Cunningham, L.K. v Olliver, B

[1994] FCA 1004

LAWRENCE KEITH CUNNINGHAM v. BRIAN OLLIVER
No. NG14 of 1993
FED No. 1004/94
Number of pages - 3
Security For Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BURCHETT J

CATCHWORDS

Security For Costs - whether claim brought for the benefit of others - Order 62, rule 3(1)(b) of Federal Court Rules considered - principle that poverty is no bar to a litigant - circumstances where application for security too long delayed.

Federal Court of Australia Act 1976, s. 56
Federal Court Rules, Order 62, rule 3(1)(b)

Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1
Ramsey v Hartley (1977) 2 All ER 673
Barton v Minister for Foreign Affairs (1984) 2 FCR 463
Weston v Beaufils (1993) 43 FCR 292

HEARING

SYDNEY
#DATE 21:11:1994

Counsel for the Applicant: Mr G.A. Moore

Solicitors for the Applicant: Messrs Caruana, Kay and

Barry

Counsel for the Respondent: Mr J.B. Simpkins

Solicitors for the Respondent: Messrs Phillips Fox

JUDGE1

BURCHETT J In this matter, I am asked to make an order for security for costs. The application is brought in reliance on s. 56 of the Federal Court of Australia Act which confers, in general terms, a power on the Court; the Court or a judge may order an applicant in a proceeding in the Court, or an appellant in an appeal to the Court, to give security for the payment of costs that may be awarded against him.

1. It should be noted that by subs. (3) it is made clear that any order made may be reduced or increased on some subsequent occasion. In other words, the Court does not lose control at the interlocutory stage, and an order for security is not something totally irrevocable. However, plainly, when such an order is made, it is intended under all foreseeable circumstances to provide the solution to the security problem.
   The subject of security is dealt with in a little more detail in Order 28, and in particular, rule 3, although the Full Court made it clear in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1, that the rules cannot operate as a fetter upon the broad discretion conferred by s. 56.

2. The applicant in the principal application is an individual, and it is not suggested that he is a person ordinarily resident outside Australia, nor is it suggested that this is a case covered by one of the special situations referred to in subrule (1) of rule 3, except to the extent that para. (b) may have some application. That paragraph provides for the case where -
   

"an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the

respondent if ordered to do so."

It is conceded that this paragraph does not have any specific application here. Provisions in similar terms have been the subject of consideration in England, and it has there been firmly held that an applicant who is suing partly for his own benefit and partly for the benefit of some other person cannot fall within the terms of such a provision: Ramsey v Hartley (1977) 2 All ER 673 at 682.

1. In the present case the applicant entered into an arrangement with his creditors and assigned his property for their benefit, and he did so subject to a provision specifically directed to the present claim. By that provision, he agreed that he would hold sixty six per cent of any net proceeds of the claim for the benefit of his creditors. Evidence has been placed before me as to who the creditors are and the amounts involved. From that evidence, it is clear that very substantial amounts, not far short of a million dollars each, are owed to two banks as unsecured creditors. However, there is no reason - apart from that bare fact and from the fact that they were willing to enter into or to permit him to enter into the arrangement containing such a provision - to think that the banks would in fact be willing to provide any security for costs in relation to the present case.

2. Counsel for the respondents, the applicants in the motion, has pointed out that it was held in Bell Wholesale that the onus is on the respondent to such a motion to show that the making of an order would stultify his claim, if he wishes to rely on that proposition. In the present case, no direct evidence has been called of any decision by the banks, or indeed by any other creditors, not to assist financially in relation to the provision of security, but there is certainly evidence from which the inference could be drawn that they would be, at the least, reluctant to do so, and that any assistance might be limited.

3. It is an important principle, which was stated in quite strong terms by Morling J in Barton v Minister for Foreign Affairs (1984) 2 FCR 463 at 469, and has been applied since in such as cases as my own decisions in Camerons Units Services Proprietary Limited v Kevin R. Whelpton and Associates Australia Proprietary Limited (1986) 13 FCR 46 at 53 and Weston v Beaufils (1993) 43 FCR 292 of 298, that an impecunious natural person is entitled to rely on the general rule that poverty is no bar to a litigant. The applicant's impecuniosity should not close the door of the court against his claim. However, to the extent that the claim is put forward on behalf of others, it is appropriate to regard this principle as qualified. In all the circumstances of the present case, if the claim for provision of security had been made promptly, I think I would have considered it appropriate to make an order, not indeed in the amount sought or any amount approaching that figure, but nevertheless in a more than nominal amount, having regard to the significant degree to which this claim, though not actually brought otherwise than for the benefit of the applicant, is nevertheless a claim brought in significant measure for the benefit of others.

4. But, there is also a principle that a claim for provision of security for costs ought to be made promptly, and that it is a ground on which it may be appropriate to refuse an application that it has been too long delayed. I think that principle is important for more than one reason. It is important as a matter of fairness to an applicant who may have spent a considerable sum of money on the prosecution of his claim, and apart from money, may have invested in it a considerable amount of time, energy and attention, and who may then be met by a claim raising at the least a real risk that all his effort will have gone for nothing, and that he will never even be able to get inside the door of the court. I think it is also an important principle for reasons of the proper functioning of the court itself, in the interests both of efficiency and of the court's continued adherence to the principle that justice should not only be done but plainly and manifestly be done.

5. In the present case, the respondents to the principal application must have been aware from the beginning that it was an application by an applicant whose ability to meet a costs order, if he should prove unsuccessful, would be at least in doubt. Counsel suggests that they did not know the full picture, but the position as I have stated it was not disputed in argument. The application for security has now been brought some almost two years after the proceeding was instituted, and this application was first threatened more than 18 months after the proceedings were instituted. The applicant in the principal proceeding has filed a number of affidavits, and a considerable amount of work has been done. In all the circumstances, I think the application for security ought to be refused, and I do refuse it.

6. I exclude from the costs order I am about to make any costs of attendances on 30 September, 21 October and 4 November, but with that exclusion I order that the costs of the motion for security be the costs of the applicant in the principal proceeding.