Ceil Comfort Insulation Pty Ltd v ARM Equipment Finance Pty Ltd

[2001] NSWSC 28

Reported Decision: (2001) 159 FLR 310

New South Wales

Supreme Court

CITATION:	Ceil Comfort Insulation Pty Ltd & Ors v ARM Equipment Finance Pty Ltd & Anor [2001] NSWSC 28 revised - 2/02/2001
FILE NUMBER(S):	SC 11842/00
HEARING DATE(S):	30/11/00
JUDGMENT DATE:	2 February 2001
PARTIES :	Ceil Comfort Insulation Pty Ltd & Ors v ARM Equipment Finance Pty Ltd & Anor
JUDGMENT OF:	O'Keefe J

COUNSEL :

Mr D Nelson - Plaintiffs
Mr M Bradford - Defendants

SOLICITORS:

For Plaintiffs
Margaretic Barristers & Solicitors
Northbridge WA

BY THEIR AGENTS
Carmody & Co
Burwood NSW

For Defendants
Raj Lawyers
Sydney

CATCHWORDS:

Practice - Security for costs - Plaintiff ordinarily resident outside New South Wales - Rules of Court - Inherent jurisdiction - Australian Constitution - Disability - Discrimination - Subject of the Queen - Resident in any State - Immunity - Effect on validity of law - Discretion

LEGISLATION CITED:

Supreme Court Rules Pt 52 r 2
Commonwealth of Australia Constitution s.117;s.16; 34; s.51 (xix); s.75(iv); s.90
Interpretation Act, 1987 s.21

CASES CITED:

Australian Building Construction Employees' and Builders Labourers' Federation and Ors v Commonwealth Trading Bank and Ors (1976) 2 NSWLR 371
Rajski v Computer Manufacture and Design Pty Ltd (1982) 2 NSWLR 443
Street v Queensland Bar Association (1989) 168 CLR 461
Nolan v Minister for Immigration and Ethnic Affairs (1988) 165 CLR 178 at 186
Bonser v La Macchia (1968-1969) 122 CLR 177
Matchett & Anor v Deputy Commissioner of Taxation [2000] NSWSC 975 (Supreme Court, unreported 23 October 2000)
Regina v Foreign Secretary Ex Parte Indian Association (1982) QB 892 at 928
Australian Temperance and General Mutual Assurance Society Ltd v Howe (1922) 31 CLR 290
Cox v Journeaux (1934) 52 CLR 282 at 283
Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191
Commissioner of Taxes v Parks (1933) St.R.Qd. 306 at 315-6
Henry v Boehm (1973) 128 CLR 483
Davies and Jones v Western Australia (1904) 2 CLR 29

DECISION:

Motion dismissed; Costs of the motion to be plaintiffs costs in the action.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

O’KEEFE J

DATE : 2 February 2001

No: 11842/2000 - CEIL COMFORT INSULATION PTY LIMITED & ORS v ARM EQUIPMENT FINANCE PTY LTD AND ANOR

JUDGMENT

1    HIS HONOUR:

A. INTRODUCTION

2    ARM Equipment Finance Pty Ltd and Corporate Acceptance Pty Ltd (the defendants) are defendants in an action by Ceil Comfort Insulation Pty Ltd (Ceil), Anthony John Iezzi and Gabriel Iezzi (the Iezzis) (collectively referred to as the plaintiffs) in which the plaintiffs seek an order that a judgment for $29,009.45, including professional and court costs, given by a Local court on 21 June, 2000 at the Downing Centre, Sydney, be set aside. On 22 November 2000, as a condition of obtaining a further adjournment of the matter, the plaintiffs were ordered to pay into court an amount of $29,009.45 to abide the outcome of the action. This was done.

3 The defendants have now moved for an order that the plaintiffs provide security for costs on the basis that Ceil is a Western Australian company, i.e. that its registered office is in Western Australia and that the Iezzis are resident in Western Australia. The defendants’ motion is based on Pt 53 r (2) of the Supreme Court Rules which relevantly provides as follows:

“ (1) Where, in any proceedings, it appears to the court on the application of a defendant -
(a) that a plaintiff is ordinarily resident outside the state;
…
the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings …”.

The motion also calls in aid the inherent jurisdiction of the Court.

4 Counsel for the plaintiffs has resisted the application, relying on the decision of Helsham J in Australian Building Construction Employees’ and Builders’ Labourers’ Federation and Ors v Commonwealth Trading Bank and Ors (1976) 2 NSWLR 371, the only authority cited in the argument on the motion by either counsel. In that case the second plaintiff was a natural person and a claim for security for costs against him was based solely on the fact that he was a resident of South Australia. In dismissing the application Helsham J held that the rule, insofar as it relates to a resident of another State, was inconsistent with the prohibition contained in s 117 of the Constitution of the Commonwealth (the Constitution). That section provides:

“A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State.”

5    Helsham J was of the opinion that he could not read the rule:

“… other than as imposing upon such a resident a discrimination, namely the liability to an order for security, which would not be imposed upon him if he were a resident in New South Wales” (supra at 373)

Furthermore, in relation to the inherent jurisdiction of the court to order security for cost he said:

“… but if I hold - as I have - that I cannot, under the rule to which I have referred, make an order for security for costs because the Constitution prevents this from being done, it seems to me that I would be equally fettered in exercising the inherent jurisdiction of this Court to order security for costs.” (supra at 374)

6 Although the headnote to the report of the decision refers to the rule in question being held to be “ultra vires and void”, such terminology is not in fact used by Helsham J. He says that the discrimination imposed by Pt 53 r 2(1)(a) “is not permitted, since s 117 was enacted” (supra at 373).

7 In Rajski v Computer Manufacture and Design Pty Ltd (1982) 2 NSWLR 443 Holland J determined that the inherent jurisdiction of the Court to make orders for security for costs enured the passing of the Supreme Court Act 1970 and, having referred to Australian Building Construction Employees’ and Builders’ Labourers’ Federation v Commonwealth Trading Bank went on to say:

“… I would respectfully offer the view that there is no discrimination between residents of different States involved in the inherent jurisdiction of the Court to award security for costs as that case seems to suggest.” (supra at 451 )

8 There is thus a disagreement between the two cases as to the ambit and operation of s.117 of the Constitution in relation to the jurisdiction or power of the Court to make orders for security for costs against a plaintiff ordinarily resident outside New South Wales.

B. To Whom does s.117 of the Constitution apply?

9 Section 117 of the Constitution is a constitutional guarantee of certain individual freedoms as for all subjects of the Queen resident in a State of Australia. This is effected by the creation of an immunity for such persons from any disability or discrimination in another State which would not be equally applicable if that person were a resident in such other State.

10 The opening words of the section, namely “a subject of the Queen”, repeated as they are later in the section, are significant. The Annotated Constitution of the Commonwealth (Quick and Garran, 1901 Ed p.766) notes that the forerunner of s.117 in the original Bill of 1891 and the later draft of 1897 referred to privileges and immunities of “citizens” of the States, thereby adopting the wording of the Constitution of the United States. However, the concept of citizenship of a State was difficult in legal theory in Australia and as the founding fathers of the Constitution were not prepared to define citizenship in the Constitution, the phrase “a subject of the Queen” was adopted instead.

11 “A subject of the Queen” is not a phrase apt to describe a corporation (P H Lane, The Australian Federal System, 2nd Ed p.907). The phrase “a subject of the Queen” is also used in s.34 of the Constitution and, by incorporation, in s.16, as one of the qualifications of members of the Houses of Parliament. It would not be sensible to regard a corporation as falling within this qualification nor would it be appropriate to give the phrase in question a different meaning in ss. 16 and 34 on the one hand and 117 on the other. In addition, the concept that a corporation could be described as a subject of the Queen is not one which has found favour with the Courts. This is exemplified in Street v Queensland Bar Association(1989) 168 CLR 461, in which Brennan J stated that “(i)ts protection is limited to natural persons” (supra at 504). This view expressed by Brennan J accords with the early United States decisions on the equivalent provision in the Constitution of the United States, (Quick and Garran, op. cit. p.777).

12    Moreover, in Street v Queensland Bar Association it was said by Mason CJ that :

“the form and language indicate that s.117 is directed towards individuals and their protection from disability or discrimination of the kind contemplated by the section” (supra at 486) (bold added)

13 Brennan J also said that the phrase “a subject of the Queen” connotes “the Queen in right of Australia” (supra at 505) and was the antonym of “alien” in s.51(xix) of the Constitution. That term encompasses persons who are not citizens of Australia even though they may be British subjects or subjects of the Queen by reason of their citizenship of some other country. (Nolan v Minister for Immigration and Ethnic Affairs) (1988) 165 CLR 178 at 186). This conclusion flows from the emergence of Australia as an independent and sovereign nation state (Bonser v La Macchia (1968 - 1969) 122 CLR 177 at 189; see also Matchett and Ors v Deputy Commissioner of Taxation [2000] NSWSC 975, Supreme Court unreported 23 October, 2000) and the recognition that “the Queen of the United Kingdom is entirely independent and distinct from” the Queen of Australia (Regina v Foreign Secretary Ex parte Indian Association (1982) QB 892 at 928).

14 Deane J took the view that the phrase “a subject of the Queen” in s.117 of the Constitution:

“must be understood, in contemporary circumstances, as a reference to a subject o f the Queen of Australia, that is to say, as a reference to an Australian citizen ” (supra at 525) (bold added)

15 Dawson J said that s.117:

“is unusual in that it is one of the few provisions of the Constitution which speaks in terms of individual freedoms rather than of legislative power. (supra at 541) (bold added),

and

“must be taken to refer to a subject of the Queen in right of Australia and hence an Australian citizen ” (id)(bold added)

16    Toohey J said that:

“ ‘Subject of the Queen’ is now to be understood as referring to the Queen in right of Australia. Whether a person living in Australia , but not a natural born or naturalised citizen is entitled to the protection accorded by s.117 is a matter to be considered when the occasion arises.” (supra at 554) (bold added)

17    Brennan J also left open the question as to whether or not a subject of the Queen was synonymous with the term “Australian citizen” (supra at 505).

18    The view expressed by Gaudron J was that:

“Within our Federal framework it is the status of being a ‘subject of the Queen’ (those words being understood to refer to a subject of the Queen in right of Australia) and resident within a State which signify membership of the body politic constituting that State. That membership carries with it rights to participate in the political processes of the State.” (supra at 572)

19 As can be seen from the foregoing, each of the judgments of Mason CJ, Deane, Dawson, Toohey and Gaudron JJ is couched in such a way as to accept implicitly that a corporation does not qualify for the protection afforded by s.117, a proposition stated explicitly by Brennan J.

20 A like conclusion is reached by reference to whether a corporation can be said to be “resident in a State” within the meaning of s.117. The word “resident” is also to be found in s.75(iv) of the Constitution. That section confers original jurisdiction on the High Court, inter alia, in matters “between residents of different States or between a State and a resident of another State.” The phrase as it occurs in s.75(iv) has been likened to s.117 in that it has been said in relation to it that “(a)n instructive parallel expression occurs in s.117” (Quick and Garran op. cit. at 776; see also P H Lane op. cit. P.907)

21 In Australian Temperance and General Mutual Assurance Society Ltd v Howe (1922) 31 CLR 290 the High Court held that the words “residents” and “resident” in s 75 (iv) refer to natural persons only and not to artificial persons or corporations. This decision was applied by Dixon J sitting in the original jurisdiction of the High Court in Cox v Journeaux (1934) 52 CLR 282 at 283. An appeal to the Full High Court from his decision was dismissed (Gavan Duffy CJ, Starke, Evatt and McTiernan JJ (1934) 52 CLR 285.

22 In Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191 Windeyer J, also sitting in the original jurisdiction of the High Court, decided that the Union Steamship Co of New Zealand Ltd “being a corporation, could not be a ‘resident’ of Victoria within the meaning of s 75 (iv) of the Constitution”. In so deciding he relied on Australian Temperance and General Mutual Life Assurance Society Ltd v Howe and Cox v Journeaux. An appeal from Windeyer J’s decision was dismissed by the Full High Court (Barwick CJ, Kitto, Menzies and Owen JJ (1969) 119 CLR 206).

23 In Commissioner of Taxes v Parks (1933) St.R.Qd. 306 at 315-6 the Full Court of Queensland equated the meaning of the word “resident” in s 75 (iv) of the Constitution with the same word in s 117.

24 Furthermore, in Henry v Boehm (1973) 128 CLR 483 Gibbs J, repeated a statement of Griffith CJ in Davies and Jones v Western Australia (1904) 2 CLR 29 at 39 and, having pointed out that the word “resident” can be used in a variety of senses, referred to Commissioner of Taxes v Parks, with which he stated his agreement. Thus the correlation between the relevant words used in s 75 (iv) and s 117 appears to have been accepted by Gibbs J.

25    Although the decision of the majority in Henry v Boehm was expressly overruled in Street v Queensland Bar Association, that does not in my opinion detract from the correlation made by Gibbs J in Henry v Boehm.

26 The considerations referred to above lead to the conclusion that because Ceil is a corporation it would not be entitled to the protection afforded by s.117 of the Constitution even if Pt 53 r 2(1)(a) subjects it to a disability or discrimination within the meaning of s.117. Since the immunity created or protection conferred by s.117 does not operate in Ceil’s favour in relation to the operation of the relevant rule, it does not operate in its favour in relation to the exercise of the inherent jurisdiction of the Court to order security for costs either.

C. Does Part 52 r 2(1)(a) subject a subject of the
Queen to a disability or discrimination?

27 The next matter to determine is whether Pt 53 r 2 (1)(a) imposes a disability or discrimination of the kind proscribed by s.117 of the Constitution.

(i) What constitutes disability or discrimination?

28    It should be noted that the phrase “disability or discrimination” is disjunctive in character. This suggests a difference in meaning between the two words rather than the two being treated as a composite phrase. That is the view taken by a majority of the members of the Court in Street v Queensland Bar Association. For example, Brennan J said that:

“Discrimination is a broader term than disability but the two terms are not mutually exclusive. A discriminatory imposition of a disability is comprehended by both.” (at 506)

and

“the term discrimination is to be distinguished from disability in three relevant respects: discrimination connotes a comparison but disability does not; discrimination imports a ground for differentiating between the persons compared, but disability is not concerned with the reason why it is imposed; and discrimination extends beyond the discriminatory imposition of a legal incapacity or liability to the discriminatory withholding of any benefit (including any right, power or privilege) and to the discriminatory imposition of any burden (including any liability) to suffer a diminution of legal rights or an increase in legal liability.” (supra at 506)

29    However, Toohey J pointed out that the terms “disability” and “discrimination” should not be given a narrow or technical meaning “particularly as the section (117) is broad and general in its terms” (supra at 554). Nonetheless, on its face disability is not as wide in ambit as discrimination and it concentrates attention on a different objective.

30    Without seeking to define the ambit of the phrase “disability or discrimination”, it is apt to include some incapacity, inability, prohibition, restriction or disqualification in relation to the exercise or enjoyment of a power, privilege or right or some limitation on a right or an added duty, liability or responsibility and any detriment, differential or different treatment or distinction.

(ii) Test for the application of s.117

31 When Helsham J decided Australian Building Construction Employees’ and Builders Labourers Federation v Commonwealth Trading Bank the law in relation to discrimination under s.117 of the Constitution had but recently been considered by the High Court in Henry v Boehm. It did so in the context of a provision in the South Australian Rules of Court regulating the admission of practitioners which required an applicant for admission who had previously been admitted elsewhere to “reside for at least three calender months in the State continuously and immediately preceding the filing of his notice of application for admission”. This provision was held not to infringe s.117 of the Constitution (Barwick CJ, McTiernan, Menzies and Gibbs JJ, Stephen J dissenting). Barwick CJ, with whom McTiernan J agreed, said:

“the constitutional prohibition is against the imposition by a State of any disability or discrimination based on the fact that the person subject to it is a resident of another State and to which a resident of the legislating State is not equally subject” (at 487) (bold added)

32 In Henry v Boehm Barwick CJ also pointed out that a law based either exclusively or partly on the domicile of a person will not offend s.117 as was decided in Davies and Jones v Western Australia and in giving effect to the South Australian provision said that :

“At least prima facie … being a resident of another State must be made by the law the basis of the imposition or creation of the disability or discrimination. But, of course, the necessary direct effect of the operation of a statute or statutory provision according to its true construction must be regarded in considering whether the law does make residence out of a State a criterion of its operation.” (supra at 489) (bold added)

and
The rules do not lay any disability or discrimination upon the plaintiff (at 489) because he is a resident of Victoria. In other words, residence is not made the basis of any disability or discrimination let alone any disability or discrimination to which a person resident in South Australia is not equally subject.” (at 490) (bold added)

33    Menzies J expressed his view as follows:

“ It is true that the restrictions do put those seeking admission as barristers of the Supreme Court of South Australia, by virtue of admission elsewhere wherever they reside, under disabilities not shared by those who qualify for admission on other grounds, but the restrictions operation uniformly upon those subject to them wherever their residence” (supra at 492)

and added:

“It is only laws effecting a disability or discrimination upon or against a person resident in one State by reason only of his residence in another State that are condemned by s 117” (supra at 493) ( bold added )

34    Gibbs J expressed the effect of the section as follows:

“One thing that is clear from the words of the section itself … is that s.117 does not prohibit discrimination generally. A law of one State will be valid notwithstanding that it subjects a person who is resident in another State to a disability or discrimination provided that the disability or discrimination would be equally applicable to that person if he were resident in the former State. What the section proscribes is a disability or discrimination based solely on the ground of residence in another State.” (supra at 496) (bold added)

35 On the basis of the test set out above, it was determined that the rule did not infringe s.117.

36    The judgments of the majority in Henry v Boehm turned firstly on a construction of the words “disability or discrimination” which limited them to a disability or discrimination imposed solely on the basis of residence in a State other than the legislating State. Such a construction had the consequence of creating a distinction between a law discriminatory on its face or in terms (proscribed) and one having a discriminatory effect in its application, although the same provision was made in relation to residents of the State and residents of another State or other States (not proscribed).

37    In Street v Queensland Bar Association, McHugh J said that under the test adopted in Henry v Boehm:

“Regard can only be had to the legal operation of the impugned provision and not to its factual consequences.” (supra at 580)

38 The approach to s.117 adopted in Henry v Boehm was rejected in Street v Queensland Bar Association which expressly overruled the earlier decision. The tests of what constitutes a disability or discrimination within the meaning of s.117 of the Constitution adopted in Street v Queensland Bar Association varied slightly from Justice to Justice. However, all members of the Court disavowed an approach which had regard only to the legal operation of the provision in question rather than to its consequences on the facts of the particular case, but they excluded from the operation of s.117 certain matters (not relevant to the present case) based on implications arising from the Constitution in relation to the institutions, affairs and functioning of a State Government and rights naturally and exclusively associated with residence in a particular State.

39 Mason CJ stated that the correct view of s.117 was that it applied even though a particular requirement for residence was universal, on its face applying equally to both those who were permanent residents of a State and those who were not resident on either a permanent or other basis of such State, if the effect of the law in a given case was to subject the resident in such other State to any disability or discrimination. He said:

“The section is not concerned with the form in which (the) law subjects the individual to a disability or discrimination. It is enough that the individual is subject to either of two detriments, whatever the means by which this is brought about by State law.” (supra at 487)

and

“… I would apply the principle … that s 117 renders a disability or discrimination invalid if the notional fact of residence within the legislating State would effectively remove the disability or discrimination or substantially deprive it of its onerous nature.” (supra at 487)

40    Brennan J said that :

“As s 117 affords protection to individuals when the individual is subject to a disability or discrimination which would not be equally ‘applicable to him’ if he were an in-State resident, it focuses upon the impact of a governmental measure on the individual not merely upon the applicability of the measure to a class of which the individual is a member. To determine the impact of a measure on an individual, it is necessary to take account the particular circumstances of the individual. In other words, s.117 is concerned not only with legal rights and liabilities, but also with the actual effect on the individual of legal rights and liabilities produced by a law or other governmental action.” (supra at 507-508)

and
“… when a condition on obtaining a benefit or avoiding a burden is so expressed that protected persons are naturally or ordinarily disadvantaged in complying with it because they do not reside in the State, s.117 may relieve a protected person from compliance with the condition in part or in whole. On the other hand, if there is a rational and proportionate connection between the condition and some objective other than the subjecting of protected persons to different treatment because they are out-of-State residents, s.117 does not apply. If there be such a connection, there is no discrimination within s.117; if there be no such connection, there is discrimination within s.117.” (supra at 510-511)

41 Deane J said that s.117 requires:

“a comparison between the non-resident citizen’s actual position under the impugned law and the position in which he would be under the law if he were resident in the particular State. If the non-resident citizen is subjected to discrimination or disability which would not be ‘equally applicable to him’ if he were resident, the guarantee of s.117 will, to that extent, be infringed.” (supra at 525)

42    Dawson J also stated that the test was based on the making of a comparison. He said that:

“The comparison is between the resident in another State who complains and his situation ‘if he were’ resident in the legislating State. It is the hypothetical situation of the complainant in the legislating State which is relevant, not the actual situation of residents in that State.” (supra at 545)

43    Toohey J was of a like opinion. He said that :

“The comparison required by s.117 is … between the plaintiff’s situation as it is in fact and as it would be were he a resident of (the legislating State).” (supra at 558)

44    Gaudron J said that:

“The protection of s.117 extends to indirect discrimination or different treatment which is revealed by the disparate impact of the matter in complaint.” (supra at 569)

45 McHugh J expressed his view of s.117 in the following terms:

“There is no reason why the terms ‘discrimination’ and ‘disability’ in s.117 should be given a meaning which excludes disability or discrimination arising from the factual operation of the law. If the interstate resident is subject to a disability or discrimination because of his residence, it cannot matter whether that result is produced because the law selects interstate residence as the basis of discrimination or the imposition of disability, or because the law selects some other criterion which operates so as to give rise in fact to a disability or discrimination on the ground of interstate residence. Discrimination can arise just as readily from a law which treats as equal those who are different as it can from a law which treats differently those whose circumstances are not materially different.” (supra at 581)

46    As can be seen from the foregoing, the tests propounded by the Justices in Street v Queensland Bar Association are wider in their ambit than those in Henry v Boehm.

(iii) Conclusion in relation to Part 53 r 2(1)(a)

47 Part 53 r 2(1)(a) gives to the Court an express power to require security for costs because, and solely because, the person at whom the rule is directed is a resident of a State other that New South Wales. Applying the law as it now stands as to what constitutes a disability or discrimination within the meaning of s.117 of the Constitution, I am of opinion that the provision of Pt 53 r 2 (1)(a)) constitutes such a disability and such a discrimination. Furthermore, even if the test or approach adopted in Henry v Boehm were to be applied the rule would impose a disability and involve discrimination against a resident of another State that would fall within the proscription in s.117 of the Constitution.

D. Validity of Part 53 r 2(1)(a)

48 Section 117 of the Constitution confers immunity from certain disability or discrimination on persons who answer to the description “a subject of the Queen resident in a State”. The concept of immunity is, in Hohfeldian terms, the jural opposite of liability ( W N Hohfeld (1913) 23 Yale LJ p. 30). It is a freedom from liability. Immunity is the jural correlative of disability. This means that where an immunity inheres in one person, the correlative inheres in another. An immunity “may and usually does co-exist” with a power (Stone Legal Systems and Lawyers’ Reasoning 1968 p.146). An immunity assumes the validity of a particular law but involves freedom of a particular person or class of persons from liability under such law. (See Vacher & Sons Ltd v London Society of Compositors (1913) AC 107; Stone op. cit. p.147). Diplomatic immunity and the immunity of the Crown from the application of certain statutes are prime examples. The law from which the diplomat or Sovereign is immune remains in force and effect generally, but is not applicable to the person the subject of the immunity.

49 The fact that Pt 53 r 2(1)(a) seeks to impose a disability on or discriminate against the Iezzis in a way forbidden by s.117 of the Constitution does not mean that the rule is to be struck down as invalid. This statement accords with legal theory and is supported by authority. Mason CJ said in Street v Queensland Bar Association :

“A person who would, but for s.117, be so effected by the law is immune from its operation insofar as it subjects him to impermissible disability or discrimination, though the law itself remains valid in its application to persons who would not be so affected.” (supra at 486)

50    Brennan J was of a like opinion. He said that:

“A law which imposes an impermissible disability or discrimination is not invalid; it remains in full force and, except in relation to a protected persons, in full effect”. (supra at 504)

51 Thus, notwithstanding that Pt 53 r 2(1)(a) subjects the Iezzis to disability and discrimination within the meaning of s.117 of the Constitution it remains valid and applicable to those persons and entities that do not respond to the description “a subject of the Queen resident in any State” within the meaning of s.117. The rule continues to have effect in relation to Ceil just as it does in relation to natural persons resident in other countries or natural persons who are not subjects of the Queen of Australia. Thus when the headnote in Australian Building Construction Employees and Builders Labourers Federation states that “r 2(1) of Part 53 of the Supreme Court Rules is ultra vires and void” it is incorrect. However, this is not the terminology of Helsham J.

E. Section 117 and the inherent jurisdiction

52 When Holland J expressed his reservation in Rajski v Computer Manufacturing and Design in relation to the effect of s.117 on the inherent jurisdiction of the Court he was no doubt conscious of the view expressed by Barwick CJ in Henry v Boehm that:

“Section 117 relates to disability or discrimination imposed or created by legislation.” (supra at 489)

- a view echoed in the judgments of Menzies and Gibbs JJ.

53 The view expressed by Barwick CJ does not appear to accord with the actual words of s.117. That section is couched in the passive voice. It makes no reference to the manner in which or mechanism by which the disability or discrimination which is proscribed by the section is imposed. Its passive form is to be contrasted with the active form of the verb in the introductory section of s.51 of the Constitution.

54 The view expressed by Barwick CJ (above) is no longer the law of Australia. Street v Queensland Bar Association not only overruled Henry v Boehm but expressly extended the operation of s.117 to matters beyond legislation; for example:

“to disability or discrimination by exercise of executive or judicial, as well as legislative power”. (supra at 504 per Brennan J; see also Mason CJ at 487; Toohey J at 552)

55 As a consequence of the change in the law effected by Street v Queensland Bar Association the dictum of Holland J cannot stand. Acts done under the inherent jurisdiction of the court are subject to the immunity conferred by s.117 and the view expressed by Helsham J in Australian Building Construction Employees and Builders’ Labourers’ Federation v Commonwealth Bank stands as a correct statement of the law in relation to the inherent power of the Supreme Court to make orders for security for costs against those persons who fall within the ambit of the immunity created by s.117 of the Constitution.

F. SUMMARY

56 From the foregoing analysis I conclude that whether the narrow test adopted in Henry v Boehm or the wider test, which is now the law, adopted in Street v Queensland Bar Association is applied, Pt 53 r 2(1)(a) would impinge on the area of immunity which s.117 of the Constitution confers on the Iezzis. It therefore can have no application to them. Absent evidence in relation to their financial state or other recognised basis for the ordering of security for costs, there is no ground on which security could be ordered against them and I decline to do so.

G. Discretion

57 The situation is different in relation to Ceil. It does not come within the ambit of the immunity created by s.117 of the Constitution. Both the rule in question and the inherent jurisdiction apply to it and an order for security for costs could be made against it.

58 The only basis advanced for the ordering of security of costs against Ceil is that it is a resident of Western Australia, that is that its registered office is in Western Australia. In Pt 53 r 2(1)(a) the word “person” includes a corporation (s.21 Interpretation Act 1987). That conclusion depends on the word resident as used in the rule having a meaning different from that given to the same word in s.117 of the Constitution. However, as Griffith CJ said in Davies and Jones v Western Australia, “the word ‘resident’ is used in many senses” (supra at 39). This statement was adopted in Street v Queensland Bar Association (supra at 484 per Mason CJ; at 516-517 per Brennan J; at 543-544 per Dawson J; at 586-587 per McHugh J).

59    One such sense does admit of a corporation being resident in a particular place, as the analysis by Isaacs J in Australasian Temperance and General Mutual Life Assurance Society Ltd v Howe shows (supra at 312 et seq). In my opinion, a corporation can be ordinarily resident in a place, in this case in Western Australia, within the meaning of the rule.

60 But Pt 53 r 2(1)(a) does not require security to be ordered if such a factual circumstance exists and if it is not proscribed by s.117. The rule confers a discretion on the Court to order or not to order security; so too does the inherent jurisdiction.

61 In the present case the plaintiffs have already provided security of $29,009.45 to cover the judgment and the professional and court costs awarded against them. That amount was provided promptly and without demur. No evidence has been adduced to suggest that Ceil is, or the Iezzis as its principals are, lacking in resources adequate to meet any order for costs should the plaintiffs be unsuccessful in the action. In these circumstances, I do not think it appropriate to exercise the discretion conferred by Pt 53 r 2(1)(a) so as to order security for costs against Ceil and I decline to do so.

H. Orders

62    Motion dismissed.

Costs of the motion to be the plaintiffs’ costs in the action.

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Last Modified: 02/02/2001