Theo v The Secretary, Department of Family and Community Services [2005] FCA 436

FEDERAL COURT OF AUSTRALIA

Theo v The Secretary, Department of Family and Community Services [2005] FCA 436

PRACTICE AND PROCEDURE – appeal from Administrative Appeals Tribunal – security for costs – bankrupt appellant – impecunious – whether Department should be awarded security

Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules O 53 r 8

Equity Access Limited v Westpac Banking Corporation & Ors (1989) ATPR 40-972 applied Fletcher v Federal Commissioner of Taxation (1992) 110 ALR 233 referred to SOLON THEO (AKA SOL THEO) v THE SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES QUD 268 OF 2004 TAMBERLIN J BRISBANE 15 APRIL 2005

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QUD 268 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: SOLON THEO (AKA SOLON THEO)

APPELLANT

AND: THE SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

RESPONDENT

JUDGE: TAMBERLIN J

DATE OF ORDER: 15 APRIL 2005

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The application for security for costs is dismissed. 2. The costs of this application for security for costs be awarded to the successful party on the appeal. 3. The matter be listed for hearing at the earliest convenient date. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QUD 268 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: SOLON THEO (AKA SOL THEO)

APPELLANT

AND: THE SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

RESPONDENT

JUDGE: TAMBERLIN J

DATE: 15 APRIL 2005

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 This is an application by the Department of Family and Community Services ("the Department") for security for costs in the sum of $20,000 against Mr Theo, who is an undischarged bankrupt, in relation to an appeal by Mr Theo from a decision of the Administrative Appeals Tribunal ("the AAT") made on 1 December 2004, affirming the decisions of the Social Securities Appeals Tribunal ("the SSAT"). 2 The decisions affirmed by the AAT related to the calculation of the Age Pension payable to Mr Theo; the cancellation on 10 September 2003 of the Age Pension payable to Mr Theo and the rejection of claims made by Mr Theo in October 2003 through April 2004 for payment to him of an Age Pension. 3 Mr Theo filed a Notice of Appeal on 15 December 2004 seeking that the decision of the AAT be set aside and that orders be made reinstating his Age Pension and for the payment of monies underpaid in consequence of the erroneous calculation of his entitlement to arrears of Age Pension. 4 By Notice of Motion filed 15 December 2004, Mr Theo sought suspension of the AAT decision pending the hearing of the appeal. This application was heard by Cooper J on 24 December 2004 and his Honour dismissed the application for a stay. 5 By Notice of Motion filed 6 January 2005, Mr Theo sought suspension of the orders made by Cooper J and leave to appeal. Pursuant to orders made by Spender J on 9 February 2005, the hearing of this application has been stood over to a date to be fixed. No date has been fixed. 6 The Department's application for security for costs is opposed by Mr Theo on a number of grounds, including the fact that he has no assets of any substance and that if an order is made staying the hearing of the appeal until he can provide security, his appeal will be stifled and he will deprived of his entitlement to a hearing on the merits. Mr Theo has filed an affidavit that he has been diagnosed with severe cancer and he informed the Court that he suffers from serious health problems. Mr Theo further contends that his appeal from Cooper J's refusal of his application for a stay should be heard prior to the hearing of the respondent's application for security for costs on the hearing of the appeal. He says that he desperately needs suspension of the AAT's decision in order to have sufficient means to provide for himself. 7 The Department contends that Mr Theo's appeal from the decision of the AAT raises no substantive ground or indicates any error of law which has any reasonable prospect of success. It contends that Mr Theo has no assets and is bankrupt and, therefore, as it considers it likely that the appeal will fail, it would then be unable to recover any costs from Mr Theo. 8 By s 56(1) of the Federal Court of Australia Act 1976 (Cth), the Court may order an applicant in proceedings before the Court to give security for the payment of costs that may be awarded to the respondent. The discretion of the Court is broad and unfettered, but must be exercised in a judicial manner. Order 53 r 8 of the Federal Court Rules ("the FCR"), which is directed specifically to appeals from the AAT, provides that the general rule is that security for costs will not be ordered unless there are special circumstances. Impecuniosity may be one matter to take into account in considering if there are special circumstances. 9 Some of the matters which it is appropriate to consider in the exercise of the s 56 discretion are set out in Equity Access Limited v Westpac Banking Corporation & Ors (1989) ATPR 40-972 at 50,635 per Hill J. They include the following: (1) the chances of success (where the evidence has not been tested, the question is likely to be whether the applicant appears to have an arguable or triable case); (2) whether an order for security would shut the applicant out from pursuing its claim; (3) whether the impecuniosity of the applicant arises out of the breaches alleged against the respondent; (4) the public interest; (5) discretionary matters peculiar to the relevant case; (6) the quantum of risk that the applicant cannot satisfy the order for costs. 10 The Department submits that the application was brought promptly and that the impecuniosity did not arise out of the breaches alleged against the respondent. There is a high risk that the appellant will not be able to satisfy an order for costs against him. It submits that the chances of success of the appeal are remote and that there is no arguable case. The Department has advanced detailed submissions as to the lack of merit in respect of each of the grounds of appeal. In effect, the Department's contention is that the appeal is an abuse of process. It contends that the security for costs should be granted because the security sought is necessary to protect the legitimate interests of the Department in facing an appeal which has no merit. The fact that Mr Theo is impecunious is not, of itself, a sufficient reason to make an order for security for costs, however, it is an important matter to take into account: Fletcher v Federal Commissioner of Taxation (1992) 110 ALR 233 at 238 per Hill J. 11 On the hearing, Mr Theo made some brief submissions but he did not directly address the merits of the submissions of the Department going to the lack of substance in each of the grounds of appeal, although he did partially develop his estoppel ground. 12 Mr Theo has provided me with copies of affidavits on which he relies and other material. He submits that the Department and the legal advisers were aware that he was an undischarged bankrupt long before the court cases were commenced. He contends that the Department has engaged in legal entanglements hoping to recover costs. He asserts that he cannot be held responsible for what he describes as erroneous and speculative undertakings by the Department and its legal advisers. He made allegations that the Department's actions are designed to intimidate him and make him to abandon his efforts to claim his rights. He says that the Department should be aware of the risks it incurred in engaging in litigation with an undischarged bankrupt and submits that it should withdraw. He asserts that the principle of estoppel restrains the Department from any expectation for security for costs in view of their knowledge in having engaged in litigation without any security on previous occasions. 13 On the evidence, it is apparent that Mr Theo has no assets from which to meet the costs of the Department if he is unsuccessful in his appeal. In my opinion, the probable effect of an order for security for costs will be that the appeal by Mr Theo will be stayed indefinitely. I note that the index for the appeal papers was settled on 24 February 2004, which is almost two months ago, and that an order for an expedited hearing has already been made and the matter tentatively listed for hearing on 7 April 2005. This time has now passed, but the matter should be re-listed for hearing within the next four weeks. I am informed by the Registry of the Court that the appeal papers will be available in the next week or so. 14 I do not consider it appropriate to make any comments on the merits of the grounds in the Notice of Appeal, however, I note that Mr Theo has not made any submissions to me today which directly deal with the merits of the submissions advanced for the Department in relation to the grounds sought to be relied on by Mr Theo. 15 Mr Theo is presently not receiving a pension and it is in his interests, and that of the Department, that the application be heard and decided promptly. In view of the expedited hearing, I do not think it is appropriate to hear the appeal against the refusal of the stay by Cooper J on 24 December 2004. This matter can be dealt with on the hearing of the appeal from the AAT decision. I direct that the appeal in relation to the decision of Cooper J and the application for stay should be heard together on the date fixed for hearing. 16 Accordingly, I dismiss the application for security for costs. Costs on this application will be awarded to the successful party on the appeal. The above means that it is not necessary to make any comment as to the adequacy or otherwise of the amount of $20,000 claimed.