FEDERAL COURT OF AUSTRALIA

Maher v Commonwealth Bank of Australia [2008] FCA 205

Federal Court of Australia Act 1976 (Cth) s 35A(6)

Jianshe Southern Pty Ltd v Get Motor Cycles Pty Ltd (No 3) [2007] FCA 1078 cited

Maher v Commonwealth Bank of Australia [2007] FCA 560 referred to

Skyring v Sweeney [1999] FCA 61 cited

Moore v Macks [2007] FCA 509 cited

Dal Pont, Law of Costs, Butterworths, Australia, 2003

DENNIS MAHER v COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

VID 284 OF 2007

SUNDBERG J

29 FEBRUARY 2008

MELBOURNE

THE COURT ORDERS THAT:

1.                  On or before 14 March 2008 the applicant provide security in the sum of $13,215 for the costs to be incurred by the respondent in the appeal, such security to be provided in a form acceptable to the District Registrar.

2.                  If such security is not provided as aforesaid, the appeal be forthwith dismissed.

3.                  The applicant pay the respondent’s costs of the motion notice of which was filed on 27 July 2007.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On the respondent’s application a bankruptcy notice was issued and served on the applicant. The applicant applied to the Federal Magistrates Court for an order that the notice be set aside. On 19 March 2007 a Federal Magistrate dismissed that application. The applicant has appealed to this Court. On 27 July 2007 the respondent applied for an order that the applicant provide security for its costs of the appeal. On 11 October 2007 a Registrar ordered that the applicant provide security in the sum of $11,215 by 8 November 2007 and that the appeal be stayed until such security was provided. The applicant seeks review of the Registrar’s decision pursuant to s 35A(6) of the Federal Court of Australia Act 1976 (Cth). The review is a hearing de novo.

2                     On the review the respondent relied on the three affidavits it had placed before the Registrar. The first is that of Polat Siva one of the respondent’s solicitors who had the conduct of the application for security. His evidence can be summarised as follows:

·               orders made by the Court in earlier proceedings that the applicant pay the costs of the respondent and others (taxed at $57,603) have not been satisfied

·               the applicant has exhausted his avenues of appeal in relation to those orders

·               the applicant has failed to satisfy other costs orders made by the Court in favour of the respondent

·               the applicant has failed to satisfy costs orders made in favour of the respondent in the Federal Magistrates Court

·               by failing to comply with the bankruptcy notice referred to at [1], the applicant has committed an act of bankruptcy pursuant to s 40(1)(g) of the Bankruptcy Act 1966 (Cth)

·               the applicant has not obtained a stay of the orders of 19 March 2007 or an extension of time within which to comply with the bankruptcy notice

·               the applicant has failed to comply with orders in the bankruptcy proceedings requiring him to file an affidavit as to his financial circumstances

·               the applicant has refused to be examined as to his financial circumstances

·               in a draft amended statement of claim prepared by the applicant’s solicitors in June 2007 in proceedings in the County Court between the parties the applicant alleged that he was bankrupt between 1991 and December 1999, had been unemployed since being made bankrupt, has been in receipt of an age pension since 2005, and has been unable to afford “full legal representation” in various court proceedings

·               real property in the applicant’s name is encumbered by mortgages and/or caveats

·               Mr Siva believes that if the appeal is dismissed the applicant will be unable to satisfy an order that he pay the respondent’s costs of the appeal

·               the applicant has failed to respond to a request that he provide security for costs in the sum of $13,215.

3                     The second affidavit relied on by the respondent is that of Helen Smyth, a costs consultant. Ms Smyth estimates the amount of the taxed costs of the respondent in opposing the appeal at $13,215. She itemises the amounts making up that total.

4                     The third affidavit is that of Michelle Kumarich, at relevant times one of the solicitors acting for the respondent. Ms Kumarich answers various allegations made by the applicant in his affidavit sworn in support of his notice of appeal.

5                     The applicant did not file any affidavit in opposition to the application for security before the Registrar. Nor has he filed any substantive affidavit in support of this application for review of the Registrar’s decision.

6                     Matters relevant to whether security should be provided include whether the application for security is brought promptly, the strength of the applicant’s case, whether the applicant is impecunious, whether any impecuniosity was caused by the respondent, whether the application for security is oppressive, and whether the applicant is in substance a plaintiff in the proceeding. See generally Jianshe Southern Pty Ltd v Get Motor Cycles Pty Ltd (No 3) [2007] FCA 1078.

7                     I am satisfied the application for security was brought promptly.

8                     I have read the Federal Magistrate’s decision the subject of the appeal and the amended notice of appeal. Many of the grounds are not available grounds of appeal or are of such generality and so wanting in particularity that they are impossible to assess. The complaint about the Magistrate’s construction of Order 36 of the Federal Court Rules was rejected by Tracey J in Maher v Commonwealth Bank of Australia [2007] FCA 560 at [9].

9                     There is no material before me to support the claim that the Magistrate denied the applicant procedural fairness.

10                  The complaint that the respondent’s demand for payment should have been on behalf of all parties jointly entitled to costs, and that each should have been named in the notice for that purpose, was dealt with by the Magistrate at [32] to [35] of his reasons. On the evidence before him the Magistrate found that the respondent was authorised to collect all of the costs on behalf of the other parties.

11                  Having reviewed the Magistrate’s reasons my assessment is that the applicant’s prospects of succeeding on any appeal are slight.

12                  In my view the applicant is impecunious. He has failed to pay the $57,603 costs order and other smaller costs orders. He has filed no material in support of his solvency or as to his assets. The material in the respondent’s affidavits (see [2]) suggesting impecuniosity is unanswered.

13                  There is no evidence that the applicant’s impecuniosity has been caused by the respondent.

14                  The word “oppressive” is used in this area to describe an application for security that is used merely to deny an impecunious applicant a right to litigate. See Jianshe Southern at [27]. As a general rule poverty is not a bar to a litigant at first instance. However the position is different as to appeals. In Skyring v Sweeney [1999] FCA 61 at [6] Spender J said:

Impecuniosity ought not to be a bar to a person prosecuting at first instance a claim, but the position on appeal seems to me to be fundamentally different. In effect, in the absence of an order for security for costs in the circumstances of this case, Mr Skyring, in effect, is given a free hit, and that seems to me to be intrinsically unfair.

See also Moore v Macks [2007] FCA 509 at [20] to [21].

15                  Notwithstanding the foregoing, I have taken into account the fact that an order for security may well frustrate the prosecution of the appeal.

16                  In my view the applicant is in substance a “plaintiff”. In the Magistrates Court he was challenging a bankruptcy notice founded upon a costs order against him in this Court. It is true that in mounting that challenge he could perhaps be described as a “resister”. However, he is in substance a plaintiff because the bankruptcy notice is based on a debt owed to the respondent in respect of which he has exhausted his avenues of appeal. See generally Dal Pont, Law of Costs at 28.53‑28.54 and 28.58.

17                  The ultimate question is whether, on the balance of probabilities there is a substantial risk that the respondent may not, if judgment is given in its favour, be reimbursed in full for its taxed costs: Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40‑972 at 50,636. The answer to the question, taking into account the considerations canvassed at [6] to [16], is that there is such a risk.

18                  I accept Ms Smyth’s estimate of the taxed costs. Accordingly I will order that security be provided in the sum of $13,215.

Associate:

Dated:         29 February 2008