FEDERAL COURT OF AUSTRALIA Elshanawany v Greater Murray Area Health Service [2004] FCA 1272 HUSAM ELSHANAWANY v GREATER MURRAY AREA HEALTH SERVICE A 33 of 2004 JACOBSON J 28 SEPTEMBER 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY A 33 OF 2004 BETWEEN: HUSAM ELSHANAWANY APPLICANT AND: GREATER MURRAY AREA HEALTH SERVICE RESPONDENT JUDGE: JACOBSON J DATE OF ORDER: 28 SEPTEMBER 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The motion for security for costs is dismissed; and 2. The respondent to pay the costs of the motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY A 33 OF 2004 BETWEEN: HUSAM ELSHANAWANY APPLICANT AND: GREATER MURRAY AREA HEALTH SERVICE RESPONDENT JUDGE: JACOBSON J DATE: 28 SEPTEMBER 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application for security for the costs of proceedings which have been listed for hearing before Madgwick J for four days commencing on 11 October 2004. The proceedings were commenced by an application filed on 26 August 2004 and were listed for hearing as a matter of urgency. 2 The matter which is to be determined by Madgwick J arises under the provisions of section 46PP of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) ("the HREOC Act"). The applicant in the proceedings claims interlocutory injunctive relief under the provisions of that section by reason of a claim of racial discrimination. 3 The applicant is a medical practitioner who obtained his qualifications from the University of Alexandria in Egypt and the Royal College of Surgeons in Edinburgh, Scotland. It is necessary to say something about the background to the proceedings and his residency status before turning to the question of security for costs. 4 The applicant came to Australia in February 2003 for a short visit to meet officers of the respondent Area Health Service and officers of the Calvary Hospital in Wagga. He came to Australia to fill a need for a medical officer in the Wagga region and he was told on his first visit that he would be sponsored by the respondent, the Murray Area Health Service. He was living in Dubai at the time and returned there before coming back to Australia to take up his position. He was granted a visa with a number of conditions including visa requirements under subclass 422. The visa which he was granted in August 2003 was a temporary resident visa which requires as a condition of the visa that he be continuously employed in Australia. 5 He was originally employed by a local doctor in Wagga but it appears that that employment has been terminated. Also, his existing contract with the Greater Murray Area Health Service comes to an end on 30 September 2004 but I have been told that the contract has been extended to 15 October 2004. The relief which the applicant claims in the proceedings is injunctive relief restraining the respondent from terminating its sponsorship of him. 6 The background of the proceedings is set out in an affidavit which the applicant swore in some other proceedings which he commenced in the Federal Court's Australian Capital Territory Registry against Calvary Health Care Riverina Limited. The affidavit is annexed to an affidavit sworn by the applicant's solicitor in the present proceedings. The applicant's affidavit deposes to the relevant background circumstances including his appointment as a visiting medical officer at the Calvary Hospital in Wagga. He refers in [22] and [23] to conversations with an officer of the Calvary Hospital which give rise to a complaint of racial discrimination. That complaint underlies the proceedings which are still on foot in the ACT. 7 There is evidence in the affidavit of the applicant's contract with the Greater Murray Area Health Service. It appears that the invitation from the Service was related to a three year cycle but, in fact, the initial contract was intended to continue only until 30 September 2004. 8 The applicant lodged a complaint with the Human Rights and Equal Opportunity Commission in February 2004 against the Calvary Health Care Riverina Ltd. I have been informed that that complaint has been terminated. Nevertheless, the applicant says in his affidavit that after the complaint was lodged, he had a meeting with Dr Paul Curtis and Miss Helen Martin, who was the newly appointed hospital manager. He deposes in [40] to a conversation which is relied upon in support of the claim for racial discrimination. It is unnecessary to set out the terms of the conversation. 9 The respondent seeks security for costs in an amount of approximately $96,000. It is not clear whether this amount is calculated on a solicitor/client basis or a party/party basis, but it has been determined upon the footing that the case is listed for hearing for four days before Madgwick J. 10 The respondent invokes the jurisdiction of the court to grant security under section 56 of the Federal Court Act 1976 (Cth) ("the Act"). In Camerons Unit Services Pty Ltd v Kevin Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46 at 52-53, Burchett J said that section 56 of the Act confers a broad discretion which is not to be regarded as limited by any judicial gloss, although the cases afford guidance as to the relevant factors. 11 The applicant is a natural person and there is long standing authority for the proposition that, in general, a natural person who commenced litigation will not be required to provide security for the costs merely because that person is impecunios. The authorities were reviewed by Hill J in Fletcher v Federal Commissioner of Taxation (1992) 110 ALR 233 ("Fletcher") at 235 to 237. 12 One of the cases to which Hill J referred on the question of the exercise of the discretion to order security against a natural person, was Rajski v Computer Manufacture and Design Pty Ltd (1982) 2 NSWLR 443 ("Rajski"). Hill J distinguished the Rajski case in Fletcher. It seems to me that underlying the decision in Rajski is the fact that, as Holland J found at page 452, the activities of Dr Rajski amounted to an abuse of process because he had manipulated the financial affairs of a company so as to put its assets out of the reach of creditors. 13 Nevertheless, the decision in Rajski is one example of the exercise of a court's jurisdiction to order security and section 56 of the Federal Court Act does not confine the exercise of the jurisdiction against a natural person to instances where an abuse of process can be demonstrated. 14 I proceed on the well established basis that the matters appropriate for consideration in the exercise of discretion under section 56 consist of six factors referred to in Equity Access Limited v Westpac Banking Corporation (1989) ATPR 40-972 ("Equity Access"). Counsel for the respondent on this application relied on each of those factors. He pointed to a decision of Bennett J in Croker v Sydney Institute of TAFE [2003] FCA 942 ("Croker") as an example of a case where the court had determined that the jurisdiction to order security was enlivened notwithstanding that the applicant in the proceedings was a natural person. In that case Bennett J addressed each of the six factors referred to in Equity Access. 15 However, it seems to me that Croker is distinguishable and is of no assistance in the resolution of the present application. In particular, security was sought in Croker for the costs of an application for leave to appeal. Moreover, her Honour found that Mr Croker had not established that there were good prospects of success of the application and he had a history of unpaid costs in litigation in which he had been an unsuccessful party. 16 I turn then to the factors dealt with in Equity Access. The first is the applicant's prospects of success in the proceedings. This seems to me in the present application to be a particularly important factor. The respondent's counsel pointed to the limited nature of the evidence in support of the claim of racial discrimination. He referred me to the affidavit sworn by the applicant in the proceedings against the Calvary Hospital and he said that there was very little if any evidence which would justify the conclusion that there was racial discrimination. He accepted that the position was different in Croker where, as I have said, Bennett J found that the applicant had not established that his prospects were good. 17 However, as against this I have to take into account the remarks made by the applicant's solicitor in an email which was annexed to an affidavit filed by the respondent in support of this application. The email is dated 7 September 2004 and states that Madgwick J has said that the applicant doctor "has an arguable case of discrimination". 18 In light of this I do not think that I can find that the applicant's prospects of success are as slight as was submitted to my by the respondent's counsel on this application. 19 The second factor referred to in Equity Access is whether an order for security would shut the applicant out from pursuing his claim. The applicant did not file any evidence to suggest that this was so. However, there is some possible suggestion that he may have assets outside of the jurisdiction and it does seem to me that having regard to the fact that the hearing is listed for 11 October 2004 there may be real difficulties for the applicant in providing security assuming he is able to do so in light of the impending hearing date. 20 The matter has been listed for hearing as a matter of some urgency and it would not be desirable to impose an order which might delay the hearing of the proceedings. 21 The third factor is whether the impecuniosity of the applicant arises out of breaches alleged against the respondent. I do not think that this factor is of much relevance in the present proceedings. Although if anything, it favours the applicant. This is because there is some suggestion that his difficulties between the Calvary Hosptital and the respondent have given rise to financial strain due to his inability to see patients in the Wagga area. 22 The fourth factor is the public interest. This seems to me to turn in the present case principally upon the applicant's prospects of success. In view of what Madgwick J has apparently said, it seems to me to follow that the public interest favours the expeditious hearing of the proceedings without the impediment of an order for security of costs. The respondent pointed to evidence which suggests that the applicant would be unlikely to be able to meet a costs order in the event that such an order is made against him. 23 It was also suggested that I could take judicial notice of the pressure that will be placed on the respondent by having a costs order in its favour upon which it could not obtain satisfaction. I do not see how I can take judicial notice of anything that relates to the respondent in the absence of evidence to support this submission. 24 The applicant pointed to the provisions of section 46(5) of the HREOC Act. That subsection provides that the court cannot as a condition of granting an interim injunction require a person to give an undertaking as to damages. The applicant submitted that this suggests an underlying legislative policy that financial impediments should not be imposed upon an applicant at the price of bringing proceedings. However, section 46(5) seems to me to address the particular matter of an undertaking as to damages. 25 The fifth factor is discretionary considerations peculiar to the case in question. Here, the respondent pointed to the applicant's connection to Australia, which is not substantial. The applicant's visa has conditions attached to it which require his continuing employment in Australia. The effect of the conditions is that if he fails in the proceedings, he will be required to leave Australia within 28 days. The respondent says that accordingly, there is no practical way in which it can recover its costs from the applicant's assets because of the fact that he will depart the jurisdiction if the proceedings are unsuccessful. 26 However, these are conditions upon the applicant's right to remain in the country and they are not of his own making. I do not see why the applicant's possible impecuniosity should require him to be treated any differently from an Australian natural person. 27 The respondent pointed to evidence of the applicant's lack of assets to meet a costs order. The evidence establishes that the applicant has changed his residence several times and that he is due to move yet again from his rented accommodation in October. The accommodation is furnished accommodation and it appears that the applicant does not even own his own furniture. There was evidence on information and belief that the applicant's personal possessions have been packed into containers. However, I do not think I can infer from that evidence that the applicant is about to depart from Australia. Rather it is consistent with the possibility that he will move yet again from his rented accommodation. There was also evidence that the applicant was driving a motor vehicle which at one stage had Dubai licence plates on it and that the whereabouts of the vehicle are presently unknown. 28 Whilst all of this evidence points to the difficulties which the respondent is likely to have in enforcing any costs order it seems to me that in the exercise of my discretion I have to weigh that fact against the applicant's prospects of success. Whilst in the time available I have not been able to consider these prospects in great depth, as I said earlier, I have taken into account what apparently fell from Madgwick J at a directions hearing. This seems to me to outweigh the difficulty which the respondent is likely to have in enforcing any order for costs. 29 I should also mention under this heading, although it is probably relevant to the first issue, namely, prospects of success, that the matter has been listed for hearing for four days. This suggests that there are perceived to be real issues to be determined. Also I note that security for costs is sought upon the basis of a four day hearing. The amount of security which is sought is substantial and that is also a factor which I think goes against the exercise of the jurisdiction to order security. 30 I have also taken into account, on the question of discretionary matters, the lateness of the application. The application for security for costs was not filed until 20 September 2004. I have already referred above to the difficulties that this may impose upon the applicant if I were to order security. The evidence relied upon by the respondent discloses that the issue of security was raised as early as 2 September 2004. In light of the fact that expedition of the hearing was ordered I think that the respondent's failure to move earlier for security for costs should be taken into account against the exercise of the discretion under section 56 of the Act. 31 The sixth and final factor is the quantum of risk that the applicant cannot satisfy an order for costs. I have dealt with that under the previous heading. Although the respondent may have difficulties so that there does seem to be a real risk that the applicant will be unable to satisfy a costs order, this is outweighed in particular by the first factor referred to above. 32 For these reasons the orders that I will make are that the motion be dismissed with costs. I certify that the preceding thirty two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 30 September 2004 Counsel for the Applicant: Mr W Sharwood Solicitor for the Applicant: Cummins Hendrix Counsel for the Respondent: Mr B Shields Solicitor for the Respondent: Deacons Date of Hearing: 28 September 2004 Date of Judgment: 28 September 2004