FEDERAL COURT OF AUSTRALIA

Elston v Commonwealth of Australia [2014] FCA 704

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.    Within 14 days of the date of these orders the appellant give security for the respondent’s costs of the appeal in the sum of $17,250 by:

(a)    paying the money into court; or

(b)    providing to the Queensland District Registrar of this Court (“the Registrar”) an unconditional bank guarantee from an Australian-owned bank (as recognised by the Australian Prudential Regulation Authority) in a form acceptable to the Registrar.

2.    The appeal be stayed until the security is given in accordance with the terms of order 1.

3.    In the event that the security is not provided in accordance with order 1, the hearing date be vacated and the appeal be stayed.

4.    The appellant pay the respondent’s costs of and incidental to its interlocutory application.

5.    The respondent have liberty to apply for additional security.

THE COURT FURTHER ORDERS THAT:

6.    At the same time he files his written submissions on the appeal, the appellant file and serve a statement providing the following particulars of the grounds of appeal:

(a)    In what respects is it alleged that the primary judge failed to afford him procedural fairness and what is the basis for the allegation?

(b)    If it be the case that ground 1 of the notice of appeal is intended also to impugn the primary judge’s decision that the Commonwealth had no obligation to afford him procedural fairness, why was his Honour in error?

(c)    What are the alleged errors of fact contained in the judgment? In what paragraphs of the judgment are they to be found? Why are they errors? What alternative findings should have been made?

(d)    What is meant by “the Shield of Crown Test”? To what issue does this ground relate?

(e)    What is meant by “the legislative intent of Parliament (Federal Test)”? To what issue does this ground relate?

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

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

1    This is an application for security for costs of a pending appeal. The appellant is apparently impecunious and the respondent is concerned that if the appeal is unsuccessful, which it contends is likely, it will be unable to recover its costs.

Background

2    The appellant, Guy Elston, was a research scientist employed by the University of Queensland. The Commonwealth administers various research grant schemes on behalf of the National Health and Medical Research Council (“NHMRC”), including the NHMRC Researcher Support Schemes.

3    The funding for Dr Elston’s position at the university came from a Commonwealth grant after Dr Elston had successfully applied to the NHMRC for an award to fund his post-doctoral research into the human brain and the university had successfully applied for funding under the NHMRC Researcher Support Schemes.

4    On 12 December 2001 the Commonwealth entered into a deed of agreement with the university under which it agreed to pay research awards to the university and the university agreed to administer the awards, to use them to “meet the expenses of the amount of any salary and other entitlements or conditions of service…” of the award recipients and to provide them with the necessary facilities for the efficient conduct of research. Dr Elston was not a party to the deed but was apparently specified in a schedule to the deed as an (or the) award recipient. The total amount of Dr Elston’s award was $400,000, payable at the rate of $80,000 per year for five years beginning on 1 January 2002 and terminating on 31 December 2006. It was not renewable.

5    In certain circumstances, the deed provided that the Commonwealth, in its absolute discretion, was entitled to suspend payment of the grant pending a review by the Commonwealth of the future performance of the award. One of those circumstances was where the Commonwealth was not reasonably satisfied that the activities of the university or the award recipient remain compatible with the objectives of the award (cl 14.1(k)).

6    On 15 August 2006 the university suspended Dr Elston without pay after receiving a complaint of misconduct against him from his head of school. On 28 August 2006 it notified the Commonwealth of its actions, advising that the complaint related to “the unauthorised removal of equipment by Dr Elston” from the university campus in May and “Dr Elston’s absence from his workplace at the university since that time”. About a week later the Commonwealth decided to suspend payment of the grant monies.

7    The university investigated the complaint, found that Dr Elston had engaged in serious misconduct and, on 18 May 2007, terminated Dr Elston’s employment.

8    On 15 September 2011 Dr Elston filed a writ in the High Court of Australia against the Commonwealth and the NHMRC. The proceeding was remitted to this Court on 22 March 2012. In the writ Dr Elston sought damages (which he later assessed at more than $54 million) for “lost [p]ersonnel [s]upport, lost [r]esearch [s]upport, [d]ishonour, [d]efamation, and the colouring of character”. In the statement of claim endorsed on the writ Dr Elston alleged that:

•    he had been dishonoured and his professional name “coloured” as a result of the suspension of the award payments, which “interfered with [his] performance”;

•    the NHMRC had “dishonoured the spirit of the Deed of Agreement”;

•    the NHMRC had failed in its duty of care and failed to provide a reasonable standard of care to him.

9    The Commonwealth sought an order that the statement of claim endorsed on the writ be struck out or, alternatively, that there be an order for summary judgment in the Commonwealth’s favour; and that, in any event, the NHMRC (formerly a statutory corporation but by that time an agency of the Commonwealth without separate legal personality) be dismissed as a respondent to the proceeding.

10    On 21 February 2013 Logan J made orders dismissing the NHMRC as a party, striking out the statement of claim, and giving Dr Elston leave to re-plead (“the February orders”). His Honour also ordered that Dr Elston pay the Commonwealth’s costs: Elston v Commonwealth of Australia [2013] FCA 108. Dr Elston applied for leave to appeal from this judgment but on 24 May 2013 Greenwood J dismissed his application with costs: Elston v Commonwealth (2013) 212 FCR 76.

11    Dr Elston filed two amended statements of claim a month apart.

12    The later of the two (statement of claim filed on 23 April 2013) is discursive but appears to allege causes of action in contract and tort which may broadly be described as follows:

•    the Commonwealth was in breach of cl 14.1(k) of the deed of agreement by suspending payments, pleading that the NHMRC admitted on 12 November 2010 that there was no review of the future performance of the award;

•    he had been defamed;

•    the Commonwealth breached its duty of care that the NHMRC ensure that its fellows are not disadvantaged by the award of a fellowship and do a number of other things to mitigate harm to a fellow.

13    The alleged defamation is not clear. The Commonwealth inferred that it related to a misdescription of the allegations being investigated by the university about which Dr Elston complained at the hearing. It pointed to an internal email from the NHMRC dated 7 September 2006 directing the suspension of the payments “pending an outcome of allegations of possible scientific misconduct…”. But the amended statement of claim refers to written statements made by two NHMRC officers on 18 June 2009 and 12 November 2010 that the suspension of payments related to “research misconduct”, which Dr Elston alleged has a defined meaning under the Australian Code for the Responsible Conduct of Research 2007. Dr Elston’s point was that he was never accused of research misconduct but “misappropriation and theft of equipment”.

14    The amended statement of claim filed on 23 April 2013 also contains a lengthy account of Dr Elston’s battles with the Child Support Agency.

15    On 9 September 2013 both amended statements of claim were also struck out and Logan J made orders dispensing with pleadings and directing that “[t]he matter proceed to trial in respect of” four issues (“the September orders”). The trial took place before Rangiah J (“the primary judge”) on 31 October 2013 and on 31 March 2014 his Honour dismissed the application with costs. Throughout the proceedings Dr Elston appeared for himself.

16    On 22 April 2014 Dr Elston filed a notice of appeal. The appeal was listed for directions before Dowsett J on 30 April 2014. His Honour ordered that the appeal be heard on a day to be fixed in the August Full Court sittings. The appeal was later listed for hearing before the Full Court on 8 August 2014. His Honour also issued a certificate for pro bono legal assistance, but Dr Elston remains unrepresented.

The present application

17    By an interlocutory application filed on 10 June 2014 the Commonwealth applied for security for its costs of the appeal in the sum of $20,000 and a stay of the appeal until the security is given, in default of which it seeks a stay or dismissal of the appeal and the vacation of the August listing. It also asks for liberty to apply for additional security at any stage of the proceedings. And it seeks an order that Dr Elston pay its costs of, and incidental to, the application.

18    The form of security the Commonwealth seeks is that the money be paid into court or that Dr Elston provide an unconditional bank guarantee from an Australian-owned bank in a form acceptable to the Queensland District Registrar of the Court, to be held by the District Registrar until further order.

19    The application is supported by two affidavits. One, sworn by Anthony John Deane, a solicitor in the employ of Clayton Utz, the Commonwealth’s solicitor in the proceeding, contains an opinion about the costs the Commonwealth is likely to incur in the appeal, and sets out the basis for that opinion. The other, sworn by Lana Simone Kelly, another Clayton Utz lawyer, sets out a history of the litigation and provides the evidence upon which the Commonwealth relies to support its application.

20    The Commonwealth’s application for security is brought on the basis of its apprehension that Dr Elston, who has yet to meet any of the costs orders made against him to date, will be unable to meet any costs order that might be made against him on the appeal. That apprehension first arose, according to the evidence, on 30 April 2014 at the directions hearing before Dowsett J.

21    During the course of that hearing Dr Elston informed the Court that he was in financial hardship and was being pursued for unpaid debts by number of creditors. He also said that he had not drawn a salary since September 2006. Later inquiries Ms Kelly caused to be made revealed that Dr Elston is not the registered owner of any property in Queensland.

22    On 27 May 2014 Ms Kelly wrote to Dr Elston about his financial position and asked that he provide “cogent objectively verifiable information and supporting documentation” to show that he was able to satisfy any adverse costs order or, alternatively, that he agree to provide security for the costs of the appeal. She drew Dr Elston’s attention to the relevant rule and outlined the Commonwealth’s position.

23    Dr Elston replied on 4 June 2014 but did not purport to demonstrate his capacity to meet an adverse costs order. Nor did he agree to provide security. And he quarrelled with the contents of the letter, albeit without offering any reasons. Rather, he said he had written to the registry of the Court seeking clarification “regarding the nature and type of securities acceptable to the Court” and said he was awaiting a reply.

24    Ms Kelly made further inquiries of Dr Elston on 5 June 2014 and attached a draft application of security for costs and the supporting affidavit of Mr Deane. Dr Elston replied the next day, stating that he had the matter under consideration and would try to reply the following week. No reply was forthcoming before the interlocutory application was filed.

25    Dr Elston relied on an affidavit he swore on 23 June 2014 to which he exhibited a number of documents, including his correspondence with Clayton Utz (including letters annexed to Ms Kelly’s affidavit) and the Queensland District Registry.

26    Dr Elston emailed the registry on 4 June 2014. He received a reply the same day. That was to the effect that the only form of security acceptable to the registry was cash, a bank cheque payable to the Court or a bank guarantee.

27    On 13 June 2014 Dr Elston wrote again to Clayton Utz, this time complaining about the Commonwealth’s decision to make the application. He pointed to the Commonwealth’s obligations to act as a model litigant (as set out in appendix B of the Legal Services Directions 2005 (Cth), made by the Attorney-General under s 55ZF of the Judiciary Act 1903 (Cth) and, in particular, cl 2(f)). Clause 2(f) relevantly states that the obligation requires the Commonwealth to act honestly and fairly in handling claims and litigation brought against it by not taking advantage of a claimant who lacks the resources to litigate a legitimate claim. Dr Elston also took issue with the Commonwealth’s assertions that his financial difficulties in conducting the litigation do not arise from any action on its part and that the appeal did not raise matters of public interest.

28    As to the first matter, Dr Elston stated that it was common ground that:

(a)    he had not been paid all funds allocated by the Commonwealth for his salary under the deed of agreement;

(b)    the Commonwealth suspended his salary in September 2006 on the grounds of allegations of “scientific misconduct”;

(c)    he had been awarded over $6 million in funding before the suspension;

(d)    he had applied for more than $16 million in funds after the suspension but received none;

(e)    he has not been able to obtain a salary in Australia since the Commonwealth suspended the payment of his salary;

(f)    the Commonwealth issued a Departure Prohibition Order (“DPO”) in 2009 to prevent him from leaving the country;

(g)    at the time the DPO was issued, he was contractually obliged to carry out research in Japan under a $3.5 million grant from the Japanese Science and Technology Corporation; and

(h)    he has an arguable case.

29    Dr Elston then served the Commonwealth with an ultimatum in the following terms:

Unless the Commonwealth provides a full written account as to:

(i)    how its decision to suspend payment of Dr Elston’s salary on the grounds of allegations of “scientific misconduct” and hold payment in suspension for eight years did not cause him any financial disadvantage and did not affect his financial ability to conduct this litigation, and

(ii)    how the issuing of a Departure Prohibition Order did not interfere with Dr Guy N Elston’s ability to perform his contractual obligations under the Japanese Science and Technology Grant, and

(iii)    how the issuing of a Departure Prohibition Order did not restrain Dr Guy N Elston’s ability to derive an income in the profession for which he was trained, and

(iv)    how clinical application of Dr Guy N Elston’s discoveries in respect of cortical development are of no public interest in the circumstances where the Commonwealth specifically identified his particular research as meritorious of funding and applied tax payer funds to enable him to perform his research projects, and

(v)    how it is not public interest (sic) to restore and/or uphold confidence in the funding of medical research in Australia particularly in view of the foreshadowed establishment of a $30 billion medical research fund from tax payer contributions,

on or before 5PM Friday 20 June 2014 the Commonwealth accepts, admits and agrees that:

(vi)    it is acting in breach of the Legal Service Directions 2005, and

(vii)    any Interlocutory Action filed by the Commonwealth in respect of security be dismissed, and

(viii)    Dr Guy N Elston be awarded full costs in respect of any such said Interlocutory Action in accordance with the attached Schedule of Fees, to be paid in full within seven days of the date of dismissal, and

(vix)    the appeal progress unhindered by the Commonwealth to a hearing before the full bench of the Federal Court on 8 August 2014.

30    Clayton Utz replied the same day rejecting the assertions in the letter about the causal link between the Commonwealth’s conduct and Dr Elston’s impecuniosity and denying the allegations that it had breached the model litigant guidelines.

31    On the day of the hearing of the present application, Dr Elston filed in court a further affidavit to show that on 20 June 2014 the Commonwealth caused a stop to be put on a cheque account held in his name by the Commonwealth Bank. He stated that this was his only cheque account. He also read evidence from a number of affidavits filed in the proceeding below.

The legal principles

32    The Court’s jurisdiction to hear an appeal from a judgment of the Court constituted by a single judge exercising the original jurisdiction of the Court is conferred by s 24 of the Federal Court of Australia Act 1976 (Cth). Section 56 of the Act gives the Court or a judge the power to order an appellant in such an appeal to give security for the payment of costs that may be awarded against him or her of such amount and in such manner and form as the Court or judge directs. It also enables the Court or a judge to order that the appeal be dismissed if security is not given in accordance with an order made under the section. Whether or not an order ought to be made is a matter for the discretion of the Court or judge as the case may be. The discretion is a broad one. But for the requirement to act judicially, the discretion is unlimited: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3. There are, however, a number of considerations that bear upon the making of an order. They were summarised by Emmett J in Dye v Commonwealth Securities Limited [2012] FCA 992 at [26]:

(a)    the prospects of success of the appeal;

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

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

(d)    whether the appellant’s impecuniosity 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 against the grant of security; and

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

The submissions

33    Both parties filed written submissions. The Commonwealth’s contained a brief procedural history and a summary of the law relating to applications for security for costs, and addressed the legal principles by reference to the grounds of the appeal and the other relevant facts. In summary, the Commonwealth contended that there was no reason to doubt the correctness of the primary judge’s decision so that Dr Elston’s prospects of success were “poor”; that an order for costs in its favour would not be satisfied as Dr Elston is impecunious on his own admission; that there is “no rational connection” between Dr Elston’s impecuniosity and any conduct on behalf of the Commonwealth; and that there are no aspects of public interest or other discretionary matters that tell against the grant of security.

34    Dr Elston’s written submissions were largely directed to the merits of his original claim based on the statement of claim that Logan J had struck out. They barely engaged with the Commonwealth’s argument and paid scant attention to the grounds of appeal. They also complained that the primary judge failed to deal with two applications as to the joinder of parties (the University of Queensland and the Child Support Agency and/or the Department of Human Services), although neither matter is covered by any ground of appeal.

The issues at trial

35    Before going any further it is convenient to record the issues Logan J sent to trial. They were:

(a)    Was the contract made by deed on 12 December 2001 between the [Commonwealth] and the [university] (“the Contract”) a contract which, for the purposes of s 55 of the Property Law Act 1974 (Qld), was a contract for the benefit of a third party, namely [Dr Elston]?

(b)    In any event, even if the Contract was not one of that kind, was the [Commonwealth] obliged to afford [Dr Elston] natural justice to the extent of affording him an opportunity to be heard prior to exercising its power of suspension of the award found in clause 14 of the Contract?

(c)    If the [Commonwealth] was so obliged, did [it] afford natural justice to [Dr Elston] prior to making its suspension decision on 7 September 2006?

(d)    If it did not, what damages flow from any such failure?

36    At a directions hearing before the primary judge on 16 October 2013 Dr Elston submitted that the September orders were ambiguous and took his Honour to certain passages in the transcript of the September hearing which he contended supported his submission. He also contended that the absence of the qualification that the matter proceed to trial “solely” in respect of the four issues was critical. The primary judge held that there was no ambiguity in the orders and ruled that the matter was to proceed to trial only in respect of the four issues. In the hearing before me, Dr Elston took me to a later exchange with the bench in which he invited his Honour to “make a direction to avoid any confusion that the order – that a direction be made that this matter not passage on the issue of defamation and not passage on the issue of breach of deed of agreement … [w]hich would be entirely consistent with your Honour’s intention as to how the matter is being passaged”. He said that he would then have the right of appeal against those orders. His Honour refused to make such an order but it is tolerably clear that that was because he considered it would be redundant.

The decision of the primary judge

37    On the first issue, the primary judge held that s 55 of the Property Law Act (which imposes a duty enforceable by a third party beneficiary of a contract in certain circumstances) did not apply to the deed of agreement between the Commonwealth and the university. He did so because cl 1.8 of the deed of agreement provided that the laws of the Australian Capital Territory applied to the deed. In the absence of any indication that s 55 of the Property Law Act was intended to have extraterritorial operation, it followed that the proper law of the contract was the law of the ACT. His Honour said that there was no equivalent provision in the laws of the ACT.

38    In any case, his Honour held that the Commonwealth was not obliged to afford Dr Elston an opportunity to be heard before exercising its power of suspension of the award. He came to this conclusion for two reasons. First, the Commonwealth’s power to suspend the payments derived from the contract made by the deed of agreement and not from any statute. Secondly, his Honour was not satisfied that the decision to suspend payments to the university affected any relevant rights or interests of Dr Elston.

39    Consequently, it was unnecessary to deal with the remaining issues. Nevertheless, in case he was wrong, the primary judge proceeded to assess damages on the assumption that Dr Elston was denied natural justice. As Dr Elston was not a party to the contract, his Honour held that he was not entitled to damages if the Commonwealth was in breach of its terms; only the university could recover damages. In any event, his Honour was not satisfied that any loss or damage Dr Elston suffered was caused by the suspension of payments. For this reason his Honour said that if Dr Elston could “somehow establish breach of a contractual obligation … capable of resulting in an award of damages to him”, he would award him only nominal damages, which he assessed at $100.

Should an order for security of costs be made?

40    A consideration of all relevant matters leads me to conclude that it would be just and reasonable to make an order for security of costs.

41    I turn first to the prospects of success of the appeal.

42    Rule 36.01(2)(c) of the Federal Court Rules 2011 (Cth) (formerly O 52 r 13(2)(b) of the Federal Court Rules 1979 (Cth)) requires that a notice of appeal state “briefly but specifically, the grounds relied on in support of the appeal”. The rule applies to all litigants. While the task of drawing a notice of appeal may be harder for those who have not had legal assistance, as Flick J observed in SZJJC v Minister for Immigration and Citizenship [2008] FCA 614 at [15], “an unrepresented party has no licence to not comply…”.

43    It is apparent that that the notice of appeal in the present case was drafted without the assistance of a lawyer. As the Commonwealth submitted, the grounds of appeal are difficult to understand. They lack the necessary specificity demanded by the rules. They read (without alteration):

1.    failure to afford Dr Guy N Elston procedural fairness

2.    the Judgment contains errors of fact

3.    absence of ruling on common law exceptions to S55 of the Property Law Act (Qld), including unjust enrichment, trust and estoppel

4.    absence of ruling on defamation

5.    the judgment failed to consider the Shield of Crown Test

6.    the judgment failed to consider the legislative intention of Parliament (Federal Test)

44    The first ground is ambiguous. It does not indicate who it was who failed to afford Dr Elston procedural fairness: the Commonwealth (as considered below), the primary judge, or both. During the hearing of the interlocutory application, however, Dr Elston made it clear that he was complaining that the primary judge had denied him procedural fairness and it appeared that he also took issue with his Honour’s decision that the Commonwealth was not obliged to afford him procedural fairness.

45    Dr Elston voiced his disagreement with the primary judge’s finding that the decision to suspend payments was made under the deed of agreement. In any case, he asserted that the deed of agreement contained “a requirement to apply natural justice”. But his argument in support was undeveloped and unpersuasive.

46    The basis of his contention in relation to the primary judge is that his Honour restricted the trial to the four issues identified in the September orders and failed to consider submissions relating to the other issues which had been raised by the writ of summons. Dr Elston wishes to argue on the appeal that this was procedurally unfair because Logan J’s orders did not state that the trial was to proceed “solely” on the four issues, and did not purport to confine the affidavit evidence to the four issues. Dr Elston also submitted that Logan J made other remarks at the hearing in September which gave the impression that Dr Elston would have the opportunity to present evidence going beyond the four issues. Dr Elston submitted that, despite the fact that all his statements of claim were struck out, pleadings dispensed with, and an order made that the matter proceed to trial in respect of the four issues, the writ remained on foot and that, although the statement of claim endorsed on the writ was struck out, there was still the matter of relief and the relief sought damages, amongst other things, for defamation.

47    I have some difficulties with these submissions, not least because any relief sought in the writ would relate to the causes of action pleaded in statement of claim and, once the statement of claim (in all its incarnations) was struck out, pleadings dispensed with and the four issues for trial identified, any relief could only be granted in relation to a cause of action established by one or more of those issues.

48    It is also difficult to see how Dr Elston could have formed the impression that the trial was not limited to the four issues.

49    Dr Elston drew attention, amongst other things, to Logan J’s admonition to him:

[T]here’s no need to address me at length about that today, as opposed to at a trial. You can take it that I’m at least persuaded that there’s a case – an arguable case that is such that I shouldn’t dismiss your whole proceeding summarily.

50    But these remarks were taken out of context.

51    In the same exchange his Honour indicated that he was minded to “order that the case proceed to trial on [the four] issues, but those alone, and otherwise just strike out the statement of claim so that there’s no extra issues for trial than those four issues” (emphasis added). His Honour then outlined the four issues. At the conclusion of the hearing his Honour gave some brief oral reasons for his decision. He said he would elaborate on those reasons in the afternoon if the parties wanted him to but neither party made such a request. In those reasons his Honour said that he was not satisfied that the pleadings pleaded material facts giving rise to causes of action and damages in respect of any pleaded causes of action, contrary to the rules of Court. He went on to say:

I am further not persuaded that there is any real chance – any real prospect of success in respect of the cause of action in defamation if indeed one be pleaded at all in the further amended statement of claim or in respect of a breach of contract grounded upon an alleged breach of clause 10 in relation to a refusal to agree to a transfer of the award in question. I am also not persuaded that any of the other causes of action or matters pleaded – and any of the other matters pleaded give rise to a cause of action other than that which I have identified in the orders that I have pronounced, and I am also persuaded that the interests of justice are best served by having the matter proceed to trial on those issues rather than to impose upon Dr Elston the burden of drawing a statement of claim which I am not persuaded he would be able to do in a way that would be compliant.

(Emphasis added.)

52    Dr Elston did not apply for leave to appeal from Logan J’s September orders and he made no complaint that Logan J denied him procedural fairness. On the contrary, his case is that Logan J’s orders envisaged that he be able to litigate all his grievances.

53    For all these reasons the first ground appears weak at best.

54    As for the second ground, no error of fact is identified. At the hearing, Dr Elston said only that the “errors of fact” go to the question of whether the Commonwealth’s decision to suspend was made under the deed of agreement. He said that there was an arguable case that it was made under the National Health and Medical Research Act 1992 (Cth) because the letter advising the university of the decision referred to provisions of a deed which did not apply to him.

55    Ground 3 is difficult to fathom. The primary judge did say that, even though s 55 of the Property Law Act did not apply, it was arguable that if the Commonwealth was obliged to afford Dr Elston natural justice under the deed of agreement such an obligation was enforceable under the principle in Trident General Insurance Co Limited v McNiece Bros Proprietary Limited (1997) 165 CLR 107, by which I understand him to mean at the suit of Dr Elston as a third party beneficiary of the agreement. Dr Elston submitted that his Honour cited Trident but did not apply it. Yet, whether or not it should be applied depended on whether there was an obligation in the first place. Once his Honour decided there was no such obligation, there was no occasion to apply the principle. In any event, his Honour found that, even if the principle in Trident applied, and even if the Commonwealth had failed to afford Dr Elston procedural fairness, he would not be entitled to damages; his only possible remedies would be an order for specific performance or an injunction.

56    Unless there is merit in the first ground, the fourth ground is bound to fail. Dr Elston maintains that defamation was a live issue at trial but, as the Commonwealth put it in its submissions, there was “no occasion to make any ruling on defamation” because it was not one of the issues that Logan J directed proceed to trial.

57    The fifth and sixth grounds are incomprehensible. Dr Elston did not offer any explanation either in his written or oral submissions.

58    I now turn to the other considerations.

59    Dr Elston does not deny the allegation that he is impecunious and the transcript of the directions hearing in April this year tends to bear out the Commonwealth’s submission in this regard. The transcript also shows that Dr Elston was toying with the idea of filing for bankruptcy. On his own account he has not had a salary since September 2006 and he informed Logan J on 9 September 2013 that at that time he had no source of income and was reliant on “the good will of [his] friends and family”. The evidence also shows that Dr Elston does not own any real estate in Queensland.

60    But the evidence in Dr Elston’s most recent affidavit concerning the stop placed on his cheque account described this account as his only cheque account, not his only bank account, and there is no evidence about how much money is in the cheque account. Furthermore, there is no evidence to indicate that he does not own assets outside Queensland.

61    Still, there is at least a prima facie case that Dr Elston is impecunious and no evidence to indicate that Dr Elston has the capacity to meet any costs order that might be made against him on the appeal (whether from his own resources or otherwise). I am certainly persuaded that there is a substantial risk that an order for costs in the appeal will not be satisfied.

62    While in general “poverty is no bar to a litigant” (Cowell v Taylor (1885) 31 Ch D 34 at 38), it is well accepted that there is an exception in the case of appeals. Spender J explained in Tait v Bindal People [2002] FCA 322 at [3]–[4]:

3    …The difference is that, at the appellate (scil.) level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust.

4    In a sense, it would be giving to a person who has been on the receiving end so to speak of a determination by the courts a free hit at great cost to the other party in the appeal proceedings …

63    To paraphrase what Jagot J said in Clack v Collins (No 1) [2010] FCA 513 at [31], in circumstances where Dr Elston has already had his day in court and been wholly unsuccessful, it is intrinsically unfair that he be permitted to pursue his appeal while placing the Commonwealth at risk that any costs order it may recover will not ultimately be paid.

64    Having regard to the failure of the notice of appeal to identify with precision or particularity any arguable ground of appeal and my preliminary assessment of the merits of the first ground, I am satisfied that it would not be oppressive to require security. I do not consider at this point in time that the making of an order for security would stifle a reasonably arguable claim.

65    Despite Dr Elston’s plea to the contrary, there is no reason to believe that Dr Elston’s apparent impecuniosity arises out of the suspension of the award payments by the Commonwealth. Rather, his impecuniosity appears to have been caused entirely by the university’s decision first, to suspend him, then to terminate his employment. Dr Elston intimated in his affidavit of 16 February 2012 filed in the High Court and read on this application that he had not received a salary since the Commonwealth suspended payments to the university. But the Commonwealth’s decision to suspend the payment of the award monies followed the university’s decision to suspend Dr Elston without pay, not vice versa.

66    Dr Elston also stated that before the Commonwealth’s decision he had applied for and received more than $4 million in salary and research support to fund his various research projects (which he purportedly detailed in the affidavit) but that since that time he applied for more than $14 million in research funding and had received no support. These figures are lower than the figures mentioned in his letter to Clayton Utz of 13 June 2014 but nothing turns on this.

67    Yet, the primary judge found (at [49]–[61]) that there was no causal connection between the failure to obtain research funding and the Commonwealth’s decision to suspend payments of the award. In particular, his Honour said at [61]:

The evidence does not establish that the NHMRC refused to recommend any of Dr Elston’s applications for funding to the Minister on the basis of any belief that allegations of research misconduct had been made against Dr Elston. In addition, the evidence does not establish that the refusal of his applications for funding was connected with the suspension of payments to the University.

68    This finding is not challenged in the notice of appeal (at least not in terms) and Dr Elston did not directly submit that it was wrong.

69    There are no discretionary considerations weighing in Dr Elston’s favour. Dr Elston made an eloquent plea that he had been the victim of a grave injustice, insinuating that the university’s allegations of theft and misappropriation were trumped up as retribution for a formal complaint he had made to the pro vice-chancellor about the administration of Commonwealth funds under the NHMRC researcher scheme. He submitted that the Criminal and Misconduct Commission (“CMC”) cleared him and found that he was acting in accordance with the terms of agreement but that the university ignored the CMC’s findings, conducted its own internal investigation and found him guilty of misconduct. The problem with these submissions is that there was no evidence to support them, none of the behaviour involved the Commonwealth, and, in any event, it has nothing to do with the appeal.

70    As for the question of public interest considerations, Dr Elston referred to the importance of medical research but that is beside the point. Dr Elston also submitted that what happened to him could happen to another award recipient and asked rhetorically, “[w]ould it not be a matter of public interest that the National Health and Medical Research Council or the Commonwealth of Australia administer … complaints with due process affording natural justice …?”. I have taken this into account but in my opinion it does not outweigh the various other considerations that tell in favour of a grant of security.

71    I am satisfied that it is in the interests of justice to make such an order.

72    I would add that I reject Dr Elston’s complaint that the Commonwealth breaches its obligations as a model litigant by pursuing its application for security for costs. Nothing in the Legal Services Directions precludes the Commonwealth from doing so. The Commonwealth’s status as a model litigant “influences the way in which the Commonwealth conducts litigation, it does not impinge the Commonwealth’s ability to enforce its substantive rights”: Wodrow v Commonwealth of Australia (2003) 129 FCR 182 at [42] (Stone J).

What orders should be made?

73    Mr Deane’s opinion is that the Commonwealth’s likely costs total $26,704. The items making up that sum are contained in a schedule to his affidavit. His opinion is based on estimates of professional time involved in the various tasks that have been and will need to be undertaken in connection with the appeal and the rates prescribed by schedule 3 of the Federal Court Rules 2011 (Cth). The assumptions upon which Mr Deane’s opinion is expressed are set out in his affidavit.

74    The amount the Commonwealth asks for is approximately 75% of the amount Mr Deane estimates his client will incur.

75    Dr Elston does not quarrel with the assumptions (both explicit and implicit), the amount or any of the calculations.

76    With the exception of the following matters, the assumptions appear to be reasonable.

77    The assumption that the appeal books will consist of 1,000 pages appears excessive (at least at first blush). The basis for the assumption was not disclosed in evidence and it is at odds with the position put to Dr Elston in Ms Kelly’s letter of 27 May 2004 where the figure of 500 was given. Given an allowance for photocopying 3,000 pages, it also appears to have been assumed that the appeal books would be prepared by the Commonwealth, although it is the respondent to the appeal. The basis for that assumption was not disclosed either.

78    There is also a provisional allowance of $2,000 for a directions hearing that appears to be unnecessary, a cost of $528.40 for attending to any defects in the appeal books, $871.50 for the solicitor’s preparation for the hearing of the appeal when an allowance of $2,150 has been made for counsel. The Commonwealth did not press for any of these amounts and I propose to discount them.

79    In all the circumstances I am satisfied that security in the sum of $17,250 should be paid into court by bank cheque or that an unconditional bank guarantee be provided by Dr Elston from an Australian-owned bank (as recognised by the Australian Prudential Regulation Authority) in a form acceptable to the Queensland District Registrar to be held by the Registrar until further order. I will give liberty to the Commonwealth to apply for extra security should the amount allowed prove to be inadequate.

80    The appeal will be stayed until security is given and, in the event that it is not provided within 14 days, the hearing date will be vacated. There is no reason why the Commonwealth should not have its costs of this application as requested. There will be orders accordingly.

81    As I foreshadowed at the hearing, I will also make orders that require Dr Elston to particularise the grounds of appeal. I had thought to make them sooner rather than later, but so as not to distract Dr Elston from the urgent task of obtaining security, I propose to order that the statement of particulars be filed and served with his written submissions on the appeal.

Associate:

Dated:    1 July 2014