Khoury v Macquarie Air Pty Ltd
[2023] FedCFamC2G 992
•3 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Khoury v Macquarie Air Pty Ltd [2023] FedCFamC2G 992
File number(s): SYG 1451 of 2022 Judgment of: JUDGE GIVEN Date of judgment: 3 November 2023 Catchwords: INDUSTRIAL LAW – Security for costs – need to consider application of s 570 of Fair Work Act 2009 (Cth) prior to assessing security application – where respondent relied exclusively on s 570(2)(b) – where applicant resident outside Australia Legislation: Fair Work Act 2009 (Cth) ss 470, 611
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 215
Federal Circuit Court of Australia Act 1999 (Cth) s 80
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 22.01
Cases cited: Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd (2020) 283 FCR 123
Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1
Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Elshanawany v Greater Murray Area Health Service [2004] FCA 1272
Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972
Haley v Laing O'Rourke Australia Management Services Pty Ltd [2021] FCCA 257
Kiefel v State of Victoria [2014] FCA 604
Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377
Madgwick v Kelly (2013) 212 FCR 1
Nalbandian v Commonwealth of Australia (Australian Bureau of Statistics) [2015] FCCA 2094
Sheather v Staples Waste Removals Pty Ltd [2012] FCA 998
United Voice v Secom Australia Pty Ltd [2015] FCCA2358
Waters v Commonwealth of Australia (Australian Taxation Office) [2014] FCA 1107
Woodhouse v McPhee (1997) 80 FCR 529
Zornada v St John Ambulance Australia (WA) Inc (2013) 237 IR 48
Zou v Superway Pty Ltd [2021] FedCFamC2G 144
Division: Division 2 General Federal Law Number of paragraphs: 48 Date of hearing: 18 August 2023 Place: Sydney Solicitor for the Applicant: Mr C Shamsabad of Solve Legal Pty Ltd Counsel for the Respondent: Mr I Latham Solicitor for the Respondent: Priest Legal ORDERS
SYG 1451 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAWZI KHOURY
Applicant
AND: MACQUARIE AIR PTY LTD ACN 634 239 302
Respondent
ORDER MADE BY:
JUDGE GIVEN
DATE OF ORDER:
3 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The application in a proceeding filed for the respondent on 18 July 2023 is dismissed.
2.The applicant must file and serve any further Amended Statement of Claim, on or by 24 November 2023.
3.The respondent must file and serve any Amended Defence, on or by 15 December 2023.
4.The proceedings are listed for further directions before Judge Given at 9.30am on 19 December 2023 at court 13.1 level 13, 80 William Street, Woolloomooloo.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE GIVEN:
Before the Court is an application in a proceeding filed for the respondent on 18 July 2023, seeking an order that the applicant give security for some part of the respondent’s costs, and that the proceedings be stayed until such security is given (application).
BACKGROUND
On 6 October 2022, the applicant commenced the instant proceedings alleging contraventions of the Fair Work Act 2009 (Cth) (Act) and seeking payments for loss and damage in the sum of $182,599.68, said to be principally comprised of unpaid wages and superannuation owed to the applicant.
On 26 October 2022, I made orders for the preparation of the matter and referred the proceedings to mediation. That mediation was unsuccessful, following which the proceedings returned before me for further directions on which occasion leave was granted to the applicant to file any Amended Statement of Claim and for any consequential Amended Defence and Reply. An Amended Statement of Claim was filed on 6 June 2023 (ASOC) and a Defence on 18 July 2023.
The next hearing fixture, being for further directions on 18 August 2023, was ultimately circumvented by the hearing of the application. Each of the parties has filed written submissions in respect of the application. At the hearing of the application the respondent was represented by its Counsel and the applicant was represented by his solicitor.
EVIDENCE
In support of its application, the respondent has filed the following Affidavits, each of which is deposed by its solicitor:
(a)Affidavit of Jeremy Brigden affirmed 17 July 2023 (first Bridgen Affidavit); and
(b)Affidavit of Jeremy Brigden affirmed 11 August 2023 (second Bridgen Affidavit).
The applicant has filed no evidence to resist the application.
By the first Brigden Affidavit, Mr Brigden deposes to:
(a)his having practised in litigation for 16 years;
(b)searches made of the Australian Securities and Investments Commission (ASIC) which indicate that the applicant holds an interest as a director and shareholder in a company “TRUCKNAVI Pty Ltd”, a current and historical extract for which is also annexed, and additional enquiries made appear to result in there being no records for said company;
(c)having undertaken searches of Land Titles Offices which appears to indicate that the applicant does not own any real property in Australia;
(d)having reviewed Facebook yielding a page which appears to be that of the applicant which says under a heading “Intro” that he “Lives in Chicago, Illinois”;
(e)having reviewed LinkedIn yielding a page which appears to be that of the applicant which describes the applicant as being in “Greater Sydney Area”;
(f)having written to the applicant’s solicitors on 13 July 2023 seeking that the applicant agree to pay the security now sought by the application, in order to obviate the filing of same (July letter); and
(g)an estimate of the costs (on an ordinary basis) of the respondent defending the instant proceedings which is said to “conservatively” total $57,000.00.
The second Brigden Affidavit deposes to the following:
(a)the respondent, with the assistance of “an HR expert” undertook a review of payments made to the applicant, and his entitlements as at the date of termination of his employment based on him being classified as a permanent-part time employee. The outcome of that process was that the respondent accepted the applicant is owed:
(i)$16,581.44 in outstanding entitlements (factoring in a leave payment already made in the sum of $5,250 and interest on the unpaid balance); and
(ii)$1,093.25 in superannuation payments;
(the calculations).
(b)on 14 April 2023, details of the calculations were sent to the applicant’s solicitor by letter, requesting that the applicant nominate accounts (including any change to his superannuation account fund) to facilitate payment of the amounts the subject of the aforementioned calculations failing which, the amount referred to in [8(a)(i)] would be remitted by cheque sent to the solicitors, and the amount referred to in [8(a)(ii)] would be remitted to the superannuation fund nominated by the applicant in connection with his employment.
LEGISLATION
Section 215 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (Court Act) provides:
215Security for costs
…
(2)The Federal Circuit and Family Court of Australia (Division 2) or a Judge may order an applicant in a proceeding in the Court to give security for the payment of costs that may be awarded against the applicant.
(3)The security is to be of such amount, and given at such time and in such manner and form, as the Federal Circuit and Family Court of Australia (Division 2) or Judge directs.
…
(5)If security, or further security, is not given in accordance with an order under this section, the Federal Circuit and Family Court of Australia (Division 2) or a Judge may order that the proceeding by:
(a) dismissed; or
(b) stayed until security or further security is given in accordance with the first-mentioned order.
The effect of s 215(2) of the Court Act is that this Court has power to order an applicant to provide security for the costs the Court may order (following the exercise of the discretion contained in s 570 of the Act).[1] Rule 22.01 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules) provides that the Court may order an applicant to give such security for the respondent’s costs of the proceeding as it considers appropriate.
[1] See Haley v Laing O'Rourke Australia Management Services Pty Ltd [2021] FCCA 257 at [23] per Judge Manousaridis considering the relevantly identical predecessor to s 215(2) of the Court Act, being s 80(2) of the Federal Circuit Court of Australia Act 1999 (Cth)
Having been brought under the Act, the question of whether security for costs ought be ordered requires the Court to have regard to the effect of s 570 of the Act, which provides:
570 Costs only if proceedings instituted vexatiously etc.
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2)The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i)the party unreasonably refused to participate in a matter before the FWC;
(ii)the matter arose from the same facts as the proceedings.
In Ryan v Primesafe (2015) 323 ALR 107 at [64] to [65] Mortimer J (as her Honour then was) described s 570 of the Act as being an “access to justice provision” aimed at ensuring:
that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings.
PRINCIPLES
The onus of persuading the Court that an award of security for costs should be made lies with the party seeking security: see CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at 284 to 285 per Bowen CJ. The onus does not shift,[2] albeit if the analysis reaches a point where impecuniosity is established, the applicant (being the respondent to the security application) bears the onus of establishing any stultification alleged in support of a submission that security ought not be ordered: see Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151 at [41] per Stern JA.
[2] Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 at [18] to [24] per Maxwell P and Buchanan JA
In Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2015] FCA 1164 Edelman J summarised the aforementioned principles as follows at [25]:
The authorities and principles concerning the onus of proof in applications for security for costs are explained by Gleeson J in Austcorp Project No 20 Pty Ltd v LM Investment Management Ltd (in liq) [2014] FCA 1371 [25]–[28]. The onus of proof in a security for costs application rests, from first until last, upon Bosch Australia to persuade the court that the order for security should be made. However, there is an evidential burden upon ABD to adduce evidence concerning matters which establish reasons why security should not be granted in circumstances where it will be unable to pay the costs of Bosch Australia if Bosch Australia is successful in its defence.
It is well accepted that an order for security is a discretionary matter for the Court. That discretion is unfettered and broad,[3] other than the requirement to act judicially. The factors which regularly arise for consideration in exercising the discretion to order that security be given for costs are generally accepted to be:[4]
(a)the applicant’s prospects of success;
(b)the extent of the risk that any adverse costs order made against the applicant may not be met;
(c)whether an order for security for costs would be oppressive in that it would stultify a reasonably arguable claim;
(d)whether any impecuniosity of the applicant arises out of conduct the subject of the proceeding;
(e)any public interest matters which might weigh in the balance in relation to the making of an order for security; and
(f)other particular discretionary matters specific to the circumstances of the case.
[3] Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3 per Sheppard, Morling and Neaves JJ, Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 510 to 511 per French J (as his Honour then was), Woodhouse v McPhee (1997) 80 FCR 529 at 533 per Merkel J, Madgwick v Kelly (2013) 212 FCR 1 at [6] per Allsop CJ and Middleton J and Waters v Commonwealth of Australia (Australian Taxation Office) [2014] FCA 1107 at [36] per Griffiths J.
[4] Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972 per Hill J at 50, 635
However, for the reasons discussed below, where proceedings engage the Act the starting point is not the general principles informing the discretion because of the rebuttable proscription in s 570 of the Act which, in essence, imposes a precondition to the discretion to award costs (even in the ordinary course). This warrants consideration of s 570 prior to any assessment of the general principles if, depending on the outcome of the s 570 assessment, it becomes necessary to consider them at all.
In Haley v Laing O'Rourke Australia Management Services Pty Ltd [2021] FCCA 257 (Haley), Judge Manousaridis considered the question of the principles which govern, or ought to govern, the Court’s exercise of the power under s 215(2) of the Court Act [5] to order an applicant in a matter arising under the Act to give security for costs that may be awarded against them under s 570 of the Act.
[5] By reference to its relevantly identical predecessor being s 80(2) of the Federal Circuit Court of Australia Act 1999 (Cth)
After considering the decision of the Full Federal Court in Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd (2020) 283 FCR 123 (Augusta Ventures), his Honour summarised the relevant principles applying to an application for security for costs in a matter arising under the Act as being whether:
(a)the claim in respect of which the application for security is made is “a matter arising under” the Act: see Haley at [21];
(b)there is a tangible prospect that circumstances will arise that will engage s 570(2) of the Act in relation to the claims made by the applicant; and if so
(c)applying the usual principles for the granting of security for costs, the circumstances warrant the Court exercising its discretion to order that the security be given, and in what amount: see Haley at [27] to [28].
This approach, whereby an assessment of s 570 precedes consideration (if ultimately necessary) of the usual principles which apply to the discretion to award security is, with respect, preferable to which appears to have been contemplated by the Full Bench of the Fair Work Commission in Zornada v St John Ambulance Australia (WA) Inc (2013) 237 IR 48 to which the respondent referred, and in which the Commission said the following at [36]:
Accordingly, the Commission should award security for costs only in the rarest of circumstances, once the Commission has balanced the merits of the application, the financial position of the parties, and what is just in the circumstances.
First, the Fair Work Commission was discussing the similar, yet not identically worded, s 611 of the Act. Second, the Fair Work Commission was clearly seeking to emphasise the rarity and caution which attends the making of an order under sections of that ilk, more than elucidating the order in which the matters ought be considered. There is nothing to suggest that had the Fair Work Commission approached the questions in the order found in Haley, it would have resulted in a different outcome, or altered the concept of rarity and caution conveyed.
In addition, the order referred in Zornada (supra) is contrary to the approach of Courts when considering a costs application in a matter arising under the Act. It is not the case that the Court first assesses the relative merits of the costs claim and only then goes on to consider whether s 570(2) is enlivened.
The respondent suggested that in Zou v Superway Pty Ltd [2021] FedCFamC2G 144 Judge Cameron took a slightly different approach by balancing the absence of the application in that case from the jurisdiction with s 570. However, I find there to be no relevant distinction, let alone inconsistency, between the approaches in Haley and Zou such that I would not, as invited by the respondent, need to prefer the approach of one case over the other. The principles identified by Judge Manousaridis in Haley are, with respect, correct and accords with the approach to s 570 generally. As Judge Cameron said in Zou at [23] and [25], citing Augusta Ventures:
[23] In Augusta Ventures v Mt Arthur Coal, the Full Court stressed the policy of s.570: that, subject to s.570(2), parties to FW Act litigation are to bear their own costs and not the risk of the costs of each other: at 468-469 [66]; 474 [89]; 476-477 [103]. Unless s.570(2) were satisfied, ordering security for costs in a FW Act action would subvert that policy
…
[25] Justice White said in Augusta v Mt Arthur Coal at 483 [132] that the question is whether effect can be given to the usual principles on which security is ordered while at the same time preserving the protection s.570 afforded to the applicant and respecting its underlying rationale. In this case I am not persuaded that it can be. To order security without, for instance, having concluded that the proceeding lacked reasonable prospects of success, would be, in effect, to impose a burden that the FW Act states should not be borne in proceedings brought under it.
Accordingly, in proceedings in which there is a matter arising under the Act in respect of which security for costs is sought, the application of s 570 of the Act should also be determined prior to any consideration of the principles informing the discretion to order security.
An assessment of whether there exists a tangible prospect that circumstance will arise to engage s 570(2) of the Act, can be a difficult task in potentia. The assessment contemplated by s 570(2) is ordinarily made at the conclusion of proceedings (or a relevant stage of proceedings such as an interlocutory application) such that the past conduct of the parties is factually available for the Court to examine in ascertaining whether a party instituted the proceedings vexatiously, or without reasonable cause, or that an unreasonable act or omission caused the other party to incur costs.
The task will be easier in respect of s 570(2)(a) when assessing whether proceedings have been instituted vexatiously or without reasonable cause, being an assessment which can conceivably be made on the basis of pleadings alone, shortly after the institution of the proceedings, or even without the matter having been tried: see Zou (supra) at [24] per Judge Cameron.
However, an application of s 570(2)(b) appears to contemplate a retrospective assessment when it says (emphasis added):
the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs…
Absent some allegedly unreasonable act or omission being extant at the time the application for security is made, it is difficult (though not impossible) to envisage a circumstance in which the Court could be prospectively satisfied there exists a tangible prospect that a party may act unreasonably, causing costs to be incurred as a result.
SUBMISSIONS
In the instant case, the respondent relies exclusively on s 570(2)(b) of the Act. The respondent does not say the proceedings are instituted vexatiously nor as a whole are instituted without reasonable cause. Rather, the respondent contends that the applicant’s pursuit of the case for casual employment is an unreasonable act or omission, and that continuing to prosecute the proceedings on that basis is also an unreasonable act or omission.[6]
[6] Transcript 18 August 2023 T5.30 to T5.34
The unreasonableness of that position stems, it is said, from [5] of the ASOC which (omitting particulars but with original emphasis) is in the following terms:
It was a term of the employment contract that the Applicant:
a. Was employed on a casual basis;
b. Worked 76 hours per fortnight;
c. Was entitled to receive a wage of $250 per day for the work he performed between 30 May 2019 until 25 February 2020 (the First Term);
d. Was entitled to receive a wage of $350 per day for the work he performed between 26 February 2020 until 21 December 2021 (the Second Term); and
e. was entitled for the First Respondent to make superannuation payments on his behalf in accordance with the Superannuation Guarantee (Administration) Act 1992 (the Superannuation Term).
By [5(a)] of the ASOC, the applicant is said to have been employed on a casual basis which the respondent says gives rise a number of conditions including casual loadings and leave entitlements which will affect the relief being sought in this case. In contrast, the respondent says that by [5(b)] of the ASOC the applicant pleads that it was a specific term of his employment contract that he work 76 hours per fortnight, which would make him a full-time employee. The respondent says that, assuming [5(b)] is correct, the applicant cannot have been employed on a casual basis and, therefore, his case (or that part of his case) becomes hopeless. It is in recognition of that discrete aspect that the respondent seeks security in an amount which reflects only part, but not all, of their anticipated costs in order to ensure that when the applicant’s case fails in relation to casual employment, as the respondent contends it must, there is a capacity to seek costs against the applicant for pursuing that part of the case.
In relation to the inconsistency between [5(a)] and [5(b)] of the ASOC, the applicant’s solicitor said that he did not “seek to defend that the verbiage is unfortunate”.[7] The Court has presumed that the applicant’s solicitor intended to say that the “wording” of the pleading was unfortunate. He went on to say that the ASOC sought to convey that the applicant was contracted to work “up to 76 hours”. A table, referred to in [13] of the ASOC as being annexed thereto (albeit omitted from the ASOC) was provided to the Court at the hearing of the application. By reference to that table, which was said to record the hours actually worked by the applicant per week, the maximum the applicant ever worked in one week was apparently 30 hours.
[7] Transcript 18 August 2023 T7.15
For the applicant it was submitted that while the ASOC was “opaque”, the applicant was employed under a casual employment contract. The applicant points to [5(a)] of the Defence filed for the respondent on 18 July 2023 by which the respondent:
Denies paragraph 5(a) of the ASOC, and contends that the applicant was mistakenly described as a casual employee (‘Classification Error’), but was at all times a permanent part time employee subject to regular and fixed hours.
as having the effect that the respondent accepts that the applicant was labelled a casual.
Consideration
There is no doubt as to the restraint cautioned for in the application of s 570 in cases in which security for costs is sought. In Augusta Ventures, the applicant in the proceedings was a representative applicant for a class of persons, whose litigation was being funded by a litigation funder. The primary Judge made an order that the litigation funder pay security for costs, and that the proceedings be stayed if security was not provided. On appeal, the Full Federal Court set the orders aside in circumstances where the potential liability for costs which attached to the representative applicant was governed by s 570 of the Act, there had been no suggestion that the proceedings had been brought other than reasonably (or without reasonable cause) and where the discretion of the litigation funder to pay the security or not would have the potential consequence that the representative applicant (and the class of litigants he represented) would be shut out of the proceedings through no action of their own. Those circumstances are not extant in the instant case which involves no such third-party funder. There are, however, some general observations made in Augusta Ventures which do not turn upon the third-party funding aspect of that case. In particular, at [127], White J said as follows:
First, and perhaps most obviously, the circumstances (if any) in which an applicant in proceedings in relation to a matter under the FW Act should be ordered to provide security for a respondent’s costs are likely to be exceptional. An applicant should not ordinarily be required to provide security for costs which, in the absence of unsatisfactory conduct on his or her part, will never be payable.
Other than the first instance judgment which was overturned by the Full Federal Court in Augusta Ventures and Nalbandian v Commonwealth of Australia (Australian Bureau of Statistics) [2015] FCCA 2094, the Court has not located any judgment in which security for costs has been ordered in proceedings to which s 570 (or its antecedent) applied. Nor were the parties able to point to any. While that factor does not, in and of itself, resolve the question, it does somewhat underscore the exceptional nature of such an order in proceedings under the Act.
While the respondent says that the applicant’s claim to be a casual employee and, consequently in relation to his superannuation is hopeless, what is really demonstrated is that there is a genuine dispute between the parties as to the nature of the applicant’s employment. At such an early stage in proceedings, there is nothing before the Court arising from the ASOC (particularly when read in light of [5(a)] of the Defence) which, infelicity of language aside, would lead the Court to conclude that there is presently a tangible prospect that s 570(2)(b) of the Act is, or would be, engaged on the basis advanced by the respondent.
Even sharp disagreement between parties, or a vehement position held by a respondent, is not the test for the reasonableness of the action at the commencement of the proceedings and before the matter has been tried: see Zou (supra) at [24] per Judge Cameron.
The complaint of the respondent is really directed to the pleadings and a small, albeit potentially significant, inconsistency which would benefit from clarification. The imprecision is acknowledged by the applicant yet is clearly not so obstructive as to have prevented the respondent from specifically meeting it by its Defence. Moreover, by that Defence the respondent does not contend that the applicant was a full time employee, which is now said to be the inconsistency which makes that part of his case hopeless. Rather, by its Defence, the respondent says that the applicant was a permanent part time employee subject to regular and fixed hours. That position is at least consistent with the calculations referred to at [8] above, but not the basis of what is said to give rise a circumstances which would satisfy s 570(2)(b) of the Act.
In support of the application, the respondent also relied on United Voice v Secom Australia Pty Ltd [2015] FCCA2358 (United Voice) at [169] per Judge Neville as providing a practical example of where a lack of preparation might lead to a costs order in proceedings brought under the Act, saying:
In my view, precisely because of (a) the extremely shoddy manner in which the Union has conducted its case, (b) the obvious weaknesses on almost every front of it, (c) very significantly, the Union has had many opportunities to explain and or to provide relevant particulars and material to support the claims it alleges against Secom but has not done so, an order for costs should be made against it, at this time, at least with respect to the production of documents claim. Absent any further Application in relation to costs, I would propose that the appropriate order in this regard is that costs be paid as agreed or as taxed in relation to the discrete issue of the production of non-member documents. I note again that it risks a further costs order, and on an indemnity basis (for reasons given earlier), if there is further failure to provide the calculations and all other relevant information to Secom to substantiate the claims in relation to the alleged underpayment of workers.
The question in United Voice related to summary dismissal/strike out (with no issue as to security for costs) and in circumstances of consistently poor preparation. I am not persuaded that the same circumstances are extant in the present case, nor that the ASOC is so shoddily drafted as to satisfy s 570(2)(b) on that basis alone.
At such an early stage in the proceedings, and where the dispute is one which appears to be one of fact for ultimate resolution in part of the proceedings, I am not satisfied that based on [5(a)] of the ASOC that the respondent has established a tangible prospect of s 570(2)(b) being engaged. I will grant leave to the parties to re-plead, noting that this exercise should really direct itself to making clear the parties’ respective positions in relation to the nature of the applicant’s employment as presently addressed in [5] of each of the ASOC and Defence including, if necessary, by any necessary process of seeking further and better particulars.
Not being satisfied that there is presently a tangible prospect that s 570(2)(b) of the Act would be engaged, I am not satisfied that there is a basis upon which to proceed to assess the usual principles for security for costs: see Haley at [37] per Judge Manousaridis and Zou at [26] to [27] per Judge Cameron.
Security for costs
While a consideration of the matters said to warrant security being ordered is, in the present case, now strictly unnecessary, the evidence will be discussed briefly.
By the July letter, the concerns of the respondent, which now ground the application for security were set out in advance (as is common[8]) as being that:
1.We understand that your client is resident outside Australia, and resides in the United States of America at an address not known to our client.
2.We have carried out searches at ASIC and ascertained that the applicant is a director and shareholder in Trucknavi Pty Ltd, owning one beneficially owned founder’s share with paid up share capital of $33.
3.We have now undertaken searches through LPI and ascertained that neither the applicant nor Trucknavi hold any interest in real property within the jurisdiction.
[8] Nalbandian (supra) at [33] per Judge Smith
Having set out the above concerns, the respondents invited the applicant to provide evidence of his current address and capacity to pay the costs of the proceedings (specified as being $57,000). The applicant did not reply nor provide any such evidence, nor has the applicant subsequently furnished any such evidence to the Court. While such a lack of response can be taken as sufficient basis to find that the claimant was impecunious or at least that three is a justifiable basis for applying for security,[9] it is to be recalled the respondent retains the onus.
[9] Ibid
At the hearing of the application, the applicant’s solicitor did not dispute that the applicant is resident in the United States of America (USA) saying that “being a pilot, obviously, he’s over there for work.”[10] The solicitor for the applicant subsequently acknowledged that there was no material before the Court, beyond submissions, to demonstrate as a matter of fact that that the applicant’s reason for now being resident in the USA was work-related.
[10] Transcript 18 August 2023 at T5.46
Next, it was submitted for the applicant that an order requiring that he pay security would stultify his ability to bring the proceedings. Initially this stultification was said to be comprised of a stay of proceedings (which is generally self-executing) upon a failure of the applicant to meet such an order. This submission proceeded on a misunderstanding of Augusta Ventures and its application to proceedings in which there is no third-party litigation funder. Traditionally the question of whether payment of security would have a stultifying effect is directed to whether it would denude the funds of an applicant to a point where they could no longer fund their prosecution of the proceedings. I am not satisfied that the applicant was alleging that a security order would result in, or compound any impecuniosity on his part.
I agree with the observations of Judge Cameron in Zou that, the applicant’s residence in the USA is a matter which would ordinarily weigh strongly in favour of security being ordered. So might the lack of real property in the jurisdiction. However, there was no evidence forthcoming from the respondent that the applicant is in fact impecunious. In the latter regard, I would take into account the general approach that a natural person who has commenced litigation will not be required to provide security for costs merely because they are impecunious: see Elshanawany v Greater Murray Area Health Service [2004] FCA 1272 at [11] per Jacobson J, Kiefel v State of Victoria [2014] FCA 604 at [34] and [51] per Mortimer J (as her Honour then was) and Sheather v Staples Waste Removals Pty Ltd [2012] FCA 998 at [18] per Nicholas J.
CONCLUSION
In the present matter, while there are factors present which might, in the absence of s 570(2)(b) of the Act being applicable weigh in favour of security being granted, because I am not satisfied on the material before me that at present there is a tangible prospect of s 570(2)(b) being satisfied,[11] the application for security should be refused and the application dismissed. I will so order.
[11] See [26] above
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given. Associate:
Dated: 3 November 2023
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