Federal Court of Australia

Fazal v BKA Practice Co Pty Ltd [2021] FCA 626

ORDERS

THE COURT ORDERS THAT:

1.    Within 28 days of the date of these orders, the applicant is to provide security for costs fixed in the sum of $9,020 (Security Amount).

2.    The Security Amount is to be paid into Court.

3.    Pursuant to r 19.01(1)(b) of the Federal Court Rules 2011 (Cth), the proceeding be stayed until the applicant has paid the Security Amount in accordance with order 1 above.

4.    If the applicant fails to comply with order 1 above, an application may be made for an order that the proceeding be dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and r 19.01(1)(c) of the Federal Court Rules 2011 (Cth).

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

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1    The respondent in this proceeding, BKA Practice Co Pty Ltd, applies for an order that the applicant provide security for costs fixed in the sum of $9,020 and, if the applicant fails to provide such security, the proceeding be stayed. The applicant relies on s 56 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and an affidavit of Mr Jerry Belleli affirmed 10 May 2021.

2    On 13 May 2021, I made an order that, unless otherwise directed by the Court, the respondent’s application for security for costs would be determined on the papers without an oral hearing.

3    The respondent filed written submissions on 12 May 2021. The applicant provided submissions to my Chambers on 8 June 2021.

4    For the following reasons, I will make an order that the applicant provide security for costs fixed in the sum of $9,020.

Legislation

5    Section 56 of the FCA Act 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.

6    Rule 19.01(1) of the Federal Court Rules 2011 (Cth) provides:

19.01     Application for an order for security for costs

(1)     A respondent may apply to the Court for an order:

(a)     that an applicant give security for costs and for the manner, time and terms for the giving of the security; and

(b)     that the applicant’s proceeding be stayed until security is given; and

(c)     that if the applicant fails to comply with the order to provide security within the time specified in the order, the proceeding be stayed or dismissed.

Principles

7    The principles applicable to determining whether to order security are uncontroversial.

8    In All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840 (All Class Insurance), Allsop CJ stated at [42]-[44]:

The Court’s discretion to require the provision of security for costs is broad and the factors informing the exercise of that discretion cannot be stated exhaustively. The only limitation is that the discretion be exercised judicially: Bell Wholesale Co Ltd v Gates Export Corporation [1984] FCAFC 29; 2 FCR 1 at 3. The matter which lies at the heart of the discretion is one of fairness, both in terms of whether security should be granted, and if so, in what amount: Madgwick v Kelly [2013] FCAFC 61; 212 FCR 1 at 21 [92]. The Court aims to achieve a “balance between ensuring that adequate and fair protection is provided to the defendants, and avoiding injustice to an impecunious plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings”: Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 at 470 (Giles J).

The Court’s discretion should be exercised having regard to all of the circumstances of the case (see Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 at 513 [26] (Kirby J)). There are a number of well-established factors relevant to the Court’s exercise. These include (see KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; 56 FCR 189 at 197–198 per Beazley J): whether the application for security for costs has been brought promptly; the strength and bona fides of the applicant’s case; whether the applicant’s impecuniosity was caused by the respondent’s conduct subject of the claim; 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; and 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.

An additional factor to add to this list is whether there are aspects of public interest which weigh in the balance against the making of an order (see Equity Access Ltd v Westpac Banking Corporation [1989] FCA 520; ATPR 40-972 at 50,635 per Hill J).

9    Similar statements of principle are set out in Kayler-Thomson v Colonial First State Investments Ltd [2020] FCA 1867 at [8] (per Beach J), Abbott v Zoetis Australia Pty Ltd (No 2) [2019] FCA 462; 369 ALR 512 at [15] (per Lee J) and Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360 at [13] (per Edelman J).

10    In Hardingham v RP Data Pty Limited [2020] FCA 1062, Burley J stated at [9]:

Whilst courts are reluctant to order that an impecunious applicant, being a natural person, provide security where the effect would be to stifle that person’s access to the courts, where such a person has already obtained access to a court and has received a decision dismissing the claim, the position is different. That is because at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought: see Tran v The Commonwealth [2009] FCA 921 at [3] – [6]; Frigger v Kitay [2019] FCA 624 at [35] and the authorities cited there.

11    In Etnyre v Australian Broadcasting Corporation [2021] FCA 610 (Etnyre), Abraham J stated at [11]:

It has been recognised that, although courts are disinclined to order security against natural persons, as Lindgren J observed in Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [32]-[33], being a natural person is no bar to an order for security for costs particularly when coupled with other factors. Lindgren J in [33] referred to circumstances … which might lead to an order for a natural person to provide security, particularly when in combination with impecuniosity.

Application to the respondent’s application for security

12    Having regard to those legislative provisions and principles, I will make an order that the applicant provide security for costs fixed in the sum of $9,020. This is so for the following reasons.

13    First, the applicant seeks to appeal from the judgment in BKA Practice Co Pty Ltd v Nida [2021] FCCA 334 (Primary Judgment). The grounds of appeal set out in the application for leave to appeal filed 12 March 2021 are that the primary judge erred by (1) “failing, refusing to consider relevant and important evidence”; (2) failing “to consider the authority to “go behind” the judgment resulting in the” relevant bankruptcy order; and (3) failing to make an “appropriate assessment of the procedural history of the proceedings in considering the cause of delays and estimating the time of delays”. Two of those appeal grounds relate to a consideration of matters relating to evidence and procedure. One of the appeal grounds appears to relate to an alleged failure to consider authority relating to “going behind” a judgment which resulted in an order as to bankruptcy. It must be said that, as matters currently stand, appeal grounds of that nature prima facie have limited prospects of success.

14    Second, I accept that the applicant is impecunious by reason of her status as an undischarged bankrupt and the risk of non-payment is material.

15    Third, the amount sought is reasonable and less than the amount that the applicant offered to pay into the Federal Circuit Court on 10 February 2021: see Primary Judgment, [60]. In my view, the amount of security sought is not oppressive.

16    Fourth, there is no evidence that the applicant’s impecuniosity was caused by the respondent.

17    Finally, the respondent has not delayed in bringing the respondent’s application for security for costs.

DISPOSITION

18    For the reasons given, and having regard to all of the circumstances, I will order that the applicant give security for costs.

19    The respondent sought an order that the applicant give security for costs and, if the applicant fails to provide such security, the proceeding be stayed.

20    However, having regard to the terms of s 56 of the FCA Act and r 19.01(1)(b) of the Federal Court Rules 2011 (Cth), I will make the following orders:

(1)    Within 28 days of the date of this judgment, the applicant is to provide security for costs fixed in the sum of $9,020 (Security Amount).

(2)    The Security Amount is to be paid into Court.

(3)    Pursuant to r 19.01(1)(b) of the Federal Court Rules 2011 (Cth), the proceeding be stayed until the applicant has paid the Security Amount in accordance with order 1 above.

(4)    If the applicant fails to comply with order 1 above, an application may be made for an order that the proceedings be dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and r 19.01(1)(c) of the Federal Court Rules 2011 (Cth).

21    I note that orders of that kind are similar to the orders made by Allsop CJ in All Class Insurance and by Abraham J in Etnyre.

Associate:

Dated:    9 June 2021