Federal Court of Australia

Du Bray v ACW [2020] FCA 1680

ORDERS

THE COURT ORDERS THAT:

1.    On or before 8 December 2020 the Appellant is to provide security for the costs of the appeal in the sum of $50,000.

2.    In the event of non-compliance with Order 1, the appeal is stayed.

3.    Liberty is reserved to either party to vary Order 2.

4.    The Appellant is to pay the costs of the Respondent in respect to the Respondent’s Interlocutory Application dated 16 September 2020.

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

REASONS FOR JUDGMENT

FLICK J:

1    On 16 July 2020, a Judge of this Court delivered judgment giving reasons for his decision to (inter alia) grant a sequestration order against the estate of Lee Francis Du Bray: ACW v Du Bray (No 2) [2020] FCA 994. That case, it may be noted, followed a series of litigation and judgments in New Zealand, those judgments being described by the primary Judge as “the outcome or culmination of many years of protracted litigation between the applicant and Mr Du Bray following the break-up of their relationship”: [2020] FCA 994 at [1].

2    On 23 July 2020, a Notice of Appeal was filed and later amended on 20 August 2020. A principal issue sought to be raised in that appeal is whether the primary Judge erred in his construction and application of s 47(1) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”).

3    On 3 August 2020, a subsequent application by the Appellant seeking an order staying proceedings under the sequestration order was dismissed by another Judge of this Court: Du Bray v ACW [2020] FCA 1142.

4    Now before the Court is an Interlocutory Application filed by the Respondent to the appeal seeking (inter alia) an order pursuant to r 36.09 of the Federal Court Rules 2011 (Cth) (“Federal Court Rules”) that the Appellant provide security for costs of the appeal and an order that the appeal be dismissed in the event of any security not being provided. That Interlocutory Application was filed on 16 September 2020. Notwithstanding the filing of an appeal, the Court as presently constituted has jurisdiction to resolve that application for security: Federal Court of Australia Act 1976 (Cth), ss 25(2B)(ab), 25(2B)(bb)(i) and 56 (“Federal Court Act”). No submission was advanced that a single Judge of the Court could not entertain and resolve an application for security for costs of an appeal to be heard by a Full Court.

5    It is concluded that security in the amount of $50,000 should be provided and that in the event that such security is not provided the appeal should be stayed – but not dismissed.

6    The general principles to be applied when exercising the discretionary power to order security, including the principles of relevance to making such an order in respect to an appeal, were not in doubt. It was the application of those general principles to the facts which occasioned division between the parties.

7    Although the present conclusion has been based upon a consideration of all of the facts and circumstances presented, two principal considerations warrant separate attention and tip the exercise of discretion in favour of ordering security, namely:

    an assessment that the appeal has limited prospects of success; and

    a finding that, by reason of his past conduct, there is a very real risk that in the absence of security being provided, the Respondent will in all likelihood be unable to recover her costs of the appeal in the event that the appeal is dismissed.

This conclusion is reached notwithstanding the submission that:

    an order for security has the potential to stifle an appeal – the finding being made, however, that there is an insufficient factual foundation for any conclusion that an order for security would have that effect in the present case.

8    Each of these matters should be briefly addressed.

General principles

9    The discretionary power to order security is governed by both s 56 of the Federal Court Act and r 36.09 of the Federal Court Rules.

10    Although the discretion has been said to be “unfettered”, many decisions outline some of the considerations relevant to the exercise of the discretion. It is sufficient to refer to two decisions.

11    First, in KP Cable Investments Pty Limited v Meltglow Pty Limited (1995) 56 FCR 189 at 197-198 (“KP Cable Investments”), Beazley J (as her Honour then was) summarised the principles as follows:

Notwithstanding the broad unfettered discretion with which the Court approaches an application for security for costs, there are a number of well established guidelines which the court typically takes into account in determining any such application. They are:

1.    That such applications should be brought promptly. This is a principle of longstanding: …

2.    That regard is to be had to the strength and bona fides of the applicant’s case are relevant considerations: … As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. …

3.    Whether the applicant’s impecuniosity was caused by the respondent’s conduct subject of the claim: …

4.    Whether the respondent’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate: …

This factor is related to the next, namely:

5.    Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security: …

6.    An issue related to the last guideline is whether persons standing behind the company have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking: …

7.    Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate: …

(citations omitted).

See also: Mijac Investments Pty Ltd v Graham [2008] FCA 1251 at [9] per Kenny J.

12    Second, in Dye v Commonwealth Securities Limited [2012] FCA 992, Emmett J also summarized some of the principles a follows:

[26]    … The relevant considerations include, at least, the following matters:

(a)    the prospects of success for the appeals;

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

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

(d)    whether impecuniosity of an appellant arises out of the conduct that is the subject of complaint in the relevant proceeding;

(e)    whether there are any aspects of public interest that weigh in the balance against granting security; and

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

See also: Visscher v Teekay Shipping (Australia) Pty Ltd [2013] FCA 219 at [4] per Jacobson J.

13    But “there is a difference in principle in relation to the ordering of security for costs in a first instance matter and the ordering, or the consideration of the ordering, of security for costs where one is at the appellate level”: Tait v Bindal People [2002] FCA 322 at [3]. Spender J there went on to identify that “difference” as being “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”. See also: Tran v The Commonwealth [2009] FCA 921 at [5] per Jagot J; Robertson v Knott Investments Pt Ltd [2010] FCA 796 at [13] per Flick J; D v P [2020] NSWCA 174 at [38] per Bell P.

14    When sitting as a Judge of this Court, French J in Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd [2004] FCA 1334 (“Carey-Hazell v Getz Bros”) observed:

[29]    As a general rule impecuniosity and even insolvency does not mandate an order for security for costs – Cowell v Taylor [1885] 31 Ch D 34 at 38. However that case did recognise an exception in the case of appeals:

‘... the appellant has had the benefit of a decision by one of Her Majesty’s courts, and so an insolvent party is not excluded from the courts, but only prevented, if he cannot find security, from dragging his opponent from one court to another.’

See also Bethune v Porteous [1892] 18 VLR 493 at 494 referred to in Wiest, EA v Director of Public Prosecutions [1988] FCA 568 (Gummow J).

[30]    The tendency in Cowell in favour of security for costs in the case of appeals is not reflected in O 52 r 20. Burchett J said of that rule in Paton v Campbell Ltd [1993] FCA 449:

‘It is plain from the manner in which that rule is expressed that there is a discretion, but that there is something of an onus resting upon one who says that an appellant must be required to provide security. A feature of an appeal, which marks it out from litigation at first instance from this point of view, is that there has already been a decision given by the judge who heard the matter at first instance, and that the appellant has, in other words, had a day in court, has had an opportunity to present his case and has had a ruling which may be presumed to be correct.’

His Honour went on to observe that it is unreal to ignore the reality that a significant proportion of appeals succeed. He referred to decisions of the Court of Appeal of New South Wales illustrating the proposition that there is a discretion to require the giving of security where the Court is of the view either that the appeal is without real merit or substance or that the issues sought to be litigated in the appeal is not one of great importance to the appellant while the prospect of the respondent being left without remedy in respect of a costs order is significant.

[31]    Security may not be ordered when an appeal is brought in good faith and raises a substantial question of law – J & M O’Brien Enterprises Pty Ltd v The Shell Company of Australia Limited (No 2) (1983) 70 FLR 261 at 264 (Bowen CJ); Lucas v Yorke (1983) 50 ALR 228 at 229 (Brennan J). But where the appeal turns largely on questions of fact and gives rise to no important question of law, the position may be different – Cummings, JB v Lewis, MT & Ors [1991] FCA 772.

[32]    There is no set of clear rules to resolve the question whether security should be ordered in a particular case. The Court is required to have regard to all the circumstances of the case in exercising what is undeniably a broad discretionary judgment.

15    Consistent with the fact that the power to order security is discretionary and necessarily is to be exercised by reference the facts and circumstances of each individual case, instances can be provided where an order for security has not been made against an appellant: e.g., Nyoni v Shire of Kellerberrin (No 9) [2016] FCA 472 per Mortimer J. Those instances include bankruptcy proceedings where the application for security has been founded upon a failure on the part of the bankrupt to satisfy prior orders for costs incurred in litigation: e.g., Pearse v Wiseguy Pty Ltd [2005] FCA 222 per Finn J.

Section 47 & the decision of the primary Judge

16    A principal focus of the appeal is the construction and application of s 47(1) of the Bankruptcy Act. That issue emerged in what the primary Judge described as the “long and sorry history of the litigation”: [2020] FCA 994 at [7].

17    Section 47(1) provides as follows:

A creditor’s petition must be verified by an affidavit of a person who knows the relevant facts.

To the extent that the Appellant also makes reference to s 52(1) of the Bankruptcy Act, it may be noted that that sub-section provides as follows:

At the hearing of a creditor's petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

18    In the course of reviewing the litigation being pursued in New Zealand, the primary Judge (inter alia) noted the criticism that had been levelled against the Appellant by one or other of the New Zealand Judges, including criticisms that:

    “Mr Du Bray’s conduct during the litigation [was characterised] as the waging of a ‘war of attrition’ against the applicant” (at [9]);

    there had been on the part of Mr Du Bray a “‘longstanding and conspicuous failure’ to pay costs” (at [11]); and

    “Mr Du Bray’s actions had constituted a ‘protracted game of ‘chicken’ with the Court’ and that the applicant had suffered prejudice as a result of those actions” (at [18]).

Such were the criticisms made by Judges in New Zealand.

19    Of more immediate concern to an assessment as to the Appellant’s prospects of success on appeal are the reasons of the primary Judge for rejecting Mr Du Bray’s argument in respect to s 47(1) of the Bankruptcy Act. His Honour’s reasons for decision in respect to this issue were expressed as follows:

GROUND 1 – VERIFICATION OF THE CREDITOR’S PETITION

[106]    The first point to emphasise is that Mr Du Bray’s articulated ground of opposition to the creditor’s petition was essentially a technical one; that the amended creditor’s petition was defective because it was not verified by a person who had knowledge of the relevant facts as required by s 47(1) of the Act. His submissions, however, tended to conflate the requirement in s 47(1) of the Act with the requirement, under s 52(1)(a) of the Act, that there be proof of the “matters stated in the petition”.

[107]    Mr Du Bray did not contend that the matters stated in the petition had not been proved, or were not the subject of proof, as required by s 52(1)(a) of the Act. His second ground of opposition, which will be considered next, referred to s 52(1)(c) of the Act and was to the effect that the Court cannot be satisfied that the debts on which the applicant relied were owing. That contention was in turn based entirely on the proposition that the Court should exercise its discretion to go behind the relevant judgments, or at least one of them. Mr Du Bray, not surprisingly given the history of the matter, did not dispute the existence of the orders referred to in paragraph 1 of the amended creditor’s petition, or suggest that he had paid the applicant the amounts that he had been ordered to pay her. Nor did he dispute that the statement in paragraph 2 of the amended creditor’s petition that the applicant did not hold security over his property, or dispute the statement in paragraph 3 of the amended creditor’s petition that he was either ordinarily resident in Australia, or had a dwelling house or place of business in Australia.

[108]    Mr Du Bray’s contention that the amended creditor’s petition was not verified by a person who had knowledge of the facts was based entirely on the fact that the affidavit verifying the petition was sworn by the applicant’s solicitor, Ms Kiera Peacock, who deposed (at paragraph 6) that “[t]he statements made in paragraphs 1, 2 and 3 of the amended creditor’s petition remain within my own knowledge true, on the basis of information and belief from [the applicant]”. His contention, in short, was that, because Ms Peacock’s assertion that the statements in the petition were within her knowledge true was qualified by the words “on the basis of information and belief from [the applicant]”, it necessarily followed that she did not know the “relevant facts” as required by s 47(1) of the Act.

[109]    That contention is rejected.

His Honour then proceeded to review the authorities, including Re Cirillo; Ex parte Commissioner of Taxation (1992) 36 FCR 279 and Daly v Watson (1994) 50 FCR 544. His Honour then relevantly concluded:

[120]    It would thus appear, on the basis of both Cirillo and Daly v Watson, that a solicitor can swear or affirm an affidavit verifying a creditor’s petition if they have knowledge of the relevant facts, even if that knowledge was acquired in the course of their acting for the creditor, including knowledge acquired from the creditor, so long as that knowledge amounted to more than mere instructions. It would equally appear, from Cirillo at least, that the verifying affidavit may be sworn on information and belief.

[121]    It is tolerably clear that, despite the inclusion of the words “on the basis of information and belief from [the applicant]” in her verifying affidavit, Ms Peacock in fact had sufficient knowledge of the relevant facts for the purposes of s 47 of the Act. In her verifying affidavit, Ms Peacock stated that she had acted for the applicant in each of the proceedings referred to in paragraph 1 of the creditor’s petition. In another affidavit sworn by Ms Peacock and read without material objection in support of the creditor’s petition, Ms Peacock stated that she had acted for the applicant in all of the proceedings before this Court since 2015 and gave a detailed recitation of the extensive chronology of the proceedings between the applicant and Mr Du Bray, including the proceedings in New Zealand. None of her evidence relating to the chronology of the proceedings was challenged or disputed in any way. There could be little doubt that Ms Peacock acquired knowledge of the matters in the creditor’s petition in the course of her acting for the applicant. That knowledge was not acquired simply as a result of instructions.

[122]    It follows that ground 1 of Mr Du Bray’s notice stating his grounds of objection to the creditor’s petition has no merit and must be rejected. …

The limited prospects of success

20    If attention be focussed, at least initially, on the Appellant’s prospects of success in his appeal, it is to be noted that the Amended Notice of Appeal sets forth eight Grounds of Appeal.

21    Without abandoning any of those Grounds, Senior Counsel for the Appellant helpfully filed with the Court the following summary as to the “main point” to be argued before the Full Court:

The main point of the appeal is that the affidavit required by s.47(1) of the Bankruptcy Act was executed by the solicitor, Ms Peacock. Ms Peacock did not have relevant knowledge of the existence or otherwise of the debt. In holding that the solicitor had sufficient knowledge to swear the Affidavit, His Honour misapplied the test. Wigney J held that the solicitor’s knowledge must amount to more than mere instructions (the judgment at [120]) and so formulated a new test inconsistent with earlier authority.

(footnote omitted).

Paragraph [120] of the reasons for decision of the primary Judge comes after a review by his Honour of the authorities.

22    In developing the “main point”, Senior Counsel for the Appellant maintained that para [120] and the reasons of the primary Judge overlooked three matters, namely:

    the need for formal proof of the “relevant facts” to which s 47(1) of the Bankruptcy Act refers, a requirement only reinforced – so the submission ran – by s 52(1) which required the Court to have before it at the hearing of the creditor’s petition “proof of… the matters stated in the petition…”;

    the hearsay nature of the affidavit evidence relied upon for the purposes of s 47(1), namely the affidavit of Ms Peacock; and

    the fact that the affidavit evidence did not refer to evidence of assets seized in New Zealand pursuant to Court orders, being orders in the nature of “freezing orders”.

In short, these three matters culminated in the submission to be advanced on appeal, namely the inadequacy of the affidavit evidence relied upon for the purposes of s 47(1).

23    On an application for security, it is unnecessary – and, indeed, inappropriate – for any concluded view to be expressed as to whether any of the Grounds of Appeal will prevail. The hearing of an application for security is not the occasion to seek to resolve the merits of the appeal itself. But it is necessary to undertake some assessment as to the Appellant’s “prospects of success”.

24    Subject to that necessary qualification, it is respectfully concluded that the “main point” sought to be agitated on appeal does not have such self-evident merit that success on appeal is likely. Indeed, it is concluded that there is a very real likelihood that the Appellant will be unsuccessful. But that will ultimately be a matter which may be resolved after hearing full argument. Any onus resting upon the Applicant seeking security to demonstrate that it is in the interests of justice to order security has been discharged.

25    No self-evident appellable error is exposed in the reasons of the primary Judge. Indeed, given his Honour’s account as to those matters which were not put in issue by Mr Du Bray ([2020] FCA 994 at [107] and [108]), it is difficult to find error in his Honour’s assessment as to the argument being presented as “essentially a technical one” and an argument having “no merit” ([2020] FCA 994 at [106] and [122]). Even if emphasis is given to the phrase “so long as that knowledge amounted to more than mere instructions”, the approach of the primary Judge was imposing upon the deponent of an affidavit a requirement going beyond “knowledge” founded upon mere instructions, and requiring the deponent to “know the relevant facts” from other sources. Even if such an approach exposes error, any such error would only have worked in favour of the Appellant. On the facts of the present case, and as found by the primary Judge, the deponent to the affidavit had acquired her “knowledge of the matters in the creditor’s petition in the course of her acting for the applicant” and that her “knowledge was not acquired simply as a result of instructions”: [2020] FCA 994 at [121]. Nor is there any self-evident reason why hearsay evidence cannot be relied upon for the purposes of s 47(1).

26    Without entering into any analysis as to whether the present appeal is but a further attempt to drag the Respondent to the appeal through yet another hearing, it is sufficient for present purposes to conclude that the appeal does not have any great prospects of success. The Appellant has had his “day in court” and has had the considerable benefit of a carefully reasoned judgment of the primary Judge: Carey-Hazell v Getz Bros.

27    To the extent that it may assume some peripheral relevance, it is to be noted that the Judge who dismissed the Appellant’s application for a stay of proceedings under the sequestration order made by the primary Judge concluded on the limited information before his Honour that “the prospects of success on appeal are not good”: Du Bray v ACW [2020] FCA 1142 at [25].

28    But any assessment as to the “prospects of success” does not itself dictate the making of an order for security. It is but one of the considerations to be taken into account.

The likelihood of any costs order not being satisfied – past conduct

29    Another of the considerations to be taken into account is whether the Appellant will satisfy any order for costs which may be made in favour of the Applicant, namely the Respondent to the appeal.

30    In respect to this issue it is concluded that there is a distinct possibility that any order for costs which may be obtained by the Applicant would not be satisfied in the event that the appeal is dismissed.

31    If attention is confined to orders made by Australian Courts, that finding is based upon the fact that the Appellant has failed to fully satisfy orders for costs (not including two costs orders made but not yet quantified) made against him by:

    a Judge of this Court on 4 July 2017, that order being for the payment by the Appellant “and associated companies” in the sum of $154,034.69;

    a Full Court of this Court, those costs being quantified by a Registrar of this Court on 29 March 2018 on a lump sum basis in the sum of $60,516.14; and

    a Judge of this Court on 20 December 2018, that order being for the payment by the Appellant in the sum of $20,950.

32    The continuing failure on the part of the Appellant to satisfy these previous costs orders is a sufficient basis upon which to conclude that a similar fate would most likely confront the Applicant seeking security in the present proceeding should the appeal be dismissed and an order for costs being made.

33    That finding is only reinforced by reference to the fact that the Appellant has also failed to satisfy orders for costs made against him by a series of New Zealand Courts over a number of years.

The likelihood that the appeal may be stifled

34    Considerable reservation should be exercised before making an order for security where there is a prospect or likelihood that such an order may stifle access to the Courts. Even accepting that there is a difference between the making of such an order in respect to an appeal as opposed to an initial hearing, caution should nevertheless continue to be exercised.

35    But no finding can be made that the making of such an order in the present case would stifle the appeal.

36    Little is known as to the financial affairs of the Appellant, other than that a sequestration order has been made. Little is known because:

    the Appellant has not filed a Statement of Affairs; and

    the affidavit that has been affirmed by the Appellant for the purposes of resisting the making of an order for security can be more characterised by what it doesn’t say as opposed to what it does say.

37    As to the former consideration, s 54 of the Bankruptcy Act requires a Statement of Affairs to be filed by a person against whom a sequestration order has been made within 14 days notification. A failure to do so constitutes an offence. A failure to file a Statement of Affairs not only deprives creditors or any ability to review the assets and liabilities of a bankrupt, it also deprives a Court of any ability to consider the extent to which liabilities may exceed assets.

38    As to the latter consideration, the affidavit of the Appellant merely states that he has a motor vehicle in a state of disrepair and clothing and further states that he otherwise does “not have any assets that do not vest in the trustee in bankruptcy”. He further states that he has “no capacity to satisfy any order that [he] pay any sum of money as security…”. Left unaddressed is whether the Appellant can nevertheless call upon others to satisfy an order for security, whether some “generous benefactor” will intervene (as put by the Appellant’s Counsel). Also missing from the affidavit is any assertion or expression of belief as to whether the making of an order for security would preclude the further pursuit of the appeal.

39    Left unexplained by the Appellant is the fact that for the purposes of the present Interlocutory Application he has managed to secure the services of Senior Counsel who both prepared written submissions and supplemented those submissions during the course of the hearing itself. Although the Court was much assisted by those submissions, an assertion by the Appellant that “does not have any assets that do not vest in the trustee” almost inevitably drives the Court to a conclusion that although the Appellant may “not have any assets”, he nevertheless has access to funds sufficient to retain the services of Senior Counsel.

40    Again, and to the extent that it may assume some peripheral relevance, it is to be noted that the Judge who resolved the application for a stay of the sequestration orders also expressed some disquiet as to the state of the evidence relied upon by the now-Appellant, when a like submission was then advanced that in the absence of a stay the Appellant would “not be able to continue to fund the appeal” to the Family Court: Du Bray v ACW [2020] FCA 1142 at [28].

41    There is thus an insufficient factual basis upon which any finding could be made that an order for security would stifle the appeal in the present proceeding.

The quantum of the security to be ordered

42    It is thus the case that the appeal in the present proceeding does not have any self-evident merit and that the making of an order for security would not stifle the appeal.

43    But that leaves for resolution the question as to the quantum of the security to be ordered.

44    An affidavit filed by the solicitor for the Applicant seeking the security, namely the Respondent to the appeal itself, sets forth an estimate as to the legal costs to be incurred in respect to the appeal. That estimate separately addresses:

    the time taken for both solicitors and counsel to prepare for the hearing of the appeal;

    the costs to be incurred in respect to the hearing of the appeal itself; and

    the prospect of further costs being incurred in respect to such other interlocutory applications as may be made by the Appellant in advance of the appeal.

Incidental amounts are also estimated in respect to disbursement. Senior Counsel for the Respondent relied upon different figures at the hearing of the present application from those set out the affidavit. There were discrepancies, the Court was then advised, because of the treatment of GST in respect to Counsel’s fees. In total, the amount ultimately relied upon came to $50,212. That amount factors in that 80% of costs would be recovered on taxation.

45    Although any amount to be ordered cannot be objectively determined and inevitably involves an element of personal judgment as to such matters as the amount of preparation necessary for the proper presentation of an appeal, it is concluded that the amount to be ordered by way of security is an amount of $50,000. And that security could be provided by way of a bank guarantee.

46    The time within which the security is to be provided was the subject of some debate during the hearing. The Appellant was in somewhat of a dilemma – the greater the amount of time to be allowed for providing the security, the less likely became the prospect of an appeal being heard expeditiously. The Appellant nevertheless opted for a period of 28 days, that being sufficient time it was submitted on his behalf to explore the means whereby the security could be provided. But his interests alone were not the only interests to be taken into account. Also to be taken into account were the interests of creditors.

47    On balance it is concluded that a period of 14 days should be permitted.

48    In the absence of security being provided, the appeal should be stayed – but not dismissed. Although the Interlocutory Application sought an order that the appeal be dismissed in the event of an order for security not being provided, the power of the Court to make such an order was not addressed during the course of submissions. Reason for reservation arises by reason of the following observations of Beaumont J in Endormer Pty Ltd v Australian Guarantee Corporation Ltd [2001] FCA 510, made in a context where his Honour set out the terms of s 56(1) of the Federal Court Act and continued:

[4]    Taken literally, this provision empowers a single Judge of the Court (even though, as in this case, that Judge will not be a member of the Full Court on the appeal) to order security for costs of the appeal.

[5]    I made such an order in a case which bears some similarity to the present case in Cummings v Lewis, unreported, 4 December 1991. The order in that case was in the usual form, that is to say, that unless, before a certain date, security for costs in the amount specified was provided, the proceedings on the appeal be stayed. Such an order is, in my view, interlocutory both as a matter of form and substance. In other words, in my view, a single Judge cannot exercise the appellant jurisdiction of the Court to dismiss an appeal in the event that security were not provided; or even to order a permanent stay of proceedings on the appeal.

[6]    It must follow, in my opinion, that the jurisdiction of the Court should more properly be exercised by the Full Court assigned to hear the appeal itself in a case such as the present where there is a substantial contest on the question of whether or not security should be provided, and where the appellants invite a single Judge of the Court who will not be participating in the appeal itself, to embark upon and make findings about questions that will be agitated on appeal (such as the history of the dealings between the parties and considerations of the kind considered by Brennan J in Lucas v Yorke (1983) 50 ALR 228).

Although both the Federal Court Act and the Federal Court Rules have undergone considerable amendment since his Honour made those observations, the power of a single Judge to make an order dismissing an appeal was not a subject addressed in submissions. It is a decision which has not been departed from in more recent decisions of this Court: Fard v Secretary, Department of Immigration and Border Protection [2016] FCA 1224 at [60] to [62] per Collier J. In those circumstances, a cautious approach should be pursued. It is for that reason that it has been concluded that the appeal should be stayed in the event that security is not provided.

CONCLUSIONS

49    On the facts presented, and by reference to the “guidelines” set forth by Beazley J in KP Cable Investments, it is concluded that:

    the Interlocutory Application was filed “promptly”, namely about one month after the Notice of Appeal was amended; and

    the Applicant on the Interlocutory Application, namely the Respondent to the appeal, has not proceeded in an “oppressive” fashion or with a view to denying the Appellant “a right to litigate”, but rather with a view to protecting her own financial position against the very real likelihood that any costs order that may be made on the appeal in her favour will not be satisfied.

It is further concluded that:

    the appeal has limited prospects of success;

    no finding can be made that an order for security would stifle the appeal; and

    there are no “public interest” considerations which weight in the balance against the making of an order for security.

A further matter taken into account, and a factor weighing in favour of making an order for security is the fact that:

    the Appellant has already had the benefit of a carefully considered judgment of the primary Judge.

Although unnecessary to decide, and had it been necessary to make a finding as to the conduct of the Appellant, it would have been concluded that:

    the appeal in the present proceeding has been filed with a view to engaging in yet further litigation with a view to unnecessarily prolonging the resolution of the dispute. Such a finding would have been made on the basis of the Appellant’s conduct in the New Zealand proceedings, and such other facts including his failure to comply with his statutory obligations (e.g., s 54 of the Bankruptcy Act) and his failure to fully disclose his financial affairs to this Court for the purposes of the present application. Also of relevance to such a finding would have been the findings made in Du Bray v ACW [2020] FCA 1142.

50    Security in the sum of $50,000 should be provided within 14 days. A failure to provide the security will result in the appeal being stayed.

THE ORDERS OF THE COURT ARE:

1.    On or before 8 December 2020 the Appellant is to provide security for the costs of the appeal in the sum of $50,000.

2.    In the event of non-compliance with Order 1, the appeal is stayed.

3.    Liberty is reserved to either party to vary Order 2.

4.    The Appellant is to pay the costs of the Respondent in respect to the Respondent’s Interlocutory Application dated 16 September 2020.

Associate:    

Dated:    24 November 2020