FEDERAL COURT OF AUSTRALIA

Wyong-Gosford Progressive Community Radio Incorporated v Australian Communications and Media Authority [2006] FCA 625

PRACTICE AND PROCEDURE – security for costs – principles to be applied – impecuniosity – applicant a not-for-profit organisation – whether an order would stifle the litigation

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 11

Broadcasting Services Act 1992 (Cth)

Federal Court of Australia Act 1976 (Cth) s 56

Federal Court Rules O 6 r 8

Amalgamated Mining Services Pty Ltd v Warman International Ltd and Anor (1988) 88 ALR 63 distinguished

Barton v Minister for Foreign Affairs (1984) 2 FCR 463 considered

Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 considered

Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 referred to

Cameron’s Unit Services Pty Ltd and Anor v Kevin R Whelpton & Associates (Australia) Pty Ltd and Anor (1986) 13 FCR 46 cited

Chang v Comcare Australia [1999] FCA 1677 referred to

Chapman v Luminis Pty Ltd [2002] FCA 496 considered

Croker v Sydney Institute of TAFE (State of New South Wales) [2003] FCA 942 referred to

Cultivaust Pty Ltd v Grain Pool Pty Ltd [2004] FCA 1366 referred to

Equity Access Ltd v Westpac Banking Corporation & Ors (1989) ATPR 40-972 referred to

Gartner v Ernst & Young (No 3) [2003] FCA 1437 referred to

King v Commercial Bank of Australia Ltd (1920) 28 CLR 289 referred to

KP Cable Investments Pty Ltd v Meltglow Pty Ltd and Ors (1995) 56 FCR 189 referred to

Oshlack v Richmond River Council (1998) 193 CLR 72 referred to

Re Trade Practices Commission v Milreis Pty Ltd and Ors; Application by Thomson Publications (Australia) Pty Ltd (1978) 18 ALR 17 cited

The Airtourer Co-operative Ltd v Millicer Aircraft Industries Pty Ltd [2004] FCA 1400 considered

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 34 ACSR 673 distinguished

Willey v Synan (1935) 54 CLR 175 distinguished

WYONG-GOSFORD PROGRESSIVE COMMUNITY RADIO INCORPORATED v AUSTRALIAN COMMUNICATIONS AND MEDIA AUTHORITY and GOSFORD CHRISTIAN BROADCASTERS LIMITED

NSD 2258 of 2005

COWDROY J

26 MAY 2006

SYDNEY

THE COURT ORDERS THAT:

1. The applicant provide security for costs in the sum of $10,000.
2. Liberty to restore the motion should further security be required following the hearing of the applicant’s application for leave.
3. Costs of the motion to be costs in the cause.
4. No order for costs in respect of the first respondent.
5. The exhibits be returned.

REASONS FOR JUDGMENT

1                     By notice of motion filed 19 January 2006  (‘the motion’) the second respondent, Gosford Christian Broadcasters Ltd (‘GCB’) seeks an order that Wyong-Gosford Progressive Community Radio Inc (‘PCR’) provide security for costs in respect of its application for leave to bring these proceedings out of time. GCB’s motion is brought pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’) which empowers the Court to make an order requiring a party to give security for the payment of costs.

2                     The motion seeks security for costs relating initially to the leave application, although GCB anticipates that if the proceedings continue beyond the leave application, further security would be required. PCR opposes the motion. The parties have agreed however that if the Court finds that security should be ordered, then the appropriate amount is $16,000. Security for costs is not sought by the first respondent, the Australian Communications and Media Authority (‘ACMA’).

OUTLINE of THE PROCEEDINGS

3                     On 21 October 2004 ACMA awarded a community broadcasting licence for the Gosford Licence Area to GCB pursuant to the Broadcasting Services Act 1992 (Cth). The decision to award that licence to GCB is the subject of challenge by PCR in the current proceedings.

4                     Under ss 5 and 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (‘the ADJR Act’), PCR was entitled to bring proceedings challenging ACMA’s decision within 28 days of the reasons for decision being furnished to PCR and after that time with the leave of the Court. PCR was provided with a statement of reasons for the decision of ACMA on 16 December 2004.  Accordingly, the period of 28 days expired in mid-January 2005.

5                     PCR did not file its application for review until 21 November 2005. Accordingly pursuant to s 11 of the ADJR Act, PCR requires leave of the Court to proceed with its appeal.  The application for leave has not yet been heard.

Facts

6                     PCR is a not-for-profit local community organisation incorporated for the purpose of operating a radio station serving youth and minority groups in the Central Coast area of New South Wales.  It is financed by grants from the Community Broadcasting Foundation Limited, membership contributions, donations from members of the community, fundraising and sponsorship.  PCR does not have access to any other significant financial resources.

7                     PCR operated a radio station for approximately ten years under a series of temporary community broadcasting licences issued pursuant to Pt 6 of the Broadcasting Services Act. In 2002 ACMA invited applications for three permanent community broadcasting licences in the Central Coast area, one of which was on the frequency which PCR was then using, namely 94.9 MHz on the FM band. PCR applied to ACMA for a permanent licence on this frequency. PCR was unsuccessful and in December 2002 ACMA granted the licence to GCB.

8                     PCR appealed ACMA’s decision to the Federal Court under the ADJR Act.  In a judgment delivered on 31 January 2003 Wilcox J upheld PCR’s appeal and set aside ACMA’s decision. Subsequently ACMA reconsidered the issue of the licence and in December 2004 again determined that the licence should be awarded to GCB. It is this decision which is now appealed by PCR. 

Applicable principles in a security for costs application

9                     Section 56 of the Federal Court Act relevantly provides:

‘(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.’

10                  The only limitation upon the exercise of the power provided by s 56 is that it be exercised judicially, which means, as Rich J observed in King v Commercial Bank of Australia Ltd (1920) 28 CLR 289 at 292:

‘…that in each case the Judge has to inquire how, on the whole, justice will be best served …’

In Oshlack v Richmond River Council (1998) 193 CLR 72, Gaudron and Gummow JJ observed at [22] (in relation to s 69 of the Land and Environment Court Act 1979 (NSW), which confers a similar discretion):

‘The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent.’

11                  Several authorities of this and other courts have considered the factors which should be taken into account in a security for costs application: see for example Equity Access Ltd v Westpac Banking Corporation & Ors (1989) ATPR 40-972 per Hill J; KP Cable Investments Pty Ltd v Meltglow Pty Ltd and Ors (1995) 56 FCR 189 at 197-8 per Beazley J; Cultivaust Pty Ltd v Grain Pool Pty Ltd [2004] FCA 1366 at [13] per Finn J; Chapman v Luminis Pty Ltd [2002] FCA 496 at [13] per Tamberlin J (‘Chapman v Luminis’); Croker v Sydney Institute of TAFE (State of New South Wales) [2003] FCA 942 per Bennett J. In summary, those considerations are:

1)         the chances of success of the applicant and whether the claim is bona fide;

2)         the risk that the applicant could not satisfy a costs order;

3)         whether the application for security for costs has been promptly brought;

4)         whether the application for security for costs is being used oppressively to deny an impecunious litigant access to the court;

5)         whether the applicant’s impecuniosity arises out of the act in respect of which relief is sought;

6)         whether there are third parties standing behind the applicant who are likely to benefit from the litigation and if so, whether they have proffered security for the costs of the litigation;

7)         whether an order for security for costs would frustrate the litigation;

8)         whether there are any public interest considerations to be taken into account;

9)         any matters relevant to the discretion which are distinctive to the circumstances of the case.

12                  The above considerations are to be construed in light of the fundamental right of a citizen to have access to the courts: see The Airtourer Co-operative Ltd v Millicer Aircraft Industries Pty Ltd [2004] FCA 1400 at [18] (‘Airtourer’). As Morling J observed in Barton v Minister for Foreign Affairs (1984) 2 FCR 463 at 469:

‘It has never been the case that impecuniosity on the part of a plaintiff is a ground for ordering him to give security for costs.  In Pearson v. Naydler [1977] 1 W.L.R. 899, Megarry V-C said:

“The basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well-established. As Bowen L.J. said in Cowell v Taylor (1885) 31 Ch. D. 34 at 38, both at law and in equity ‘the general rule is that poverty is no bar to a litigant’. The power to require security for costs ought not to be used so as to bar even the poorest man from the courts.”’

However, as Branson J noted in Airtourer at [21]:

‘Recognition by this Court of the general rule that poverty is no bar to a litigant has not meant that the Court has proceeded on the basis that an order for security for costs can never be made against a litigant. An order for security for costs is only rarely sought against a litigant who is not impecunious. An order for security for costs made against an impecunious litigant when justified by a factor other than mere impecuniosity does not offend the general rule that poverty is no bar to a litigant.’

13                  This passage accords with the comments of Moore J in Chang v Comcare Australia [1999] FCA 1677 at [25] where his Honour said:

  ‘While impecuniosity is not, by itself, sufficient to warrant an order for security, it is generally a relevant consideration ...’

APplication to the present case

14                  Several of the factors outlined above have relevance to the facts of the present case.

Likelihood of success

15                  GCB submitted that PCR’s claim was unlikely to succeed since it was brought out of time and was an appeal against a decision made by ACMA on remitter from a successful appeal by PCR to this Court. GCB said that after ACMA’s initial decision was set aside, ACMA was concerned to ensure that the process for the award of the licence was thorough and complete and that for this reason PCR’s challenge is likely to fail.

16                  I am unable at this early stage of proceedings to form a conclusion concerning the merits of the application. As Tamberlin J said in Chapman v Luminis at [17]:

‘It is neither possible nor appropriate on a security for costs application to reach any firm conclusions as to the prospects of an appeal being successful beyond a general consideration of the reasons for decision and the formation of a general overview.’

17                  Although the appeal is from a decision by ACMA rather than from a decision of this Court, I consider Tamberlin J’s observations are pertinent. The notice of appeal in these proceedings makes numerous challenges to the decision-making process engaged in by ACMA, and I am not able to assess the merits of those challenges without investigating factual material. The fact that the appellant’s challenge relates to the second decision of ACMA does not give rise to the inference that the appeal will not succeed.

The financial position of PCR

18                  PCR has not provided any direct evidence to the Court with respect to its incorporation, office-bearers, or financial position, although in its oral submissions it made brief reference to the fact that it was impecunious. The only evidence relating to the current financial status of PCR is the statement contained in the affidavit of Mr Norbert Lindberg, secretary of PCR, that the delay by PCR in bringing proceedings has resulted, in part, from the need to raise funds to finance the litigation. The Court has no information with respect to the success of PCR’s fundraising activities and no recent financial statements have been produced. The Court has been provided with financial statements from 2003-2004 but because PCR was still operating the radio station and was in receipt of community grants at this time, the statements provide very little guidance as to the current finances of PCR. Since early 2004 PCR, because of the loss of its broadcasting licence, has not been eligible for the community grants which has presumably had an adverse effect on its financial position.

19                  The only other references to the financial position of PCR are comments made by PCR’s Counsel in oral submissions, as follows (at transcript P-49 and P-51):

‘… we are a small community group, we don’t have the money to pay security for costs, we can ill afford this expensive litigation but here we are anyway and we want our case to proceed to a hearing, which is exactly what we are saying.

…

Effectively both sides are saying we are poor, we are impoverished. If we were in a position, both sides are saying if we were in a position where we had to put up security for costs we couldn’t afford to do so.’

Written submissions filed for PCR made no reference to impecuniosity and did not state that an order for security for costs would stifle the litigation.

20                  Information relating to PCR’s current financial status was solely within the power of PCR to provide to the Court, but it has failed to do so. The indirect evidence which is before the Court suggests that PCR is unlikely to have any significant financial resources. GCB has asked the Court to infer that PCR is impecunious, and in the absence of any evidence and given the suggestion to that effect by Counsel for PCR, I conclude that PCR would not presently have the resources to meet a costs order made against it.

21                  Such conclusion gives rise to the question whether an order for security for costs would stifle the proceedings. Other than the oral submission referred to above, PCR has not made a direct submission that an order for security for costs would stifle the litigation. However since PCR is impecunious, an order for security for costs may have this consequence.

22                  In an often-cited passage of the Full Federal Court, Sheppard, Morling and Neaves JJ in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 said at 4:

‘In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts.’

23                  The fact that PCR has chosen to oppose the application without providing adequate evidence of its financial position poses a difficulty for the Court. However, given the evidence that PCR is a not-for-profit organisation managed by volunteers, I think it is reasonable to infer that those supporters will not benefit from the litigation in any pecuniary sense, especially since these proceedings seek administrative law remedies rather than damages.

24                  A further consideration is that PCR is not a mere nominal applicant. In this sense, the present facts are distinguishable from those considered by Hely J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 34 ACSR 673, in which the applicant had no private right or interest. Hely J observed in that case at [37]:

‘In my view, the fact that no private right or special interest of the applicant is involved in these proceedings is a factor which weighs in favour of making an order for security, rather than against it.’

25                  His Honour added at [38]:

‘If those who control the applicant wish to have the benefit of litigating when no private right or special interest of the applicant is at stake in the proceedings and when the applicant is impecunious, then it is appropriate that security for the respondent’s costs be provided.’

26                  In these proceedings PCR has an interest in the litigation since ACMA’s decision resulted in PCR’s inability to continue to broadcast. This is not a case where PCR is being used as a ‘stalking horse to enable someone else to evade personal responsibility’: see Cameron’s Unit Services Pty Ltd and Anor v Kevin R Whelpton & Associates (Australia) Pty Ltd and Anor (1986) 13 FCR 46 at 53.

27                  I consider that the circumstances of the present case are, despite some similarities, also distinguishable from those considered by Branson J in Airtourer. That case involved an impecunious co-operative which was pursuing litigation out of a limited pool of funds. There was evidence before her Honour that the applicant planned to exhaust its funds to meet its own legal costs, leaving no funds in reserve for any costs order made against it. Branson J commented at [27]:

‘I do not conclude that an order requiring the applicant to provide a relatively modest sum by way of security for costs would preclude the applicant from pursuing its application to the Court. It might require the directors of the applicant to request additional funds from members of the applicant but, as the proceeding is presumably being pursued by the applicant in the interests of its members, I see nothing inappropriate in such an outcome.’

28                  Since PCR is a not-for-profit organisation which aims to provide radio broadcasts serving youth and ethnic minority groups, the proceedings are not being pursued by PCR in the interests of its ‘members’ so much as in the interests of the wider community group which it serves. I am not satisfied that volunteer members of a not-for-profit organisation should be required to provide funds for litigation when the organisation is impecunious. To impose such a requirement would mean a not-for-profit community organisation with a history of providing services to the public, which was legitimately bringing proceedings to the Court, might be prevented from pursuing an action to protect its interests merely on the ground of impecuniosity. This would, in my opinion, breach the principle that impecuniosity should not, without more, prevent a litigant from accessing the courts.

29                  However, the difficulty which remains in this instance is that, because PCR has provided very limited information with respect to its financial status, members, objectives, any possible sources of funding and other relevant details, no conclusive finding can be made on the evidence as to the effect which an order for security for costs may have in these proceedings. Further, in the absence of a direct submission from PCR that the proceedings would be stifled if an order were made, I am unwilling to draw the inference that this consequence would follow.

The true aggressor in the proceedings

30                  PCR has submitted that it is not the true ‘aggressor’ in the present application and relies upon the decision of Wilcox J in Amalgamated Mining Services Pty Ltd v Warman International Ltd and Anor (1988) 88 ALR 63 (‘Amalgamated Mining’). In those proceedings Amalgamated Mining sought a declaration that statements contained in a letter from Warman’s solicitors alleging that Warman’s copyright had been breached by Amalgamated Mining’s supplier were unjustified. In deciding that Amalgamated Mining should not be required to pay security for costs, Wilcox J said (at 67-8):

‘If one applies the homely test adopted by Scrutton LJ [in Maatschappij Voor Fondsenbezit v Shell Transport and Trading Co and Ors [1923] 2 KB 166] of asking who, in the litigation, was the attacker and who was the defender, I think it must be said that the first attack came in the letter from [Warman’s solicitors]. Although the letter was not written directly to Amalgamated Mining, it is that company which has an interest in defending and, in a commercial sense, probably has very little alternative other than to take that course. I think that it is an accurate analysis of the matter to say, therefore, that it is the respondents to the principal proceeding who are the attackers and that Amalgamated Mining is, in substance, the defender.’

His Honour also referred to the decision of the High Court in Willey v Synan (1935) 54 CLR 175.

31                  I consider the facts of the present case to be different from those in Amalgamated Mining and Willey v Synan. Those were both cases in which proceedings had been instigated to forestall a threat by a respondent to existing entitlements of the applicant. In these proceedings the respondents have not threatened existing rights of PCR. PCR does not have any specific entitlement to the licence. Although it is true that the decision of ACMA has led to PCR being unable to operate its radio station, PCR only ever held a temporary licence and never had an ongoing right to operate. It cannot be said that the action of either respondent deprived, or threatened to deprive, PCR of its rights such that it was forced to bring these proceedings to protect itself. Accordingly I do not consider that PCR can reasonably be construed as ‘the party attacked’ in these proceedings, or that either of the respondents can be considered as the true attacker.

NECESSITY FOR JOINDER

32                  PCR also submits that GCB is joined only as an interested party, and not as an ‘adversary’ to PCR. PCR refers to the fact that no relief is sought against GCB specifically, and says that GCB was only joined in the present proceedings because Wilcox J had required its joinder in the previous litigation. PCR also refers to the fact that, despite the fact that PCR was successful before Wilcox J, GCB was not required to pay PCR’s costs, which it submits recognised GCB’s non-adversarial status in the proceedings. The submission is that GCB, although joined, has no real need to participate in these proceedings because no relief is claimed against it.

33                  Order 6 r 8(1)(b) of the Federal Court Rules states that the Court may order that a person be added as a party where such joinder ‘is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated on’. It is important that the Court have an opportunity to hear from GCB in respect of any prejudice which it would sustain because of PCR’s delay in bringing these proceedings. Further, GCB has a direct interest in the outcome of these proceedings, since an order by the Court quashing ACMA’s decision would affect GCB’s right to continue broadcasting: see Re Trade Practices Commission v Milreis Pty Ltd and Ors; Application by Thomson Publications (Australia) Pty Ltd (1978) 18 ALR 17 at 23. In these circumstances, although no relief is sought against GCB, its position is threatened by the relief sought by PCR. GCB’s role is not akin to an ‘observer’ having no active role. Accordingly it is entitled to defend these proceedings and to seek security for its costs in so defending them.

other considerations

34                  The application by GCB has been promptly brought, having been filed one day after the first return date for the application. PCR submitted that the motion was premature, because the leave application had not yet been heard. I see no reason why GCB should have waited until after the leave application before bringing its application for security for costs. Had it done so, it would have been open to PCR to submit that GCB had delayed in bringing an application for security for costs, by reason of which expenses had been incurred in prosecuting the application: see Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 at 308; Gartner v Ernst & Young (No 3) [2003] FCA 1437 at [34]. Further, GCB may have been unable to recover its costs on the leave application if PCR was unsuccessful. It was appropriate for GCB to bring its application when it did.

35                  No submission was made that PCR’s case raised any particular point of broad public importance for determination. Although there is obviously a public interest in ensuring that a public authority such as ACMA exercises its powers appropriately, there is also a public interest in having decisions made expeditiously and finally, particularly decisions which affect a public service such as community radio. Accordingly I do not consider that the public interest assists either PCR or GCB in these proceedings.

36                  Nor do I consider that there are any particular circumstances in this case, other than those outlined above, which would influence the discretion of the Court.

37                  For the above reasons, I am satisfied that GCB is entitled to an order for security for costs for the amount sought. Since PCR is impecunious, and since I do not have financial information before me which clearly indicates what the effect of an order will be on the continuation of the litigation, I am not prepared to make an order for $16,000. The Court will, however, make an order for $10,000.

Associate:

Dated:              26 May 2006