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

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.

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 the question of security in the judicial review proceedings.  This appeared to be accepted by counsel appearing for Mr Chang.

Background

3                     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.

4                     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.

5                     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 advisedMr 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.

6                     On 12 April 1999 Comcare paid Mr Chang’s solicitors $37,100 for legal costs in the AAT proceedings in accordance with the heads of agreement.  The payment was made subject to a condition, agreed to by Mr Chang’s solicitors and counsel, that the costs would be repaid if Mr Chang succeeded in having the AAT decision set aside.  On 15 April 1999 Finn J ordered that a certificate of taxation issue in the sum of $21,393.15 for the costs of the proceedings determined on 25 October 1996.  This amount remains unpaid.

7                     On 20 May 1999 Mr Chang filed a debtor’s petition with the Insolvency Trustee Service of Australia (“ITSA”), together with a statement of affairs under s 55(2)(b) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”).

Contentious factual issues

8                     There are two contentious factual issues.  The first concerns the settlement and the application for consent orders on 20 November 1998.  The second is whether or not Mr Chang is presently impecunious.

The signing of the Heads of Agreement and Consent Orders

9                     A central contention of Mr Chang in the appeal proceedings is that he did not consent to the orders made by the AAT.  It was accepted by the respondents that if there was no consent the orders could not stand.  It is unnecessary, in these proceedings, to determine conclusively whether Mr Chang consented.  It is, however, necessary to review the evidence that is presently available to assess the likelihood of Mr Chang establishing that he did not consent to the orders that were made and thus assess the likelihood of his appeal succeeding.  

10                  At the start of the AAT hearing on 16 November 1998 Mr Chang was represented by Mr Anforth of counsel, instructed by Ms Beard of Maliganis Edwards Johnson.  Comcare was represented by Mr Wallace of counsel, instructed by Mr Snell of Sparke Helmore.  On 16 and 17 November 1998Mr Changgave evidence in chief.  From 17 to 19 November 1998 Mr Chang was cross-examined.  On the afternoon of 19 November 1998 Mr Anforth sought and received Comcare’s permission to interrupt the cross-examination in order to speak with Mr Chang about the possibility of settlement.  The legal representatives of both parties then sought, and were granted, an audience with the Tribunal in chambers.  Following discussions with the Tribunal in chambers, Mr Anforth sought instructions from Mr Chang to negotiate a settlement. Settlement negotiations then commenced, but no settlement eventuated.

11                  On 20 November 1998 Mr Chang appeared in person and notified the Tribunal that he was no longer represented.  The precise circumstances of the withdrawal of his legal representatives are unclear.  In paragraph 3 of his affidavit dated 21 September 1999 filed in these proceedings, Mr Chang says that in the late afternoon of 19 November 1998, his solicitors asked him to pay an amount exceeding $30,000 into its trust account before they would continue to represent him.  Mr Chang says that he could not afford the payment, and that his solicitors told him that they could no longer act for him.  On 20 November 1998 Mr Anforth and Ms Beard attended the hearing and Mr Anforth told the Tribunal that the solicitors were withdrawing because “the nature of the financial arrangement with the client has not been able to be agreed” and because unspecified conditions “of a non-financial nature” “that were put on acting in the first instance” had not been complied with.  Mr Anforth also referred to “other reasons”, on which he declined to detail, which made it difficult for him to continue to appear.

12                  After Mr Anforth advised the Tribunal that he no longer appeared the Tribunal proceeded to inform Mr Chang of the difficulties he would face if he continued unrepresented and of its preliminary views regarding his claims.  The Tribunal then adjourned to enable Mr Chang to reconsider, with his legal representatives, the withdrawal.  Further discussions then took place between the Tribunal, Mr Chang and Mr Wallace in chambers regarding the possibility of settlement.  Following this, the parties recommenced settlement negotiations.

13                  Mr Chang’s evidence was that while he had discussions with Mr Anford about settlement after Mr Anford’s retainer had terminated, it was only in the context of whether Mr Anford’s fees and the fees of those instructing him would be paid.  Mr Snell’s evidence was that Mr Anford’s role was a wider one.

14                  When the Tribunal reconvened on the afternoon of 20 November 1998 to deal with the signed heads of agreement and consent orders, Mr Anforth was still present, as is evident from the transcript:

“MS BURTON: But we would like Mr Chang perhaps, for our satisfaction to be very sure that you, and I know that Mr Anforth is still here, and we thank you Mr Anforth for remaining today but to be very sure that you understand absolutely the effect of these orders that you are asking us to make.”

15                  The evidence tends to suggest that Mr Chang agreed to the settlement with some assistance from lawyers he had previously retained but the assistance was informal.  It is unlikely a finding would be made that Mr Chang entered the agreement without any advice, albeit informal, and on both Mr Chang’s and Mr Snell’s versions of what occurred, Mr Chang plainly had the opportunity of seeking advice of that character.  A further matter relevant to the present applications of Mr Chang is the conduct of Mr Snell towards Mr Chang during the settlement discussions.  However whatever ultimate findings might be made about Mr Snell’s conduct, the conduct alleged by Mr Chang, anger aggression and a refusal to speak directly to Chang, do not presently appear to be of character that suggests Mr Chang’s will would have been overborne by Mr Snell in the circumstances.

16                  I now turn to consider the agreement itself.  It is desirable to set out the heads of agreement and proposed consent orders that were signed by the parties on 20 November 1998.  The heads of agreement were as follows:

“1. That the parties shall request of the Administrative Appeals Tribunal a decision in the terms set out in the draft Consent Orders attached hereto and marked with the letter “A” (“the Orders”).

2. Upon the Administrative Appeals Tribunal making the Orders the Applicant shall accept that his employment with the Productivity Commission, formerly the Industry Commission, shall cease on and from 26 November 1998 pursuant to the General Employment Conditions Award 1995 and Productivity Commission Certified Agreement of 1998 (The VR).

3. That upon the cessation of the Applicant’s employment on 26 November 1998 the Applicant will become eligible to recover the VR according to law.

4. That the amount of compensation payable to the Applicant in respect of the Orders will be the sum that he is entitled to recover according to law in accordance with the Orders.”

The proposed consent orders were as follows:

“1. The parties having reached agreement as to the term of decision that the parties request the Tribunal to make, with the consent of the parties decides:

(a) That the decisions which are subject of review be set aside and in substitution therefore the Tribunal decides:

(i) That the Applicant suffers from an ailment, namely occupational overuse syndrome (the ailment);

(ii) Thus the Applicant’s employment by the Industry Commission contributed to the aggravation; acceleration and/or recurrence of the said ailment (the aggravation);

(iii) Thus the aggravation resulted in the Applicant being incapacitated for work on and from 4 July 1993 to 26 January 1994 and from 5 December 1995 to 10 May 1996 for the purposes of Section 19 of the Safety, Rehabilitation and Comepnsation Act 1988 (the Act);

(iv) That the aggravation has not resulted in the Applicant suffering a permanent impairment, or the need for household and attendant care;

(v) That the Applicant’s employment ceased to contribute to the aggravation on and from 10 May 1996;

(vi) That the Applicant is entitled to payments of compensation for medical treatment medical treatment to and including 9 May 1996;

(vii) That the Applicant is not entitled to any payment of compensation under Part II of the Act in respect of the said ailment, the aggravation of the said ailment, and or in respect of any injury arising out of, or in the course of, his employment by the Industry Commission on and from 10 May 1996.

2. The Respondent shall pay the Applicant’s costs in the proceedings agreed in the amount of $37,100.00 such amount including all disbursements and Counsel’s fees.”

17                  The decision of the Tribunal made under s 42 C(1)(a) was in substantially the same terms as the proposed orders though immaterial changes were made by the AAT to their format and language.

18                  It is clear from the transcript that the AAT took Mr Chang through the terms of settlement and explained their effect to him:

“MS BURTON: But we would like Mr Chang perhaps, for our satisfaction to be very sure that you, and I know that Mr Anforth is still here, and we thank you Mr Anforth for remaining today but to be very sure that you understand absolutely the effect of these orders that you are asking us to make.  And I think from what you said and just listen to the alterations we made – to make them more clear, it seems that you do – that you understand now that the decisions – the reviewable decisions that were before the Tribunal are now set aside.

And in substitution these decisions will be made that takes over all the outstanding matters as to which you sought a review and that it is decided that you do suffer an ailment, namely the occupational overuse syndrome and that relates to your sore arms and that it is a condition that was contributed to or aggravated or accelerated the ailment or its recurrence by your employment and that aggravation resulted in you being incapacitated for work in the period only mentioned, that is 4 July 1993 to 26 January 1994.  Now, that period, as we understand it, is between the time you finished your course – your university course and came back to the Department.

MR CHANG: In the middle of the year, 3 July, ’93.

MS BURTON: Yes, middle of year – but you understand that is the period for which you will be receiving incapacitation payments - - -

MR CHANG: Yes.

MS BURTON: - - - by way of compensation.  And again, from 5 December 1995 to 10 May 1996.

MR CHANG: Yes.

MS BURTON: And other than that, there will not be any other compensation for your incapacity to work under the Act.  You understand that?

MR CHANG: Yes.

MS BURTON: Now, you understand also that the claim you made for permanent impairment is not one for which you will receive any compensation?

MR CHANG: Yes.

MS BURTON: And you will not receive compensation for any of the past or future care – household help that you have needed or have had or that you might need in the future.  That is not a matter that you will receive compensation for.

MR CHANG: Yes.

MS BURTON: And that your employment has ceased to contribute to the aggravation or did cease to contribute as from that date, 10 May 1996?

MR CHANG: Yes.

MS BURTON: Your medical expenses, be they the psychiatric and the chriopractor and the things you mentioned, will be subject to the production of vouchers and bills and so on, will be attended to by Comcare up to and including – I am sorry, including 9 May 1996.  If there happens to be one on 10 May, that will be looked at but on and from 10 May 1996 there will be no further compensation entitlements for this condition.

MR CHANG: Yes.  I wish to clarify a bit.  This so-called voucher – some of the receipts I have lost but I can produce the butts with my name and the dollar term on it, you know, for a - - -

MS BURTON: What you will be doing is producing the evidence of that treatment to Comcare and it will be assessed in relation to its relationship with this condition and we are not asked to go in and look at each individual voucher but if you have a problem there because you have lost receipts, Comcare will assist you in either getting a duplicate or you will show whatever evidence you have got.  And that will be worked out between you and I am sure from here on in it will be done amicably and reasonably.  There is always ways of verifying attendances.

MR CHANG: Thank you.

MS BURTON: Now, in addition, the respondent is going to pay your costs and that has been agreed as well and we are pleased to note that as to the amount and that includes – that is the total amount that Comcare is liable for irrespective of what arrangements you might have had or what you might individually owe your solicitors and counsel.  That is the extent of Comcare’s liability as we understand it and your liability to your solicitors and legal representatives is not a concern of the Tribunal.

MR CHANG: Yes.

MS BURTON: Now, in relation to the other matters, we note that agreement has been reached about your employment and that you have made some agreement about your entitlements and that is something the Tribunal notes but does not go into the details and that is irrespective of what they are, the orders that we make will stand.  Do you understand that?

MR CHANG: Yes.

MS BURTON: So, they are completely independent from here on in.  Once the Tribunal has made these orders, that is irrespective of what other entitlements you may receive in relation to your employment conditions when your employment is terminated.

MR CHANG: That concerns me a bit because I just come across in my mind now, Mr J.R.  Wallace, actually a representative of the respondent, not a representative of the Productivity Commision.  So, I wonder whether it has got any effects of this agreement at all on the Industry Commission.  I see some bargaining to this.

MS BURTON: I think that Mr Wallace will probably give the Tribunal his undertaking that he is authorised to sign that particular agreement on behalf of the employer as well as - - -

MR WALLACE: I just confirmed with Mr Alan Walton of the Productivity Commission, the Personnel Manager, that he has given me those instructions to bind the Commission.

MS BURTON: And he is present here today, is he not?

MR WALLACE: Yes.  Mr Walton is from the Commission, Mr Chang, and he has authorised me to sign.

MR CHANG: Okay.

MS BURTON: So Mr Wallace has signed the terms of settlement on behalf of the respondent, but he has undertaken to the tribunal and we have all heard that, that he has the authority for and has signed those terms on behalf of the Productivity Commission – Industry Commission, so that is covered.  Now, Mr Wallace, did you want Mr Chang to acknowledge this is [sic] any other manner than having done it in this way on the transcript?

MR WALLACE: No, thank you, Senior member, the transcript has been taken of the proceedings, you have covered all of the points I would have asked you to cover and I thank you very much and the other members of the tribunal for their patience and attendance in these proceedings.

MS BURTON: Well, we are very pleased at the outcome, so we can all thank each other.  But instead of going well overtime in this matter we are now a week ahead of ourselves and, Mr Chang on behalf of the tribunal we wish you the very best in your future; we believe you will have one.

MR CHANG: I wish to thank the Senior Member and the bench for their patience and their time, thank you very much.  It is almost close to Christmas, so Merry Christmas.

MS BURTON: The same to you.  Thank you, we will adjourn.”

19                  The exchanges between the Tribunal and Mr Chang would, in my opinion, support an inference that the consent of Mr Chang had been willingly given and that he was given an adequate opportunity to raise with the Tribunal any aspect of the agreement that may have been troubling him.  Mr Chang’s expression of thanks and Christmas greetings in his last comments, in my opinion, would more readily allow such an inference to be drawn. 

20                  I am conscious, in making the preceding observations, of a medical report on which Mr Chang relies.  It is a psychiatric report of Dr Knox dated 17 March 1999.  In the final paragraph of that report, Dr Knox stated:

“From my knowledge of Mr Chang’s psychiatric health I believe it probable that he did suffer very significant aggravation of his Adjustment Disorder With Mixed Anxiety And Depressed Mood as a result of the stress of the Administrative Appeals Tribunal hearing, particularly once he was without legal representation. I believe it probable that he was unable to think clearly due to being overwhelmed by re-experiencing disabling emotions associated with his unhappy earlier work circumstances, experiencing significant anxiety and depression. I believe Mr Chang’s judgment was likely to be impaired under these circumstances and he was not in a fit mental state to fully appreciate the consequences of his decision to accept a settlement.”

21                  However, Dr Knox does not express a view about the extent to which Mr Chang’s judgment was impaired and leaves unanswered to what degree Mr Chang was not able to appreciate the consequences of his decision to settle the proceedings.

The impecuniosity of the applicant

22                  As earlier noted, on 20 May 1999, Mr Chang filed a debtor’s petition with ITSA together with a statement of affairs.  In that statement Mr Chang did not disclose the fact of his employment with the Commission, the receipt of voluntary redundancy entitlements totalling $54,740.60, and details of what he did with these entitlements.  On 1 October 1999, Mr Chang advised ITSA by fax of the fact of the $54,740.60 payment, and said that it had been “spent and used to pay for food, clothing, electricity, rent, medical and other expenses etc. over the years since March 1992”.  Mr Chang also noted that his employment with the Commission had been terminated on 26 November 1998.  Lastly, Mr Chang advised ITSA that he “may seek to set aside the current bankruptcy”.

23                  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

24                  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

25                  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

26                  The applicant’s prospects in the proceedings are generally a relevant consideration, although I am mindful of the difficulties in assessing these in detail prior to hearing: see Equity Access Ltd v Westpac Banking Corporation (supra) at 50,636.  There are two main issues in these proceedings.

27                  It is not entirely clear whether it is part of Mr Chang’s case in the appeal proceedings that the AAT decision should be set aside for want of procedural fairness.  On the basis it was, counsel for Comcare submitted that Mr Chang would have to establish that the Tribunal was on notice that it would have been unfair to Mr Chang to have proceeded as it did on the afternoon of 20 November 1998.  Reference was made to Titan v Babic (1994) 49 FCR 546, Sullivan v Department of Transport (1978) 20 ALR 323, Fitzwarryne v Comcare [1999] FCA 409, R v Moodie; ex parte Mithen (1977) 17 ALR 219 and In the Marriage of MI and A Tynan (1992) 16 FamLR 621.  Counsel for Comcare submitted that Mr Chang had not provided any evidence as to why the Tribunal should have been on notice of any unfairness.  Indeed, the opposite was true.  As is evident from the transcript set out above, the Tribunal took Mr Chang through the proposed consent orders and Mr Chang signalled in unambiguous terms that he understood them.  Counsel for Mr Chang did not take issue with these submissions.  In my opinion, Mr Chang would have formidable difficulties in establishing a denial of procedural fairness. 

28                  The next basis on which the consent orders are challenged is that Mr Chang never truly agreed to the terms of settlement.  Mr Chang relies on the grounds of duress and mental incapacity.  Turning first to duress, the duress identified by Mr Chang was the threat of proceedings continuing, the alleged anger and aggression of Mr Snell, and the applicant’s weakened psychological state.  Counsel for Mr Chang submitted that, taken together, these constituted illegitimate pressure amounting to duress.  A threat of prosecution is not by itself sufficient to warrant a finding of duress: see Scolio Pty Ltd v Cote (1992) 6 WAR 475.  It is unlikely, in my opinion, that Mr Chang will be able to demonstrate, having regard to the material before me, that the settlement was reached because he had been subjected to duress.

29                  Turning now to mental incapacity, counsel for Mr Chang submitted that it was necessary for Mr Chang to both show that he was incapable of understanding the nature of what he was doing by making the agreement, and that those acting for Comcare knew this.  Reference was made to Gibbons v Wright (1954) 91 CLR 423 at 437 and 441.  It was submitted that, on the basis of Mr Chang’s affidavits, Dr Knox’s medical reports, the applicant’s exhaustion after four days of hearing and two days of cross-examination, and the circumstances that Mr Chang was acting for himself and was subject to pressure by the other side, Mr Chang did not understand the general nature of what he was doing by signing the agreement.  However, it was accepted by Mr Chang’s counsel that at present there is no direct evidence that those acting for Comcare knew of any incapacity on the part of Mr Chang.  Indeed, in paragraph 6 of his affidavit dated 30 September 1999, Mr Snell states that at no stage did he observe Mr Chang to behave “in a way which indicated, indeed suggested, that he did not give his informed consent to the settlement of the proceedings”.

30                 Counsel for Comcare submitted that the high point of the applicant’s claim is the opinion of Dr Knox that Mr Chang “was not in a fit mental state to fully appreciate the consequences of his decision to accept a settlement”.  It was submitted that this does not satisfy the test for incapacity established in Gibbons v Wright (supra), namely whether Mr Chang was incapable of understanding the nature of what he was doing.  It was submitted that Mr Chang was afforded ample opportunity to raise any lack of consent when he was taken through the terms of the settlement by the Tribunal.  Counsel for Comcare and the solicitor appearing for the Commonwealth also drew my attention to Mr Chang’s requests to the Commission in the days following the Tribunal’s decision, which I described earlier under the heading “Background”, for details of his voluntary redundancy entitlements and for payment of the entitlements into a nominated bank account.  It was submitted that this behaviour is inconsistent with the applicant’s avowed incapacity. Counsel for Mr Chang submitted that inconsistency can be resolved by adopting the view that Mr Chang wished to affirm the voluntary redundancy component of the settlement but to have the workers compensation component set aside.  However, as counsel for Comcare pointed out, it is difficult to accept that Mr Chang had the mental capacity to consent to one component of the agreement, but not to another.  It is, in my opinion, unlikely that Mr Chang will be able to establish that when he was suffering from mental incapacity he entered the agreement.

The applicant’s existing liability to Comcare

31                  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

32                  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.

33                  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.

34                  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. 

Associate:

Dated:              1 December 1999