Federal Court of Australia

Frigger v Trenfield (No 14) [2023] FCA 307

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal is dismissed.

2.    The applicants are to pay the second respondent’s costs as agreed or taxed.

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

REASONS FOR JUDGMENT

PERRY J:

1.    INTRODUCTION

1    This is an application by Mr Harmut Frigger and Mrs Angela Frigger for leave to appeal from the decision of a single judge of this Court granting an application for security for costs by the second respondent, Mr Mervyn Jonathan Kitay, in the sum of $25,000.

2    At the hearing of this application, the applicants sought leave to file an amended draft notice of appeal provided earlier that day. That application was not opposed and counsel for the second respondent indicated that he was able to address the amended application orally. Leave to file and serve the amended application was therefore granted, and was relied upon by the applicants for the purposes of their application for leave to appeal.

3    For the reasons set out below, the application for leave to appeal must be refused with costs.

2.    BACKGROUND AND DECISION OF THE PRIMARY JUDGE

4    This matter has a complex litigation history. It is unnecessary to recant the whole of that history for the purposes of this application. The background to the proceeding and issues raised before the primary judge are relevantly summarised in his Honour’s reasons as follows (at [1]-[4]):

Mrs and Mr Frigger were made bankrupt in July 2018. In August 2018 they made an unsuccessful application in the Federal Circuit Court for orders annulling their bankruptcies. The application was dismissed on the basis of a lack of jurisdiction. Thereafter, for some considerable time, they pursued an application for leave to appeal out of time against the making of the sequestration orders. They sought no order for annulment as part of those proceedings. Ultimately, their application for leave to appeal was dismissed in April 2020 by reason of the failure by Mrs and Mr Frigger to pay security for costs as ordered by the Court. Now, by application dated 18 March 2021 they seek annulment of their bankruptcies pursuant to s 153B of the Bankruptcy Act 1966 (Cth), alternatively orders setting aside the sequestration orders.

The grounds on which Mrs and Mr Frigger seek annulment include a claim that they are solvent. As to that ground, Mrs Frigger has deposed that she and her husband hold all of their assets in a self-managed superannuation fund known as the Frigger Super Fund (Fund). They claim that the assets of the Fund now total $26 million in value and that, in addition, there are claims for losses to the Fund in the many millions of dollars that are being pursued in other proceedings.

Mr Mervyn Kitay, the liquidator of Computer Accounting & Tax Pty Ltd (in liq) was a petitioning creditor on the application that led to the making of the sequestration orders. Mr Kitay is a respondent to the present application by Mrs and Mr Frigger. He opposes the application. He seeks an order for security for costs in an amount of $25,000.

Mrs and Mr Frigger seek to proceed by way of summary judgment on their substantive application. They allege that there was a defect or irregularity in the making of the sequestration order. Speaking broadly, it is alleged to arise because (a) the bankruptcy notice and creditor's petition which led to the sequestration orders against them were based upon a judgment for costs; (b) the circumstances pertaining to the terms of engagement of Herbert Smith Freehills as lawyers for Mr Kitay are such that there is in truth no liability for Mr Kitay to pay any costs under the judgment; and (c) approval was required under s 477(2B) of the Corporations Act 2001 (Cth) for the retainer to be valid and enforceable and there was no such approval. They rely upon the alleged strength of these claims as a reason why the security for costs application should not be entertained. They contend that the appropriate course is for the summary judgment application to be listed expeditiously.

5    The decision below, therefore, essentially concerned two issues: (1) whether the application for summary judgment should be determined before the security for costs application; (2) whether an order for security for costs should be made against the applicants.

6    The primary judge rejected the applicants’ submission that their application for summary judgment should be determined before the security for costs application (at [5]). His Honour also held that it had been clearly demonstrated that an order for security for costs was appropriate and that the amount in which security was sought ($25,000) based on a one day hearing was reasonable.

7    The primary judge explained that in determining whether to order security, it is common for the Court to undertake a preliminary assessment of the strength of the substantive claims made in the proceeding (at [10], citing Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103 at [41]-[43] (Murphy J)). His Honour held that the need to assess the merits of the substantive claims is particularly keen where there is a real prospect that the order may stifle the proceedings (at [10]).

8    In this regard, the primary judge approached the application for security for costs on the assumption, favourable to Mrs and Mr Frigger, that an arguable basis for an order annulling the bankruptcy existed (at [11]). The primary judge undertook this approach, despite considering that Mr and Mrs Frigger were seeking to re-argue contentions about the annulment of their bankruptcy which had already been rejected in earlier proceedings, and from which there had been no appeal (at [11]).

9    However, his Honour made no equivalent assumption as to the alternative claim that the sequestration orders should be set aside (at [12]). The primary judge found that the applicants’ submissions did not disclose an identifiable basis for making such orders. Furthermore, among other difficulties, his Honour held (at [12]) that the proceedings were not an appeal from the sequestration orders, no issue of fraud or irregularity had been properly articulated, the passage of time would stand in the way of any application to set aside the sequestration orders for irregularity, and the contentions said to give rise to irregularity had been advanced unsuccessfully in the earlier proceedings: Frigger v Kitay (No 2) [2020] FCA 497. Therefore, even assuming merit in the annulment application, the primary judge held that the applicants could succeed in the present case only if they demonstrated that: (1) the judge who made the sequestration order was bound not to make the order; and (2) if satisfied that the sequestration order ought not to have been made, the Court was persuaded that it should exercise its discretion to set aside the sequestration order (at [14]).

10    As to the second of these matters, the primary judge found that there were reasons why the application to set aside the sequestration order may be refused in the exercise of the Court's discretion including:

(1)    the applicants’ contentions in support of the annulment application, including that Mr Kitay had no liability to pay his lawyers, were not new (subject to one additional matter) and had been consistently rejected (at [16]); and

(2)    the additional claim, being alleged proof that Mr Kitay had not paid his legal fees and that they would be paid only out of monies recovered from the applicants, lacked merit. This is because it was not necessary for the costs claimed to have been actually paid, as the existence of a liability to meet such costs sufficed (at [16]).

11    The primary judge also accepted that a significant factor that may bear upon the annulment application is the applicants’ claim that they are, and were when the sequestration order was made, solvent. However, in this regard, the primary judge referred to his Honour’s findings in Kitay, in the matter of Frigger (No 2) [2018] FCA 1032 at [126]. In that case, his Honour decided not to dismiss the petition for sequestration orders from which there had been no appeal, finding that:

… by reason of the funds available to Mr and Mrs Frigger from the Frigger Superannuation Fund, they are able to pay their debts. However, those are the only funds available to a creditor. The petitioning creditors are unable to resort to the monies in the Frigger Superannuation Fund. The petitioning creditors have sought to levy execution, but have been unsuccessful in doing so. In those circumstances, even though I am satisfied that Mr and Mrs Frigger are able to pay their debts I decline to dismiss the petition under s 52(2) of the Bankruptcy Act.

12    In addition to considering the likely merits of the substantive claims for relief, the primary judge also took into account the following considerations in deciding that the interests of justice fell in favour of granting the application for security for costs (at [16]-[20]):

(1)    the unexplained delay of almost three years in bringing the annulment application;

(2)    the failure to pay the order for costs against them, in the abandoned application for an extension of time within which to appeal the making of the sequestration order, which the primary judge held to manifest “a most concerning approach to orders made by this Court in relation to costs. Mrs and Mr Frigger evidently consider they can disregard those orders based upon their own views as to whether there was a proper basis for the making of those orders” (at [18]);

(3)    the fact that many of the grounds raised relied upon matters known to, and indeed relied upon by, Mrs and Mr Frigger at the time of the hearing of the creditor’s petition and application for an extension of time within which to appeal; and

(4)    the fact that Mr and Mrs Frigger had taken “substantial steps in the administration to the extent of conducting what they describe as a trial against their trustee” (at [20]).

13    The primary also noted that the applicants had been found by the Court of Appeal in Western Australia to have engaged in conduct for the purpose of putting their assets out of the reach of their creditors: Frigger v Kitay [2016] WASCA 173. Relevantly, the primary judge rejected Mrs Frigger’s submission that those findings of fact should not be taken into account (at [25]-[29]).

14    His Honour summarised (at [24]) the relevant matters regarding Mrs and Mr Frigger for the purposes of the application for security for costs as follows:

(1)    they made a conscious decision not to pursue their application for leave to appeal out of time against the making of the sequestration orders against them;

(2)    they have refused to pay the costs awarded against them in those proceedings;

(3)    they have provided no explanation for the delay for almost a year between the decision not to pursue the appeal and the commencement of the present application;

(4)    they have provided no adequate explanation for the delay in commencing the annulment proceedings;

(5)    the debt which led to their bankruptcy arose out of a costs order;

(6)    they have failed to meet many costs orders;

(7)    many of the matters that they wish to raise in support of their application have been considered and rejected in earlier decisions of this court;

(8)    the claim that the sequestration orders should be set aside lacks merit;

(9)    even assuming there are arguable grounds to support the annulment application there are matters that would weigh against the making of such an order in the exercise of the Court's discretion;

(10)    they have been ordered to provide security for costs in the past and have not provided security as ordered;

(11)    they are serial litigants in this and other courts;

(12)    they have disregarded court orders;

(13)    they point to no means by which Mr Kitay might expect to be paid in the event that he was to obtain a costs order in his favour in these proceedings; and

(14)    on their own account they have access to substantial funds in the Fund and therefore they are able to meet any order for security.

15    Having regard to these considerations, the primary judge concluded that it is “plainly in the interests of justice that there should be an order for security” (at [36]).

3.    SHOULD LEAVE TO APPEAL BE GRANTED?

3.1    Relevant principles

16    A decision to order security for costs is an interlocutory order: Waters v Commonwealth of Australia [2015] FCAFC 46; (2015) ACSR 445 at [7] (the Court). As the applicants seek to appeal from that interlocutory order, leave to appeal is required pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth).

17    As I explained at the commencement of the hearing of the application for leave to appeal, the power to grant leave to appeal is discretionary. The relevant considerations in deciding whether to grant leave to appeal include whether an appeal would have any reasonable prospects of success in that “the decision is attended with sufficient doubt” and whether the applicant would suffer “substantial injustice” if leave were refused, assuming the decision subject to appeal is wrong: Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 at [29] (the Court); Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 398–399 (Neaves J).

18    Accordingly, an assessment of the merits of the applicant’s appeal is relevant to determining the application for leave to appeal. Importantly, in considering this question, it will generally be appropriate to consider the proposed grounds of judicial review at a “reasonably impressionistic level”, and therefore the Court should not descend into a fuller consideration of the arguments for and against each ground: see by analogy Tu’uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] HCA 28; (2022) 96 ALJR 819 at [16]-[18] (Kiefel CJ, Gageler, Keane and Gleeson JJ). While there are some cases in which a closer examination of the merits is appropriate (Tu’uta Katoa (at [18])), in this matter, as I explain below, the applicants’ proposed grounds of appeal lack any merit on their face. This is not a case where there is a reason to examine the merits of the proposed grounds other than at a reasonably impressionist level.

19    Relevant also to the assessment of the applicant’s prospects of success is the fact that the decision of the primary judge was discretionary. In those circumstances, it is necessary for the applicants, as they accepted, to establish that it is reasonably arguable that the exercise of discretion by the primary judge erred in a manner identified in House v The King [1936] HCA 40; (1936) 55 CLR 499. As Dixon, Evatt and McTiernan JJ held in House at 504–505:

It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.

3.2    Leave to appeal should be refused

3.2.1    Approach to determining the merits of the proposed grounds of appeal

20    As earlier mentioned, the applicants sought, and were granted leave, to rely upon the amended draft notice of appeal provided on the day of the trial, for the purposes of seeking leave to appeal. In those circumstances, the amended draft notice of appeal must be taken to reflect the issues which the applicants would wish to press, in the event that leave to appeal was granted and the respondents were entitled to treat the draft amended notice of appeal accordingly. I therefore agree with the respondent that to the extent that the applicants’ submissions traversed complaints outside the grounds of appeal in the amended draft notice of appeal, they should be disregarded. Accordingly, when I assess the merits of the proposed appeal in the course of considering the application for leave to appeal, I have done so against the grounds as pleaded in the amended draft notice of appeal and not as pleaded in the original notice of appeal or as pleaded in the application for leave to appeal.

21    For the following reasons, each of the proposed substantive grounds of appeal have no reasonable prospects of success. In addition, at the oral hearing, the applicants sought to overturn the primary judge’s award of costs of the application for security for costs in favour of the second respondent. However, as that submission proceeded on the assumption that they were otherwise correct in challenging the primary judge’s decision, it follows that this further argument also lacks any reasonable prospects of success. On balance, the interests of justice plainly would not be served by the grant of leave to appeal, and the application must be dismissed.

3.2.2    Proposed ground 1 (the primary judge misdirected himself in ordering security for costs) lacks merit

22    Ground 1 of the amended draft notice of appeal alleges that the primary judge:

… misdirected himself in the exercise of the discretion to order security for costs of $25,000 and the result is so unreasonable or plainly wrong that the appellate court may infer that there has been a failure to properly exercise the discretion.

Particulars

(a)    The [applicants] were unable to comply with the order, prior to the discharge of the bankruptcies, by withdrawing a lump sum from their superannuation fund, which funds would immediately vest in the bankruptcy trustee pursuant to s 58(1) Bankruptcy Act 1966.

23    In this regard, it was common ground that the applicants were discharged from their bankruptcy on 26 July 2021 (with the application for leave to appeal having been filed a short time beforehand on 20 July 2021). It was also common ground that, on the same day, the applicants had paid security for costs in the sum of $25,000 into court.

24    In relation to proposed ground 1, Mrs Frigger submitted that:

until 26 July 2021 when the Friggers were discharged from bankruptcy by law, it was not possible for them to pay security into court. All their assets are held in their self-managed superannuation fund3, and they were required to withdraw a lump-sum to enable payment. Such withdrawal would immediately vest in the bankruptcy trustee as after-acquired property.

(Applicants’ written submissions at [2]; citations omitted.)

25    The consequence of this order, on the applicants’ submission, was that they were put into “an impossible situation”, where approximately 25 percent of the applicants’ income would have been paid into security for costs to continue the appeal. In Mrs Frigger’s submission, the security for costs order would thus have the result of stifling the progress of their application to set aside the sequestration order, and was therefore plainly wrong or unreasonable and should never been made.

26    In essence, the applicants’ submissions reflect their dissatisfaction that an order was made for security for costs in spite of their bankruptcies. However, as the respondent submits, the fact that an applicant is bankrupt does not, of itself, render a security for costs order inappropriate. Rather, the primary judge correctly understood that the question for determination was whether, in all of the circumstances, it was in the interests of justice to make an order for security for costs (at [6]).

27    Furthermore, the primary judge appropriately considered the significance of ordering security for costs against the applicants. As the primary judge correctly acknowledged (at [9]), a person with valid grounds to seek an order for annulment should not have their ability to do so stifled by an order for security for costs. The primary judge further correctly observed that, before an order is made for security for costs, “usually there must be some additional factor beyond a concern as to whether a costs order will be met due to impecuniosity”. In this case, the primary judge found that there were many additional factors established on the evidence which led his Honour to conclude that it was plainly in the interests of justice to make an order for security for costs, as is evident from the summary of considerations weighing in favour of such an order at [24] of the primary judge’s reasons.

28    That reasoning discloses no apparent error. Proposed ground 1 therefore lacks any reasonable prospects of success.

3.2.3    Proposed ground 2 (the primary judge incorrectly identified the applicant’s grounds to set aside the sequestration orders or to annul the bankruptcy) lacks merit

29    Ground 2 of the draft notice of appeal alleges that:

The learned judge erred in mixed fact and law by mistaking the ground upon which the [applicants] rely for orders to set aside the sequestration orders alternatively to annul the bankruptcy.

30    The ground is vague and lacks any particularity. That would itself justify a finding that the ground lacked sufficient merit to warrant a grant of leave to appeal: FEY17 v Minister for Home Affairs [2020] FCA 1014 at [90] (Greenwood J); WZAVW v Minister for Immigration and Border Protection [2016] FCA 760 at [35] (Gilmour J).

31    In their submissions in support of this ground, the applicants allege that the primary judge erred in finding that any factual matter or legal issue that was raised in the original sequestration proceedings could not be raised again in an application for annulment. The applicants contend that the correct position is that “even though there was a matter that was already raised before the original judge who made the sequestration orders the same matter can be raised again in an annulment even though the annulment is not an appeal” (T6.18-20).

32    The applicants further submit that the primary judge erred by failing to find that:

(1)    Mr Kitay never had a liability to pay the costs of his lawyers, Herbert Smith Freehills (HSF), because he “has not paid costs for eight years and there is an admission by the solicitor that a client is not going to pay costs then that is a breach of indemnity principle and it is an issue that we can raise again in our application for annulment” (at T8.41-44); and

(2)    as “the retainer was in favour of Mr Kitay only at principle”, HSF had “no authority to issue no authority to issue the bankruptcy notices on behalf of Computer Accounting and Tax – the second judgment creditor” (at T7.25-29).

33    None of these proposed matters have any apparent merit.

34    First, the grounds of annulment raised in the substantive application do not refer to matters beyond those considered by the primary judge in the sequestration order. They seek only to raise a general application to set aside those orders. It was for these reasons that, in assessing the merits of the applicants’ claims for the purposes of determining where the interests of justice lay on the security for costs application, the primary judge found that:

(1)    the applicants “re-argue points the merits of which have been considered and rejected in earlier proceedings in respect of which there has been no appeal” (at [11]); and

(2)    in these circumstances, a Court would not normally set aside sequestration orders if they have already been the subject of review in earlier proceedings (at [12]).

35    There is no challenge to the first finding above. With respect to the second finding, there is plainly no merit in the applicants’ submission that “[t]he same matter can be raised because then it will be a different judge who would be considering whether the sequestration orders ought not to have been made” (at T6.22-23).

36    Secondly, there is no apparent merit in the allegation that Mr Kitay never had a liability to pay HSF’s costs. Rather, as the second respondent submitted:

Mr Kitay has retained HSF to act in these proceedings and there is a strong presumption that HSF as the solicitor on the record in these proceedings represents Mr Kitay.

The right of a solicitor to charge a client, and the obligation to pay a solicitor, arises by operation of law from the existence of the retainer.

A contractual provision positively excluding all rights to remuneration will be a ‘cost agreement’ as defined by ss.252 and 282 of the Legal Profession Act 2008 (WA), with the result that it will be void by s.287 if not in writing.

It is essential that the party claiming that another party is not entitled to party / party costs show that there was an agreement that prevented the solicitors from looking to the client for their fees.

(Second respondent’s written submissions at [33]-[36].)

37    Nor does the claim that there was no authority to issue bankruptcy notices on behalf of the second judgment creditor, Computer Accounting and Tax, have any likely prospects of success. In earlier proceedings in the Supreme Court of Western Australia, a costs order was made in favour of both Mr Kitay and Computer Accounting, creating a joint debt in favour of those two parties. As the primary judge correctly held at [12], finality in the decisions of the Courts is a fundamental principle and, unless conferred by statute or an issue of fraud arises, the Court has no inherent power to reopen a substantive exercise of judicial power and set aside an order earlier made: Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529; and Gamser v Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145. Therefore, in the absence of any jurisdiction to amend that costs order, being the foundational liability on which the bankruptcy notice was based, it follows that Computer Accounting had the right to issue the bankruptcy notice.

38    This proposed ground therefore lacks any reasonable prospects of success.

3.2.4    Proposed ground 4 (that the primary judge erred by refusing to recuse himself) lacks any merit

39    The final proposed ground of appeal is ground 4, as ground 3 was omitted from the amended notice of appeal. Proposed ground 4 reads that:

The learned judge erred at law by refusing to recuse himself.

Particulars

(a)    he commented that the failure of a client to pay legal costs for more than 8 years is not an indication the client has no liability to pay;

(b)    Pre-judging the results of the [applicants’] originating application.

40    The applicants’ submission in support of the contention is as follows (at T9.12-28):

[The primary judge] found that it doesn’t matter if a client never paid the costs, there’s still a liability to pay, and we say his – that comment was – was sufficient to demonstrate an apprehension of bias or actual bias because the – a client who doesn’t pay costs for eight years where a lawyer is saying that the client doesn’t have to pay is sufficient for that point to be made out and for [the primary judge] to reject that point, we say, was sufficient to demonstrate bias because he has prejudged an issue or ground of the – for the annulment which we were relying on. And in the – of course, your Honour, you will have read the transcript and there was a very short exchange between [the primary judge] and myself where I simply said after he made that comment about, “our clients are able to take as long as they like to pay,” I – I asked him to recuse himself and he did not ask me to give any more grounds for – for the request for recusal. He simply rejected it and said, “Well, I’m not going to recuse myself.” That, in itself, we say it demonstrates actual bias. And then we say the – the judgment itself also shows that Colvin J was biased because he has prejudged the – the resolution of the annulment application and the application to set aside the sequestration order, and – and that – that means that – that he could never bring an open and fair mind to the resolution of whether security for costs should or should not have been ordered.

41    A copy of the transcript of argument before the primary judge is found at annexure DJ-2 to the affidavit of David William John sworn on 4 February 2022. The relevant passages are as follows (at T6.37-T7.20 of the hearing before the primary judge):

MS FRIGGER: The second reasons why we say there should not be an order for security for costs is Mr Kitay has no liability to pay costs. He has not paid costs to Herbert Smith Freehills for more than 11 years, and, no matter what anybody says, that is not a commercial arrangement between a person who is not a pro bono client and a firm such as Herbert Smith Freehills.

HIS HONOUR: Well, Mrs Frigger, it used to be the basis upon which all litigation was conducted by all lawyers in commercial litigation practice. That is to say there was no charge unless and until matters had been completed.

MS FRIGGER: That used to be …

HIS HONOUR: … a liability and to liability incurred, but matters were settled up at the end. And it might have taken three, four of five years, and then …

MS FRIGGER: Your Honour, I would say …

HIS HONOUR: … charges were…

MS FRIGGER: I would say from your comments that you're actually running an argument on behalf of Mr Kitay, which is actual bias, and I ask you to recuse yourself at this point in time.

HIS HONOUR: I'm not — well, I will receive the application in relation to actual bias. In my view, the matter which I have raised is an exploration of the merits of the position that was being advanced by way of submission to me. It does not display actual bias, no prejudgment in relation to the outcome of the case or preference of any party's interests, and therefore I reject the application.

MS FRIGGER: Yes, of course … not surprising, your Honour.

42    The applicants referred to a number of further instances where the primary judge allegedly demonstrated either apprehended or actual bias, including findings that the applicants “are serial litigants in this and other courts” (at [24(11)]) who have “disregarded court orders” (at [24(12)]). However, these examples are not given as particulars in the proposed ground of appeal, despite leave being granted to amend those proposed grounds.

43    To the extent to which the applicants seek to raise an allegation of actual bias in the form of prejudgment, nothing is identified which could establish that the primary judge was “so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented”: Minister for Immigration & Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 at [72] (Gleeson CJ and Gummow J; Hayne J agreeing at [176]). In particular, in the passage of the transcript quoted above, the primary judge explained that he was merely exploring the merits of the submissions by Mrs Frigger. Doing so did no more than assist Mrs Frigger to respond to and address aspects of concern to his Honour regarding her submissions and demonstrate therefore an open mind to persuasion. There is no merit whatsoever in the submission to the contrary.

44    The test for determining whether a decision maker is disqualified by reason of the appearance of bias is well-established, namely, “whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide”: Michael Wilson & Partners v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at [31] (Gummow A-CJ, Hayne, Crennan and Bell JJ; see also Charisteas v Charisteas [2021] HCA 29; (2021) ALJR 824 at [11] (Kiefel CJ, Gageler, Keane, Gordon and Gleeson JJ). As such, the test is an objective one: Wilson at [32]-[33]; Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 at [7]-[8] (Gleeson CJ, McHugh, Gummow and Hayne JJ). This test requires consideration of two steps:

(1)    the first step requires identification of what it is said might lead a decision maker to decide a case otherwise than on its legal and factual merits; and

(2)    the second step requires the articulation of the logical connection between that matter and the risk that the decision maker will decide the matter otherwise than on its merits.

(Ebner at [8]; Isbester v Knox City Council [2015] HCA 20; (2015) 255 CLR 135 at [21] (Kiefel, Bell, Keane and Nettle JJ).)

45    In applying the test for apprehended bias, it is also important to emphasise that the fair-minded lay observer “is taken to be aware of the nature of the decision and the context in which it was made, as well as to have knowledge of the circumstances leading to the decision”: Isbester at [23] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

46    None of the matters raised by the applicants, either cumulatively or individually, in support of the proposed ground, have any reasonable prospects of success.

47    First, the applicants’ contention that the primary judge’s refusal to recuse himself demonstrates bias or apparent bias in itself lacks any merit. To the contrary, it is the duty of a judge to hear a matter, notwithstanding a party’s objection, if no proper basis has been established for the judge to disqualify herself or himself: Ogawa (formerly Ms PD) v President of the Australian Human Rights Commission [2022] FCAFC 161 at [32] (the Court).

48    Secondly, the fact that the primary judge considered the merits of the applicants’ substantive application in determining whether it was appropriate to make orders for security for costs cannot establish actual or apprehended bias. In this regard, there is no challenge foreshadowed in the amended notice of appeal to the primary judge’s explanation as to the relevance of undertaking “a preliminary assessment of the strength of claims for the purpose of determining whether to order security”, depending upon the circumstances (at [10]; emphasis added). As the primary judge expressly accepted, that assessment was a “preliminary” one. Furthermore, in so doing, the primary judge made the assumption in favour of the applicants that there was an arguable basis for their claim that there should be an order for annulment (at [11]).

49    Added to this, the applicants expressed concern that the primary judge had regard to the applicants’ failure to pay a previous security for costs order made by Charlesworth J: Frigger v Kitay (No 2) [2020] FCA 497. Specifically, the applicants submitted that the “unjustified and unsubstantiated” reference to their previous failure to pay a costs order demonstrates the primary judges’ actual bias (T9.39). However, in submissions before the primary judge, and also in oral reply submissions before me, Ms Frigger accepted that the applicants had not paid these costs orders. An uncontested finding of fact cannot demonstrate any bias, whether apprehended or actual, on behalf of the primary judge.

50    Proposed ground 4 therefore has no reasonable prospects of success.

3.2.5    Other considerations militating against a grant of leave to appeal

51    In addition to the lack of merit in the proposed grounds of appeal, additional factors militate against a grant of leave to appeal:

(1)    The order for security for costs has in fact been satisfied. As earlier explained, the applicants have already paid $25,000 to the Court in satisfaction of the security for costs order, and there is no evidence that this payment has had any effect so as to stifle the applicants’ involvement in any litigation.

(2)    The question of whether an order should be made for security for costs involves the exercise of a broad discretion, albeit that it must be exercised judicially, and depends upon the particular circumstances of the case, as the primary judge correctly recognised. In this regard, it is also well-established that Courts should be circumspect before interfering with discretionary decisions on matters of practice and procedure: Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261 at [22] (the Court).

(3)    As the respondents submit, the interlocutory judgment did not have the practical effect of determining the substantive relief claimed by the applicants.

(4)    No legitimate issue of public interest has been identified by the applicants.

4.    CONCLUSION

52    It follows from these reasons that the applicant has not shown any error, in a manner identified in House, in the primary judge’s exercise of discretion. The amended application for leave to appeal should be refused with costs.

Associate:

Dated:    5 April 2023