FEDERAL COURT OF AUSTRALIA

McCardle v Lyons [2019] FCA 1554

ORDERS

THE COURT ORDERS THAT:

1.    The respondents’ interlocutory application filed 29 May 2019 for security for costs is dismissed.

2.    The applicant’s application for leave to appeal the orders of the Federal Circuit Court made 8 March 2019 be fixed for hearing on Wednesday 11 December 2019 at 10:15am on the basis that the matter shall be fully argued, as if on appeal, so that if leave to appeal is given, the appeal may be determined concurrently.

3.    On or before 4 October 2019 the respondents file and serve any affidavit material on which they intend to rely in the application for leave to appeal, together with an outline of submissions not exceeding ten pages.

4.    On or before 18 October 2019 the applicant file and serve any affidavit material in reply, together with any outline of submissions in reply, not exceeding five pages.

5.    On or before Wednesday 20 November 2019 the applicant is to file and serve an application book, produced on double-sided printing, containing the documents set out in the schedule hereto under separate numbered tabs.

6.    The costs of this case management hearing be reserved.

THE COURT NOTES THAT:

1.    The Court endeavoured to contact the applicant by telephone, as she had requested, and she did not answer her telephone.

2.    Should the applicant fail to file and serve an application book by 20 November 2019 as required by order 5 above, then the respondents may apply, or the Court may on its own motion make an order pursuant to rule 5.21, alternatively rule 5.23 of the Federal Court Rules 2011 (Cth) that the application be dismissed, including pursuant to a self-executing order.

3.    Should the applicant fail to appear at the hearing of the application fixed for 11 December 2019, the Court may dismiss the application, without adjudication.

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

SCHEDULE

1.    Documents in the Federal Circuit Court

(a)    The originating process in the Federal Circuit Court.

(b)    Communications between the applicant and the Federal Circuit Court in relation to the hearing on 7 December 2018, including appearance by telephone.

(c)    The transcript of the hearing on 7 December 2018.

(d)    The handwritten orders of 7 December 2018.

(e)    The sealed orders of the Federal Circuit Court of 7 December 2018.

(f)    The affidavit material tendered by the respondents at the hearing in the Federal Circuit Court on 25 February 2019.

(g)    The affidavit material tendered by the applicant at the hearing on 25 February 2019.

(h)    The written submissions of the respondents before the Federal Circuit Court at the hearing on 25 February 2019.

(i)    The written submissions of the applicants before the Federal Circuit Court at the hearing on 25 February 2019.

(j)    The transcript of the hearing before the Federal Circuit Court on 25 February 2019.

(k)    The reasons for decision of the Federal Circuit Court judge.

(l)    The sealed orders of the Federal Circuit Court.

2.    Documents in the Federal Court

(a)    Application for leave to appeal filed 22 March 2019.

(b)    Amended notice of appeal.

(c)    The affidavit of the applicant dated 22 March 2019 together with annexures.

(d)    The affidavit of the applicant dated 18 June 2019 together with annexures.

(e)    The affidavit of the applicant dated 19 June 2019 together with annexures.

(f)    Any affidavits of the respondents relevant to the application for leave to appeal.

(g)    Any affidavit of the applicant in reply relevant to the applicant for leave to appeal.

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

1    The applicant was employed by the respondents as a solicitor until 18 May 2017, when she was given notice of termination of her employment. On 12 October 2018, the applicant commenced a proceeding in the Federal Circuit Court pursuant to s 46PO of the Australian Human Rights Commission Act 1986 (Cth), alleging that the respondents dismissed her from her employment while she was on sick leave, and thereby discriminated against her on the ground of a disability. On 8 March 2019, upon the application of the respondents for summary judgment, a judge of the Federal Circuit Court dismissed the proceeding under s 17A of the Federal Circuit Court Act 1999 (Cth), or alternatively under r 13.10 of the Federal Circuit Court Rules 2001 (Cth), holding that the applicant did not have reasonable prospects of successfully prosecuting the proceeding: McCardle v Lyons [2019] FCCA 511.

2    An order dismissing a proceeding under s 17A of the Federal Circuit Court Act is interlocutory for the purposes of appeal to this Court, and leave to appeal such an order is therefore required: Federal Court of Australia Act 1976 (Cth), s 24(1A) and (1D)(ca). On 22 March 2019, the applicant filed an application for leave to appeal the orders of the Federal Circuit Court. The respondents seek security for their costs of the application for leave to appeal, and any appeal.

3    At a case management hearing on 29 April 2019, the respondents foreshadowed their application for security for costs. Subsequently, on 2 May 2019 I ordered that any application by the respondents for security for costs be fixed for 20 June 2019, and that both parties file and serve written submissions. I also made orders that the applicant file and serve her submissions in support of her application for leave to appeal, which submissions were to include particulars of her proposed grounds of appeal.

4    The respondents filed an application for security for costs on 29 May 2019, together with an affidavit in support of the application affirmed by the first respondent. The applicant did not comply with the orders that affected her, in that she did not file an outline of submissions in support of her application for leave to appeal, or an application to adduce additional evidence on appeal, as she was permitted to do. Nor did the applicant file within time any material in response to the respondent’s application for security of costs.

5    At the hearing on 20 June 2019, the applicant presented evidence to the Court that during May 2019 she had been suffering from mycoplasma pneumonia, as a result of which she was admitted to hospital on 24 May 2019, and discharged on 1 June 2019. The applicant produced a copy of a hospital discharge record to support her claim, and submitted that her illness had prevented her from preparing the documents. The applicant also filed two lengthy affidavits which were served on the respondents only shortly prior to the hearing. The respondents sought an adjournment on the ground that the applicant had not given particulars of her proposed grounds of appeal, as I had ordered on 2 May 2019. I adjourned the hearing to 2:15pm on 12 September 2019. The applicant was present in Court when I pronounced that order. A sealed copy of orders made on 20 June 2019 was sent by my chambers to the applicant’s email address on 23 July 2019. When the application was called on for hearing after 2:15pm on 12 September 2019, there was no appearance by or on behalf of the applicant. I caused enquiries to be made of the Registry as to whether the applicant had made any contact, but was advised she had not. The last communication from the applicant to my chambers prior to the hearing was on 10 September 2019 when, in response to a request from the Court to all parties, the applicant emailed the transcript of the two hearings in the Federal Circuit Court that are the subject of her application for leave to appeal.

6    The respondents proceeded with their application for security for costs, which I heard in the absence of the applicant. Although the applicant did not appear, I have had regard to the applicant’s affidavit dated 22 March 2019 in support of her application for leave to appeal which, although it was not read into evidence, bears on the merits of the applicant’s application for leave to appeal because it articulates some of her claims. I have also had regard to an amended notice of appeal that the applicant lodged on 31 July 2019, which I have treated as containing the applicant’s proposed grounds of appeal, and I have had regard to the applicant’s written submissions dated 31 July 2019. There were two further affidavits of the applicant dated, respectively, 18 and 19 June 2019 which were not read into evidence by the respondents on their application.

7    The respondents read into evidence two affidavits of the first respondent dated, respectively, 29 May and 8 August 2019. The first affidavit annexed an affidavit of the first respondent dated 22 January 2019, which was filed in the Federal Circuit Court in support of the respondents’ application for summary judgment. In addition, I received into evidence the transcripts of the hearings before the primary judge on 7 December 2018 and 25 February 2019.

Background

8    It is necessary to identify the interlocutory steps in the proceeding in the Federal Circuit Court in order to place in context the applicant’s proposed grounds of appeal, should leave to appeal be given. The proceeding in the Federal Circuit Court was listed for an initial interlocutory hearing before the primary judge in Melbourne on 7 December 2018. The applicant claims that she requested permission to appear by telephone, and that the Court contacted her shortly before the hearing was due to commence to check the line. She claims that she was told that the Court would call her back at around 10:15am. The applicant claims, however, that the Court did not contact her further. A transcript of the hearing on 7 December 2018 records that at the commencement of the hearing the primary judge stated –

I’m told that there was some foul up with the applicant in this case who wants to be heard by video – sorry – telephone. Tell me how you suggest we should proceed today. It’s not a terribly convenient way to go, I must say, but, then again, she’s in Adelaide.

9    After counsel for the respondents foreshadowed an application for summary judgment the primary judge stated –

Why don’t I just deal with that and I - I will - I’m not sure that the applicant by video link or telephone could add much to that so I will simply give you a date for the hearing of that application on the first available.

10    In relation to orders, his Honour stated to counsel for the respondents –

Okay. Well, could I trouble you, Mr McKenney, to formulate a minute that will simply say a time for - within which you are to issue, file and serve the application in a case, affidavit in support and submissions, any response and then I will hear it, but I imagine it won’t take terribly long and it will be largely dealt with on submissions, so I will allocate you an hour or so on a date early next year. 25 Feb.

11    The evidence of the first respondent is that a representative of the respondents wrote out proposed orders by hand, which were then signed by the judge, and an order was later authenticated. A copy of the handwritten orders annexed to the applicant’s affidavit of 22 March 2019 has the word “consent” written on them. There is no evidence that the respondents discussed the proposed orders with the applicant. The applicant claims that she did not consent to the orders and, at least at the time of the hearing on 7 December 2018, knew nothing of them.

12    The orders made on 7 December 2018 provided for the respondents to file and serve an application to have the proceeding dismissed, together with an affidavit in support and an outline of submissions by 16 January 2019. They also provided for the applicant to file and serve any material in response by 6 February 2019, and for the hearing to be listed on 25 February 2019 on an estimate of one hour.

13    The respondents did not comply with the orders that required them to file and serve their material by 16 January 2019. According to the first respondent, an interlocutory application was filed with the Federal Circuit Court on 15 January 2019, but a sealed copy was not sent to the applicant until 29 January 2019. An affidavit was not sworn until 22 January 2019, and was not filed until 23 January 2019. An unsealed copy of the affidavit was sent to the applicant on 24 January 2019 by email and by express post. The respondents’ outline of submissions was not sent to the applicant until 29 January 2019, when it was sent by express post together with sealed copies of the application and the affidavit. The applicant states in her affidavit dated 22 March 2019 in support of her application for leave to appeal that she received the documents in the post on or around 31 January and 2 February 2019 in circumstances where she was required to respond by 6 February 2019.

14    The applicant claims that in the above circumstances she sought orders by consent for an extension of time to file material, and for the hearing date to be vacated and refixed in March 2019. She claims that proposed consent orders, signed by the parties, were sent to the associate of the primary judge, but were rejected by his Honour. The applicant claims that she had to prepare documents in response which were hurried, and that she was not given sufficient time to respond to the respondents’ application.

15    The applicant claims that on the day of the hearing on 25 February 2019 she arrived in Melbourne by bus at 6:30am, and that at the hearing itself she was given only a few minutes to “ad lib” her submissions. The transcript of the hearing on 25 February 2019 records the following at T8/44-T9/23 –

HIS HONOUR: No. I follow that. Is there anything else you would like to direct my attention to because - - -

MS McCARDLE: I’m sure – I’m sure there is, your Honour, but you’ve put me on the spot and I did have more pages to read.

HIS HONOUR: Not really. No, no.

MS McCARDLE: So I’ve tried to - - -

HIS HONOUR: No. No, no. Just – just - - -

MS McCARDLE: I’ve tried to say it in a nutshell.

HIS HONOUR: Just one second, Ms McCardle. I don’t want you complaining hereafter that you were not given a fair opportunity to be heard. I’ve given you that and I’ve also read the very extensive written submissions that you’ve – you’ve prepared. That was the reason for asking you to do that, so that I would read them behind the scenes and not keep you on your feet.

MS McCARDLE: Yes. Thank you, your Honour.

HIS HONOUR: And the time on your feet has been to highlight anything you wanted to bring to my attention from the written document. If you’ve done that I’ve heard from you and I will move now to see if there’s anything in reply from Mr McKenney.

16    The applicant then claims that after the judge had reserved, she noticed that the respondents had paid her sick leave payments for the week commencing 8 May 2017, which she claimed was contrary to the respondents’ case that they knew nothing of her being sick at the time of her dismissal. The applicant claims that she engaged a solicitor who endeavoured to file an interlocutory application on her behalf in which she sought leave to adduce further evidence. She claims that they sought to file the application via the Commonwealth Portal, but the application was rejected by the primary judge. Subsequently, on 8 March 2019 the primary judge delivered his decision and dismissed the applicant’s proceeding.

17    A question in the proceeding before the Federal Circuit Court was whether the applicant’s employment was terminated by reason of a disability, which the applicant claimed was an illness for which she was on sick leave at the time of the termination. In relying on a claim of unlawful discrimination, the burden on the applicant was to show that her dismissal was “because of” a disability: Disability Discrimination Act 1992 (Cth), s 5(1). The term “disability” is defined by s 4(1) of the Act as including a total or partial loss of the person’s bodily or mental functions, and also includes behaviour that is a symptom or manifestation of the disability. This latter part of the definition was added by amendments effected by the Disability Discrimination and Other Human Rights Legislation Amendment Act 2009 (Cth). The central question in determining whether action was taken “because of” a disability is why was the action taken? Attention should also be directed to the separate, comparative, question: how would the alleged discriminator treat or have treated a person without the disability in the relevant circumstances? See: Purvis v New South Wales (2003) 217 CLR 92 at [231]-[236] (Gummow, Hayne and Heydon JJ).

18    At [6] and [7] of the primary judge’s reasons, his Honour summarised the affidavit evidence of the applicant, which included the following –

6.    …

u)    she suffered pain and depression and took time off work although she did not give the precise days that she did not attend her work by reason of ill health;

v)    on 11 May 2017 a solicitor with her firm sent her a text message asking whether her firm should retain a locum solicitor until her return, with which suggestion she agreed;

w)    she did not resign her position nor abandon her position as she said she was “just battling to get well enough to return to the firm and its work”; and

x)    on 18 May 2017 she received an email that had the effect of dismissing her.

7.    The applicant said she was dismissed because she was ill. She said the third respondent failed to provide time off with pay or assistance to return and they failed to provide proper notice or three weeks’ severance to her.

19    The evidence that the respondents adduced before the Federal Circuit Court included transcriptions of text messages between the applicant and the first respondent dated 14 May 2017 that stated (verbatim) –

09/05/17

Hi Roxanne. It's Nick Lyons. I tried to call you but your mailbox is full. I have just been advised by Ange that you have a criminal matter of Butt on at the Horsham Mag Ct tomorrow. We can't reach the client and your file does not record any other arrangement being made for the hearing tomorrow in your absence. Can you please call me as a matter of urgency about this. Thanks.

14/05/17

Hi, there is not much I can do about court when I am ill. Nor do I have any files etc. I suggest it be by phone request n adjourned. I also suggest you put on a junior solicitor to be trained as there is far too much work at Horsham for just one person anyway. We also need to have the time billing integrated with invoicing. We are not billing correctly and as I have never worked so hard or long before then I shld be well over budget each year and receiving a bonus but thats not the case (on paper). You are also diddling yourselves of $ by not having it all set up properly because clients are not being billed on actual time. Noone has the time or the authority to set it up for you. I have not even had one cpi increase in my salary yet am doing more n more all the time n it was just expected of me to take over NGs files. Its all too much with the many queries we handle each day. I think it hasnt helped my existing stress over my back pain. Please dont tell me the time billing is all integrated when its not as I was at the training last year n the systems guy said the firm hadnt paid for it to be integrated for the invoicing. I thought then it was a waste of time and money unless you do it properly. What is the point of time recording unless it is integrated to invoicing? Surely you dont expect us to manually go through our months time sheets and try to find every clients time to bill out? That is ridiculous and who would do that? Our files are not suited to costing by Blackstones because they are too slow and its adding more costs to average matters. Its ok for big matters like pi. You need a better manager who can do this n do precedents etc. Nothing seems to get done at the firm. Why are there so many open days at Ararat? Its wasting a whole day of several lawyers for people who just want second opinions or have no money - its a risk. I am having a procedure later this week here in sa so hoping it relieves pressure in my back n be avail following wk. R.

18/05/17

Roxanne. You have told clients in writing that you are helping your daughter set up a new business. I have read this in an email on one of your files. You have also been observed working in a cafe in Victor Harbour. To do this and provide us and me in particular with no assistance with your clients and files is deceptive and unacceptable. I am very disappointed.

Thanks Nick.

20    As to these text messages, the first respondent deposed in his affidavit of 22 January 2019 –

During May 2017 I had become increasingly concerned about the Applicant's failure to attend work for the Third Respondent and her management of clients and files. To that end on a number of occasions I tried to call the Applicant on her mobile phone and sent her a text message on 9 May 2017 seeking to ascertain her whereabouts and including requests for urgent updates on various files she was managing particularly for the purposes of upcoming Court appearances. She did not return my calls and did not respond to my text message until five days later and did not provide any assistance in relation to her files and cases including court hearings. I also became concerned about information that I received concerning evidence of the Applicant assisting her daughter to set up a new business. …

21    The foundation of the respondents’ application for summary judgment was that the reasons for the termination of the applicant’s employment were those set out in the particulars of a letter of termination dated 18 May 2017 that they sent to the applicant. In the letter, the respondents stated that the applicant had abandoned her employment. The first respondent stated in his affidavit of 22 January 2019 in support of the application for summary judgment that this was the principal reason for the termination of the applicant’s employment. In the letter of termination, the respondents gave particulars to the applicant as follows –

•    You have been uncontactable.

•    There is confusing information as to the nature of leave taken. We understand through messages to other staff that you are on sick leave but you have:-

(a) Not advised formally you are on sick leave;

(b) Not provided any sick leave medical certificate, as required by Law;

(c) Not advised if or when you intend to return;

(d) Provided no assistance to us in:-

(i)    Managing your clients/files

(ii)    Advising of Court dates during your absence;

(iii)    Advising of current status of files;

(iv)    Responding to requests for advice on your files when urgent Court matters were/are pending in your absence.

•    Numerous requests for you to obtain Legal Aid accreditation.

•    Unnecessarily briefing Counsel and increasing the cost of representation to a client.

•    Under charging of clients.

•    Causing staff disharmony.

•    Failing to disclose whereabouts.

•    Failing to follow Partner instructions and firm policy regarding file procedures.

•    Failing to advise Partners of W.A Law disciplinary action to the possible detriment of our firm's reputation and ability to obtain Legal Aid Accreditation.

Further, it has been reported to us on more than one occasion that you have been observed working in a cafe in South Australia.

22    The applicant stated in oral submissions to the primary judge that she had back pain, that she had a day procedure on 3 April 2017, but her symptoms persisted such that she could not work. She stated that she had informed staff of the respondents on 7 May 2017 that she was unwell, and needed to take time off, and referred to a text message from one of the other solicitors employed by the respondents concerning whether a locum should be engaged. In summary, the applicant submitted that the respondents were well aware that she was on sick leave when they terminated her employment. The transcript of the hearing of 25 February 2019 records the applicant handing two affidavits to the Court. Those affidavits are not in evidence on this application.

23    The primary judge resolved the competing arguments as follows –

18.    It seemed to me there was real force in the respondents’ contention that the applicant’s termination had nothing whatever to do with any disability of the applicant. Conversely, the applicant’s termination had everything to do with her unexplained absence from work for a sustained period. In my view, the applicant’s assertions about the stressful atmosphere of the respondents’ work environment were not borne out by the evidence. The applicant said she communicated with respondent employees to notify them that she was unable to attend work by reason of an assortment of maladies. No corroboration was given of those assertions. It fell to the applicant to prove her contentions in this regard. She failed to do so.

19.    Of course, the applicant argued that she suffered ill health soon after commencing with the respondent firm, initially suffering stress, then back issues, breast cancer, difficulty sitting, sleeping and driving and a spinal procedure. The proof of those issues was poor. Next to no medical proofs were adduced. Most importantly, little in the way of evidence was adduced to show that the controlling minds of the third respondents (the firm partners) knew of the applicant’s medical conditions from time to time or that she was off work because of the medical issues then besetting the applicant. Quite properly, the respondents seized on the connective disjoint between the claims made by the applicant and any applicable act of discrimination by the respondents. I agree. In my view, there was next to no evidence to show that the respondents terminated the applicant by reason of a discriminatory step. The two broad categories relating to the reasons for termination were conduct and performance-related issues.

20.    The respondents invoked s 140 of the Evidence Act in inviting me to be very careful before concluding that the applicant had made out such a serious case as the one she advanced. They relied on the well-known evidentiary principles in Briginshaw v Briginshaw. I agree that it is appropriate to examine the applicant’s claims with an eye to the principle enunciated in that authority, as well as with s 140 of the Evidence Act in mind.

24    On this basis, the primary judge held that the applicant did not have reasonable prospects of success.

The proposed grounds of appeal

25    As I have stated, I shall treat the document which the applicant has lodged with the Court and which is described as an amended notice of appeal as containing the applicant’s proposed grounds of appeal. The proposed grounds are as follows –

1.    [The primary judge] erred in law by not applying ss 14, 42 and 67 of the Federal Circuit Court Act 1999 (Cth) and refusing the interstate Applicant to be heard by telephone on 7 December 2018 despite such application being filed within time and by the prescribed method, and denied procedural fairness to the Applicant;

2     [The primary judge] erred in law by not applying s 54 of the Federal Circuit Court Act 1999 (Cth) and contrary to r 10.01, r 13.05 and r 15.03 of the Federal Circuit Court Rules 2001 by accepting purported Consent Orders on 7 December 2018 as interlocutory orders, unsigned by the Applicant, without more, in circumstances where the Applicant was known to have not attended the hearing via audio link, nor present for such consent, and or should have known there was no consent by the Applicant to effectively dismiss her claim on the first hearing date, thereby denying procedural fairness;

3.    [The primary judge] erred in law by not applying s 42 the Federal Circuit Court Act 1999 (Cth) by refusing to grant a mutually agreed adjournment of 25 February 2019 to a later date in around March 2019 due to the Respondents having served their documents late on the Applicant, in breach of the existing orders of 7 December 2018, and thereby denied procedural fairness to the Applicant;

4.    [The primary judge] erred in law by not applying s 14 of the Federal Circuit Court Act 1999 (Cth) by failing to allow sufficient time for a proper hearing on 25 February 2019, and denied procedural fairness to the Applicant;

5.    [The primary judge] erred in his discretion by disposing of the Applicant’s filed Application in a Case and Affidavit to adduce further evidence relevant to a material fact regarding the Respondents claim they had no knowledge of her sickness where that evidence arose after the Respondents submissions, and before judgement was entered or Orders perfected;

6.    [The primary judge] erred in law by not applying r 16.05(2)(h) of the Federal Circuit Court Rules 2001 by not appropriately considering the further evidence by the Applicant;

7.    [The primary judge] erred in law and in fact by the Respondents having attempted to mislead the court or by inaccurate information by filing material including sworn documents that they did not know the Applicant was suffering ill-health in or around May 2017 thereby causing His Honour’s decision to miscarry on the issue of discrimination dismissal and contrary to the Australian Human Rights Act 1986 (Cth), and as supported, underpinned or expanded by the Disability Discrimination Act 1992 (Cth), Fair Work Act 2009 (Cth) and the Equal Opportunity Act 2010 (Vic);

8.    [The primary judge] erred in law contrary to s 140 of the Evidence Act 1995 (Cth) in his decision on the credibility of the Respondents documents and statements which was inconsistent with the facts on a balance of probability that the Respondents knew the Applicant was sick including by various text messages and telephone calls, thereby ignoring incontrovertibly established facts.

26    The proposed grounds may be grouped as follows –

(1)    proposed grounds 1 and 2 relate to the directions that were made by the primary judge on 7 December 2018;

(2)    proposed ground 3 relates to the primary judge’s refusal to make the orders sought by consent enlarging time for the applicant’s material, and vacating the hearing date;

(3)    proposed ground 4 is concerned with the time allowed by the primary judge for the hearing on 25 February 2019;

(4)    proposed grounds 5 and 6 relate to the primary judge’s refusal to consider the applicant’s application to adduce further evidence;

(5)    proposed ground 7 alleges that the primary judge’s decision was induced by misleading evidence from the respondents; and

(6)    proposed ground 8 seeks to agitate in a different way the allegation that the respondents knew that the applicant was sick.

Security for costs

27    In support of their application for security for costs, the respondents relied upon the Court’s powers under s 56 of the Federal Court of Australia Act 1976 (Cth) and r 36.09 of the Federal Court Rules 2011 (Cth). Because no appeal is on foot, as leave to appeal has been sought, I do not consider the Court’s power under r 36.09 is engaged. However, the Court’s general power to order security for costs in proceedings under s 56 of the Act is available. Section 56 provides –

56     Security

(1)    The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her.

(2)    The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs.

(3)    The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.

(4)    If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.

(5)    This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security.

28    The grounds on which the respondents sought security for costs may be summarised as follows –

(1)    the prospects of success on any appeal are poor, noting that the applicant would have to satisfy the Court that leave to appeal should be given;

(2)    the primary judge’s decision is not attended by sufficient doubt to warrant a grant of leave to appeal and the “high threshold” for obtaining leave to appeal from an interlocutory decision will not be satisfied;

(3)    the applicant has not suffered substantial injustice, as the applicant was intending to leave the employment of the respondents, in respect of which the respondents rely on an email dated 28 April 2017 to an estate agent managing the applicant’s rented home in which she stated that she was going to give notice to her employers the following week, and would seek to vacate the property on 6-7 May 2017;

(4)    the risk that a costs order will not be satisfied by the applicant is high, because –

(a)    the applicant is an undischarged bankrupt having filed a debtor’s petition on 31 March 2016, and she was not due to be discharged until 1 April 2024 because the trustee had filed a notice objecting to the discharge;

(b)    the applicant has not satisfied an order for costs of the Federal Circuit Court of 8 March 2019, pursuant to which the respondents had claimed $35,575 in costs.

(5)    the applicant’s impecuniosity is unrelated to her employment;

(6)    the applicant failed to disclose disciplinary complaints and findings against her to the respondents during the term of her employment; and

(7)    the applicant was declared a vexatious litigant in Western Australia on 3 March 2017, while she was employed by the respondents, and which she did not disclose to them.

29    In this proceeding, the third respondent is acting as the solicitors for all of the respondents. I am not satisfied that the respondents will incur any solicitors’ professional costs in this application for leave to appeal. The Chorley exception (London Scottish Benefit Society v Chorley (1884) 13 QBD 872), which allowed solicitors acting for themselves in litigation to recover their own costs under an order for costs against another party, is not part of the law of Australia: Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29. However, the respondents have retained counsel, and may incur counsel’s fees together with disbursements. The respondents initially sought security for costs in the sum of $25,000, but during the course of argument this claim was revised to $13,200, representing counsel’s fees for one day’s appearance, and two days for the preparation of paperwork and argument for the hearing. There may be a further issue as to whether the applicant would be liable on a party and party basis for the GST component of counsel’s fees charged to the respondents on the basis that the respondents may be entitled to an input credit.

30    In their submissions, the respondents relied on Elston v Commonwealth of Australia [2014] FCA 704, which concerned an application for security for costs of an appeal, which in turn cited Clack v Collins (No 1) [2010] FCA 513, where at [8]–[13] and [31], Jagot J referred to the principle that parties do not have the same right on appeal of access to the courts as they do at first instance, and that an appeal may allow the party who had been wholly unsuccessful below a “free hit” against a respondent, who would be left at risk that any costs order would not ultimately be paid.

31    The applicant’s written submissions claimed that the summary termination of her employment by the respondents was not justified, and pointed to evidence to support her case that the respondents were aware of her illness, and that she was on sick leave. This evidence included the contents of the text messages between her and the first respondent referred to at [19] above, and a communication with another employee solicitor of the firm on 11 May 2017, who asked her whether a locum should be employed until her return from sick leave and which is referred to by the primary judge at [6] of his Honour’s reasons. The applicant submitted that these were material facts that were not properly considered by the primary judge, and submitted that the primary judge –

… erred on the balance of probability of the Applicant’s sworn evidence, medical documents, and alleged failure to corroborate assertions in circumstances where the Applicant was denied procedural fairness…

32    The applicant submitted that the respondents had not proved on the balance of probabilities that they did not know of the applicant’s ill-health, and that there was contrary evidence.

33    The applicant made other submissions in writing, including that an application for security for costs had been refused by the Federal Circuit Court, thus giving rise to an estoppel. I can put this submission to one side. There is no evidence that the respondents made an application for security for costs in the Federal Circuit Court. Even if they had made such an application, and it had been dismissed, no question of issue estoppel or res judicata would arise.

Consideration

34    The respondents bear the onus of establishing that security for costs should be granted: CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at p 285 (Bowen CJ).

35    In relation to parties suing for their own benefit, for the purposes of assessing whether impecuniosity justifies making an order for security for costs, courts have conventionally differentiated between natural persons and corporations. A natural person will not ordinarily be ordered to give security for costs. However, that consideration does not apply with the same force in relation to appeals: Cowell v Taylor (1885) 31 Ch D 34 at 38 (Bowen LJ). Different considerations may be applicable to applications for security for costs of an appeal because the applicant has failed at first instance, and has therefore had his or her “day in court”: Clack v Collins (No 1) at [31] (Jagot J). See also, Dye v Commonwealth Securities Limited [2012] FCA 992 at [27]-[28] (Emmett J). By parity of reasoning, the same considerations are capable of applying to an application for leave to appeal where often the application for leave to appeal and any appeal are heard together, which is a course that I have foreshadowed to the parties in the present case. However, the circumstances of this case are that the applicant has not had the benefit of a full hearing in the Federal Circuit Court, and in this Court her claim, in substance, is that the primary judge’s decision summarily to dismiss the proceeding miscarried.

36    In Soh v Commonwealth of Australia [2008] FCA 1524, at [10], Moore J identified six factors relevant to the decision whether security for costs should be ordered, namely: (i) the prospects of success; (ii) the quantum of risk that a costs order will not be satisfied; (iii) whether the making of a costs order would be oppressive in that it would stifle a reasonably arguable claim; (iv) whether any impecuniosity of the party from whom security is sought arises out of the conduct complained of; (v) whether there are aspects of public interest which weigh in the balance against such an order; and (vi) whether there are any particular discretionary matters peculiar to the circumstances of the case. I regard this as guidance only, and not a checklist to be followed in all cases.

37    Prospects of success may be especially relevant to an application for security for the costs of an appeal: Singh v Secretary, Department of Employment and Workplace Relations [2007] FCA 90 at [12] (Sundberg J). As this is an application for security for costs, and not the application for leave to appeal, still less the appeal, I shall consider the respondents’ submissions that the applicant’s prospects of success are poor at a high-level only. I have not heard full argument as if on appeal, and nor do I have the benefit of all the documents that I would expect in an appeal book. For instance, the respondents, who bear the onus of establishing that security for costs should be granted, and who submit that the applicant’s prospects are poor, have not put in evidence on this application the originating process in the Federal Circuit Court, or the applicant’s affidavit of 6 February 2019 referred to at [6] of the primary judge’s reasons, or the written submissions made to the Federal Circuit Court. However, as I noted earlier, I have received into evidence the transcript of the hearings before the primary judge on 7 December 2018 and 25 February 2019.

38    I do not accept the respondents’ submissions that the applicant’s prospects of success on appeal are poor. In my view, at least the applicant’s eighth proposed ground of appeal referred to under [25] above may have merit. While the applicant’s case appears to be wide-ranging, within her written submissions and affidavit in support of her application for leave to appeal is a claim that there was evidence before the primary judge on which the applicant relied, and to which his Honour did not give proper consideration.

39    In Spencer v The Commonwealth (2010) 241 CLR 118 at [25], French CJ and Gummow J stated in relation to the power to give summary judgment under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) –

Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue.

40    An examination of [18]-[20] of the primary judge’s reasons, which I have set out at [23] above, suggests that upon the respondents’ interlocutory application for summary judgment, where no evidence was tested by cross-examination, his Honour engaged in a process of weighing the evidence. It is arguable that his Honour required the applicant to furnish corroborative evidence in resisting the application for summary judgment, and treated the absence of corroboration as absence of proof. His Honour’s references to s 140 of the Evidence Act 1995 (Cth) and Briginshaw v Briginshaw (1938) 60 CLR 336 tend to reinforce these points. Arguably, an assessment of the competing weight of the evidence was undertaken, when this was a matter for trial.

41    It is unnecessary for present purposes to form a view about the applicant’s complaints that she was denied procedural fairness at the hearing on 7 December 2018 or at the hearing on 25 February 2019, or in relation to her application to the Federal Circuit Court to adduce further evidence. There will likely be an issue as to whether any departure from the rules of procedural fairness which the applicant alleges was material to the orders that were made by the Federal Circuit Court: Stead v State Government Insurance Commission (1986) 161 CLR 141 at p 145.

42    I do not accept the respondents’ submission that, on the assumption that the applicant is able to show that the primary judge’s decision was attended by sufficient doubt, that she would not be able to demonstrate substantial injustice. The primary judge’s order was to dismiss the applicant’s proceeding with costs, which the respondents have claimed in the sum of $35,575. On the hypothesis that the decision was in error, the applicant has lost her opportunity to pursue a cause of action, and has a liability for the respondent’s costs which are claimed in a substantial sum.

43    I do not consider the fact that the applicant was declared a vexatious litigant in Western Australia in unrelated litigation, or the fact that she has been the subject of disciplinary action by professional regulators, to affect my view for present purposes of the merits of the application for leave to appeal the orders of the primary judge. Nor do I consider that those matters should otherwise inform my discretion as to whether to order security for costs.

44    As I have mentioned, the respondents claimed from the applicant their costs of the proceeding below of $35,575, comprising $10,000 solicitors’ professional costs and $25,575 in counsel’s fees. The respondents submit that the applicant has not complied with the order for costs in the Federal Circuit Court. There is no evidence that those costs have been taxed, and therefore there is no evidence of any enforceable obligation on the applicant to pay any sum certain to the respondents on account of their costs. Furthermore, because the third respondent is acting as the solicitor for the respondents, there would be a real issue as to whether the applicant has any liability for the professional costs that have been claimed: Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29. Nonetheless, I am satisfied that there is a real risk that the applicant may not be able to meet a costs order should one be made against her in this Court. It appears that the applicant remains an undischarged bankrupt. This is evidenced by correspondence from the trustee in bankruptcy dated 23 May 2019 who confirmed this to be the case, and who stated that the current date of discharge is 1 April 2024. The evidence does not support a contention that the applicant’s bankruptcy was caused by any act of the respondents.

45    In all the circumstances, and weighing the competing considerations, I am not persuaded to order that the applicant provide security for the respondents’ costs of this application for leave to appeal, and if allowed, any appeal. My principal reasons are that I reject the submission that the application lacks merit, and I consider this case to be distinguishable from those cases where applicants have had their day in court and an opportunity to present their case. There was no direct evidence from the applicant that an order for security for costs would stultify the litigation. However, the view I have taken of the merits of the application for leave to appeal, and the fact that the applicant has not had a hearing of her claim in the Federal Circuit Court outweigh the countervailing considerations.

Conclusion

46    The respondents’ application for security for costs will be dismissed.

Associate:

Dated:    20 September 2019