Case: The Airtourer Co-operative Ltd v Millicer Aircraft Industries Pty Ltd [2004] FCA 1400
Outcome: discussed
The submissions by counsel for the respondents referred to the judgment of Branson J in The Airtourer Co-operative Ltd v Millicer Aircraft Industries Pty Ltd [2004] FCA 1400 , where her Honour there indicated that s 56 of the Federal Court of Australia Act 1976 (Cth) does not indicate any predisposition to or bias towards the granting of an order against an impecunious litigant. Counsel for the respondents later said: 'The discretion is completely unfettered and ought to be exercised without any predisposition.' However, counsel for the respondents also submitted: '... The whole purpose of the Act, and, indeed, the underlying thesis behind section 1335 of the Corporations Law, is to ensure that vexatious claims are not brought by companies having no assets, so that a person in the position of a respondent to just such a claim ought not be penalised by the fact that it can be an empty shell of a company as the applicant ...'. 11 At the conclusion of those submissions, the primary judge said: 'What I would like to do now is give the parties my preliminary thoughts on this matter. My preliminary thoughts in this matter is that this is not ...' And counsel for the applicants for security said: 'Your Honour, could I just reply on one point, please?' He continued to make a submission, and the primary judge then said: 'What I would like to do now, as I said, is to give the parties my preliminary views of where I think this is going. My preliminary view is that perhaps this is not a preliminary view. This is a final view. Impecuniosity is no bar to litigation. There's no question about that, and that has been made clear in cases such as Spender J's decision very recently. Further, I am of the view that this is not vexatious litigation. In my opinion, there is a sound case here being argued by the applicants. I would have been somewhat inclined not to make any order in relation to security for costs at all in relation to this matter. I note, however, that the applicants the respondents to this notice of motion have made an offer of $100,000, and I would have thought that that would have been a reasonable offer in the circumstances of this case ...'. Those observations seem to indicate two reasons why security was not ordered: First, ' Impecuniosity is no bar to litigation .'; and secondly, ' ...this is not vexatious litigation ... there is a sound case here being argued by the applicants.' 12 Section 1335 of the Corporations Act 2001 (Cth) provides: ' 1335 Costs (1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given. (2) The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs.' 13 The condition to the exercise of the discretion to order security was met by the evidence in this case.