against whom the order is sought is a person against whom an order for costs could be made. Counsel for the Commission has properly conceded that by virtue of the Supreme Court Civil Procedure Act, s12 which empowers the court to award costs against "any ... person" as well as "any party" this Court would have the power to order the Commission to pay costs in this case. However it is not necessary for me finally to decide whether the court has the power to order the Commission to require security for costs because even assuming I do have the power I am not satisfied that this is an appropriate case in which to exercise it.

10. I am not satisfied that any justification exists for ordering that the Commission provide security for any costs which it might be ordered to pay directly to the defendant. An order for costs against a person not a party to the litigation would only be made in exceptional circumstances such as for example where the court was satisfied that the Commission permitted or encouraged plainly unmeritorious litigation to proceed such as was the case in Collins and the Victorian Legal Aid Commission (1984) FLC 91-508. But there is nothing on the materials before me to suggest that this is such a case. In any event there is no suggestion that the Commission could not satisfy any order for costs made against it so there is no occasion for an order requiring it to provide security for any costs which it might be ordered to pay. Those considerations are also relevant to the determination of whether an order should be made against the Commission requiring it to provide security for any costs which the plaintiffs are required to pay. In relation to that determination I also take into account that the Legal Aid Commission Act 1990, s26 empowers the Commission to accede to a request made by a party to pay costs which an assisted person has been ordered to pay to that party and that such request shall be determined by guidelines issued pursuant to s27. Those guidelines require the Commission to consider various specified matters and limit the amount payable to $5,000. An order made now that the Commission shall provide security for any costs payable by the plaintiffs would have the effect of virtually pre-empting the operation of that statutory scheme and should only be contemplated in exceptional circumstances such as where the Commission is encouraging or supporting litigation which is manifestly oppressive or unmeritorious. I am not satisfied that it has been shown that the circumstances in this case as they presently appear fall into that category.

11. Counsel for the applicant has not been able to cite any cases in which orders of the kind he seeks have been made against a legal aid authority. That does not preclude the making of an order in this case but it does suggest that exceptional circumstances need to be shown to exist before such orders are made.

12. I should add that I am not unmindful of the general considerations of justice which militate in the applicant's favour but for the reasons I have given I do not feel that they are sufficient to justify my making what are conceded to be the exceptional orders sought in this case. I should also emphasise that my determination of this application is made on the basis of the circumstances relating to the matter as they presently appear and in the light of the stage which the proceedings have reached and in the light of the limitations which presently apply to the grant of aid to the plaintiffs.

13. I am not persuaded that in the exercise of the discretion conferred by Rules of the Supreme Court, O80, r18 or pursuant to the inherent jurisdiction of the court the orders sought should be made.