Chang v Comcare Australia

Case [1999] FCA 1677

FEDERAL COURT OF AUSTRALIA

Chang v Comcare Australia [1999] FCA 1677

PRACTICE AND PROCEDURE – security for costs – application to set aside consent orders of Administrative Appeals Tribunal made pursuant to heads of agreement on grounds of duress or lack of mental capacity – whether applicant is impecunious – whether applicant likely to be able to establish duress – whether applicant likely to be able to establish lack of mental capacity – present indebtedness of applicant – quantum of security

PAUL MENG CHANG v COMCARE AUSTRALIA and COMMONWEALTH OF AUSTRALIA

AG 125 of 1998

NG 1287 of 1998

MOORE J
1 DECEMBER 1999
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

AG 125 of 1998
NG 1287 of 1998

BETWEEN:

PAUL MENG CHANG
Applicant

AND:

COMCARE AUSTRALIA
First Respondent

COMMONWEALTH OF AUSTRALIA
Second Respondent

JUDGE:

MOORE J

DATE OF ORDER:

1 DECEMBER 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.In proceedings AG 125 of 1998, the applicant provide security for the Commonwealth’s costs in the sum of $10,000 and Comcare Australia’s costs in the sum of $35,000.

2.If the applicant fails to comply with the order to provide security in accordance with order 1 within 28 days the proceedings be dismissed.

3.        The applicant pay the costs of the application for security.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

AG 125 of 1998
NG 1287 of 1998

BETWEEN:

PAUL MENG CHANG
Applicant

AND:

COMCARE AUSTRALIA
First Respondent

COMMONWEALTH OF AUSTRALIA
Second Respondent

JUDGE:

MOORE J

DATE:

1 DECEMBER 1999

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Introduction

  1. The applicant, Mr Chang, has two applications before the Court.  The first application (NG 1287 of 1998) (“the judicial review proceedings”) was filed on 25 November 1998 under the Administrative Decisions (Judicial Review) Act 1977 (Cth) for judicial review of a decision of the Administrative Appeals Tribunal (“the AAT”). The first respondent was the Productivity Commission (“the Commission”) and the second respondent was Comcare Australia (“Comcare”). The second application (AG 125 of 1998) (“the appeal proceedings”) was filed on 16 December 1998 under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) and was an appeal from the same decision on a question of law. The first respondent was Comcare and, in due course, the second respondent was the Commonwealth. On 18 February 1999 I stood the judicial review proceedings over generally pending the outcome of the appeal proceedings.

    Nature of present application

  2. The Commonwealth has applied for orders that Mr Chang provide security for costs in the sum of $15,000.00.  Comcare has sought security in the sum of $51,000.00.  At the commencement of the hearing of the applications for security on 7 October 1999, it was proposed by counsel for Comcare that I decide whether security should be ordered in the appeal proceedings on the basis that the decision would effectively resolve…

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Chang v Comcare Australia [1999] FCA 1677
Case
[1999] FCA 1677
Decision Date

CaseChat Overview and Summary

In Chang v Comcare Australia, the Commonwealth and Comcare Australia applied for security for costs in relation to proceedings brought by Mr Chang against decisions of Comcare. The Commonwealth sought $15,000 and Comcare sought $51,000. Mr Chang, a former employee of the Commission, had previously appealed decisions of Comcare related to claims for compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth). These appeals included challenges to Comcare’s rejection of claims for compensation and rehabilitation assessment, which were ultimately settled, leading to a decision by the AAT ordering Comcare to pay compensation and Mr Chang’s costs. Mr Chang subsequently applied for judicial review of the AAT decision. The court was required to determine whether special circumstances existed to justify ordering security for costs, considering Mr Chang’s impecuniosity, his prospects of success, and whether the respondents would be unable to recover their costs if they were successful.

The court held that special circumstances existed warranting an order for security. Mr Chang’s prospects of success were deemed limited, and the respondents would be unable to recover costs if they were successful in the current proceedings due to his bankruptcy. Mr Chang had also not satisfied an earlier liability to pay costs from previous proceedings. The court ordered Mr Chang to provide security for the Commonwealth’s costs in the sum of $10,000 and for Comcare’s costs in the sum of $35,000. If Mr Chang failed to comply with the order within 28 days, the proceedings would be dismissed. The court also ordered Mr Chang to pay the costs of the application for security.

Orders

Orders of the court

1. In proceedings AG 125 of 1998, the applicant provide security for the Commonwealth’s costs in the sum of $10,000 and Comcare Australia’s costs in the sum of $35,000.

2. If the applicant fails to comply with the order to provide security in accordance with order 1 within 28 days the proceedings be dismissed.

3. The applicant pay the costs of the application for security.

Background

Background to the litigation

The Commonwealth has applied for orders that Mr Chang provide security for costs in the sum of $15,000.00. Comcare has sought security in the sum of $51,000.00. At the commencement of the hearing of the applications for security on 7 October 1999, it was proposed by counsel for Comcare that I decide whether security should be ordered in the appeal proceedings on the basis that the decision would effectively resolve the question of security in the judicial review proceedings. This appeared to be accepted by counsel appearing for Mr Chang. Background Mr Chang is a former employee of the Commission, who commenced employment with the Commission as an economist in 1989. Over the years 1990 to 1998, Mr Chang made a number of applications to Comcare pursuant to the Safety, Rehabilitation and Compensation Act 1988 (Cth) for, among other things, repetitive strain injury and occupational overuse syndrome. Some of these resulted in earlier proceedings before the AAT and the Federal Court. In 1993 Comcare rejected claims for compensation and rehabilitation assessment, and Mr Chang successfully challenged these decisions by way of appeal to the AAT: Meng Chang v Comcare (unreported, A93/78 and A93/79, AAT No 10525, 13 November 1995). On 25 October 1996 Finn J in the Federal Court upheld an appeal by Comcare on one aspect of the AAT’s decision and ordered Mr Chang to pay Comcare’s costs of the appeal: Comcare v Meng Chang [1996] FCA 927. On 25 June 1997 the Full Court dismissed with costs an appeal by Mr Chang from the decision of Finn J. The present proceedings relate to two decisions of Comcare, on 30 May 1996 and 30 July 1996, rejecting claims by Mr Chang for compensation. On 1 August 1996 Mr Chang appealed against these decisions to the AAT. The hearing of the appeal commenced on 16 November 1998. On 20 November 1998 the proceedings were settled, the parties signed heads of agreement and consent orders were agreed. The circumstances in which settlement was reached is in issue and I consider the evidence later in this judgment. On the same day, the AAT made a decision pursuant to s 42C of the AAT Act (“the AAT decision”), setting aside the decisions under review and ordering Comcare to pay compensation for medical treatment and Mr Chang’s costs in those proceedings. The heads of agreement also provided for Mr Chang’s voluntary redundancy from the Commission. On 21 November 1998, Mr Chang’s voluntary redundancy was processed by the Commission in accordance with the heads of agreement. Also on that day Mr Chang wrote to the Commission requesting details of payments due to him under the heads of agreement and specifying a bank account for payment. On 25 November 1998 the Commission advised Mr Chang of his voluntary redundancy entitlements, which totalled $54,740.60. On the same day Mr Chang notified the Commission that he had filed an application for judicial review of the AAT decision. On 27 November 1998 Mr Chang instructed the Commission to pay the $54,740.60 into a nominated bank account. On 1 December 1998 the Commission paid Mr Chang this amount in accordance with his instructions. On 16 December 1998 Mr Chang commenced the appeal proceedings.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MOORE J
A further relevant consideration in support of ordering security is the fact that Mr Chang has an existing liability to Comcare to pay costs arising from costs orders made by Finn J and by the Full Court: see Bride v Stewart (unreported, French J, 19 January 1990).Conclusion Order 53 r 8 is in terms that makes it clear that it is only in exceptional cases that security for costs should be ordered. The circumstances must be “special circumstances”. Thus there is a clear bias in the rule against ordering security. Accordingly, authorities to which reference has been made to this point concerning the ordering of security have to be approached with this in mind. However the present case is one where, in my opinion, Mr Chang has limited prospects of success, the respondents will be unable to recover their costs if they succeed and Mr Chang has obtained the benefit of the decision which he now seeks to impugn. In addition he has not satisfied an earlier liability to pay costs pursuant to orders made by this Court. I am satisfied that special circumstances exist which warrant an order for security for costs. The evidence as to the likely costs that the respondents will incur in the proceedings is as follows. Ms Hawkins, solicitor for the Commonwealth estimated future party/party of costs and disbursements to be in the order of $15,000. Comcare’s party/party costs for the proceedings are estimated to be $51,000. These figures were not challenged but I was invited by Mr Chang’s counsel to discount these figures. It is appropriate, in my opinion, to order that Mr Chang provide security for the Commonwealth’s costs in the appeal the sum of $10,000 and Comcare in the sum of $35,000.

Ratio Decidendi

Legal Principle Established

Established by: MOORE J

In oral argument, counsel for Comcare in these proceedings submitted that the fact of the $54,740.60 payment and the implausibility of the applicant’s explanation for its dissipation provided strong grounds for doubting that Mr Chang is impecunious. However, in supplementary submissions counsel for Comcare accepted that if any of the $54,740.60 remained in Mr Chang’s hands as at 20 May 1999, such monies would have vested in the Official Trustee and would be divisible among Mr Chang’s creditors: Bankruptcy Act ss 58, 115(2), 116(2). Likewise, if any of the $54,740.60 was disposed of by Mr Chang in order to defeat creditors or “as a preference”, such monies may still be available to the Official Trustee: ss 121, 122. However, while Comcare may prove in Mr Chang’s bankruptcy for the costs it is owed in respect of the earlier proceedings before Finn J (Bankruptcy Act s 82; Re British Gold Fields of West Africa [1899] 2 Ch 7), any liability incurred by Mr Chang in respect of costs in these proceedings would not be provable in his bankruptcy. Thus, irrespective whether Mr Chang has spent, as he contends, the $54,740.60 he was earlier paid, the respondents will be unable to recover any costs incurred in these proceedings even if they are successful and a costs order made in their favour.Principal considerations as to whether security should be ordered The power of the Court to order security is contained in s 56 of the Federal Court of Australia Act 1976 (Cth) and O 53 r 8 of the Federal Court Rules. Section 56 provides:“56 (1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him or her.(2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs.(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security.”Order 53 r 8, which concerns appeals from the AAT, provides:“8 (1) The Court may, in special circumstances, order that such security for costs of appeal to the Court be given as it thinks fit.(2) Subject to sub-rule (1), no security for costs of an appeal to the Court shall be required.”The submissions of counsel raised the following considerations:Mr Chang’s impecuniosity While impecuniosity is not, by itself, sufficient to warrant an order for security, it is generally a relevant consideration: Barton v Minister for Foreign Affairs (1984) 2 FCR 463 at 469 per Morling J; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972 at 50,635 – 50,636 per Hill J. Mr Chang is impecunious at least in the sense that Mr Chang will not be able to satisfy any order for costs. Moreover, counsel for Comcare submitted that the applicant’s impecuniosity was not caused or contributed to by Comcare and does not arise out of the settlement of the compensation proceedings. Counsel for Mr Chang did not attempt to argue otherwise.The applicant’s prospects in the litigation