Waters v Commonwealth of Australia

Federal Court of Australia|2017-10-10|Before: Markovic J

The application for leave to appeal filed on 12 April 2017 be dismissed.
The applicant pay the respondent's costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 Natalie Waters, the applicant, seeks leave to appeal from orders made and judgment given on 27 March 2017, the effect of which was that the Court: (1) refused Ms Waters' application for the primary judge to recuse himself on the ground of apprehended bias; (2) refused to set aside or discharge an order made on 16 October 2014 which required Ms Waters to provide security for the costs of the respondent (ATO) in the amount of $30,000; and (3) ordered, pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and rr 5.21(a) and 19.01(1)(c) of the Federal Court Rules 2011 (Cth) (Rules), that if Ms Waters did not by 5.00 pm on 26 May 2017 comply with the order made by the Court on 16 October 2014 requiring her to provide security for the ATO's costs then the proceeding against the ATO would be dismissed. (See Waters v Commonwealth of Australia (Australian Taxation Office) [2017] FCA 312 (Primary Decision)).

Legal principles - applications for leave to appeal 9 The Primary Decision is interlocutory. Thus, Ms Waters requires leave to appeal from the Primary Decision: s 24(1A) of the Federal Court Act. 10 The principles that guide the Court in determining whether leave to appeal should be granted are well settled. The Court will consider, first, whether in all the circumstances the decision the subject of the application for leave to appeal is attended with sufficient doubt to warrant its being reconsidered by a Full Court; and, secondly, whether substantial injustice would result if leave were refused, supposing the decision to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Decor Corporation) at 398. 11 In Decor Corporation the Full Court (Sheppard, Burchett and Heerey JJ) said the following about these principles at 399-400: In our opinion, the principles discussed in Niemann and in the other cases to which we have referred provide general guidance which a court should normally accept. However, there will continue to be cases raising special considerations, and the court should not regard its hands as tied in any case beyond this; that by s 24(1A) the legislature has evinced a policy against the bringing of interlocutory appeals except where the court, acting judicially, finds reason to grant leave. When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice - concerning which the High Court has given (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177) a strong warning that "a tight rein" should be kept on appeals - and an interlocutory decision determining a substantive right - where leave will more readily be granted. 12 In Waters Leave to Appeal Flick J, after referring to the principles guiding the exercise of the discretion to grant leave set out in Decor Corporation, said at [8]: In respect to interlocutory decisions affecting matters of practice and procedure it is further recognised that "if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice": Re the Will of F B Gilbert (1946) 46 SR (NSW) 318 at 323 per Jordan CJ. The Chief Justice there went on to observe that if a "tight rein" were not so exercised the "disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal". Appl'd: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ; National Mutual Holdings Pty Ltd v Sentry Corp (1988) 19 FCR 155 at 161 per Bowen CJ, Woodward and Lockhart JJ. The risk to the proper administration of justice is not only posed by those with "a long purse". In respect to decisions involving the exercise of a discretionary judgment, a Court will not intervene unless there is some error of the kind identified in House v R (1936) 55 CLR 499, 10 ALJR 202. Appl'd: Welsh v Digilin Pty Ltd [2008] FCAFC 149 at [16], (2008) 250 ALR 13 at 19 per Tamberlin, Greenwood and Collier JJ. 13 In Food Channel Network Pty Ltd v Television Food Network, G.P. [2009] FCA 1446 at [26] Reeves J observed that a court should be careful to avoid converting a leave application into a preliminary hearing of the appeal and noted that the approach he would adopt in his "assessment of the issues [w]ould be more akin to the 'rough and ready' approach suggested by Brennan CJ and McHugh J in Jackamarra v Karkouer (1998) 195 CLR 516 at [9]".

the application for leave to appeal and the proposed grounds of appeal 14 Ms Waters' application for leave to appeal includes the following grounds: Recusal application 1. The primary judge erred in adopting and applying a legal onus to a fair-minded layperson test for apprehended bias and further erred in having regard to it in the exercise of his Honour's discretion for the disposition of the recusal application. 2. The primary judge erred in having an unreasonable lack of regard in relation to applications generally for disqualification as to the significance of referring to a clause contained in the affidavit evidence of the respondent's solicitor, which had been held as not read by his Honour and held by the Full Court of this Court to be in error. Application to discharge or set aside security 3. The primary judge erred in finding that the respondent had denied the primary allegations made by the applicant. 4. The primary judge erred in placing insufficient regard to and/or having an unreasonable rejection of the applicant's affidavit evidence and proper evidentiary material tendered regarding her tenuous financial position in circumstances where that evidence was accepted by his Honour without qualification and the respondent failed to cross-examine the applicant. 5. The primary judge erred in having an unreasonable lack of regard to undisputed evidence of the unexplained lack of communication by the respondent to the applicant in relation to its costs, yet placed considerable weight on evidence that the applicant had delayed sending a response to correspondence from the respondent for reasons that were identified and cogent. 6. The primary judge erred in finding that the evidence of the applicant that her financial position had not been caused or contributed to by the conduct of the respondent, in circumstances where the applicant tendered evidence to support her claim that the same disability persists today and for which has been identified to date by Centrelink as impacting her ability to find and maintain employment and restrict hours of work 7. The primary judge erred in misconceiving the ground as held by his Honour for the respondent's security for costs order at first instance. 8. The primary judge erred in finding that the order for security was objectively reasonable and would not stultify the proceedings, without considering the evidence, including the medical and financial evidence tendered by the applicant, particularly in circumstances where his Honour held that the financial position of the applicant had altered significantly. Principal errors of law 9. The primary judge fell into jurisdictional error in exceeding authority by referring to and having regard to the applicant's correspondence to the respondent which proposed action by her involving matters confined to the parliament and government, beyond the limit of judicial power. 10. The primary judge erred in holding that the applicant, a lay person who has studied postgraduate law on a limited basis, would not be prejudiced by not having lawyers to represent her in any contested hearing of her substantive matter and further erred in misconceiving the applicant's evidence regarding her ability to afford lawyers to represent her in the substantive matter. 11. The primary judge erred in rejecting the significance of his Honour's finding that the applicant has an arguable case, undisputed and undisturbed, in circumstances where the applicant has regularly invoked this Honourable Court, properly pleaded her substantive matter, in the absence of vexation or other abuse of process. 12. The primary judge erred in abandoning established principles to maintain the authority and predictability of the law of precedent and in so doing, his Honour's discretion miscarried. Substantial injustice 13. Substantial injustice would be caused if leave to appeal is refused as the judgment will deny the applicant a hearing on the merits on her arguable case, as held by the primary judge, undisputed and undisturbed, over three years after filing the originating application, in circumstances where the applicant has regularly invoked this Honourable Court, properly pleaded her substantive matter, in the absence of vexation or other abuse of process. In effect, refusal will finally determine the rights of the parties without any trial of the applicant's serious, unresolved claims. Important issues on appeal 14. The appeal involves important questions as to: a. how evidence on an application for summary dismissal of proceedings for default on payment of security is to be evaluated and assessed, in particular, in circumstances where: i. the applicant has been held to be relatively impecunious; ii. the respondent has made certain admissions in its Defence; and iii. The primary judge held that the applicant has an arguable case, the Court has been regularly invoked, the matter properly pleaded, in the absence of vexation of other abuse of process. b. the public interest in not barring access of individuals, regardless of poverty, to exercise their Constitutional entitlement to access this Honourable Court to have legitimate claims resolved by the seat of judgment. c. what constitutes a significant issue and the articulation of the logical connection between the matter and the alleged deviation from impartial decision-making necessary to decide a case on its merits, in relation to a disqualification application. 15 Grounds 1 to 12 of Ms Waters' application for leave to appeal are repeated in Ms Waters' draft notice of appeal, which accompanied her application for leave to appeal, and are the grounds of appeal Ms Waters would raise should leave to appeal be granted. 16 The proposed grounds of appeal and the additional grounds raised in Ms Waters' application for leave to appeal can, as the ATO submitted, be considered under the following headings: (1) recusal grounds; (2) discharging or setting aside the order for security for costs grounds; (3) error of law grounds; (4) substantial injustice; and (5) public interest.

Recusal grounds 17 Ms Waters submitted that it was sufficiently apparent that a fair-minded lay observer might reasonably apprehend that Waters Security for Costs had created the appearance of bias and that the primary judge might not bring an impartial, unbiased and unprejudiced mind to the resolution of any further decisions in the proceeding. Ms Waters contended that the ground is "defined by the assessment of affidavit evidence of the ATO's solicitor, the impressionistic view and with respect, inferences and speculation that were drawn to characterise the evidence as unequivocally supporting the ATO's case". 18 Ms Waters submitted that in Waters Security for Costs at [17] the primary judge relied on evidence that was not read by the ATO at the hearing of its application for security for costs. Ms Waters referred to the judgment of Katzmann J in Waters Leave to Appeal at [52], where her Honour said, referring to the evidence in question, that "[o]bjection 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". Ms Waters submitted that inadmissible and excluded evidence had been taken into account by the primary judge in Waters Security for Costs, which caused her prejudice, and that "this may continue in future decisions where an objective assessment of evidence were to be required" by the primary judge. 19 Ms Waters further submitted that this ground constituted an "articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits", relying on Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337. She contended that the evidence in question was the only evidence adduced by the ATO to discharge its legal onus to establish the threshold question of impecuniosity for the purposes of its security for costs application and that the failure to lead credible evidence, according to the authorities, means no entitlement to security existed. 20 Ms Waters submitted that the primary judge "airbrushed this error out by stating that, 'Justice Katzmann also pointed out in [52] and [53] of Waters leave to appeal that the error was not inconsistent with Ms Waters' own evidence'". Ms Waters submitted that, in so doing, having adopted and applied a legal onus to a fair-minded layperson test for apprehended bias, the primary judge erred. Ms Waters further submitted that the primary judge's reference to excluded evidence that was critical to establishing the ATO's case is a "significant issue", as articulated in Kwan v Kang & 2 Ors [2003] NSWCA 336 (Kwan) at [86]-[87]. Ms Waters contended that the main thrust of her submission was that the primary judge did not appreciate the difference between the finding by Katzmann J in Waters Leave to Appeal at [52] and the test for recusal. 21 The principles to be applied in determining whether there should be disqualification for apprehended bias are set out in the Primary Decision at [14] to [16]. They were not in dispute. As the primary judge identified at [15], the central question is whether a fair-minded and informed lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question that he or she is required to decide. The primary judge noted that this involved two essential steps, namely: (1) an identification of what was said might lead a judge to decide a case other than on its legal and factual merits; and (2) an articulation of the logical connection between the matter and the feared deviation from the course of deciding a case on its merits. 22 The primary judge refused the recusal application. His Honour did so after considering each of the matters raised by Ms Waters as to why he should recuse himself and concluding that there was no logical connection between each of the matters complained of and why he might not determine Ms Waters' interlocutory application on its merits. 23 The mere fact that the primary judge determined the security for costs application against Ms Waters is not sufficient to create an appearance of bias or to conclude that the primary judge might not bring an impartial mind to the resolution of the FCA Proceeding. That proposition simply addresses the first limb of the test in determining whether there is apprehended bias that would lead to recusal, that is, what is said might lead a judge to decide a case other than on its legal and factual merits. 24 Central to Ms Waters' submissions is the primary judge's reference at [17] of Waters Security for Costs to evidence included in an affidavit of the solicitor for the ATO that was not read and the effect of the findings of Katzmann J in relation to that matter in Waters Leave to Appeal at [52]. In order to consider Ms Waters' submissions it is useful to set out the relevant part of the decision of Katzmann J, with whom North J agreed, in Waters Leave to Appeal at [49]-[53]: 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. 25 The primary judge's reference to evidence that was not read by the ATO was found by Katzmann J to be an error on which nothing turned because it was not inconsistent with Ms Waters' own evidence. 26 Further, Ms Waters' reliance on Kwan does not take the matter any further. The passages relied on by Ms Waters at [86]-[87] are as follows: 86 It is not unknown for judges to make findings on an interlocutory issue and to express those findings in a way that indicates that they have come to a final conclusion. If that conclusion is as to a significant issue on which the ultimate result of the trial depends, and further evidence is still to be led and final addresses are still to be made, the likely consequence is that the judge concerned will have to disqualify himself or herself. 87 The reason for this is that a finding expressed in terms of finality, when made at an interlocutory stage, will usually give the impression that the judge's mind is made up. If the judge's mind is made up before evidence and final addresses are complete, it will mean that a conclusion has been unfairly arrived at. There is then likely to be an apprehension that, when the time comes to give final judgment, the judge might not be impartial or might be prejudiced against the party who was unsuccessful in the interlocutory judgment. It will then not merely be an apprehension that the judge will decide the case adversely against that party. 27 The primary judge's reliance at [17] of Waters Security for Costs on the evidence that was not read was not a finding expressed in terms of finality on a significant issue which would lead a fair-minded layperson to believe that his Honour's mind was made up in the sense described in Kwan. The finding was included in a part of the judgment that set out background matters. It was a finding of fact in connection with an application for security for costs which, although an error, was said to be immaterial by a majority of the Court in Waters Leave to Appeal. There was no departure by the primary judge "from the law of precedent in security for costs applications and the moving party's legal and evidentiary onus to lead credible evidence" as contended by Ms Waters. That that is so is evident from Waters Leave to Appeal and the outcome of Ms Waters' subsequent applications to the High Court. 28 The draft grounds of appeal relied upon by Ms Waters in relation to the recusal application do not lead me to conclude that the Primary Decision, insofar as it addresses the recusal application, is attended with sufficient doubt to warrant its being considered by a Full Court.

Discharging or setting aside the order for security for costs grounds 29 Ms Waters submitted that in dismissing her application to discharge or set aside the security for costs order the primary judge fell into "fundamental, interrelated errors in relation to evidence admitted to the Court". Ms Waters further submitted that the primary judge accepted at [59] of the Primary Decision that her circumstances had changed significantly since the order for security for costs was made. She contended that that finding, together with the evidence led by the ATO on its application for security for costs, leaves the question as to the basis on which security was ordered "at first instance", at which time Ms Waters owned her own residence, then sold it at a significant profit, which was prima facie evidence that she could have met an adverse costs order ameliorating the ATO's risk. Ms Waters also submitted that "[f]urther conflicting reasons held by the primary judge were such that it was not reasonable to discharge or set security aside based on that contrasting change in circumstances". Ms Waters contended that "the duality of [the primary judge's] approach is replete with inconsistencies" and, "by reason [of] the findings, are erroneous". 30 Ms Waters submitted that the primary judge was inconsistent in the assessment of her evidence in that he accepted at [59] of the Primary Decision that she "ha[d] other debts and need[ed] to meet her ongoing daily living expenses", but noted her evidence and submissions that she had a subsisting disability assessed by Centrelink, was on a Newstart benefit and decided to restore her lost superannuation given her age, among other things. Ms Waters also noted that the evidence on which she wished to rely in relation to poverty in Australia to elucidate the financial challenges she was facing was rejected as irrelevant by the primary judge. She contended that this evidence provided a clear, objective, factual indicator that she was living below the poverty line and required access to her savings in order to meet reasonable expenses. Ms Waters submitted that, in light of the primary judge's inconsistencies and, to some extent, lack of regard to her evidence, particularly in relation to her financial affairs, she has adduced further evidence in her affidavit sworn 21 June 2017 on which she relies in her application for leave to appeal. 31 Ms Waters submitted that the primary judge's finding at [64] of the Primary Decision that she had failed to convince the Court that the ordering of security for costs would not stultify the FCA Proceeding was made on an incomplete picture of her evidence. Ms Waters further submitted that before the primary judge she relied on the affidavit of her former solicitor, Michael Gerard Coffey, upon which she had also relied at the hearing of the ATO's application for security for costs, and that she asked the primary judge to reassess Mr Coffey's evidence. She submitted that Mr Coffey's affidavit provided cogent evidence that her financial position was caused by the ATO. Ms Waters noted that her submission to the primary judge was that, should she have to meet an order for security for costs, her ability to run her justiciable claims would be stultified because she would not be able to afford to pay lawyers and would, on that basis, have no prospect of success. Ms Waters submitted that the primary judge's observations at [64] in relation to her ability to appear for herself were "not substantiated by the grim statistics calculating success of self-represented litigants in this Honourable Court" and that "[t]o suggest that self-represented litigants, regardless of upper tertiary education, would not suffer prejudice without lawyers in any contested hearing on the merits, is without any practical foundation". 32 Ms Waters submitted that the determinative factor in ordering security for costs was set out at [48] of Waters Security for Costs, where the primary judge held that "most significantly, there are three costs orders against the applicant in the ATO's favour which have not been paid and in respect of which Ms Waters has refused meaningfully to engage". Ms Waters referred to [56] of the Primary Decision, where the primary judge noted that "Ms Waters' past conduct in relation to the outstanding legal costs in proceedings apart from these was a matter which was taken into account in determining whether or not to make an order for security for costs … But there were many other matters taken into account …". Ms Waters further submitted that there were no such other determinative matters, apart from criticism at [63] of Waters Security for Costs of her having failed to "provide more detailed evidence as to her financial affairs", which related to Ms Waters' evidentiary onus to prove stultification and not the legal onus borne by the ATO as moving party. 33 Ms Waters contended that the lessening of focus by the primary judge on her apparent lack of communication with the ATO to settle its previous costs orders provided a gateway for the primary judge to hold a lack of regard for engagement by the parties as to previous costs orders since Waters Security for Costs. She contended that the primary judge also had no regard to the ATO's lack of any substantive response to any written correspondence either from Ms Waters or her former solicitor from 6 May 2016. She further contended that, from that date, the only opportunity she had to communicate with the ATO's solicitors was the day on which her interlocutory application was listed for directions, 6 December 2016. 34 Ms Waters also submitted that at [80]-[88] of the Primary Decision the primary judge rejected the precedent set by the authorities that she relied on to support her fall-back contention of stultification owing to her change in financial circumstances and that his Honour preferred the approach of "wide power" of unfettered judicial discretion. Ms Waters further submitted that "such unfettered judicial power can not (sic) abrogate the ATO's onus to establish the sine qua non to begin the discretion" and that the primary judge erred in dismissing the relevance of those authorities, especially in light of the fact that her matter was at first instance and not on appeal. 35 The focus of Ms Waters' submissions is on the primary judge's findings at [59] and [64] of the Primary Decision, addressing Ms Waters' financial position and the issue of stultification respectively. 36 Before turning to the particular issues raised it is convenient to summarise the Primary Decision insofar as it concerns Ms Waters' application to vary or discharge the security for costs order. In considering that application: (1) the primary judge first set out the Court's power to vary or discharge an order for security for costs and the test to apply; (2) his Honour then addressed, by way of clarification, a claim made by Ms Waters that the solitary ground for the ATO's original security for costs application was the unpaid costs orders in proceedings other than the FCA Proceeding. His Honour noted that the security for costs order was intended to secure the ATO's costs of the FCA Proceeding from the date of its commencement until final determination, as was made clear at [69] of Waters Security for Costs. His Honour observed that it was also noted at [18] of Waters Security for Costs that the ATO's solicitor gave evidence that, on her instructions, the ATO was seeking protection for any costs incurred in defending the FCA Proceeding in circumstances where, at that time, Ms Waters had not paid three extant costs orders. The primary judge said at [56]: Without doubt, Ms Waters' past conduct in relation to the outstanding legal costs in proceedings apart from these was a matter which was taken into account in determining whether or not to make an order for security of costs, as is made clear in [55] and [69] of the reasons for judgment. But there were many other matters taken into account, both for and against making such an order, as is evident from those reasons for judgment (see [47] ff). (3) the primary judge then set out the reasons why he did not consider that Ms Waters had established a sufficient basis for varying or discharging the security for costs order. His Honour noted, accepting Ms Waters' evidence of what she described as material changes in circumstances since October 2014, that he did not consider that the matters raised by her rendered enforcement of the security for costs order unjust in all the relevant circumstances of the case. At [59]-[61] the primary judge said: 59 When the security for costs order was made, it is fair to say that, at that time, in relative terms Ms Waters was asset rich and cash poor. That has now changed with the sale of her residential property on 26 July 2016. As the ATO pointed out, when Ms Waters finalised her affidavit dated 22 December 2006 she had cash deposits totalling $97,000. That sum of money was available to her after she had repaid the loan and interest to her father in the amount of $103,000. I accept that Ms Waters has other debts and needs to meet her ongoing daily living expenses (which were not particularised by her). But it is difficult to resist the ATO's submission that Ms Waters made a choice not to seek to obtain a bank guarantee in the amount of $30,000 or otherwise pay that sum as security for costs, rather than use the net proceeds as she did. Ms Waters explained why she placed $50,000 of the net proceeds on fixed deposit and with a view to restoring her lost superannuation. That was an informed choice by her. It is not a matter for the Court to determine whether or not Ms Waters' personal financial choices were sound. The important point is that the choices were made by Ms Waters in circumstances where she could otherwise have used the available money to satisfy the security for costs order, whether by bank guarantee or otherwise. The stay would then have been lifted. 60 The same can be said in respect of her decision to put $47,000 into her savings account. Ms Waters did not provide any details of her living expenses. It is entirely unclear whether she pays any rent for living in her great aunt's residential property. It may be assumed that she does have ongoing living expenses, but their quantum remains unclear. Ms Waters tendered in evidence extracts from a report entitled "Poverty in Australia 2016" by the Australian Council of Social Service, which contains statistics and statements concerning the median income poverty line for a single adult in 2014. In the Executive Summary, it is stated that, while an overall minority of people receiving social security payments fell under the poverty line in 2014 (36.1%), a majority of Newstart recipients (55%) were in that category. Furthermore, it states that a single person with no children on Newstart in 2013-14 fell $109.55 per week below the poverty line. It is difficult to see how this material assists Ms Waters' interlocutory application. The material relates to 2014 and provides no adequate evidentiary foundation to obtain a clear understanding Ms Waters' individual financial circumstances and living expenses, even as a recipient of Newstart, in late 2016 or at the date of the hearing of her interlocutory application. 61 Ms Waters' unchallenged evidence regarding her Centrelink benefits, her repayment of a debt to Centrelink and what she was told concerning the "preclusion period" should be accepted. The fact remains, however, that when Ms Waters swore her affidavit she had available to her an amount in cash of $97,000, which she could have used to pay the security for costs, including if necessary a security for a bank guarantee, but she chose not to do so. (4) the primary judge concluded that, based on the evidence relied upon by Ms Waters and her submissions, he was not persuaded that there had been any relevant change to the matters which underpinned the decision to require her to pay security for costs; (5) the primary judge then referred to the discussions between the parties on the issue of the outstanding costs orders. His Honour, having considered the correspondence that passed between the parties, noted that in the ATO's letter dated 6 May 2016, addressing an invitation to reconsider an earlier proposal which had been made on Ms Waters' behalf or, alternatively, make a counteroffer to settle the substantive matter, the ATO gave no assurance that a substantive response would be provided to Ms Waters. The primary judge also noted that it appeared that there was no further communication between the parties prior to the directions hearing on 6 December 2016, when it must have been apparent to Ms Waters that the ATO was still pressing for payment of the outstanding costs orders, and that Ms Waters did not give any evidence of any step taken by her from that date to 21 March 2017 to seek to resolve any of the outstanding costs orders: at [62]-[63]; and (6) at [64] the primary judge found that none of the material relied on by Ms Waters put in doubt his previous finding that her impecuniosity was not caused by the ATO's conduct, nor was he persuaded that he should depart from his earlier conclusion that the security for costs order would not have the effect of stultifying the proceeding. His Honour continued: … It is evident that, despite the making of that order, Ms Waters was able to retain solicitors and counsel to represent her in proceedings in the Full Court of this Court and two proceedings in the High Court. Ms Waters' submissions concerning stultification related to the consequences of what she said was her financial inability to retain lawyers to act for her in the substantive proceeding. I do not accept that the proceeding is necessarily stultified if Ms Waters is unable to obtain legal representation. As noted above, she appeared for herself in support of her interlocutory application and to oppose the ATO's interlocutory application. Ms Waters impressed me as an intelligent and highly competent person. Her written submissions were clear and coherent and of considerable assistance to the Court. Her oral submissions, which were of considerable but not unreasonable length, were relevant and focused. Ms Waters displayed a high level of skill as an advocate. This included taking the Court to relevant passages of several authorities which Ms Waters relied upon in support of her case. In my respectful view, Ms Waters more than held her own in presenting her case. I accept that the presentation of her substantive case would be more demanding but, based upon my observations of Ms Waters, I do not doubt that she would be able competently to present that case. Accordingly, I do not accept her submissions concerning stultification, focused as they were on her inability to retain legal advisers. 37 Turning first to Ms Waters' submissions to the effect that the primary judge's assessment of the evidence was inconsistent. The primary judge accepted Ms Waters' evidence and set out its effect at [59] of the Primary Decision, noting that, after sale of her residential property and the repayment of a loan and interest owing to her father, she had cash deposits of $97,000. The primary judge accepted that Ms Waters had ongoing daily living expenses, although they were not particularised, but found that Ms Waters had made a choice not to pay $30,000 as security for costs. His Honour found that she had chosen instead to use the net proceeds as she did, placing $50,000 in a fixed deposit, with a view to restoring her lost superannuation, and $47,000 into her savings account. That is, the primary judge was concerned with the choice that Ms Waters had made. 38 On the application for leave to appeal Ms Waters relied on an affidavit sworn by her on 21 June 2017 in which, among other things, she set out her living expenses in more detail. That evidence was not before the primary judge and, as such, cannot assist me. In any event, Ms Waters gave evidence by way of affidavit in support of her application to vary or discharge the security for costs order and was not cross-examined by the ATO. As the primary judge observed at [58] of the Primary Decision, he accepted the evidence given by Ms Waters, which included evidence as to her financial position. In effect, her evidence before the primary judge was taken at its highest, a factor that must have weighed in Ms Waters' favour. 39 The other focus of Ms Waters' submissions concerns the primary judge's finding at [64] that the security for costs order would not have the effect of stultifying the FCA Proceeding. The submission put to the primary judge by Ms Waters was that the effect of the security for costs order would be to stultify the proceeding because Ms Waters would be unable to obtain legal representation. The primary judge did not accept that that would necessarily be the case, noting that Ms Waters had appeared for herself on the application for recusal and to discharge or vary the order for security. Ms Waters submitted that his Honour's finding was based on an incomplete picture of her evidence. However, when regard is had to [64] it is evident that the primary judge considered and rejected both arguments put by Ms Waters, namely, that her impecuniosity was caused by the ATO's conduct and that the security for costs order would stultify the proceeding, based on the material relied on and the submissions made by Ms Waters. 40 In my opinion, having regard to the relevant part of the Primary Decision, the exercise of discretion by the primary judge to refuse to discharge or set aside the security for costs order is not attended with sufficient doubt such that it ought to be reconsidered on appeal.

Error of law grounds 41 Ms Waters submitted that the primary judge fell into jurisdictional error at [45] of the Primary Decision "in exceeding judicial authority by referring to and having regard to [her] letter to the ATO which proposed action by her involving matters confined to the Parliament of Australia and Australian Government, beyond the limit of judicial power". Ms Waters relied on the decision in Craig v The State of South Australia (1995) 184 CLR 163 at [12]. She further submitted that the quotation extracted by the primary judge was extensive and could not be dismissed as "mere chronological reference and therefore of less significance". 42 Ms Waters also submitted that the primary judge erred in diminishing the significance of his finding at [67] of Waters Security for Costs that she has an "arguable case", which she submitted was undisputed and undisturbed by the Full Court. Ms Waters contended that, whether ordered by virtue of s 56(4) or s 31A of the Federal Court Act, summary dismissal without her arguable claim being heard is a miscarriage of justice. In support of that submission Ms Waters referred to the decisions establishing the need to consider "with heavy caution" the ordering of summary dismissal; noted that there has been no direction that Ms Waters' pleading does not conform with the Rules, nor has any application been made for its strike out or summary dismissal; and contended that she accessed this Court "as regularly invoked, properly pleaded, and 'arguable case'". 43 In my opinion, the primary judge did not err in the ways contended for by Ms Waters. First, by quoting from the letter from Ms Waters to the ATO at [45] of the Primary Decision, the primary judge did not fall into jurisdictional error as submitted by Ms Waters. That letter formed part of the chronology of correspondence between the parties about the outstanding costs orders in favour of the ATO. The primary judge did nothing more than recite part of that letter insofar as he considered it was relevant to the issues before him for determination. 44 Secondly, Ms Waters' reliance on Spencer v The Commonwealth of Australia (2010) 241 CLR 118 and other decisions in which courts have observed that the power to summarily terminate a proceeding should be exercised with caution is misplaced. Those cases were concerned with the exercise of summary dismissal powers by the courts which in this Court is found in s 31A of the Federal Court Act. The Primary Decision concerned, among other things, the exercise of discretion under s 56(4) of the Federal Court Act, which empowers the Court or a Judge to order that a proceeding be dismissed if security is not given in accordance with an order made under s 56. 45 Insofar as the primary judge indicated at [67] of Waters Security for Costs that he was prepared to accept that Ms Waters had an arguable case, that was a factor which, as the primary judge identified, was relevant to and weighed in her favour in considering whether an order for security should be made. Further, as the primary judge explained at [71] of the Primary Decision, the statement made by his Honour at [67] of Waters Security for Costs was made "in the context of the well settled principle that the Court should not engage in a detailed assessment of the strength or weakness of a case at the interlocutory stage" and that "[t]he significance of the statement is confined to the express purpose for which it was made".

Substantial injustice 46 Ms Waters submitted that the effect of the dismissal of the FCA Proceeding was to cause her significant injustice and that the dismissal is not in the interests of the administration of justice. She further submitted that her substantive rights have been denied without a hearing on the merits of her "proper, justiciable claims, and in doing so, has placed an impermissible fetter on first instance access to the Federal Court". 47 Ms Waters contended that the provision of security is oppressive in the sense that its effect is merely to deny her right to litigate and recover her just rights at law and to stifle her substantive matter. Ms Waters says that the primary judge's approach to her application to have the oppressive security discharged or set aside was "a wrongful and unreasonable exercise of his Honour's discretion, causing significant injustice" to her and that there is no evidence in the Primary Decision that the primary judge exercised caution as was required when ordering self-executing summary dismissal of her substantive matter. 48 The order for security for costs was made in 2014. As I have already observed, it required Ms Waters to provide security for the ATO's costs in the amount of $30,000. That order was made having regard to Ms Waters' circumstances at the time. Ms Waters was unsuccessful in her application for leave to appeal to a Full Court of this Court from the decision in Waters Security for Costs and in subsequent applications to the High Court. Ms Waters' application to have the order for security discharged or varied also failed. In considering that application the primary judge had regard to all of the matters put to him, including the outstanding costs orders in favour of the ATO which had not been satisfied. 49 The effect of the orders made by the primary judge was to accede to the application made by the ATO that the FCA Proceeding be dismissed. But that order only took effect after Ms Waters was given a further period of two months to provide the security for costs the subject of Order 1 made on 16 October 2014. The orders made did not deny Ms Waters her right to litigate. They provided her with a further period of time to provide the security for costs as ordered and, in the absence of her doing so, the FCA Proceeding was dismissed.

Public interest 50 Ms Waters submitted that she had adduced cogent evidence in her affidavit sworn on 21 June 2017 that her case is in the public interest. The evidence to which Ms Waters referred is an article which appeared in the Australian Financial Review on 12 April 2017 titled "Ex-ATO staffer claims bullying". Ms Waters submitted that the publication of her story was initiated by the Australian Financial Review. 51 The evidence relied on by Ms Waters does not demonstrate that it is in the public interest for there to be a grant of leave to appeal. In Australian Securities and Investments Commission v P Dawson Nominees Pty Ltd (2008) 169 FCR 227 a Full Court of this Court (Heerey, Moore and Tracey JJ) granted leave to appeal from an interlocutory judgment because their Honours were of the view that the questions in the case had "general importance beyond the concerns of the parties" and there was some divergence of Australian authority at intermediate appellate level: at [10]. The questions posed in Ms Waters' application for leave to appeal concern the exercise of discretion on matters of practice and procedure. The public interest is not engaged.

Conclusion 52 For the reasons set out above I am not satisfied that the Primary Decision is attended with sufficient doubt to warrant its being considered by a Full Court. Nor am I satisfied that substantial injustice would result if leave were refused, supposing the decision to be wrong. It follows that Ms Waters' application for leave to appeal should be dismissed and Ms Waters should be ordered to pay the ATO's costs of the application. I will make orders accordingly. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.

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