KATZMANN J
28 I agree with Flick J that leave to appeal should be refused. I also agree generally with his Honour's reasons and I endorse, in particular, what he said at [11] of those reasons.
29 Strictly speaking, as his Honour points out, it is unnecessary in an application for leave to appeal to undertake a detailed analysis of the merits of the proposed appeal. But the leave application was listed for hearing before a Full Court on the basis that, if leave were granted, the Court would hear the appeal. In these circumstances and in order to further illustrate why the proposed appeal enjoys insufficient prospects of success to warrant a grant of leave, I prefer to descend into greater detail than his Honour.
30 The draft grounds of appeal are extracted by Flick J at [12] of his reasons.
31 The first draft ground of appeal attacks the primary judge's description of the applicant as "a disgruntled former employee". Much was made of this in submissions.
32 The allegation was that in giving this description the primary judge was making an adverse credit finding contrary to the available evidence and without giving the applicant's solicitor an opportunity to be heard on the question. The applicant's counsel, Mr King, criticised the primary judge for what he characterised as "[a]pparent attempts to besmirch [the applicant's] name as truculent and disgruntled" (although the word "truculent" does not appear in the judgment) and he criticised the Commonwealth for "airbrushing" these supposed attempts out of his Honour's reasons.
33 This draft ground is baseless.
34 First, it wrongly presumes that "disgruntled" is a synonym for untruthful or unreliable. "Disgruntled" merely means dissatisfied or discontented. The Macquarie Dictionary defines it as "mildly upset, discontented". It is not, as Mr King claimed in his submission in reply, "commercial speak for a serial 'whinger' and employer code for an implausible or possibly 'dodgy' complaint". Moreover, it says nothing about the truthfulness or reliability of the applicant, with which credit or credibility is concerned. The insinuation in the written submissions in reply that describing the applicant in this way reflects apprehended bias should not have been made. It is inconceivable that a fair-minded hypothetical reasonable bystander might think that in doing so the primary judge might not bring (or have brought) an impartial and unprejudiced mind to the questions in dispute (Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-294). As the Commonwealth submitted, the description carries no pejorative connotation. To press the point after this error was pointed out, is, to say the least, an error of judgment.
35 Secondly, it is unarguable that the applicant is disgruntled with her former employer. After all, she is suing it for damages. In her statement of claim she makes numerous allegations of wrongdoing by the respondent and its employees. Amongst other orders she is applying for aggravated and exemplary damages, the latter because "the [r]espondent's conduct was continuous, deliberate and in contumelious disregard of [her] rights". What else is she if not disgruntled?
36 Thirdly, the primary judge's remarks must be seen in context. The context was that the applicant had submitted that there were public interest considerations which militated against an order for security for costs. His Honour dealt with the submission at [64] of his reasons in a way which discloses no appealable error:
I do not consider that there are any relevant public interest considerations which point against the making of an order for security for costs. Merely because the ATO is a public authority does not mean that there is a public interest component in litigation which is brought by a disgruntled former employee. Nor do I consider that a sufficient public interest component is provided by the fact that Ms Waters raises complaints of contraventions of the Disability Discrimination Act. I consider that the subject matter of the litigation is very much in the nature of an inter partes dispute which has no appreciable public interest aspect.
37 Grounds 2-5 and also 7 relate to questions of impecuniosity, that is to say the applicant's capacity to pay the respondent's costs if she were to lose her case. Underlying all of them is a fundamental tension between the case put below and the case sought to be made on appeal. In this application, the applicant criticises the primary judge for various statements to the effect that there is reason to believe that she may be unable to pay the respondent's costs. Mr King insisted that she was not impecunious. He described her as "asset rich" and "income poor". Yet, the case she put below in opposition to an order for security was that she was a person of limited means who has been in a somewhat perilous financial situation for some time.
38 Although the applicant did not give evidence herself, her solicitor, Mr Coffey, filed an affidavit which was read in opposition to the respondent's application. He actually described the applicant as impecunious. The heading to paragraphs 49-56 of the affidavit was:
Applicant's impecuniosity caused by the Respondent's conduct
39 Mr Coffey also asserted that the applicant's gross earnings for the 2013 financial year were in the order of about $22,000 and in the previous year about $15,000. He repeatedly referred to her as being in financial difficulty, sufficient, he pointed out, to require her to seek early access to her superannuation on the basis of financial hardship. It can scarcely be an error that his Honour relied on the applicant's own evidence. His Honour referred to that evidence at [57]:
I accept the submission by Mr Glover (who appeared for the ATO) that the evidence indicates that Ms Waters is relatively impecunious. Indeed, Mr Coffey acknowledged as much in his affidavit and, in particular, in the limited information which he gave concerning Ms Waters' financial and employment position, as outlined above. That information included the fact that Ms Waters is currently eligible for a Pensioner Concession Card and that for the income tax years 2012 and 2013, the tax withheld from Ms Waters' income amounted to only $1,613 and $777 respectively. It might also be noted that Ms Waters failed to adduce any evidence relating to the following matters which would have given a clearer picture as to her current financial circumstances:
(a) the quantum of the restructured mortgage payments she is making in respect of her residence or the equity she has in that property;
(b) the quantum of outstanding fees owed to her current solicitors;
(c) the amount of the discounted legal fees the subject of her arrangement with her lawyers; and
(d) the fee arrangements regarding her Counsel.
(Emphasis added.)
40 The applicant claims that the primary judge made several errors in this paragraph.
41 The first alleged error is that his Honour imposed a test of "relative impecuniosity", when the correct test "relevant impecuniosity".
42 This allegation must be rejected. It is tolerably clear that the expression "relative impecuniosity" was intended to reflect the effect of the evidence given by Mr Coffey. His Honour was not imposing a test. Correctly understood, "relative impecuniosity" denotes the relationship between the applicant's financial position and her ability to pay the respondent's costs, should she fail in the proceedings. There is, in truth, no difference between "relative" and "relevant" in this context. The "relevant impecuniosity" is the "relative impecuniosity".
43 Secondly, the applicant alleges that the primary judge erred in holding or treating her as having a burden of proof to demonstrate why an order against her should not be made. This is the subject of draft ground 5.
44 Mr King submitted that to impose a burden is "at odds with the finding, based on the ATO's express concession in evidence, that Ms Waters was 'not impecunious'". This submission was said to be supported by what his Honour said at [16] where he referred to evidence from Donna Trembath, the respondent's solicitor, that she believed Ms Waters was not impecunious, and where he set out the basis for that belief. It is wrong to describe this as a concession by the respondent of anything and it takes Ms Trembath's remarks out of their proper context. Ms Trembath said she did not know whether the applicant was impecunious. She merely pointed to a number of matters which suggested she was not.
45 There is an ostensible conflict in the authorities about whether it is correct to speak of a burden of proof in this area of discourse. In Equity Access Limited v Westpact Banking Corporation & Ors (1989) ATPR ¶40-972; [1989] FCA 520 ("Equity Access") at 50,635, upon which the respondent relied, Hill J said that there was no burden "one way or the other", citing Sir Lindsay Parkinson & Co Ltd Triplan Ltd (1973) 1 QB 609 at 626 (Lord Denning MR and Lawton LJ). On the other hand, in Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [27] Lindgren J said that the onus was on the respondents who were seeking security for their costs to prove that the applicant would not be able to satisfy a costs order in their favour. More recently, in Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103 Murphy J held that the legal burden rests on the respondent "from first to last" to persuade the Court that an order for security should be made (at [24]). He relied on Livingspring Pty Ltd v Kliger Partmers (2008) 20 VR 377 ("Livingspring") at [21] (Maxwell P and Buchanan JA) and Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; [2014] NSWCA 65 at [18]-[20] (Macfarlan JA) but pointed out, consistently with those cases, that there was an evidential burden on the party resisting the order to raise for consideration matters it wished the Court to take into account.
46 Ultimately, however, it is unnecessary to resolve the apparent conflict because in the present case the primary judge was not concerned with the legal onus. He was speaking of the evidential or persuasive onus. While Mr King suggested that there was not even an evidential onus upon the party against whom an order is sought, the authorities are against him. The applicant contended that she was in straitened financial circumstances owing to the respondent's conduct. She also contended that to require her to pay security in the sum of $30,000 would stultify the proceedings. On these matters the weight of authority shows that it was for her to establish the facts that make good these contentions: see, for example, Livingspring at [22]. As the primary judge observed at [58], the matters to which he referred at (a)-(d) of [57] were matters peculiarly within her knowledge. Yet, she offered no evidence. Furthermore, the respondent had written to the applicant requesting detailed statements about her financial position over the previous three year period (including a statement of assets and liabilities, recent income tax returns and details of any loans) but the request went unanswered.
47 Mr King also argued that the primary judge made other errors in [57] of his reasons. He contended that it was wrong for his Honour to rely on the evidence that the applicant held a pensioner concession card. According to him, a pensioner concession card merely signified that the applicant had a disability; it did not indicate that she was a person of limited financial means. Mr King also argued that it was an error to rely on the amount of income tax withheld for the years 2012 and 2013.
48 It is unnecessary to deal with either of these arguments as neither is the subject of any draft ground of appeal.
49 The applicant further contended that the primary judge found evidence of impecuniosity relying only on a sentence in an affidavit from a witness for the Commonwealth which had been struck out despite the absence of a notice of contention asserting that the ruling was in error.
50 This contention, which is the subject of draft ground 2, is based on one paragraph in the primary judge's summary of Ms Trembath's evidence. It appears at [17] of the reasons and the contentious part is emphasised in bold:
Ms Trembath acknowledged that Ms Waters had experienced difficulty in the past in obtaining legal representation and this might be due in part to her inability to meet the high costs of legal representation.
51 In para 37 of her affidavit, after setting out reasons to believe that the applicant was not impecunious, Ms Trembath had stated:
That said, the Applicant has experienced difficulty in obtaining legal representation in the past, during the Supreme Court Proceedings, and I expect this to be at least in part a reflection on the Applicant's ability to meet the high costs of legal representation.
…
(Emphasis added.)
52 Objection was taken to the second clause in the sentence, the objection was upheld and the respondent did not press it. It was therefore an error for his Honour to refer to it. But nothing turns on the error because it is not inconsistent with the applicant's own evidence. Mr Coffey also said in his affidavit at [48] that the applicant was "eligible for waiver and exemption" of court fees in this Court because she held a Centrelink pensioner card.
53 Contrary to the applicant's contention, as I have already observed it was not the only evidence to suggest that the applicant might be unable to pay the respondent's costs.
54 In draft ground 7 the applicant contends that the primary judge erred by failing to follow and apply a decision of Mortimer J in Kiefel v Victoria [2014] FCA 604, especially at [34] and [40].
55 At [34] her Honour spoke of "[t]he potential chilling effect of requirements to provide security for costs on individual litigants" and the impact an order for security could have on an impecunious litigant's access to justice. Her Honour said that this meant that at trial an impecunious litigant will rarely be ordered to provide security. The remarks she made at [40] were to like effect. The primary judge referred to these observations (at [42]-[43] of his reasons) and said he agreed with "the general thrust" of them. He added, however, that he did not believe that her Honour's observation that an order for security will rarely be made against an impecunious litigant should be taken as "circumscribing the breadth of the relevant discretion". He said there was no predisposition one way or another, noting that each case turns on its own facts and circumstances. Like Flick J, I am unable to discern any appealable error in this approach and none was identified in the applicant's submissions. The reference to "wrong principle" in House v The King (1936) 55 CLR 499 at 505 is to a binding rule, not a guideline: Norbis v Norbis (1986) 161 CLR 513 at 520 (Mason and Deane JJ). Furthermore, the primary judge's approach accords with the observations of French J in Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 511 and endorsed by the Full Court in Madgwick v Kelly (2012) 212 FCR 1 at [6]. There is a traditional rule that impecuniosity alone will not be a bar to natural persons continuing with proceedings (at least at trial level). But, as Branson J pointed out in The Airtourer Co-operative Limited v Millicer Aircraft Industries Pty Limited [2004] FCA 1400 at [21]:
Recognition by this Court of the general rule that poverty is no bar to a litigant has not meant that the Court has proceeded on the basis that an order for security for costs can never be made against an impecunious litigant. An order for security for costs is only rarely sought against a litigant who is not impecunious. An order for security for costs made against an impecunious litigant when justified by a factor other than mere impecuniosity does not offend the general rule that poverty is no bar to a litigant. Indeed in Morris v Handley [2000] NSWSC 957 at [12] Young J pointed out that what we call applications for security for costs have their origin in 'de-pauperisation' applications. Such applications, it seems, were intended to result in a pauper shown to have brought a vexatious or oppressive action losing his or her entitlement to sue in forma pauperis.
56 Here, security was ordered not on the basis of "mere impecuniosity". The applicant's financial circumstances were but one factor his Honour took into account. The major factor influencing his Honour's decision was her refusal to discuss with the Commonwealth the question of payment of its costs in the Supreme Court proceedings.
57 In ground 6 the applicant alleges that the primary judge erred in failing to give any or proper weight to his ruling that the applicant had a sufficiently arguable case or to the fact that her legitimate cause was unresolved.
58 His Honour said (at [67]) that he was prepared to accept that the applicant had an arguable case and he identified it as a consideration which weighed in her favour. This does not disclose error. Indeed, it is difficult to understand how the primary judge could be criticised for proceeding in the way that he did or how he might reasonably have proceeded differently. The proceeding was in its infancy. The pleadings had not even closed when the application for security was made and the application was heard and determined before any evidence had been filed. As Hill J observed in Equity Access at 50,636:
In the ordinary case where the hearing of the motion for security for costs takes place some considerable time prior to the hearing of the action and before the evidence has been tested, there would be difficulty in embarking upon a consideration of the prospects of success, at least in any detail.
59 Similarly, in Jazabas Pty Ltd v Haddad (2007) 65 ACSR 776; [2007] NSWCA 291 (an application for security for costs under s 1335 of the Corporations Act 2001 (Cth)) at [18] Basten JA doubted whether it was appropriate for a court to go beyond considering whether there was a bona fide and arguable claim and canvas the merits in any detail. In this respect his Honour noted the observations made in Ariss v Express Interiors Pty Ltd (In liq) [1996] 2 VR 507 at 514 (Phillips JA, Ormiston JA and Charles JA agreeing).
60 An appellate court will not disturb a discretionary judgment if it considers that insufficient weight has been given to a relevant consideration unless it "clearly" concludes that for that reason the discretion has been wrongly exercised: Lovell v Lovell (1950) 81 CLR 513 at 533 (Kitto J). As Aickin J explained in Gronow v Gronow (1979) 144 CLR 513 at 537, it is "a mistake to suppose that a conclusion that the trial judge has given inadequate or excessive weight to some factors is in itself a sufficient basis for an appellate court to substitute its own discretion for that of the trial judge".
61 Draft grounds 8 and 12 relate to the primary judge's treatment of outstanding costs orders in earlier proceedings in the Supreme Court of New South Wales ("Supreme Court proceedings"). In those proceedings Barr AJ struck out the applicant's second amended statement of claim. The applicant applied to the Court of Appeal for leave to appeal. That application was dismissed. She then sought special leave from the High Court, which dismissed her application on the papers. At each point costs were awarded against her and in favour of the respondent. By the conclusion of those proceedings the respondent estimated its total costs on a party-party basis to be between $109,981 and $146,642. The primary judge considered (at [48]) that the most significant factor in favour of an order for security for costs was that there were three costs orders against her and in favour of the respondent "which have not been paid and in respect of which Ms Waters has refused meaningfully to engage".
62 Each of these draft grounds rests on a misconception.
63 Contrary to what is alleged in draft ground 8, the primary judge did have regard to the fact that the respondent had not taken any steps to have its costs in the Supreme Court proceedings assessed. He did not, however, consider it significant. In draft ground 12 the applicant alleges that the primary judge erred in holding that the respondent was entitled to protection for its existing and future costs. In his submissions, Mr King took issue with the proposition that it was entitled to protection in respect of its existing costs, in the mistaken belief that this was a reference to the costs in the Supreme Court proceedings. The misconceptions that underpin both these draft grounds are put to rest on a careful reading of his Honour's reasons, in particular what his Honour said at [55].
I consider that the relevant issue here is not whether a debt immediately arises upon a Court making a costs order, as opposed to after costs have been assessed, but rather, the reasonableness of Ms Waters' refusal to enter into discussions with the ATO with a view to agreeing an amount and thereby obviating the need for those costs to be assessed. Having regard to Ms Waters' refusal to engage in any such discussions and that the costs remain unpaid, I do not consider that it is unreasonable of the ATO to seek security for costs in respect of the current proceedings with a view to protecting its position on costs in these proceedings. Ms Waters' past conduct is a relevant consideration in the particular circumstances of the current case.
64 Mr King also submitted that the primary judge erred in finding that the applicant refused to pay any of the costs due to the respondent in the Supreme Court proceedings. But his Honour made no such finding. All he found was that she had refused to engage in discussions and that she did not pay. Both those conclusions were open on the evidence.
65 While those costs had never been assessed, there was evidence that the respondent had written to the applicant on more than one occasion asking her to pay the costs, providing an estimate of what the costs were and inviting her to enter into discussions with a view to reaching an agreement. The applicant only replied to the first letter. That was in August 2012. Then she asserted it was premature to negotiate costs as she intended to appeal. After she had exhausted all her appeal rights, however, she did not then indicate a willingness to negotiate and, when the respondent wrote again inviting her to do so, the invitation was met with silence.
66 Mr King also submitted that any refusal to pay costs in the Supreme Court proceedings was irrelevant to the question of whether security for costs should be ordered in the current proceedings. But one of the matters appropriate for consideration in an application for security for costs is whether there are any particular discretionary matters peculiar to the circumstances of the cases: Equity Access at 50,635; Dye v Commonwealth Securities Ltd [2012] FCA 992 at [26] (Emmett J). This was such a matter. The applicant's failure or refusal to enter into discussions with the respondent about payment of its costs in the Supreme Court proceedings was far from irrelevant to the question of whether this Court should require her to put up security for the respondent's costs in the present proceedings, particularly after the High Court dismissed her application for special leave. It could signify an inability or an unwillingness to pay. The weight to be attached to this circumstance was entirely a matter for his Honour.
67 The applicant's contention in draft ground 9 should also be rejected. Although it is not clear from the applicant's written submissions, it seems to be based on what the primary judge said at [59] of his reasons:
[A]s I observed in Ninan [Ninan v St George Bank Ltd [2012] FCA 905; (2012) 294 ALR 190] at [37], an applicant who wishes to resist security for costs on the basis that there is causal connection between his or her impecuniosity and the respondent's conduct needs to substantiate that claim by appropriate evidentiary material and not mere assertion or submission. In my view, Ms Waters has not discharged her onus of establishing that her relative impecuniosity was caused by the ATO's conduct in circumstances where:
(a) it is now over nine years since the relevant alleged events occurred;
(b) Ms Waters resigned from the ATO on 19 November 2004, but then returned to work in the private sector on 5 November 2007;
(c) she is well qualified and she does not assert that her psychiatric illness prevents her from being employed; and
(d) in her statement of claim in the proceedings, Ms Waters pleads that her illness prevented her from working for only three of the ten years which have now elapsed since the conduct of which she complains occurred.
68 None of the matters listed here is said to be incorrect. There is no appealable error in his Honour's reasons. In his submissions in reply, Mr King referred to what his Honour said [60]-[63] but his Honour was not concerned there with the question of whether the respondent had caused or contributed to the applicant's financial position. He was there considering the question of whether an order for security would stultify the proceeding. It is to that question I turn next.
69 In draft ground 10 the applicant seeks to impugn the primary judge's finding that the order the respondent sought was both objectively reasonable and would not stultify the proceeding. She alleges that was an error "without considering the evidence including the medical and financial evidence" she offered.
70 The primary judge plainly considered the financial evidence. The problem for the applicant was that there was not enough of it to persuade him that an order would have the effect of stultifying the proceeding. His Honour referred to her failure to call evidence about either the equity she had in her apartment (purchased for $250,000 in 2003 and secured at that time with a mortgage of $200,000), the amount of the restructured mortgage payments that Mr Coffey said she was making on the property, the amount of legal fees outstanding to her current solicitors and the fee arrangements she had with counsel. Mr King drew attention to the transfer and the mortgage both of which were signed 11 years before the hearing. It is impossible to understand what significance could be attached to them in the circumstances. The proposition that the applicant would have to sell her apartment to pay the $30,000 sought in security was not supported by the evidence. Since it was for the applicant to show why an order for security for costs would stultify the proceeding and she elected not to put the full financial picture to the Court, it is unsurprising the primary judge came to the conclusion that he did.
71 In the footnotes contained in his written submissions Mr King directed the Court to aspects of the medical evidence without explaining the relationship between the evidence and his draft grounds. In the body of his submissions Mr King pointed to one report which contained observations that the applicant was courteous and cooperative. That is hardly to the point. In oral argument Mr King submitted that all the doctors agreed that the applicant's disability was caused by "workplace conduct". Assuming this to be correct, it is difficult to discern any logical connection between the submission and the proposition with which this draft ground is concerned, that is, the reasonableness or otherwise of an order for security and the prospect that it would stultify the proceeding. To the extent that the submission might have been advanced in support of the argument as to the merits of the applicant's case, I would simply repeat what I said at 32 above in relation to draft ground 6.
72 Draft ground 11 is conclusory and was not given any separate attention in the submissions by either party.
73 As the primary judge noted at [36], the decision as to whether to order security for costs is a broad discretionary decision. There is no sound basis for concluding that in the present case the discretion miscarried. It follows that, even if leave to appeal were granted, I would have dismissed the appeal.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.