FEDERAL COURT OF AUSTRALIA

Nyoni v Shire of Kellerberrin (No 9) [2016] FCA 472

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent’s application for orders for security for costs is dismissed.

2.    The second to fourth respondents’ application for security for costs is dismissed.

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

REASONS FOR JUDGMENT

MORTIMER J:

1    This is the third interlocutory judgment in this appeal. In the other two judgments, I have set out the background to Mr Nyoni’s claims at trial, as well as tracing the manner in which Mr Nyoni’s appeal has been dealt with: see Nyoni v Shire of Kellerberrin (No 7) [2016] FCA 135; Nyoni v Shire of Kellerberrin (No 8) [2016] FCA 245.

2    The respondents have sought orders for security for costs in the appeal. The making of this application was foreshadowed at the appeal case management hearing on 19 February 2016 and a timetable was set by directions for the filing of material in support and in opposition. There has been substantial compliance with that timetable, although – as has become something of a pattern – Mr Nyoni filed some of his material shortly after the time specified in the directions. That material has been accepted and no objection made by the respondents. The first respondent seeks orders for the payment of $50,000 by Mr Nyoni for security for costs, and the second to fourth respondents seek orders that Mr Nyoni pay the same sum. Thus, orders are sought that Mr Nyoni pay a total of $100,000 in security for costs.

3    Orders are also sought staying the appeal until the security is paid, and dismissing the appeal if security is not paid.

4    Joint written submissions were made on behalf of the first to fourth respondents, and Mr Nyoni made written submissions in response.

5    I have some sympathy with the respondents’ general position and the considerations which may have driven these applications. It would not be inappropriate to describe Mr Nyoni’s pursuit of the respondents as dogged and unremitting. As I have noted in earlier judgments, Mr Nyoni has a tendency to file documents containing intemperate allegations and language, and required an order from the Court to restrain him. He has brought a large number of proceedings in both state and federal courts concerning the events in Kellerberrin between approximately 2007 and 2012, concerning the pharmacy the appellant operated in that town.

Nevertheless, considering the applicable principles to security for costs applications and, in particular, access to justice issues, I do not consider it is in the interests of the administration of justice for such orders to be made on this appeal.

APPLICABLE PRINCIPLES

6    In Kiefel v State of Victoria [2014] FCA 604 at [27]-[46], I set out the applicable powers of the Court to make security for costs orders (s 56 of the Federal Court of Australia Act 1976 (Cth) and r 36.09(1) of the Federal Court Rules 2011 (Cth)), some of the authorities which have considered the factors which may be taken into account in the exercise of this discretion, and my own views on some of the factors and approaches discussed in the authorities. I refer below to the matters which, in my opinion, are most relevant to the exercise of the discretion on this application.

7    I noted that, like the general costs power in s 43, to which it is linked, the Court’s power under s 56 is widely expressed. The power “must be exercised judicially, but that is the only relevant limitation”, and “each case must depend on its own circumstances”: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3-4. I referred to some of the usual factors which are considered, by reference to the decision of Emmett J in Dye v Commonwealth Securities Ltd [2012] FCA 992 at [26].

8    In Kiefel, I noted that the potential chilling effect of requirements to provide security for costs on individual litigants are well recognised, and the impediment which such orders could otherwise impose on access to justice means, at first-instance level, an individual impecunious litigant will rarely be ordered to provide security. At [35] – [38] of Kiefel, I noted that there were varying approaches to such applications in the context of appeals, and I noted that the historical context of some of the authorities relied on diminished, in my opinion, their relevance to access to justice considerations in Australian courts in the 21st century. I adhere to my opinion that, in the context of an appeal as of right (a matter I emphasised in Kiefel at [38]), there is no basis for any gloss or presumption on the operation of the principles at first instance. Access to justice, and the effective exercise of a right of appeal for an individual litigant, whether impecunious or of limited means, may often be for all practical purposes stifled if significant security for costs orders are made. I also referred to the identification by Allsop CJ and Middleton J in Madgwick v Kelly [2013] FCAFC 61; 212 FCR 1 at [92] of two components of fairness in the exercise of the s 56 discretion: fairness as to whether security should be ordered, and then fairness as to the amount. For the purposes of this application, I also refer to and adopt the opinions I expressed at [44] and [46] of Kiefel.

CONSIDERATION OF RELEVANT FACTORS IN THIS APPLICATION

Prospects of success

9    The respondents submit none of the appellant’s grounds of appeal have any reasonable prospects of success, emphasising that the trial judge’s dismissal of each of the appellant’s claims was based on findings of fact (at least in part) and that the bar for overturning findings of fact on appeal was high. Whether or not the latter proposition accurately reflects the nuances of the application of the well-known passages of Fox v Percy [2003] HCA 22; 214 CLR 118 at [28]-[29], and the materiality threshold described in Warren v Coombes [1979] HCA 9; 142 CLR 531, need not be pursued.

10    An appellate court will correct error in a trial judge’s decisions, whether as to law or fact or both, in circumstances where the appellate court considers it is warranted. Mr Nyoni’s appeal, even after the considerable amount of work which has been applied to the notice of appeal, is fact intensive, and also raises questions of law concerning the law of trespass, the law of accessorial liability, alleged breaches of the Trade Practices Act 1974 (Cth), the tort of misfeasance in public office, evidence law and the adequacy of damages. I do not consider it appropriate in a wide ranging appeal, especially where the appellant succeeded against the fifth respondent, for the court on a security for costs application to second guess the outcome of the appeal, or even express detailed views about the prospects of the various grounds.

Impecuniosity or access to assets to satisfy costs orders

11    As I noted in Kiefel at [51]-[52], there is:

something of a contradiction in examining impecuniosity in the context of an application for security for costs. Asserted impecuniosity may be the catalyst for an application, because that status provides a rational foundation for the proposition that a respondent cannot reasonably expect to recover its costs if a proceeding (or appeal) is successfully defended. Yet, asserted impecuniosity also tells against capacity to provide security for costs. This seems to be what underlies the consistent line of authority to the effect that impecuniosity by itself is not a justification for an order for security for costs.

Consideration of, and evidence about, potential stultification of a proceeding if security is ordered is capable of resolving the apparent contradiction. The stultifying effect of a security order may be obvious in some circumstances, or require detailed evidence in others. Whatever the factual circumstances, consideration of impecuniosity by reference to the likelihood of stultification is one of the key matters which should inform the exercise of the s 56 discretion. It also provides the foundation for an evaluation of the fairness of such an order. Finally, the level of impecuniosity of a particular party may be important: a specified amount of security may be within the means of a litigant, whereas immediate satisfaction of an estimated taxable party–party costs order may not. The question in those circumstances then is whether the court is imposing a lesser amount for the purpose of providing the moving party with access to a fund for costs, or for some other purpose.

12    In the present case, Mr Nyoni has not filed any evidence deposing to his financial circumstances in any detail. However, it is common ground he is facing bankruptcy proceedings in the Federal Circuit Court of Australia, on the application of (amongst others) two individuals who were central players in the events surrounding the Kellerberrin pharmacy, and against whom Mr Nyoni’s allegations in Nyoni v Chee Koon Hee (No 4) [2013] FCA 948 were unsuccessful.

13    The bankruptcy petition was listed for hearing before Lucev J on 11 April 2016. The Court’s records reveal that his Honour granted Mr Nyoni leave to amend his Notice of Grounds of Opposition and ordered that judgment be reserved to a date to be fixed.

14    The respondents have been pursuing Mr Nyoni for costs in several proceedings for a considerable period of time. They have obtained access to funds held on Mr Nyoni’s behalf by the Supreme Court of Western Australia to satisfy some of the costs orders. Over $90,000 appears from the evidence to have been released to them in this way. They continue to pursue Mr Nyoni for the balance of their costs, including relatively small sums of $1,000 in various Supreme Court proceedings. Mr Nyoni’s affidavit also annexes solicitors’ correspondence on behalf of the second to fourth respondents outlining that Mr Nyoni owes $48,550 in costs (excluding interest) in relation to four matters in this Court.

15    If Mr Nyoni has any real or substantial assets, I would have expected the respondents to be aware of them by now, and to have drawn them to the Court’s attention for the purposes of their security for costs application. Their written submissions at [15] and [17] appear to proceed on the basis that he is impecunious. Mr Nyoni’s own written submissions also proceed on that basis, and at [11] and [14] state:

Respondents then went on to take, what was left of the forced sale of appellant’s business in the Supreme Court of Western Australia, rendering applicant impecunious and indigent due to the subsequent SEPA orders respondents took against appellant at the Supreme Court of WA. Further, in those proceedings, appellant's entire assets were taken and when appellant attempted to sale [sic] the remaining asset, the house in which appellant and family live in, respondents devised another trick and altered appellant's boundaries, behind hs [sic] back, cutting the property into half, and excising off the septic system for the property …

Respondents have stripped appellant of his assets, his livelihood, his work rights and in front of the Amended Notice of Appeal filed 12 April 2016, respondents now wish to impose security of costs to frustrate the appeal, which has reasonable prospects of success.

(Footnotes omitted.)

16    Although this appears in his written submissions rather than his affidavit, I give Mr Nyoni some latitude as a self-represented litigant.

17    Generally, the party resisting security has the onus to demonstrate the stultifying effect of a security for costs order: see Madgwick at [81] per Allsop CJ and Middleton J and the authorities there cited. As I have noted above, there is no evidence from Mr Nyoni deposing in express terms that he could not prosecute his appeal if a security order was made but considering all of the evidence and submissions it seems to me Mr Nyoni has made this point, and the respondents have at a general level accepted this to be the case. Otherwise, if Mr Nyoni had access to funds to pay costs, I am confident the respondents, in their multiple debt recovery processes against him, would have discovered the existence of those funds by now. Instead, for example, the most recent enforcement action that appears to have been taken by the respondents was the issuing of a “Means Inquiry Summons” in the Supreme Court of Western Australia for the small sum of $2,000, representing just one of the debts owed by Mr Nyoni.

18    I am satisfied for the purpose of this application that Mr Nyoni could not meet an order that he pay, in a short period of time (the interlocutory application seeks payment within 21 days), or any period of time before the appeal, an amount of $100,000 as security for costs. Indeed, I am satisfied he could not meet an order that he pay any substantial sum in that time. I am satisfied that, if orders were made of the kind sought by the respondents, Mr Nyoni’s appeal would end up being dismissed for non-payment of security.

Whether the impecuniosity of the appellant arises out of the conduct that is the subject of complaint in the relevant proceeding

19    Mr Nyoni relies on this factor to oppose the making of the security for costs orders. There is some merit to this contention in a broad sense. It does appear from the evidence, from the judgment under appeal and accounts of other court proceedings, and from matters relied on by each party, that the great bulk of Mr Nyoni’s current financial circumstances, including the large sums of money he still owes in costs and the debts which underlie the bankruptcy petition, all stem from litigation surrounding the events in Kellerberrin and the longstanding disputes about the running of Mr Nyoni’s pharmacy. The respondents were on one side of this dispute (along with a number of other individuals) and Mr Nyoni was on the other. All the litigation appears to have been commenced by Mr Nyoni, although there appears to have been an underlying series of complaints made to various regulatory authorities by the respondents, or some of them, and or alternatively their agents and employees.

20    If Mr Nyoni were to be successful, in whole or in part, on this appeal, it is not presently possible to identify how many of the existing costs orders against him might be affected. No doubt much would depend on the grounds of appeal he succeeded on.

21    Ultimately, this factor is about fairness. It would be unfair to impose a security for costs order on an appellant who was impecunious (and unable to provide assurance of capacity to satisfy a costs order at the conclusion of an appeal) by reason of the matters she or he complains about in the appeal itself. At a broad level, that is what Mr Nyoni says has happened to him. I say “at a broad level” because there is also evidence that he has commenced multiple claims against multiple respondents, rather than simply pursuing one claim. Despite this, I give this factor some small weight against the making of an order.

Timing of the security application

22    This application was foreshadowed at the same time the Court was attempting to settle an acceptable version of Mr Nyoni’s notice of appeal. It seems the respondents waited until it was clear the appeal was proceeding. They had sought that the appeal be stayed pending the bankruptcy proceedings; an application I refused. There can be no criticism of the respondents in relation to the timing of this application.

23    That said, the appeal is currently listed to be heard in the August sittings, which is only three months away. The appeal is being tightly case managed, with the active assistance of a Registrar in Perth, and, if there are particular costs concerns occasioned by the manner in which Mr Nyoni conducts the appeal from now on, the respondents have the usual liberty to apply and raise their concerns with the Court.

The amount of any security

24    No submissions were made by the respondents that a lesser sum than $50,000 for each of the first and second to fourth respondents would be sufficient to mitigate adequately the risk the respondents might not be able to recover their costs if the appeal is dismissed.

25    An order for security for costs should not be used as an alternative way of striking out an appeal. Nor should it be used to push an appellant towards discontinuing an appeal. Rather, it is a process available to secure, in advance, the costs of a respondent to an appeal where the circumstances justify reversing the sequence which usually applies: namely that costs orders are made, if at all, after a proceeding has been heard and determined. But, as I have attempted to demonstrate, the whole notion of providing monetary security in advance must be balanced carefully against access to justice considerations, in the light of the conferral by the Federal Court Act of a right of appeal, which an appellant has regularly exercised. Where an appellant has sufficient funds, there will be no access to justice issues in a security for costs application, and other discretionary factors will no doubt assume more importance.

CONCLUSION

26    The respondents have to date conducted themselves responsibly in this appeal, in the face of some baseless and intemperate allegations by Mr Nyoni, and various inappropriate applications (such as the introduction into the appeal of entirely new claims) which have been without much legal merit. No doubt Mr Nyoni is a thorn in their respective sides. However, in my opinion, an order that he provide security for costs is not appropriate, no matter how vexatious aspects of his conduct may be.

27    The appeal has now been sufficiently regularised that it will be conducted on the basis of a tolerably intelligible notice of appeal, and will be argued and concluded in a one day hearing. If the appeal lacks merit to the extent the respondents submit, it should be a relatively straightforward task to prepare for the appeal, and to persuade the appeal court that is so.

28    As I said in Kiefel at [88]:

The discretion is exercised, in my opinion, because the Court concludes that it is fair in the particular circumstances of a case that a particular respondent not assume the risk usually assumed by respondents in litigation, and have available something in addition to the usual mechanisms for pursuing costs orders.

29    In my opinion, the interests of the administration of justice are best served, in the face of a determined self-represented litigant such as Mr Nyoni, by the substantive appeal being heard and determined in an efficient way, as soon as reasonably practicable. The resources of the parties and the Court are best focused on this outcome. If Mr Nyoni is unsuccessful, so be it. On the respondents’ submissions, the appeal should be easily dealt with on its merits. The question of costs will then fall for consideration by the Full Court. However, Mr Nyoni will have been able to exercise his right to appeal in the usual manner which, in the circumstances of this case, I consider to be the predominant consideration.

30    The interlocutory applications will be dismissed. There will be no order as to costs.

Associate:

Dated:    5 May 2016

SCHEDULE OF PARTIES