FEDERAL COURT OF AUSTRALIA

Kemppi v Adani Mining Pty Ltd [2018] FCA 2012

ORDERS

THE COURT ORDERS THAT:

1.    By 4pm on 31 January 2019 the appellants give security for the first respondent’s costs of the appeal in the sum of $50,000 by:

(a)    paying the money into Court; or

(b)    by providing an irrevocable bank guarantee from an Australian trading bank in a form acceptable to the Registrar.

2.    The first respondent notify Robertson J’s chambers if and when order 1 is satisfied.

3.    In the event that order 1 is not complied with, the appeal be dismissed.

4.    Costs reserved.

5.    Liberty to apply on two days written notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ROBERTSON J:

1    These reasons concern an application for security for costs brought by the first respondent to an appeal, Adani Mining Pty Ltd. The second respondent is the Queensland South Native Title Services Limited, the third respondent is the State of Queensland and the fourth respondent is the Native Title Registrar.

2    The appeal, filed on 7 September 2018, is from the orders made by the primary judge on 17 August 2018 dismissing the then applicants’ (now appellants’) further amended originating application: see Kemppi v Adani Mining Pty Ltd (No 4) [2018] FCA 1245; 360 ALR 697.

3    That application concerned certain grounds of challenge to a certificate issued under s 230BE(1)(b) of the Native Title Act 1993 (Cth) and to the registration of the Adani Indigenous Land Use Agreement (ILUA).

4    The background, and the issues at first instance, may be sufficiently seen from the following paragraphs of the judgment of the primary judge, at [2]-[4]:

The area of the proposed Carmichael coal mine falls within the claim area of the Wangan and Jagalingou native title determination application (the W & J application). As a consequence, Adani needs to obtain the agreement of the Wangan and Jagalingou People with respect to any native title that may be affected by its development. To that end, in April 2016, Adani, the State of Queensland (the third respondent) and the Wangan and Jagalingou native title claim group (the W & J claim group) entered into an Indigenous Land Use Agreement (the Adani ILUA) under the provisions of Division 3 of Part 2 of the Native Title Act 1993 (Cth) (the NTA). Subsequently, Adani successfully applied to the Native Title Registrar (the fourth respondent) to enter the Adani ILUA on the Register of Indigenous Land Use Agreements (the Register) under Part 8A of the NTA.

Ms Kemppi’s main goal in this proceeding was to set aside that registration. The path to that goal comprised two stages. The first stage concerned a certificate that was issued by Queensland South Native Title Services (QSNTS) (the second respondent) in April 2016 under s 203BE(1)(b) of the NTA (the Certificate). That Certificate was subsequently used by Adani to support its application to the Registrar to enter the Adani ILUA on the Register. Accordingly, in the first stage, Ms Kemppi sought, by this proceeding, to have that Certificate declared to be “void and of no effect”. Assuming she is able to obtain that declaration, in the second stage, Ms Kemppi sought a declaration that the Registrar had no jurisdiction to consider Adani’s application and therefore his decision to enter the Adani ILUA on the Register was “void and of no effect”.

There were two legs to Ms Kemppi’s attack on the Certificate. In the first leg, she claimed that, in issuing the Certificate, QSNTS acted unreasonably and thereby committed jurisdictional error which, she claimed, justified the declaration of nullity that she sought. In the alternative, in the second leg, she claimed that, in issuing the Certificate, QSNTS failed to take account of a number of relevant considerations which, she claimed, resulted in jurisdictional error which, she claimed, should lead to the same result. Finally, Ms Kemppi made a third challenge to the registration of the ILUA. She claimed that Adani’s application to register the ILUA did not comply with regs 5 and 7(2)(e) of the Native Title (Indigenous Land Use Agreements) Regulations 1999 (Cth) (the Regulations) and, for that reason, the Registrar’s decision to register the ILUA was void and of no effect.

5    The primary judge referred to and relied extensively on a statement of agreed facts adopted by all the active parties. The fourth respondent, the Native Title Registrar, had filed a submitting appearance.

6    The conclusion of the primary judge, at [169], was as follows:

For the reasons set out above, I have concluded that none of Ms Kemppi’s grounds of challenge to the Certificate and/or the registration of the Adani ILUA has any merit. Having reached this conclusion, it is unnecessary to consider a consequential issue that was addressed by the parties in closing submissions. That was, if the Certificate was not validly issued and/or if the application for registration of the Adani ILUA was invalid because it did not contain a “complete description” as required by reg 7(2)(e) of the Regulations, what effect, if any, did that invalidity have on the Registrar’s decision to register the Adani ILUA?…

7    The appeal is as of right. I am informed it is likely to be heard in the May 2019 Full Court sittings. There is a slim possibility that it may be heard earlier.

8    The grounds of appeal, relevant to the assessment of the quantum of any order for security for costs are 14 in number.

9    The appellants submit that their notice of appeal demonstrates an arguable case of error on the part of the primary judge. The grounds are summarised by the appellants as follows:

The Appellants submit that their notice of appeal filed 7 September 2018 demonstrates an arguable case of error on the part of the learned primary judge in that:

(a)    grounds 1-11 of the Appellants’ notice of appeal concern the correct construction and application of s.203BE(5) of the Native Title Act 1993 (Cth), where there is an arguable case of conflict between the approach of the learned primary judge and previous authority;

(b)    grounds 12-14 of the Appellants’ notice of appeal concern the correct construction and application of the term “complete description” as it appears in r.7(2)(e) of the Native Title (Indigenous Land Use Agreements) Regulations 1999 (Cth), where that regulation has not been previously judicially considered.

As to (a), the appellants seek to contrast [145]-[146] of the primary judge’s decision with Bright v Northern Land Council [2018] FCA 752 at [164]-[170] per White J, and QGC Pty Ltd v Bygrave (No 3) [2011] FCA 1457; 199 FCR 94 at [100]-[101] per Reeves J.

10    The relief sought in the notice of appeal is as follows:

1.    The appeal is upheld.

2.     The orders below are set aside.

3.    A declaration that the certificate issued on behalf of the Second Respondent on 26 April 2016 under s.203BE(5)(b) of the Native Title Act 1993 (Cth), certifying the application by the First Respondent for the registration of the agreement referred to in the Second Further Amended Statement of Claim at [15] as the “Project Agreement” on the Register of Indigenous Land Use Agreements under the Native Title Act 1993 (Cth) is void and of no effect.

4.    A declaration that the Fourth Respondent had no jurisdiction to consider the First Respondent’s application made on 27 April 2016 for the Project Agreement to be registered on the register of Indigenous Land Use Agreements under the Native Title Act 1993 (Cth).

5.    A declaration that the decision of the Fourth Respondent, made on 8 December 2017, to register the Project Agreement on the Register of Indigenous Land use Agreements under the Native Title Act 1993 (Cth) is void and of no effect.

6.    An order that the First, Second and Third Respondents, pay the Applicants’ costs of and incidental to the application to the learned primary judge and the appeal.

7.    Such further orders as the Court considers appropriate.

11    There are also notices of contention filed by Adani and by the State dealing with the matter the primary judge found it unnecessary to consider: see [6] above.

12    The application for security, brought only by the first respondent, is relevantly in the following terms:

1.    Pursuant to section 56(1) of the Federal Court of Australia Act 1976 (Cth) and rule 36.09 of the Federal Court Rules 2011 (Cth), the Appellants provide the First Respondent with security for its costs of the appeal in the amount of $161,000.00 (or such other sum as the court deems fit) (Security).

2.    The Security shall be provided either by payment into Court or the provision of an irrevocable bank guarantee from an Australian trading bank (or in such other form as the court deems fit).

3.    The Security shall be provided within 14 days of the Court’s order.

4.    The appeal be stayed until the Security is given.

5.    If the Security is not given within 14 days of the Court's order, the appeal be dismissed with costs.

6.    Liberty to apply on 2 days’ notice.

Evidence

13    Adani relies, in support of its interlocutory application, on two affidavits of Ms Elizabeth Kaye Poulos, the solicitor with the day-to-day carriage of the appeal proceeding on behalf of Adani, affirmed 5 November 2018 and 10 December 2018. Adani also relies on two affidavits of Mr Adam David Bloom, costs lawyer, sworn 9 November 2018 and 3 December 2018.

14    Ms Poulos’ first affidavit sets out her assessment of the work required to be performed by Adani’s legal representatives in the appeal proceeding and who, she anticipates, would be likely to undertake that work. She said her assessment is based upon her knowledge of the issues in the appeal proceeding and in the first instance proceeding as well as her 17 years’ experience as a solicitor.

15    Ms Poulos deposes to the numerous amendments to the present appellants’ pleadings at first instance.

16    She deposes to the hearing of the first instance proceeding being conducted over four days in March 2018.

17    She deposes to the financial position of the appellants as impecunious and without assets of any substance.

18    She deposes to existing costs orders in other proceedings made against one of the appellants. Those costs orders are very substantial. There are also other proceedings in which, Ms Poulos deposes, the appellants have been ordered to pay Adani’s costs.

19    Ms Poulos deposes to correspondence she has had with the solicitors for the appellants in relation to the present application for security for costs.

20    The effect of the correspondence is that the solicitors for Adani sought security in the amount of $300,000 and the solicitors for the appellants stated that the appellants were unable to provide any form of security in that amount. The solicitors for the appellants stated that the appellants may be able to raise the sum of $10,000 but would need time to raise that amount through appeals for public donations.

21    Ms Poulos deposes that in relation to the proceedings at first instance, judgment remains reserved on the question of costs.

22    She deposes, in her first affidavit, that having regard to the issues raised in the notice of appeal she anticipates the hearing of the appeal proceedings will take one day.

23    In her second affidavit, Ms Poulos notes that the appellants estimate the time required for the hearing of the appeal to be two days.

24    Ms Poulos also annexes to her second affidavit financial statements for 2016-2018 in relation to the Wangan Jagalingou Aboriginal Corporation. She also annexes a document downloaded from the website of the Wangan and Jagalingou Family Council website.

25    In his first affidavit or report, Mr Bloom’s estimate of past costs is $19,225. His estimate of anticipated appeal steps, including the steps in relation to the security for costs application, is $59,000 for professional costs plus anticipated outlays of $82,950. The total of these three figures is $161,000.

26    Mr Bloom’s second affidavit concerns whether or not he has changed his opinion in light of his new instruction that it had been necessary to brief alternative Senior Counsel to assist with the appeal proceeding and in relation to Adani’s application for security for costs. Mr Bloom’s answer was “No”.

27    The respondents to the application for security, the appellants on the appeal, rely on an affidavit of Mr Steven Kenneth Hartwell, costs assessor, sworn 3 December 2018 and an affidavit of Mr Colin Stanley Hardie, solicitor on the record for the appellants, affirmed 5 December 2018.

28    The effect of the evidence on which the appellants, the respondents to the application for security, rely is that the appellants are impecunious. Mr Hardie deposes that he believes that the Wangan Jagalingou Traditional Owners Aboriginal Corporation does not have sufficient funds to pay legal fees for the present appeal. That Corporation has a bank balance of $9270.14. Mr Hardie deposes that in the past an unincorporated association consisting of representatives of each of the families who make up the Wangan and Jagalingou People and identify as traditional owners has raised the funds to pay the legal accounts by appealing to members of the public through an online campaign. That unincorporated association intends to conduct a further public campaign to pay the legal bills of the appellants in the current appeal.

29    Mr Hardie believes that it may take up to six to eight months to raise the $160,000 Adani seeks as security for its costs. There is no guarantee that the funds would be able to be raised at all. He says those members of the public who have been prepared to contribute to the cost of the litigation in the past may not be as inspired to contribute funds to meet orders for security for Adani’s costs as opposed to contributing to the costs of the action brought by the appellants.

30    In his affidavit sworn 3 December 2018, Mr Hartwell deposes to his opinion as to the costs in respect of work done to date and in respect of the future anticipated costs of the appeal. As to the former he states a figure of $15,623. His total estimated figure is approximately $130,000.

Submissions

31    The parties filed short written submissions in relation to this application for security.

32    Adani submits that a non-exhaustive statement of considerations relevant to the exercise of the power to make an order under s 56 of the Federal Court of Australia Act 1976 (Cth) was made in Renshaw v Queensland Mining Corporation Limited [2016] FCA 994 as follows:

Self-evidently the power to make an order under s 56 of the Act is broad. It is unconstrained by anything other than the requirement that it be exercised judicially: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3–4. The “touchstone” is fairness: Madgwick v Kelly (2013) 212 FCR 1 at [92] (Allsop CJ and Middleton J). That said, without wishing to be prescriptive, a number of considerations will bear upon the exercise of the discretion. They include the matters referred to by Emmett J in Dye v Commonwealth Securities Ltd [2012] FCA 992 at [26] (“Dye”):

(a)    the prospects of success … ;

(b)    the risk that an order for costs will not be satisfied;

(c)    whether the making of an order for security would be oppressive insofar as it would stifle a reasonably arguable claim;

(d)    whether impecuniosity of an appellant arises out of the conduct that is the subject of complaint in the relevant proceeding;

(e)    whether there are any aspects of public interest that weigh in the balance against granting security; and

(f)    whether there are any other particular discretionary matters peculiar to the circumstances of the case.

It is generally accepted that the party seeking security bears a legal onus of establishing that the party against whom the order is sought will be unable to pay its costs if it succeeds on the appeal: see, for example, Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [27] (Lindgren J); Prynew Pty Ltd v Nemeth [2010] NSWCA 94 at [16] (“Prynew”). I say generally because, as I pointed out in Waters v Commonwealth (Australian Taxation Office) [2015] FCAFC 46; 108 ACSR 445 at [45] (North J agreeing), there is an ostensible conflict in the authorities about whether it is correct to speak of a burden of proof on an application for security for costs.

(The appellants refer to the similar statement of criteria in Equity Access Ltd v Westpac Banking Corporation [1989] FCA 361; (1989) ATPR 40-972.)

33    Adani submits that the courts are much more willing to order security against impecunious individual plaintiffs on appeal than at first instance.

34    Adani submits that the principal reasons why security for costs should be ordered are as follows. First, the appellants will be unable personally to satisfy any costs order if the appeal is unsuccessful. Second, the appellants have not established that an order for security for costs will stifle the appeal. The hearsay opinion evidence about the time it might take to raise $160,000 is speculative and vague. Third, the appellants, collectively and individually, have a history of being ordered to pay, but not in fact paying, Adani’s costs. Fourth, Mr Burragubba, one of the appellants, is a frequent unsuccessful litigator against Adani’s interests. Fifth, the appellants have already had the benefit of a trial. Sixth, Adani is not the cause of the appellants’ impecuniosity. Seventh, Adani has not delayed in bringing its application for security for costs. Eight, the appellants’ prospects of success on appeal are low. Ninth, merely because the proceedings involve a challenge in relation to the Native Title Act does not make it relevantly in the public interest. Tenth and finally, an order for security of costs will protect Adani from the unfair approach of the appellants’ unnamed benefactors raising funds to pay the appellants’ lawyers but not to pay Adani’s costs when the litigation against Adani was unsuccessful.

35    As to the appropriate amount of security, Adani submits that the security ordered should be no lower than Mr Hartwell’s estimate which is approximately $130,000. Adani submits that a 14 day period is reasonable for the dismissal of the appeal in the absence of the provision of the security because the appellants have been on notice since 3 October 2018 that this application would be filed. As I will later indicate, the 14 day period was modified in senior counsel’s oral submissions on behalf of Adani.

36    The appellants submit that on the terms sought by Adani, the ordering of security will stifle the proceedings and as such Adani’s application should be rejected. The appellants agree that they bear the onus of making out that an order for security will frustrate the proceedings. They submit that Adani accepts that the appellants are impecunious and that the uncontradicted evidence of the appellants is that: (a) their costs to date have been met by the generosity of others; and (b) a person associated with fundraising that has met the costs of the appellants believes that the time required to provide funds to the appellants to satisfy an order for security for costs may well exceed the timeframe within which Adani seeks that security.

37    The appellants submit that the resolution of the proper construction and application of s 203BE(5) of the Native Title Act and r 7(2)(e) of the Native Title (Indigenous Land Use Agreements) Regulations 1999 (Cth) are matters of significant public interest. So too, they submit, is the underlying matter raised by the appeal, being the surrender of native title: surrender, they submit, is a matter of great significance to native title holders and results in the permanent loss of status as a native title holder.

38    In the alternative, the appellants make submissions as to the terms of any order for security.

39    The appellants submit that a stay in default of provision of security is the conventional order, and Adani provides no persuasive reason for departing from that conventional order. Any issue as to whether the appeal should be dismissed should be determined after the stay has come into effect in the light of the evidence then available. There is no warrant, the appellants submit, for staying the proceeding prior to the expiry of the time within which security should be given.

40    The appellants submit that the appropriate time for them to provide any security is by 4:00pm on 31 January 2019. That deadline is well in advance of the first day of hearing, based on a listing for 28 February 2019. Excluding the days referred to in r 1.61(5) of the Federal Court Rules 2011 (Cth), it amounts to a period of 22 days.

41    In the event the Court is minded to order the provision of security, the appellants submit that:

(a)    the order should provide for security in an amount significantly less than $128,522 to be provided by the Appellants by 4pm on 31 January 2019;

(b)    the order should provide for the proceeding to be stayed in default of provision of security, rather than dismissed.

Consideration

42    In my opinion there should be an order for security for costs. I accept that the courts are more willing to order security against impecunious individual plaintiffs on appeal than at first instance. In my opinion, an order is necessary to mitigate the injustice that would arise if Adani were successful on the appeal and could not recover costs from the appellants who chose to bring the appeal. I assume in this respect that costs would follow the event, that is, the outcome, of the appeal.

43    Albeit at an impressionistic level, I regard the appeal as arguable. I note there is no application to strike out the appeal.

44    I do not consider that the appellants have shown that a costs order in any amount would stifle the appeal.

45    Although I accept that there is some interest beyond that of the appellants’ in the questions of statutory construction, that consideration is counterbalanced by the fact that this is an appeal. At this point any public interest nature of the matter does not outweigh the legitimate interests of the first respondent so far as costs are concerned.

46    Relevant to my assessment of the appropriate amount is the nature of the appeal and any complexity of it. The original proceedings were in the nature of judicial review and the appeal proceedings should involve much less by way of legal services for which costs would be recoverable.

47    In my opinion it is appropriate to take into account the appellants’ right of appeal but also that the first respondent Adani should be entitled to some protection in respect of costs if the appeal fails.

48    In my opinion Adani’s estimate of $161,000 takes insufficient account of the fact that the original proceedings were judicial review proceedings and the appeal is also of that nature. I think Mr Hartwell’s estimate also suffers from that defect. That is, neither expert, nor the material on which they rely, takes sufficient account of the limited nature of the appeal. In departing from the experts’ estimates I see no analogy with Domino’s Pizza Enterprises Ltd v Precision Tracking Pty Ltd (No 2) [2017] FCA 211 to which I was taken by senior counsel for Adani. That was a complex patent case at first instance with a trial listed for a number of weeks and where the Court was of necessity much more reliant on the evidence as to prospective costs adduced by the parties’ experts.

49    Of course the present estimate by Mr Bloom does not concern the level of legal services which Adani may choose to use. The present exercise concerns the appropriate proportion of the amount of Adani’s prospective legal costs which the appellants would be liable to pay if their appeal was unsuccessful and the appropriate level of protection to Adani.

50    Nevertheless, as I have indicated, for present purposes and having regard to principles of fairness and the purpose of an order for security for costs, I regard both Mr Bloom’s and Mr Hartwell’s estimates of Adani’s prospective costs as disproportionate and unpersuasive in relation to these judicial review proceedings on appeal. As I have said, in my opinion, neither expert adequately took into account this limited nature of the appeal.

51    As has frequently been said by the Court, the quantum of security is necessarily impressionistic and the Court can bring its experience to bear in assessing an appropriate amount of security.

52    I have taken into account, albeit in a preliminary way, the prospects of success and whether the making of an order for security would be oppressive insofar as it would stifle or tend to stifle a reasonably arguable claim.

53    In my opinion, for a one to two day judicial review appeal in this Court, the appropriate amount to order by way of security for Adani’s costs should be no more than $50,000, given the nature of the appellants’ appeal and its relatively uncomplicated nature. This sum takes into account that the appeal may extend into a second day, notwithstanding Ms Poulos’ original estimate that the appeal will take one day.

54    I do not accept Adani’s submission, in its written submissions, that 14 days to provide security is an appropriate period. The application was not filed until 9 November 2018 and could not be heard before today given the parties’ understandable desire to file evidence in support of their respective positions together with short written submissions. The appellants were not to know that the application for security would be granted. Senior counsel for the first respondent accepted in oral submissions that 31 January 2019 would be an appropriate date.

55    I am minded now to make an order that the appeal be dismissed in default. It seems to me that each side should have that certainty. I am also not minded to order now that if security is not given then the appeal be dismissed with costs. In my opinion the question of those costs may be affected by what steps the appellants take to provide security, even if those steps are unsuccessful.

56    I am not minded to grant a stay until security is given, in light of the short time for that payment to be made.

57    An appropriate form of order would be:

THE COURT ORDERS THAT:

1.    By 4pm on 31 January 2019 the appellants give security for the first respondent’s costs of the appeal in the sum of $50,000 by:

a.    paying the money into Court; or

b.    by providing an irrevocable bank guarantee from an Australian trading bank in a form acceptable to the Registrar.

2.    The first respondent notify Robertson J’s chambers if and when order 1 is satisfied.

3.    In the event that order 1 is not complied with, the appeal be dismissed.

4.    Costs reserved.

5.    Liberty to apply on two days written notice.

58    I will notify the National Appeals Registrar of these orders so that the possibility of the appeal being heard in the February 2019 sittings may be enhanced.

Associate:

Dated:    18 December 2018

SCHEDULE OF PARTIES