Ramstrom v Baldino - [2014] SASC 29

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
RAMSTROM v BALDINO
[2014] SASC 29
Reasons for Decision of The Honourable Justice Nicholson
7 March 2014
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
PROCEDURE - COSTS - SECURITY FOR COSTS - OTHER REASONS FOR SECURITY
The respondent sought an order for security for costs of an appeal from a decision of the Equal Opportunity Tribunal filed by the appellant.
Held: The further prosecution of the appeal is stayed until the appellant has paid into Court the sum of $25,000 to secure the respondent's costs of the appeal.
Equal Opportunity Act 1984 (SA); Supreme Court Rules 2006 Rule 295, referred to.
Ramstrom v Baldino [2013] SAEOT 14; Dagenham Nominees Pty Ltd v Shanks (2011) 110 SASR 577; Morgan v WorkCover Corporation [2013] SASC 47; McVicar v S & J White Pty Ltd [2006] SASC 233, (2006) 245 LSJS 177; Morgan v WorkCover Corporation [2012] SASC 190; Sands v State of South Australia [2013] SASC 105; Devries v Australian National Railways Commission (1993) 177 CLR 472; Warren v Coombes (1979) 142 CLR 531; Jones v Hyde (1989) 85 ALR 23; Abalos v Australian Postal Commission (1990) 171 CLR 167; Fox v Percy (2003) 214 CLR 118; Diakos v Mason [2010] SASC 108; Foxgold Pty Ltd v Paterson [2005] SASC 376, considered.

RAMSTROM v BALDINO
[2014] SASC 29
Civil
NICHOLSON J.
Introduction

In proceedings brought in the Equal Opportunity Tribunal the complainant (appellant in this Court) alleged that the respondent (to both the complaint below and to the appeal in this Court) by his words and conduct on various occasions, engaged in actions of sexual harassment directed towards the complainant in the workplace. The Equal Opportunity Tribunal, after a hearing lasting approximately two weeks, dismissed the complainant’s action brought under the Equal Opportunity Act 1984.[1] In a lengthy judgment, the Tribunal came to the conclusion and held that none of the factual allegations made by the complainant, and in contest, had been proved on the balance of probabilities (but in the context of the Briginshaw[2] approach). The Tribunal also held that, to the extent that the respondent had admitted elements of the factual allegations “or something like them”, in each instance, such conduct did not constitute sexual harassment under the Act.
[1] Ramstrom v Baldino [2013] SAEOT 14 (Judgment of her Honour Judge Cole sitting with members Ms H Jsinski and Mr D Shetliffe).
[2] Briginshaw v Briginshaw (1938) 60 CLR 336.
By notice of appeal filed 24 January 2014 the complainant has appealed to the Full Court of this Court against the whole of the decision of the Equal Opportunity Tribunal. By interlocutory application filed in this Court by the respondent on 31 January 2014, the respondent has applied for orders or directions, inter alia:
1.That the Court stay the appeal pending the provision by the appellant of security for the respondent’s costs of the appeal in a form and of a value to be determined by the Court.
2.…
3.That the respondent have the costs of this application.
4.…
In these reasons I will continue to refer to the complainant/appellant as the “complainant” and the respondent (applicant on this security for costs application) as the “respondent”.
The respondent’s application for security for costs came before me in the Chamber List at which time I made orders for the filing of affidavits and set the matter down for argument. The following written material was before the Court at the hearing of the argument:
(i)affidavit of Andrew James Culshaw (the solicitor having the carriage of the proceedings on behalf of the respondent) sworn 31 January 2014;
(ii)second affidavit of Andrew James Culshaw sworn 5 February 2014;
(iii)third affidavit of Andrew James Culshaw sworn 26 February 2014;
(iv)affidavit of the complainant sworn 21 February 2014;
(v)affidavit of Linda Jane Appelbee (a solicitor representing the complainant) sworn 21 February 2014;
(vi)undated written outline of submissions for the respondent; and
(vii)written outline of submissions provided on behalf of the complainant dated 22 February 2014.
Relevant legal principles
The application for security for costs was brought pursuant to rule 295(1)(g) of the Supreme Court Rules 2006. That sub-rule provides (relevantly):
295(1)The Court may exercise any of the following powers in relation to an appeal or an application for permission to appeal.
.. . .
(g)The Court may, in special circumstances, order that security be given for the costs of an appeal;
. . . .
By sub-rule (3) of rule 295, the power to order security in respect of appeals to the Full Court may be exercised by a single judge.
In order for the discretion to order security for costs to be enlivened “special circumstances” must be demonstrated. Even where there is a finding that “special circumstances” exist, the granting of security for costs remains a discretionary determination. There are a number of factors that will inform, on a case by case basis, the exercise of that discretion.
In this case, the complainant has conceded, indeed maintains, that she is now impecunious insofar as is relevant on this application. I will return to the evidence as to the extent of her impecuniosity later in these reasons. However, whether or not impecuniosity, alone (at least in the case of an individual rather than a corporation) can constitute “special circumstances” for the purposes of rule 265 has been a matter of some debate within the authorities.[3] It is not necessary that I form a concluded view on this issue because the respondent does not rely on impecuniosity alone to establish special circumstances. The respondent also asserts, as relevant to a finding of special circumstances, that the complainant’s appeal has very low prospects of success. Like White J in Sands,[4] it is sufficient to say that I regard the complainant’s impecuniosity as a significant matter bearing on the question of special circumstances.
The matters relied upon by the respondent in support of his claim to be entitled to an order for security for costs
Complainant’s impecuniosity
[3] See generally the discussions in, for example, Dagenham Nominees Pty Ltd v Shanks (2011) 110 SASR 577; Morgan v WorkCover Corporation [2013] SASC 47; McVicar v S & J White Pty Ltd [2006] SASC 233, (2006) 245 LSJS 177; Morgan v WorkCover Corporation [2012] SASC 190 and Sands v State of South Australia [2013] SASC 105 particularly at [10]-[11] (White J).
[4] [2013] SASC 105 at [11].
In her affidavit, the complainant deposes to a number of matters concerning her financial affairs. They include the following. She owns jointly with her husband the house in which they live. The house is subject to a mortgage to Bendigo Bank in the amount of $260,000. The bank has valued the house at a market value of $425,000 leaving, if these numbers are broadly accurate, a joint equity in the house in the amount of $165,000. Apart from her house, the complainant has an old car and some Telstra shares both of which are of minimal value in the context of this application.
The complainant’s only significant present liability is the costs associated with the proceedings in the Equal Opportunity Tribunal. She deposes to being liable to her solicitors for work in progress in an amount of approximately $120,000 and for counsel fees of approximately $56,000. She has been advised that her solicitors require her to pay them at least $50,000 for the present, and counsel requires, for the present, payment of $30,000 (total $85,000). The complainant is also liable for medical report and evidence fees in the amount of a little over $8,000.
The complainant has applied to the bank for the joint loan to be refinanced to enable her to meet her legal costs. However, discussions with her financial adviser have led her to believe that the maximum she would be able to obtain, by way of refinancing the mortgage loan, “may not reach the amount sought, at this time, by my solicitors with respect to the costs and disbursements associated with the trial”. The complainant then deposes in the following terms “in the circumstances I will not be in a position to provide any payment into Court if an order is made for security for costs in relation to the appeal”.
The appellant is not working at the moment because of a work injury with respect to which she is pursuing a WorkCover claim. According to the complainant, since 9 September 2010 she has been wholly incapacitated for work and in receipt of WorkCover income maintenance payments which now amount to only 80 per cent of her previous wage. The complainant states in her affidavit that she and her husband can now barely service their mortgage and their living expenses.
I am satisfied that the complainant ought to be regarded as impecunious for the purposes of this application. I am satisfied that the complainant’s debts, presently due (by way of legal and associated costs) exceed her share of the equity in the home that she owns jointly with her husband. Even if she and her husband were to sell the home, her share of the net proceeds would not be sufficient to enable her to discharge her debts as presently due.
However, there are two matters that have not been made clear by the complainant’s affidavit evidence. First, no indication is given as to the additional amount of funds the complainant and her husband would be permitted to borrow upon a refinancing of the mortgage and no indication is given as to the amount of her husband’s share, if any, that she might be able to gain access to for the purpose of meeting her costs obligations. I accept that even if she were to have access to all of her husband’s share, that would not be sufficient to discharge all of her legal costs. I also accept that it would be within her husband’s legal rights to refuse her any access. Nevertheless, at this stage, all that I can infer from the evidence is that she has a potential to borrow (jointly with her husband) and gain access to something between $0 and approximately $165,000.
This lack of detail has some significance in the context of the second matter not made clear in the evidence. There is no evidence from the complainant or her legal advisers as to the extent to which the requirements of her legal advisers to receive a down payment against their fees might be moderated if the circumstances were such that a security for costs order, in the amount claimed by the respondent or something less, were to be made.
In these circumstances, I am not persuaded that the complainant, necessarily, would not have the capacity to make a security for costs payment. She appears to have some capacity to borrow. It is conceivable that if the complainant chose to prefer to meet an order for security for costs rather than discharge her obligations, in part, to pay her own legal advisers, those legal advisers might still continue to act on the appeal. However, even if they were to cease to act, this would not necessarily prevent the appeal from proceeding with the complainant as litigant in person. This matter is relevant to the question of “stultification” of the appeal dealt with further below.
Strength of the case on appeal
The complainant’s notice of appeal sets out four grounds of appeal. The first three of which, at least, are couched in terms that can be described as expressing a high level of abstraction. However, and at least for the purposes of this application, I observe that the affidavit of the complainant’s solicitor, Linda Jane Appelbee, and the written outline relied on do supply significantly more detail in support of the grounds of appeal. The grounds of appeal are in the following terms.
1.The Equal Opportunity Tribunal has erred in:
1.1     The approach and findings made in relation to the appellant’s evidence and in failing to consider and address all relevant evidence and, especially the evidence of the respondent.
1.2     Failing to correctly approach and adequately address and have regard to the evidence of the treating psychiatrist, Dr Kerry Pincombe.
1.3     Failing to provide adequate reasons in its judgment and, in particular, failing to adequately address the submissions made by the complainant concerning the credibility of the respondent, which was a central and critical issue in the case.
1.4     Applying a test of causation that sexual harassment must have caused the appellant’s emotional and mental state for compensability to arise.
The Tribunal found against the complainant essentially because it rejected her evidence and preferred that of the respondent on critical issues of fact. The factual issues in contest fell to be determined essentially upon a consideration of the complainant’s evidence given under oath and that of the respondent given under oath. The Tribunal was obliged to reach its findings on a balance of probabilities. Whilst evidence was called from other witnesses with a view to corroborating aspects of the complainant’s evidence, they were able to provide little, if anything, by way of eyewitness observations of the impugned interactions between the complainant and the respondent.
The Tribunal made strong findings, when rejecting the complainant’s evidence, both as to her credibility and her reliability. It found that her evidence was not materially supported by any of the corroborating witnesses. At paragraph 85 of the judgment the Tribunal stated “there are issues which go beyond demeanour and state of mind which cause us to doubt Ms Ramstrom’s credibility”. The Tribunal dealt, item by item, with the various allegations of impropriety alleged by the complainant. Its reasons contain specific findings to the effect that: it did not believe the complainant on critical issues, her evidence was, at times, inherently unlikely and unconvincing, the complainant was not a reliable witness, and her evidence fell well short of satisfying the Tribunal. The Tribunal found aspects of the complainant’s evidence to be inconsistent with other aspects of the evidence before it which it accepted. As far as the respondent is concerned, the Tribunal accepted that he gave evidence truthfully to the best of his ability.
It is true, as the complainant asserts, that the Tribunal in its reasons pays far more attention to, and critiques in more detail, the complainant’s evidence when compared with its approach to the respondent’s evidence. Under the heading “credibility” the Tribunal expressed in general terms its credibility findings for each witness. By and large the Tribunal accepted all of the non-party witnesses as witnesses of truth. However, it found that the recollection of the complainant’s husband “was not entirely reliable”.[5] As to its overarching assessment of the two protagonists the Tribunal said this.[6]
Mr Baldino was clearly under stress as he gave his evidence. He frequently took some pains to limit his answers to the precise terms of the question, which was sometimes unhelpful. However, we accept that Mr Baldino gave his evidence truthfully to the best of his ability. The evidence of all of the witnesses was affected by the length of time which had passed since November 2008.
Mr Ramstrom was emotional from time to time as she gave her evidence. Periodically, she had difficulty focussing on the question she was asked, and at times she lost concentration altogether. We accept that the state of her mental health played a role in her difficulties in giving evidence. Her evidence was also affected by the length of time which has passed since the circuit. However, there are issues which go beyond demeanour and state of mind which cause us to doubt Ms Ramstrom’s creditbility.
[5] Tribunal reasons at [83].
[6] At [84]-[85].
Thereafter, the Tribunal explored at some length[7] a number of matters canvassed in the complainant’s evidence concerning events said to have taken place during a Port Lincoln circuit trip. The relevance of this evidence was as a factual context within which to consider the evidence of subsequent events the subject of the sexual harassment allegations. During its discussion of the Port Lincoln circuit evidence the Tribunal made a number of findings adverse to the complainant and in support of its earlier conclusion that it had cause to doubt the complainant’s credibility.[8]
[7] At [86]-[95].
[8] At [85].
The Tribunal’s reasons extend for 189 paragraphs over 71 pages. Each incident relied on by the complainant was explored and the evidence relevant to it summarised (in some cases more briefly than in others) and a finding made as to whether or not the incident or behaviour in question occurred in the manner complained of by the complainant.
The complainant’s essential complaint, on appeal, is that the Tribunal failed to consider and address all of the relevant evidence and failed to critically review the evidence of the respondent in the same way in which it purported to critically review the appellant’s evidence. The complainant referred to her closing written submissions before the Tribunal which comprised some 71 pages (exhibited as LJA1 to the Appelbee affidavit on this application). Counsel for the complainant referred to these submissions in support of the argument that the Tribunal had failed to have regard to all of the evidence and to the whole of the complainant’s case before it when deciding to prefer the evidence of the respondent. It was submitted that this can also be inferred from the lack of reference to the complainant’s extensive submissions throughout the Tribunal’s reasons.
Whilst these are potentially valid criticisms, it is not possible given the nature of the issues before the Tribunal and the substantial amount of evidence and written and oral submissions received by the Tribunal, to form a clear view on an application of this nature as to the prospects of success of an appeal. What can be said is that, given the matter was, in very large part, decided against the complainant on the basis of her lack of reliability and lack of credibility by a Tribunal comprised of a judge and two other members, the complainant in seeking to overturn the findings of fact is starting from a position of real difficulty. Ordinarily, an appellate court will adopt the approach described by Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission.[9]
More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact. If the trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge “has failed to use or has palpably misused his advantage” or has acted on evidence which was “inconsistent with facts incontrovertibly established by the evidence” or which was “glaringly improbable”.
[9] (1993) 177 CLR 472 at 479 (footnotes omitted); and see also, Warren v Coombes (1979) 142 CLR 531; Jones v Hyde (1989) 85 ALR 23 and Abalos v Australian Postal Commission (1990) 171 CLR 167.
This expected approach is to be subject to the constraints reaffirmed by the High Court in Fox v Percy.[10] These constraints include the obligation on an appellate court to give the judgment which in its opinion ought to have been given in the first instance and after conducting a real review of the trial, of the evidence adduced and of the judge or tribunal’s reasons. As Gleeson CJ, Gummow and Kirby JJ pointed out in Fox v Percy[11] “appellate courts are not excused from the task of ‘weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect’ ”.
[10] (2003) 214 CLR 118, particularly, at [23]-[31] in the judgment of Gleeson CJ, Gummow and Kirby JJ.
[11] At [25].

In the present case, the nature and strength of the findings made by the Tribunal, in rejecting the credibility and reliability of the complainant, are such that this orthodox or ordinary position will need to be addressed and overcome by her before any appeal will succeed. For this reason, I accept the respondent’s submission to the effect that the complainant’s prospects of succeeding on appeal must be viewed with great caution.
The circumstances of the respondent
According to the affidavit evidence read on behalf of the respondent, the respondent has incurred legal costs to date, in obtaining advice and defending the complainant’s allegations in the Tribunal, in the amount of approximately $270,000. The respondent must be regarded as having a very low prospect of recovering even a reasonable proportion of these costs from the complainant. This is for two reasons. First, whilst the respondent has sought an order for costs in the Tribunal, as I understand the position, the jurisdiction is not one in which costs ordinarily follow the event. The respondent will need to demonstrate that the claim brought against him was frivolous or vexatious. This is not an easy test to satisfy. I make no finding as to the respondent’s likelihood of success in this respect, I simply point out that the mere fact that a claim has been found to be without merit even on the basis of a want of credibility and reliability in the complainant will not necessarily lead to a finding of frivolous or vexatious. Second, and in any event, the complainant’s financial circumstances, as deposed to, are such that even if the respondent were to obtain an order for costs, his prospects of any appreciable recovery from the complainant look bleak.
Costs of the appeal
The respondent’s solicitor, Mr Culshaw, in his affidavits has itemised in some detail projected costs and expenses to be incurred by the respondent should the appeal proceed. Mr Culshaw, on the basis set out in his affidavits, has estimated that solicitor and counsel fees for preparation and presentation of a one day appeal hearing in this matter would amount to a shade over $35,000. It is this amount with respect to which security is sought. The complainant has identified some areas where the estimates might be considered a little high and submits that a figure of $20,000 fairly represents the respondent’s likely exposure. The respondent submits that, having already paid his lawyers the sum of approximately $270,000, and having already been vindicated by the Tribunal, he should not be put in a position where he must incur further substantial costs to defend his position on appeal without any prospect of recovering those costs.
The complainant’s submissions– in essence
The complainant concedes impecuniosity but maintains that, on its own, impecuniosity is not sufficient to constitute special circumstances as required by rule 265. As far as the strength of the case on appeal is concerned, the complainant maintains that it is not appropriate on an application of this nature to embark upon a detailed examination of the strength or otherwise of the appeal. I accept this submission and I have not done so. However, some overarching assessment needs to be made. In this case, and notwithstanding detailed criticisms directed at the Tribunal’s judgment in the course of the complainant’s submissions, there is plainly a significant hurdle over which the complainant will need to jump and as to which she is likely to have difficulty.
The complainant also maintains, and has asserted in her affidavit, that if security for costs were to ordered her appeal would be stultified. In other words, it would bring the matter to an end and she would not be able to have, on her case, a wrongly arrived at judgment overturned, in accordance with her statutory given rights of appeal. There is always a risk that an order for security of costs will stultify an appeal. It is an important consideration. It is an awkward consideration because the very basis relied upon for the complainant’s plea of stultification is the same basis relied upon by the respondent in support of his claim for security, that is, the impecuniosity of the complainant may well eliminate any prospect of recovering his costs expended on the appeal.
There are other considerations that bear on this question of stultification. First, I am not satisfied for the reasons already given that an order for security for costs in the amount sought or something less than that necessarily will cause the appellant to be unable to continue with the appeal. Further, there is the issue that the respondent has already been put to the expense of approximately $270,000 by way of legal fees for the trial in the Tribunal, in circumstances where he has very limited prospects of recovering any contribution of substance. Finally, the observations of Kourakis J (as he then was) in Diakos v Mason[12] are pertinent in this context and in the context generally of the exercise of the discretion.
Turning now to the overall merits of the application for security for costs, I proceed on the basis that impecuniosity should be given greater weight when security is sought on an appeal than it is on an application at first instance. An order for security for costs by trial judge may deny a plaintiff the important right to a judicial determination of his or her claim for redress of a wrong. However, the appellant has had the benefit of a judicial determination of the underlying controversy. The statutory right of a further review by way of appeal is a safeguard against error, but the fact remains that the plaintiff has had his side of the controversy judicially determined and in fact determined adversely to him. Moreover, the risk of injustice to an appellant if an order for security is prohibitive can be assessed with greater certainty on an appeal than at first instance.
[12] [2010] SASC 108 at [10].
The complainant also submitted that her impecuniosity had been caused, at least in part, by the conduct of the respondent. This submission is contradicted by the findings of the Tribunal as they presently stand. In any event, counsel conceded that even if his client were to succeed on appeal, the financial loss suffered by the complainant attributable to the impugned conduct of the respondent was only of the order, to this point, of something a little over $20,000. When considering whether or not the complainant’s impecuniosity has been caused by the respondent, I ignore the fact that the most significant contribution (by quite some way) to her impecuniosity is the legal fees she has incurred and still owes as a result of an unsuccessful claim brought in the Tribunal. This component of her impecuniosity is not to be placed at the feet of the respondent. If this were to be ignored, it could not be said that the complainant was impecunious and, more importantly, it could not be said that the financial loss she maintains has been caused to her by the respondent (absent the Tribunal’s finding) has contributed to impecuniosity. Any contribution the respondent may have made to the complainant’s impecuniosity is not a factor I place much weight on.
The resolution of the application
I am satisfied, for the reasons given, that there are special circumstances enlivening the discretion available under rule 265. Those special circumstances include, at the least, the claimant’s impecuniosity and her limited, on the information available at present, prospects on the appeal. These two factors together with the other matters I have dealt with support an exercise of the discretion to make an order for security for costs and I will do so. I will not make the order in the sum sought. It is not unusual for a court to act conservatively in this respect and to make an order for something less than the full amount claimed by the applicant. I will make an order for security for costs in the amount of $25,000.
The respondent has submitted that the circumstances are not dissimilar to the circumstances in Foxgold Pty Ltd v Paterson.[13] In that case, an order was made for security for costs and that the amount was to be paid into court on or before a certain date. A further order was made that failing payment into court by that date the appeal was to stand dismissed.
[13] [2005] SASC 376.
I have an inherent reluctance to making orders of a self-executing nature unless the case is one that clearly calls for such an approach. I am not satisfied that this case clearly calls for that approach. The order I make is in the more common form; that the further prosecution of the appeal is stayed until the appellant (complainant) has paid into Court the sum of $25,000 to secure the respondent’s costs of the appeal.
I will hear the parties as to any consequential matters.