FEDERAL COURT OF AUSTRALIA

Lim v Comcare [2016] FCA 1346

ORDERS

THE COURT ORDERS THAT:

1.    Within 28 days of the date of these orders the appellant give security for the respondent’s costs of the appeal in the sum of $15,000 by:

(a)    paying the money into Court; or

(b)    providing to a Registrar of this Court 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.    In the event that the security is not provided in accordance with Order 1, any hearing date allocated for the appeal be vacated and the appeal be stayed.

3.    In the event that the security referred to in Order 1 is not paid within 56 days of the date of these orders, the appeal be dismissed.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    The applicant, Dr Sharon Lim, is a former employee of the Australian Communications and Media Authority (ACMA). In March 2011, Dr Lim submitted a claim for compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth). Comcare subsequently disallowed Dr Lim’s claim. Dr Lim sought a review of that adverse decision in the Administrative Appeals Tribunal. That review application was unsuccessful. Comcare’s decision was affirmed by the Tribunal. Dr Lim then filed an appeal in this Court against the Tribunal’s decision. That appeal was dismissed by a single judge of this Court in June 2016. The present proceeding is an appeal from the judgment of the primary judge.

2    By amended interlocutory application filed on 5 October 2016 the respondent to Dr Lim’s appeal, Comcare, sought security for costs in respect of Dr Lim’s appeal in the sum of $15,000, together with a number of ancillary orders. Dr Lim opposed the making of any order in respect of security for costs.

3    For the reasons that follow, an order for security for costs of Dr Lim’s appeal in the sum of $15,000 is appropriate.

Background

4    It is necessary to provide some background, albeit in the briefest possible terms, in respect of Dr Lim’s appeal. That is because, in support of it application for security for costs, Comcare contended that Dr Lim’s appeal does not have good prospects of success. In opposing Comcare’s application, on the other hand, Dr Lim contended that her appeal had significant prospects of success.

5    Dr Lim’s claim for compensation was based on her suffering from an “adjustment reaction with depressant anxiety” as a result of alleged bullying and harassment by her supervisor at ACMA. There appears to have been no dispute that Dr Lim suffered from a psychological condition at the time of her claim, though the assertion that this was the result of bullying or harassment was contested. The critical question in determining whether Dr Lim was able to claim compensation in relation to the condition suffered by her was whether that condition was an “injury” as defined in s 5A of the Compensation Act. That question primarily turned on whether or not the psychological condition was suffered as a result of reasonable administrative action taken in a reasonable manner in respect of Dr Lim’s employment. If it was, the condition was not an injury for the purposes of the Compensation Act. That is because s 5A excludes, from the statutory definition of injury, any injury, disease, or aggravation of an injury or disease, that was suffered as a result of reasonable administration action.

6    The question whether Dr Lim’s psychological condition was suffered as a result of reasonable administrative action hinged largely on when she suffered that condition. Comcare contended that reasonable administrative action by Dr Lim’s supervisor in early 2011 contributed significantly to the development of Dr Lim’s psychological condition. If that was the case, Comcare submitted that Dr Lim suffered her condition as a result of that action. Dr Lim, on the other hand, contended that she suffered the condition well before early 2011. She therefore maintained that her condition could not have been suffered as a result of any relevant administrative action by her supervisor in 2011.

7    The Tribunal found that Dr Lim’s psychological condition was suffered on or a few days before she consulted a doctor in mid-March 2011. The Tribunal also found that the action taken by Dr Lim’s supervisor in early 2011 both contributed to the development of Dr Lim’s psychological condition and was reasonable administrative action taken in a reasonable manner in respect of Dr Lim’s employment. The Tribunal concluded that Dr Lim’s condition therefore fell within the exclusion in s 5A and was therefore not an injury for the purposes of the Act.

8    An appeal to this Court from the Tribunal is confined to questions of law: Administrative Appeals Tribunal Act 1975 (Cth) s 44. The questions of law that ultimately formed the basis of Dr Lim’s appeal from the Tribunal’s decision essentially revolved around the two key findings made by the Tribunal: first, that Dr Lim’s psychological condition was suffered in March 2011; and second, that is was suffered as a result of reasonable administrative action by her supervisor. The questions before the primary judge were ultimately framed in the following terms:

ERROR 1: Whether the Tribunal was operating under a misconception that needed to be satisfied of an appropriate clinical diagnosis of the psychological disturbances the applicant reported before it could find she had suffered an “injury” within s 5A(1) of the SRC Act?

ERROR 2: Whether the Tribunal misunderstood its statutory task and approached the determination of whether the applicant had suffered an injury for the purposes of s 5A by the application of a formula purportedly derived from an expression of Drummond J in Comcare v Mooi [1996] FCA 508, (1996) 69 FCR 439 (said to be at 444)?

ERROR 3: Whether the Tribunal misunderstood its statutory task and misconstrued the expression “suffered as a result of” in s 5A of the SRC Act?

ERROR 4: Whether the Tribunal failed to provide reasons in breach of its obligation under s 43(2B) of the AAT Act in respect of its finding that the performance appraisal having “contributed to [the applicant’s] psychological condition at [42] of its Reasons?

ERROR 5: Whether the Tribunal misunderstood its statutory task and unnecessarily confined the ambit and operation of s 7(4) of the SRC Act?

9    Dr Lim ultimately did not press the fifth question before the primary judge. It can accordingly be put to one side. The first two questions were essentially directed at the Tribunal’s finding that the condition was suffered by Dr Lim in March 2011. Dr Lim contended, in simple terms, that the Tribunal’s misconception or misunderstanding of its statutory task in determining whether and when Dr Lim suffered an injury led it to erroneously reject her contention that she suffered the psychological condition as early as September or October 2010.

10    The third and fourth questions, on the other hand, were essentially directed at the Tribunal’s finding that Dr Lim’s condition was suffered as a result of reasonable administrative action. In simple terms, Dr Lim contended that the Tribunal misconstrued the expression “suffered as a result of” in s 5A of the Compensation Act. In particular, Dr Lim contended that the Tribunal erroneously proceeded on the basis that any causal link between the administrative action and the condition would satisfy the requirement that the condition was suffered “as a result of” that action.

11    The primary judge answered each of the four questions adversely to Dr Lim. In simple terms, his Honour rejected Dr Lim’s contention that the Tribunal misconstrued s 5A of the Compensation Act in arriving at its relevant findings. In particular, his Honour found that the Tribunal did not proceed on the basis that there needed to be a clinical diagnosis before it could find an injury had been suffered; did not erroneously apply a formula (including any formula supposedly derived from the decision in Comcare v Mooi (1996) 69 FCR 439) in considering whether and when an injury had been suffered; did not misconstrue the expression “as a result of” in s 5A; and provided adequate reasons for its finding that Dr Lim’s condition was suffered as a result of reasonable administrative action. The primary judge dismissed Dr Lim’s appeal and ordered her to pay Comcare’s costs.

12    Needless to say, what has just been said about Dr Lim’s arguments before the primary judge, and the primary judge’s findings in relation to them, is no more than a brief summary. These matters will no doubt need to be explored in considerably more detail in the substantiative appeal.

13    While Dr Lim was represented by counsel before the primary judge, it appears that she is no longer represented by a lawyer. The result, regrettably, is that Dr Lim’s notice of appeal, which has already been amended once by leave, is somewhat prolix and confusing. The most recent grounds of appeal are in the following terms:

1.    the Appellant was denied justice by this Court constituted as a single judge ('SJFC') that declared at hearing it was not prepared to entertain any disruption to prior Full Federal Court ('FFC') judgements notwithstanding that the questions of law in the Appellant's notices and submissions contended such disruption.

2.    the Appellant was denied justice by the SJFC's apparent failure to properly comprehend the difference at law between the making of a finding of fact in the common law context vis-a-vis the making of a finding of fact under a statutory construct, resulting in the SJFC misleading or deceiving itself that the Tribunal had "properly" applied "the terms of s5A to the facts".

3.    the SJFC erroneously accepted that it was open to the Tribunal under the SRCA to make causal findings on the basis of "common sense" rather than in accord with statutory construction and, accordingly, misled or deceived itself in respect to the s5A(1) causal efficiency test "suffered as a result of" that had meaning given by its pre-existing expression at s7(6) consistent with the legislature's intent and the mischief SRCA 5A was meant to cure as stated explicitly in the 2006 Explanatory Memorandum.

4.    the SJFC erroneously accepted that it was open to the Tribunal to make a finding as to whether the subject condition had been sustained at any relevant and material time by simply forming an ad hoc opinion on its own cognisance as to whether the Appellant was/wasn't at that time "operating outside the boundaries of normal mental functioning and behaviour" without any consideration as to whether the Appellant had suffered any consequent "incapacity for work" within the statutory meaning at SRCA s4(9).

5.    the SJFC, to the extent it considered the subject condition to be an "ailment" rather than an "injury simpliciter", erroneously accepted that it was not necessary to give consideration to the questions of law relating to application of SRCA s7(4) potential or otherwise as raised in the Appellant's notices and submissions.

6.    the SJFC erroneously found that "the Tribunal did not fail properly to apply the terms of s5A to the facts" consequent on:

(a)    s5A was only applicable to a "disease", "an injury (other than a disease)" or an "aggravation of a physical or mental injury (other than a disease)" but the Tribunal failed to find that the identified "psychological condition" fell within any of these three SRCA statutory constructs and, therefore, its invocation of the s5A(1) exclusion to dismiss the Appellant's claim constituted an error of law;

(b)    the Tribunal's admitted failure at [TD-43] to undertake and properly evidence an " evaluation of competing potential 'causes' " cited by the SJFC as "the very task of fact-finding entrusted to the Tribunal" [SJFC-44];

(c)    corruption of the exclusionary appraisal action for s5A purposes by causal entanglement arising out of the Supervisor addressing the dispute about operational matters including issuance of unlawful direction within the context of the administrative action involved in reasonably making "a reasonable appraisal of the employee's performance".

(emphasis in original)

14    There appears, at first blush, to be a disjunct between the questions of law the subject of the primary judge’s findings and at least some of the issues that are apparently sought to be agitated by these grounds of appeal. That is not intended to be a criticism of Dr Lim. The prolixity of the grounds of appeal, however, make it somewhat difficult to form any realistic view at this stage concerning the strength or otherwise of Dr Lim’s case on appeal.

SECURITY FOR COSTS – RELEVANT PRINCIPLES

15    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). An appeal to the Court under s 44 of the AAT Act, whilst called an appeal, is in fact in the original, not the appellate, jurisdiction of the Court.

16    Under s 56 of the FCA Act, the Court or a judge has 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.

17    Rule 36.09 of the Federal Court Rules 2011 (Cth) contains rules relevant to an application for security for costs of an appeal. Rule 36.11(1) of the Rules provides, in effect, that such an application can be heard by a single judge.

18    The principles that apply in relation to security for costs applications are well known and do not need to be rehearsed in these reasons. It is well accepted that whether or not an order ought to be made is a matter for the discretion of the Court or judge. The discretion is a broad one. But for the requirement to act judicially, the discretion is effectively unlimited or unconfined.

19    The various considerations that may bear upon the making of an order have been considered in numerous authorities. Those considerations include: the appellant’s prospects of success; the extent of the risk that a costs order against the appellant will not be met if the appeal is unsuccessful; whether the making of an order for security for costs would be oppressive, in that it would stifle a reasonably arguable claim; whether any impecuniosity of the appellant arises out of the conduct complained of; whether there are other aspects of the public interest that weigh in the balance against the making of an order for security; and whether there are any particular discretionary matters peculiar to the circumstances of the case: see generally Equity Access Ltd v Westpac Banking Corporation [1989] FCA 520; (1989) ATPR 40-972 at 50,635 [24]; Soh v Commonwealth of Australia [2008] FCA 1524 at [10]; Clack v Collins (No 1) [2010] FCA 513 at [13].

20    It is generally accepted that security for costs may be more readily granted in respect of an appeal. In Tait v Bindal People [2002] FCA 322, Spender J pointed out that there was a difference in principle in relation to the ordering of security for costs in a first instance matter and the ordering of security for costs at the appellate level. His Honour explained (at [3] and [4]):

… The difference is that, at the [appellate] 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.

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. …

21    Where security for costs is sought in respect of an appeal, it may also be relevant that the appellant has not satisfied an adverse costs order arising from the proceedings at first instance: Singh v Secretary, Department of Employment and Workplace Relations [2007] FCA 90 at [13]-[14]; Dranichnikov v Centrelink [2002] FCA 1622 at [19]; Willoughby v Clayton [2008] WASCA 93 at [15]. The fact that a costs order in respect of the proceedings at first instance has not been satisfied would tend to suggest that there is at least a risk that the appellant may not, or may not be able to, meet any adverse costs order arising from the appeal.

Evidence and submissions

22    Comcare’s evidence in support of its application for security for costs largely comprised evidence of communications between its lawyers and Dr Lim. That correspondence concerned the payment of Comcare’s costs of the proceedings before the primary judge, as well as the provision of information to enable Comcare to assess whether there was a risk that Dr Lim would not be able to satisfy any costs order should her appeal be unsuccessful.

23    In relation to the payment of the costs of the proceedings before the primary judge, on 8 August 2016, Comcare’s lawyers wrote to Dr Lim seeking payment of Comcare’s costs of $47,701.41 (comprising solicitors’ costs of $20,999 and disbursements, mainly in relation to counsel’s fees, of $26,702.41). The letter pointed out that Comcare had a presumptive right to indemnity costs because Comcare had, prior to the hearing of the appeal from the Tribunal, sent Dr Lim an offer to resolve the matter and a notice of offer of compromise.

24    Dr Lim did not immediately respond to the letter requesting payment of Comcare’s costs. After a follow up email from Comcare’s lawyers dated 26 August 2016, Dr Lim eventually responded on 3 September 2016. She requested copies of relevant invoices, together with certain other information she claimed was relevant to her consideration of the “costs issue”. Comcare’s lawyers provided copies of the invoices to Dr Lim under cover of a letter dated 22 September 2016. That letter also responded in a reasonable fashion to Dr Lim’s request for information. Dr Lim has not paid Comcare any amount in respect of the costs order made at first instance.

25    In relation to the costs of the appeal from the judgment of the primary judge, on 19 September 2016 Comcare’s lawyers wrote to Dr Lim and requested certain information to enable Comcare to consider whether it should apply for security for costs of the appeal. That information included whether Dr Lim was presently earning any income and, if so, what that income was; whether Dr Lim owned any property and, if so, what the estimated value of that property was; and whether Dr Lim owned any other assets or had any other sources of income that may be called upon in the event that she was ordered to pay Comcare’s costs of the appeal from the judgment of the primary judge. The letter noted that if Dr Lim did not respond to the request for the specified information, her “non-response may be cited as a reason in support of any application for security for costs.” Dr Lim did not respond to the request for information.

26    Comcare’s solicitor estimated that the quantum of costs that Comcare was likely to incur in defending the appeal is likely to be between $49,134 and $52,764. This estimate was based, in part, on the costs incurred by Comcare in defending the proceedings before the primary judge. The estimate of Comcare’s further costs was not challenged by Dr Lim.

27    Comcare submitted that the failure of the respondent to reply, or meaningfully reply, to the correspondence concerning the payment of Comcare’s costs of the first instance proceedings and her current financial circumstances reveals that there is a real risk that Dr Lim will not, or will not be able to, meet any adverse costs order made in respect of the appeal. Comcare also contended that Dr Lim’s appeal does not have good prospects of success.

28    Dr Lim did not adduce any evidence in opposition to Comcare’s application for security for costs. As noted earlier, Dr Lim apparently has no legal representation in relation to the appeal. At the hearing of the application for security for costs, leave was granted to allow Dr Lim to be represented by a so-called “McKenzie friend”. The submissions that were made on Dr Lim’s behalf were essentially directed to the prospects of success on her appeal. It was submitted that Dr Lim’s case on appeal was “strongly arguable” and that Comcare was, in effect, attempting to stifle a reasonably arguable claim. It was not, however, suggested that if Dr Lim was ordered to provide security for costs in the sum of $15,000, she would be unable to provide that security and therefore would be unable to prosecute her appeal. No attempt was made to explain why Dr Lim had provided no response to Comcare’s request for the payment of its costs in respect of the first instance proceedings, or the request for information concerning her financial circumstances.

29    In written submissions filed by Dr Lim it was suggested that public interest considerations militated against the making of an order for security for costs. The asserted public interest considerations appeared to revolve around some perceived inconsistency in previous decisions concerning s 5A of the Compensation Act. The written submissions also adverted to discretionary considerations arising from the approach taken by Dr Lim’s barrister before the primary judge. No evidence was adduced in relation to that matter. The written submissions also contended that Dr Lim’s impecuniosity arose from Comcare’s conduct. No evidence was adduced in support of either the contention that Dr Lim was impecunious, or that her impecuniosity was caused by Comcare.

Should an order for security for costs be made?

30    This is an appropriate matter for an order for security for costs. The important considerations that lead to the conclusion that the Court should exercise its discretion in favour of ordering security for costs are as follows.

31    First, the evidence demonstrates that there is at the very least a risk that Dr Lim may not be able to meet any further adverse costs order made against her. She has not paid Comcare’s costs of the proceedings at first instance, or attempted to provide any explanation for why that is so. She has not challenged her liability to pay Comcare’s costs, or the quantum of those costs, or otherwise suggested any basis for why she should not be required to pay the costs and disbursements outlined in the correspondence. Nor has she sought further time in which to pay those costs. Comcare’s reasonable demands have been effectively met by silence.

32    Likewise, Dr Lim has not responded to Comcare’s reasonable requests for information concerning her present financial circumstances. She has not even attempted to explain why she is unable or unwilling to supply that information. Nor has she adduced any evidence, or made any submissions, concerning her ability, or inability, as the case may be, to meet any adverse costs order should her appeal be dismissed. Dr Lim’s stony silence in respect of these matters is sufficient to support an inference that there is a risk that she will be unable to meet any adverse costs order.

33    Second, Dr Lim’s silence concerning her financial position means that her submission that an order for security for costs would effectively stifle the prosecution of her appeal must be rejected. Dr Lim did not submit, let alone adduce any evidence capable of proving, that she would be unable to comply with an order that she provide security in the sum of $15,000.

34    Third, Dr Lim has had her “day in court”. Her review application in the Tribunal was unsuccessful and her appeal from the Tribunal on questions of law has been dismissed. In the circumstances, were Dr Lim not ordered to provide security for Comcare’s costs of the appeal, she would be given a “free hit” at significant potential cost to Comcare.

35    Fourth, it is at this stage not possible to accept Dr Lim’s submission that she has a strongly arguable case on appeal. As already noted, Dr Lim’s grounds of appeal are prolix, in some respects difficult to understand, and do not appear to meaningfully engage with the findings made in respect of the five questions of law that were agitated before the primary judge. Indeed, some of the appeal grounds appear to raise new and novel arguments that were not agitated below.

36    Dr Lim has filed fairly detailed written submissions in support of her grounds of review. Oral submissions concerning her appeal grounds were also made on her behalf at the hearing of the application for security for costs. It was, with respect, somewhat difficult to follow some of the arguments that were advanced by or on behalf of Dr Lim in respect of her appeal. Like the grounds of appeal, the submissions tended to stray well beyond the questions of law that were addressed by the primary judge.

37    As already indicated, Comcare submitted that Dr Lim’s appeal did not have good prospects of success. It submitted that some of the grounds were, or appeared to be, futile or at best unclear. It also submitted that a number of the arguments that appeared to be advanced were not squarely raised before the primary judge.

38    In all the circumstances, it is both unnecessary and undesirable to give any detailed consideration to Dr Lim’s grounds of appeal or the arguments advanced by the parties for and against them. It is not possible to form any real view as to the prospects of success of Dr Lim’s appeal without conducting a painstaking and thorough analysis of the Tribunal’s reasons, the questions of law and arguments advanced on the appeal from the Tribunal, the primary judge’s resolution of those questions, the complex and in some respects confusing arguments now sought to be advanced by Dr Lim, and the relevant authorities. That task is not made easy by the prolixity, if not opacity, of at least some of Dr Lim’s appeal grounds and submissions.

39    The task of embarking on a detailed consideration of Dr Lim’s appeal grounds and submissions, and Dr Lim’s prospects of success in relation to her appeal, has been made more difficult by the fact that the High Court has just handed down a decision which appears to be relevant to at least one of Dr Lim’s grounds. In Comcare v Martin [2016] HCA 43, the High Court considered the meaning of the exclusionary phrase “as a result of” in s 5A. The Court found (at [43]) that an interpretation of that phrase as importing a “common sense” test for causation did not adequately have regard to the statutory text, context and purpose. Ground 3 in Dr Lim’s appeal grounds contends that the primary judge erred in making causal findings on the basis of a common sense test.

40    It does not, however, necessarily follow from the decision in Comcare v Martin that this appeal ground will succeed. The parties have not had an opportunity to make submissions on the implications of Comcare v Martin in the context of this matter. Much will depend on the particular findings made by the Tribunal and the primary judge in respect of causation. It should also be noted, in this context, that it would appear that Dr Lim also urged the primary judge to adopt a common sense approach to causation: see the judgment of the primary judge at [54]. It would be unwise to venture any opinion in respect of the way the Tribunal and the primary judge dealt with the question of causation in the context of an application for security for costs and in the absence of full argument on that point.

41    In all the circumstances, the task of considering the merits of Dr Lim’s appeal is best left to the Full Court which will have the benefit of having heard full argument from the parties, including in relation to Comcare v Martin. The preferable approach, therefore, is to treat the prospects of success of Dr Lim’s appeal as a neutral consideration.

42    Fifth, Dr Lim has not been able to identify any relevant public interest or other discretionary considerations that would militate against her being required to provide security for costs.

43    Finally, the security sought by Comcare is, in the circumstances, fairly modest, particularly when balanced against the unchallenged estimate of Comcare’s costs of defending the appeal. As Comcare submitted, the amount of security sought ($15,000) is significant enough to deprive Dr Lim of a “free hit” and require her to carefully consider whether she wishes to pursue the appeal, but not so large as to be oppressive.

44    Having regard to each of these six considerations, on balance the interests of justice favour ordering Dr Lim to provide security in the sum of $15,000 as sought be Comcare.

45    There are, however, some issues with the form of the orders sought by Comcare.

46    First, the proposed orders do not state what would constitute acceptable security. In the circumstances, however, it would be appropriate to indicate that the appropriate security in the sum of $15,000 should be paid into Court by bank cheque, or that an unconditional bank guarantee be provided by or on behalf of the appellant from a recognised bank, in a form acceptable to a Registrar of the Court, to be held by the Registrar until further order.

47    Second, the proposed orders provide for the dismissal of Dr Lim’s appeal if she does not provide the required security within 28 days of the order for security for costs being made. In the circumstances, it would be preferable for the appeal to be stayed if Dr Lim does not provide security within 28 days. A further period of 28 days should then be allowed for Dr Lim to provide security before the appeal is dismissed. That would effectively give Dr Lim until the end of the year to provide the required security if she wishes to prosecute her appeal.

48    Orders will be made accordingly. It is noted that Comcare did not apply for costs in respect of this application. In those circumstances, no order for costs will be made.

Associate:

Dated:    10 November 2016