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Australian Anti Ice Campaign Pty Ltd v Alcohol And Drug Foundation Inc[2024] QCA 161
Australian Anti Ice Campaign Pty Ltd v Alcohol And Drug Foundation Inc[2024] QCA 161
SUPREME COURT OF QUEENSLAND
CITATION: | Australian Anti Ice Campaign Pty Ltd v Alcohol And Drug Foundation Incorporated [2024] QCA 161 |
PARTIES: | AUSTRALIAN ANTI ICE CAMPAIGN PTY LTD ACN 609 511 695 (appellant) v ALCOHOL AND DRUG FOUNDATION INCORPORATED ABN 66 057 731 192 (first respondent) GEOFFREY MUNRO (second respondent) |
FILE NO/S: | Appeal No 5803 of 2024 SC No 10711 of 2022 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane – Unreported, 8 April 2024 (Bradley J) |
DELIVERED ON: | 3 September 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 15 August 2024 |
JUDGES: | Bond and Flanagan and Brown JJA |
ORDER: | The appeal is dismissed with costs. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – where the appellant was ordered to pay the respondents security for costs in the amount of $110,000 – where the appellant and first respondent were both charitable organisations – where the appellant was self-represented, and the first respondent had incurred significant legal costs in defending the proceedings, largely due to the appellant’s inability to produce appropriate pleadings – where the appellant contends that the learned primary judge gave too much weight to the status of the first respondent as a charity – where the appellant contends that the learned primary judge failed to have sufficient regard to the stultifying effect that the order would have on the appellant’s ability to conduct the proceedings, and the interests of justice generally – whether the learned primary judge, in making the order, had appropriate regard to these considerations Uniform Civil Procedure Rules 1999 (Qld), r 670, r 671, r 672 Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd (2021) 9 QR 141; [2021] QCA 198, applied Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114, cited House v The King (1936) 55 CLR 499; [1936] HCA 40, cited Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, cited Pearson v ING Bank (Australia) Ltd (2023) 14 QR 170; [2023] QSC 86, considered Rigato Farms Pty Ltd v Ridolfi [2001] 2 Qd R 455; [2000] QCA 292, applied Rozenblit v Vainer (2018) 262 CLR 478; [2018] HCA 23, cited |
COUNSEL: | The appellant appeared on its own behalf with G Ivers assisting A L Low for the respondent |
SOLICITORS: | The appellant appeared on its own behalf Moulis Legal for the respondents |
- [1]BOND JA: I agree with the reasons for judgment of Flanagan JA and the order proposed by his Honour.
- [2]FLANAGAN JA: This is an appeal from orders requiring the appellant to provide security for the respondents’ costs of the proceedings in the amount of $110,000.00. The orders further provide that the security is to be paid into court or provided in a form acceptable to the Registrar within three months, and that the proceedings be stayed until security is provided.
- [3]The granting of these orders constituted an exercise of discretion by the learned primary judge under rr 670, 671 and 672 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). Rule 670(1) provides that on application by a defendant, the court may order the plaintiff to give the security the court considers appropriate for the defendant’s costs of and incidental to the proceeding. Rule 670(2) provides that r 670(1) is made subject to the provisions of the UCPR, particularly rr 671 and 672.
- [4]Rule 671 relevantly provides that the court may order a plaintiff to give security for costs only if the court is satisfied that:
- “(a)the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or
- …
- (h)the justice of the case requires the making of the order.”
The respondents’ application for security expressly relied on r 671(a) and (h).
- [5]Rule 672 states the discretionary factors for security for costs and provides:
- “In deciding whether to make an order, the court may have regard to any of the following matters—
- (a)the means of those standing behind the proceeding;
- (b)the prospects of success or merits of the proceeding;
- (c)the genuineness of the proceeding;
- (d)for rule 671(a)—the impecuniosity of a corporation;
- (e)whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;
- (f)whether the plaintiff is effectively in the position of a defendant;
- (g)whether an order for security for costs would be oppressive;
- (h)whether an order for security for costs would stifle the proceeding;
- (i)whether the proceeding involves a matter of public importance;
- (j)whether there has been an admission or payment into court;
- (k)whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
- (l)whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
- (m)the costs of the proceeding.”
- [6]The notice of appeal does not contain any numbered grounds of appeal. An analysis of the notice of appeal, the appellant’s written submissions and its oral submissions, reveals that the appellant contends the primary judge committed five errors; namely, that his Honour:
- failed to take into account or give sufficient weight to whether the respondents’ conduct was in trade or commerce (Ground 1);
- failed to take into account or give sufficient weight to the appellant’s submissions before the primary judge that the appellant had demonstrated high prospects of success for its claim in misleading and deceptive conduct (Ground 2);
- found that there was no evidence to support a finding that the appellant’s financial position was the result of conduct engaged in by the respondents (Ground 3);
- found that the appellant’s 30 June 2023 financial statement recorded higher funds being available to the appellant than was the case as at 30 September 2017, which was immediately before the publications upon which the appellant grounds its claim (Ground 4);
- gave considerable weight to the fact that the first respondent is a charity (Ground 5).
- [7]While not specifically stated in the notice of appeal, the appellant’s overarching complaint is that the primary judge erred by ordering security because it has the effect of stultifying the proceedings, which gives rise to a substantial injustice. The making of the order was therefore so unreasonable or plainly unjust that this Court may infer error.
- [8]None of these grounds seek to challenge the finding that the prerequisite for security for costs in r 671(a) was satisfied. Nor is there any challenge to the form or amount of security ordered.
- [9]For the reasons which follow, the appellant has failed to establish any specific error. Further, even though the order for security may stultify the proceedings, the appellant has failed to establish that the order gives rise to a substantial injustice.
- [10]The appellant accepts that this is an appeal from an exercise of discretion, and it must therefore demonstrate the kind of error identified in House v The King.[1] Further, given this is an appeal from an interlocutory exercise of discretion in a matter relating to practice and procedure, it calls for an even greater exercise of appellate restraint. As observed by de Jersey CJ in Rigato Farms Pty Ltd v Ridolfi:
“… appeal courts should be especially circumspect about interfering with decisions on matters of practice and procedure. As put by the High Court … ‘particular caution’ must be exercised. The constraints confirmed in House v. The King are real constraints, to be respected not perfunctorily discarded, and they are especially powerful, in limiting an appellate court, in a case of this character.”[2]
(citations omitted)
- [11]The requirement for an even greater exercise of appellate restraint in appeals such as the present was also considered by Bond JA in Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd.[3] His Honour observed:
“In appeals from an exercise of judicial discretion in an interlocutory decision concerning questions of practice and procedure, although there is no absolute rule and each case must be considered in light of its own particular circumstances, generally an appellate court will not interfere unless, in addition to error of principle, the appellant demonstrates that the order will work a substantial injustice to one of the parties…”[4]
(citations omitted)
- [12]In Pearson v ING Bank (Australia) Ltd,[5] Cooper J summarised the relevant principles in considering an application for security for costs pursuant to rr 670, 671 and 672 of the UCPR:
- “[39]Rule 670(1) confers a discretion in broad terms to order that a plaintiff give security the Court considers appropriate for a defendant’s costs.
- [40]Rule 670(2) provides that the discretion must be exercised subject to the provisions of the UCPR, particularly rr 671 and 672. Further, the discretion must be exercised in the way which best suits the interests of justice in the particular circumstances and with the obligations set out in r 5 kept firmly in mind.[6]
- [41]Rule 671 sets out eight circumstances which enliven the Court’s jurisdiction to order security for costs under the UCPR. As already noted, ING submitted that the prerequisite for security for costs stated in r 671(h) is established in the present circumstances: that the Court should be satisfied that ‘the justice of the case requires the making of the order’.
- [42]Rule 672 sets out various matters to which the Court may have regard in deciding whether to exercise the discretion to make an order for security for costs. These discretionary factors are also relevant to the Court’s consideration whether the prerequisite for security for costs stated in r 671(h) is established.[7]
- [43]The matters stated in r 671 and the discretionary considerations stated in r 672 also provide guidance about matters which may be relevant to the exercise of the Court’s inherent jurisdiction.[8]
- [44]However, these are not exhaustive of the factors that may be considered in deciding whether to order security for costs pursuant to either r 670 or the Court’s inherent jurisdiction.[9] The discretion to order security for costs is unfettered. The factors relevant to the exercise of the discretion will vary from case to case and the weight to be given to any circumstances depends upon its own intrinsic persuasiveness and its impact upon other circumstances which must be weighed.[10]”
- (citations in original)
Relevant background
- [13]The appellant and the first respondent are both registered charities which operate in the anti-drug industry. The appellant’s charitable purpose is to reduce the use of methamphetamine in the Australian population, including by means of educational workshops in high schools, prisons, youth justice and workplace settings. These workshops are presented by people with lived experience of drug abuse. In this respect, the appellant was established as a charity by its Chief Executive Officer, who herself has recovered from a two-year methamphetamine addiction. The first respondent has taken a different approach and does not support the use of lived experience educators being used in particular settings. The first respondent’s differing approach was the subject of a published article on its website on 14 September 2017 concerning the appellant and its school workshops. The article was entitled “Telling war stories is not good drug education”. According to the appellant, the website article contained a number of false representations, including that the appellant’s anti-drug program is delivered to primary school students and involves presenters simply telling their story of addiction. The article further asserted that the use of presenters who have recovered from drug addiction has been proven to be ineffective or counterproductive, and that it carries the risk of encouraging young people to engage with drugs.
- [14]On 27 September 2017, the first respondent published a PowerPoint presentation on its website entitled “Drug education in schools: best practice and the role of [Local Drug Action Teams]”. The appellant alleges that this PowerPoint presentation also contained false statements. On the same date, 27 September 2017, the first respondent also published a video presentation on its website entitled “Drug education in schools: Best practice and the role of LDATs’”. The appellant alleges that this video presentation also contained false representations.
- [15]On 7 September 2022, the appellant filed a claim and statement of claim. An amended statement of claim was filed on 9 March 2023, a further amended statement of claim was filed on 9 June 2023, a second further amended statement of claim was filed on 12 June 2023 and a third further amended statement of claim was filed on 1 February 2024. Prior to the hearing of the application before the primary judge, the appellant, under cover of a r 445 letter dated 6 March 2024, provided another proposed further amended statement of claim.
- [16]The appellant seeks declarations that the first respondent’s publications constitute injurious falsehood and are misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law. The pleading further alleges that the respondents acted with malice in making the publications. Injunctive relief is also sought. The appellant seeks damages pursuant to s 236 of the Australian Consumer Law or under common law in the amount of $2,320,634.00 for loss of a valuable commercial opportunity to expand its school workshop program nationally, as well as a loss of revenue of $130,000.00 from various institutions together with $185,000.00 for the loss of a valuable commercial opportunity to work with LDATs.
- [17]On 11 December 2023, Freeburn J ordered that the second further amended statement of claim filed on 12 June 2023 be struck out in its entirety with leave to replead. A costs order was made in favour of the respondents for costs thrown away as a result of the further amended statements of claim filed on 9 and 12 June 2023.[11] This costs order remains unsatisfied by the appellant.[12]
- [18]On 19 March 2024, the respondents filed an application seeking summary judgment pursuant to r 293 or, alternatively, that certain paragraphs of the third further amended statement of claim filed on 1 February 2024 be struck out and an order for security for costs.
The primary judge’s ex tempore reasons
- [19]The primary judge first dealt with the summary judgment application, noting that the appellant’s claims were for damages for injurious falsehood and for misleading and deceptive conduct in breach of the Australian Consumer Law. His Honour observed that the application for summary judgment required the court to be satisfied that there exists no real prospect of the appellant succeeding in its claims against the respondents. As already observed, prior to the application being filed by the respondents on 19 March 2024, the appellant had provided a proposed further amended statement of claim which had not been filed at the time of the hearing of the application. By reference to this pleading, his Honour identified that the appellant had alleged eight false representations. His Honour observed:
“It is plain to me that some of those representations, as pleaded, would appear, even at first glance, to be highly damaging about the person about whom they are written or spoken.”[13]
His Honour also considered that the consequential damage would “seem almost obvious”.[14]
- [20]His Honour noted that the various versions of the statement of claim, rather than supporting an inference that the appellant is incapable of pleading its case, was more readily explicable by the fact that the appellant is not legally represented. Both before the primary judge and this Court, Mr Ivers was granted leave to appear for the appellant without objection. At various times he has been an employee of the appellant or a volunteer. This is to be contrasted with the position of the respondents, who are legally represented. The second respondent is an employee of the first respondent.
- [21]As to the strikeout application concerning various paragraphs of the third further amended statement of claim filed on 1 February 2024, his Honour noted that in the appellant’s r 445 letter (in response to the respondents r 444 letter), a further pleading had been provided. As no r 444 letter had been sent in relation to the proposed pleading, his Honour did not deal further with the strikeout application.
- [22]As to the application for security for costs, his Honour observed that in the course of argument he had raised with each party his concern that by engaging in litigation, resources were being diverted from each parties’ charitable objects and purposes. This observation was made by his Honour in the context of encouraging both parties to specifically consider whether the litigation was within the terms of their charitable objects and purposes.[15]
- [23]His Honour referred to evidence showing that the respondents had incurred in excess of $88,000.00 in legal fees over a period of approximately two years. This was in circumstances where the appellant had not provided a pleading which would permit the matter to proceed to a hearing. The $88,000.00 in legal fees included an estimate of the costs that could be assessed on the ordinary basis of $53,000.00 in relation to the costs order made by Freeburn J on 11 December 2023.
- [24]The primary judge proceeded on the basis that, in accordance with r 671(a), the appellant is a corporation and there was reason to believe that it would not be able to pay the respondents’ costs if ordered to pay them. In this respect, his Honour made reference to the appellant’s financial statements dated 5 February 2024, which disclosed that the appellant had retained equity of about $160,000.00. Its income during the financial year ending 30 June 2023 was $226,000.00 and its expenditure over that period was approximately $190,000.00.
- [25]His Honour noted Mr Ivers’ submission that much of the retained funds of the appellant are represented by a B2B Barter account with a balance of $58,000.00 and a Qoin account with a balance of about $96,500.00 (noting that there was some uncertainty about the true value of the Qoin account balance). His Honour further noted Mr Ivers’ statement that the appellant planned to raise a fighting fund for the purposes of meeting its own costs in conducting the litigation. As correctly noted by the primary judge, this was not a basis on which a security for costs application could be determined.
- [26]Before his Honour there was evidence from the respondents’ solicitors (which was unchallenged) that the likely costs the respondents would incur if the matter were to proceed to trial was in the range of $110,000.00 to $192,000.00.
- [27]His Honour considered that it would be unsatisfactory that a charity, in the position of the first respondent, “would be put in a position where, in order to defend itself, it would incur costs of that order and not have any reliable means on which to recover any part of those costs should it be successful in a Defence.”[16]
- [28]As to the appellant’s submission before the primary judge that its present financial position was the result of the conduct engaged by the respondents, his Honour observed:
“There is no evidence before the Court to that effect. As I understood the financial statements, they indicate the position of the plaintiff has been, to some extent, improving in the 30 June 2023 accounts over those that are reported for 30 June 2022. And both figures record much higher funds being available to the plaintiff than was the case at 30 September 2017, immediately before the publications upon which the plaintiff grounds its claim.”[17]
- [29]His Honour considered that it was in the interests of justice that the first respondent, as a charity, “should not be exposed to incurring further [legal] costs that divert it from its charitable purposes without at least some security that it might recover those costs should it be successful.”[18]
- [30]His Honour gave specific consideration to the risk that ordering security for costs might stifle the appellant’s ability to proceed with its action to trial. His Honour noted, however, that:
“In the broader context of the relationships between the parties to the proceeding, it seems to me that balancing the interest of those who ought to benefit from the activities of two charities, that the ordering of security might at least cause the parties to reflect upon whether the manner in which this litigation has been commenced and conducted on both sides should continue.”[19]
- [31]His Honour referred to two further matters. First, his Honour considered that by ordering the provision of security, the appellant would understand, in a real and direct way, what the consequences are for a party who comes to court and seeks to sue another party. Secondly, his Honour considered that the balancing of positions was important in circumstances where the appellant has not been legally represented and has therefore conducted the proceeding without incurring much in the way of legal costs.
No error has been established requiring interference with the primary judge’s exercise of discretion
- [32]The errors sought to be established by the appellant in relation to Grounds 1 and 2 all constitute an alleged failure on the part of the primary judge to make specific findings that the conduct of the respondents was in trade or commerce and constituted conduct that was misleading or deceptive or likely to mislead or deceive. The asserted errors are misconceived. The primary judge was dealing with an interlocutory application in a proceeding. His Honour was not required, nor would it have been appropriate, to make such findings at an interlocutory stage.
- [33]One of the discretionary factors for security for costs stated in r 672(b) is that the court may have regard to the prospects of success or merits of the proceeding. Having refused the application for summary judgment pursuant to r 293, his Honour was not satisfied that the appellant had no real prospect of succeeding on all or part of its claim. Further, his Honour was not satisfied that there was no need for a trial of the claim or at least part of the claim. It follows that in granting the application for security for costs, his Honour proceeded on the basis that the appellant had some prospects of succeeding on all or part of its claim. A court, in having regard to the prospects of success or merits of the proceeding in deciding an application for security for costs, is not required to make any final determination on questions of law or fact, which are ultimately matters for trial.
- [34]As to Grounds 3 and 4, the primary judge correctly identified that there was no evidence which supported the appellant’s submission that its financial position was the result of the respondent’s conduct. The onus was on the appellant to persuade the primary judge that its impecuniosity was caused by the respondents’ conduct.[20]
- [35]The fact that the appellant did not discharge this onus with appropriate evidence is sufficient to dispose of Grounds 3 and 4. His Honour’s reference to the appellant’s financial statements suggesting an improvement from 30 September 2017 to 30 June 2023 was merely an observation that, in the absence of any evidence that the respondents’ conduct caused the appellant’s impecuniosity, the appellant’s own accounts appeared to suggest otherwise. The appellant’s complaint that his Honour erred in this regard does not alter the appellant’s failure to discharge its onus.
- [36]As to Ground 5, the appellant asserts that the primary judge should not have given any special consideration to the first respondent’s position as a charity in circumstances where it “has been shown to have made false, misleading and damaging public statements about another corporation”.[21] This submission cannot be accepted.
- [37]First, it was a matter for the primary judge as to what weight should be given to this consideration.[22] Secondly, it was not established, in the context of an interlocutory application, that the first respondent had engaged in misleading or deceptive conduct, nor was it established that such alleged misleading or deceptive conduct had caused damage to the appellant. At the time of the hearing of the interlocutory application before the primary judge, the appellant had not yet been able to plead a proper case. Thirdly, his Honour made reference to both the appellant and the first respondent being charitable organisations. His Honour’s concern was that monies being expended in relation to the litigation did not further the charitable objects and purposes of each party’s charity. It was in this context that his Honour considered that it was in the interests of justice that the first respondent should not be exposed to incurring legal costs that diverted funds from its charitable purposes without the appellant providing security. These concerns identified by the primary judge were appropriate considerations. As already observed, the discretionary factors listed in r 672 are not exhaustive. Fourthly, the fact that the first respondent is a charity was a relevant consideration in circumstances where it had already incurred $88,000.00 in legal costs. These costs were primarily incurred because of the appellant’s inability to produce a proper statement of claim. As observed by Keane J in Rozenblit v Vainer:
“Litigation is sufficiently stressful and expensive for all concerned without the unnecessary aggravations of additional cost, stress, distraction and delay occasioned by inefficiency, incompetence or sheer disregard of the rules. To the extent that the contention advanced on behalf of [the plaintiff] reflects an assumption that inefficiently or incompetently conducted litigation, and the waste in terms of time and money inflicted upon the other party or parties, is nevertheless consistent with the promotion of access to justice because the end may ultimately justify the means, that assumption must be rejected. Inefficient or incompetent conduct of litigation may cause injustice even if it is not intended to do so. Litigation that is conducted inefficiently, incompetently or in disregard of the rules by one party is no less oppressive to the other party because it is not intended to be oppressive. And it is no less oppressive because the litigant who engages in such conduct is impecunious.”[23]
- [38]None of the errors asserted by the appellant have been established. Further, in circumstances where the primary judge gave specific consideration to issues concerning the effect of the order on both the appellant’s ability to conduct the proceedings and the interests of justice more generally, the appellant has not established that the exercise of discretion was so unreasonable or plainly unjust as to permit this Court to infer error in the absence of specific error.
Disposition
- [39]The appeal should be dismissed with costs.
- [40]BROWN JA: I agree with the reasons of Flanagan JA and agree that the appeal should be dismissed with costs. I just wish to add one matter in relation to the consideration of the charitable status of the appellant and first respondent.
- [41]As Flanagan JA has stated in his judgment, the matters to which the Court may have regard under r 672 of the Uniform Civil Procedure Rules 1999 are not exhaustive and the learned primary judge did not err in considering the charitable status of the parties. I agree that it was a relevant consideration in this case given that there was a clear question as to whether the appellant could properly fund the litigation within its charitable objects, thus potentially increasing the risk that the appellant could not meet any costs order made against it if unsuccessful. This is particularly so given that the first respondent had a costs order already in its favour which was unpaid. While I have some doubt as to the relevance of the effect of the litigation on those who ought to benefit from the activities of the charity in terms of the grant of security, it is unnecessary for me to reach any concluded view in that regard. That consideration should in any event be a matter considered by any charity before they venture down the path of litigation. The first respondent had incurred significant legal costs in defending the matter, where a large proportion of those costs had been incurred in seeking to ensure that the appellant delivered a proper statement of claim and the first respondent’s avenues for meeting legal costs are potentially constrained by its charitable status. That matter was, as Flanagan JA observes, relevant to the primary judge’s considerations and what the interests of justice required in this case.
Footnotes
[1] (1936) 55 CLR 499, 504–505.
[2] [2001] 2 Qd R 455, [23].
[3] (2021) 9 QR 141 (Fraser JA and Wilson J agreeing) at [12]–[14] (“Adeva”).
[4] Adeva, [13].
[5] (2023) 14 QR 170.
[6] Equititrust Ltd v Tucker [2020] QSC 269, [42].
[7] Robson v Robson [2008] QCA 36, [32]–[33], [36] and [61] (Robson).
[8] Mbuzi v Hall [2010] QSC 359, [57] (Mbuzi).
[9] Ibid.
[10] KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189, 196-197 citing Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405, 415.
[11] Affidavit of Emily Jane Jennings, filed 19 March 2024, para 15(b).
[12] Affidavit of Emily Jane Jennings, filed 19 March 2024, para 43.
[13] RB, Book 1, page 6, lines 31–33.
[14] RB, Book 1, page 6, line 42.
[15] RB, Book 1, page 8, lines 17–28.
[16] RB, Book 1, page 9, lines 36–38.
[17] RB, Book 1, page 9, lines 40–46.
[18] RB, Book 1, page 10, lines 8–11.
[19] RB, Book 1, page 10, lines 23–29.
[20] Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114 at [26].
[21] Appellant’s Amended Outline of Argument, [54].
[22] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 41–42 (per Mason J).
[23] (2018) 262 CLR 478, 491–492 [42].