mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Selliah v Minister for Immigration and Multicultural and Indigenous Affairs [1998] FCA 469
Outcome: referred to
A successful litigant is, therefore ordinarily entitled to an award of costs: see, e.g., Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72 at 86 per Gaudron and Gummow JJ; at 97 per McHugh J (dissenting in result) and 120-1 per Kirby J. The inability of the unsuccessful party to meet costs is generally not a sufficient reason to deprive the successful party of a costs award. In Selliah v Minister for Immigration and Multicultural and Indigenous Affairs [1998] FCA 469 , Nicholson J said: "[I]t is contended for the applicant that as he has been in detention since arriving in Australia he has no assets in this country, an order against him would be futile. No evidentiary foundation exists for a finding of futility. Even if the proper inference to be drawn from the applicant's detention is that such an order would be futile, I do not consider that would amount to special circumstances warranting the making of a different order. Here the applicant chose to comprehensively argue his case and expose himself to the risk of costs. Having failed, any futility of collection is not a reason for an order to the contrary." The same principles apply here. The appellants have not shown a proper basis to justify the Court in making other than the usual costs order.
Case: Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634
Outcome: referred to
Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634 (Appleglen ) at 635-6, Pincus J determined upon a deed of guarantee executed by the directors of the applicant company, which was the trustee of a family trust, subject to a monetary limit. The present case In the present case security has been offered in the form of a deed of guarantee, unlimited as to amount, executed by Mr Fitzsimons in favour of the respondents. As an alternative, he has offered to submit to being joined as a party and, by implication, to the making against him of any order that is made against Instyle for payment of the respondents' costs. Mr Fitzsimons has resisted, on grounds of confidentiality, disclosure of his financial affairs, although some details emerged incidentally from the evidence. He has a 1/100 share of lot 21 DP718774 at Mascot. Apparently there is a lease to Instyle. Apparently Instyle carries on its business there. The other 99/100 share is owned by Carolyn May Patterson. Mr Fitzsimons and Ms Patterson own their respective shares as tenants in common. The property is subject to a registered mortgage to St George Bank Limited. Mr Fitzsimons and Ms Patterson own as joint tenants Lot 1 DP 822332 and Lot 1 DP 29787, both in the Local Government area of Randwick, Parish of Botany, and both subject to two mortgages to St George Bank Limited. The evidence does not reveal the values of these properties or the amounts now secured by the mortgages. There could be difficulty in realising Mr Fitzsimons's interest in them. But according to the view that I take, this does not matter. It would be possible to order Instyle to provide security in the form of a deed of guarantee (executed by Mr Fitzsimons) as has happened in certain other cases, such as Appleglen and Gentry Bros . The respondents would have to sue Mr Fitzsimons on the guarantee. In this respect they would not be in as a favourable a position as they would be if Mr Fitzsimons, rather than Instyle, had been the applicant.
Case: Austin, Nichols &amp; Co Inc v Lodestar Anstalt [2009] FCA 1228
Outcome: cited
respondents rely on s 1335(1) of the Corporations Act 2001 (Cth) (the Corporations Act ) and s 56 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) Section 1335(1) of the Corporations Act provides: 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. Section 56(1) of the FCA Act provides as follows: 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 or her. The power conferred by s 1335(1) depends on satisfaction of the condition expressed in that provision but s 56 of the FCA Act is not subject to satisfaction of that or any other condition. In addition, s 56 is not confined by reference to a corporate applicant or to the costs of the respondent. More importantly, there can be circumstances in which it may be appropriate to order the provision of security even though there is no question of the applicant's capacity to satisfy an adverse costs order, such as where the applicant has no assets within the jurisdiction: see, for example, Austin, Nichols &amp; Co Inc v Lodestar Anstalt [2009] FCA 1228.
Case: Avspares Pty Ltd v Skywest Aviation Pty Ltd (1997) 24 ACSR 272
Outcome: distinguished
respondents rely on KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 ( KP Cable ) and Avspares Pty Ltd v Skywest Aviation Pty Ltd (1997) 24 ACSR 272 ( Avspare s). In KP Cable , Beazley J, when a judge of this Court, reviewed the authorities, expressed disagreement with Powell J, and noted her concurrence with what was said by Byrne J in Mantaray and by Cooper J in Gentry Bros . Her Honour did so on the basis that all that was being said in those two cases was that "the offer of security by way of a guarantee from the directors or shareholders or other persons interested in the outcome of the litigation was a factor, which could be decisive in a given case, to be considered in determining whether any other form of order for security for costs should be made" (at 204). Beazley J concluded that the question for her to decide was whether the respondents should be deprived of the provision of security such as cash or a charge over assets merely because such an offer had been made. She thought that they should not be, noting that one of the individuals concerned had rugs and antiques which that individual valued at $30,000 and which were not necessary for the individual's daily living needs or for the purposes of her earning a living. Her Honour observed that there was no reason why they should not be charged to the extent of the security that her Honour proposed to order. In Avspares , the company was the only applicant and the husband and wife who stood behind it indicated a preparedness to assume personal responsibility by way of guarantee or otherwise for the costs and offered to secure the amount by charging their motor vehicles and furniture and house contents. Tamberlin J thought that the value of those assets would be sufficient to meet the amounts sought by way of security. His Honour considered that the proceeding should be permitted to continue provided the two individuals accepted responsibility for the costs and secured the amount sought by a charge over their personal assets. In view of the fact that the offer made included an offer of a charge, Tamberlin J's decision in Avspares is distinguishable. An objection to the insistence on a requirement of anything over and above the personal liability of the individual concerned is that the respondent obtains an advantage, and the individual is subjected to a disadvantage, that would not be the case if the individual had been the applicant. I note that in the following two cases there was no requirement that the individuals give a charge or other security beyond their deed of guarantee or their undertaking to the Court.
Case: Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463
Outcome: cited
seems to follow from the dictum of Connolly J that if the present respondents can be placed in a position in which they will enjoy the same remedies against Mr Fitzsimons in respect of costs as they would if he were the applicant instead of Instyle, the object of s 1335(1) of the Corporations Act would be achieved and Mr Fitzsimons's own worth would be "not really relevant". The basis of this approach is the proposition that the impecuniosity of an individual is not a ground on which to order him or her to give security for costs: see Cowell v Taylor (1885) 31 ChD 34 at 38; Pearson v Naydler [1977] 1 WLR 899 at 902; Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463 at 469.
Case: Cameron's Unit Services Pty Ltd v Kevin R Whelpton &amp; Associates (Australia) Pty Ltd (1986) 13 FCR 46
Outcome: followed
Cameron's Unit Services Pty Ltd v Kevin R Whelpton &amp; Associates (Australia) Pty Ltd (1986) 13 FCR 46 , Burchett J was faced with circumstances similar to those in Harpur in that the individual who was the only shareholder in the applicant company with a substantial interest in any proceeds of the litigation, was also an applicant. It was common ground that both he and the company were insolvent. Nonetheless, his Honour declined to order the company to provide security. His Honour referred to the dictum of Connolly J to the effect that in such circumstances the individual's worth was "not really relevant". What was relevant, his Honour said, was that the company was "not a stalking horse to enable someone else to evade personal responsibility" (at 53). Burchett J said that if the individual accepted responsibility, he or she, even though impecunious, was entitled to rely on the general rule that poverty is no bar to a litigant.
Case: Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325
Outcome: distinguished
other cases too the view has been taken that provided the individual behind the corporate litigant or the trust of which the corporate litigant is trustee assumes liability for the costs, the purpose of the statutory provision is served: see Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 at 306 (Byrne J); Gentry Bros Pty Ltd v Wilson Brown &amp; Associates Pty Ltd (1992) 8 ACSR 405 at 415 (Cooper J) ( Gentry Bros ) and Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325 at 328 (WASCFC) ( Clyde Industries ). In Gentry Bros Cooper J said that the making of an order which secures the personal liability of the shareholders "is in itself the provision of security" (at 415). In Clyde Industries the Acting Master had ordered that the plaintiff company pay into Court $5,000 or provide a bank guarantee in that sum and provide a written guarantee by the company's directors (which they had offered) to indemnify the appellant for its taxed costs. The Full Court of the Supreme Court of Western Australia dismissed the company's cross appeal. However, the Full Court appears to have treated the relevant ground of cross-appeal only as being that the order for provision of security in the sum of $5,000 would stultify the action.
Case: Cowell v Taylor (1885) 31 ChD 34
Outcome: cited
seems to follow from the dictum of Connolly J that if the present respondents can be placed in a position in which they will enjoy the same remedies against Mr Fitzsimons in respect of costs as they would if he were the applicant instead of Instyle, the object of s 1335(1) of the Corporations Act would be achieved and Mr Fitzsimons's own worth would be "not really relevant". The basis of this approach is the proposition that the impecuniosity of an individual is not a ground on which to order him or her to give security for costs: see Cowell v Taylor (1885) 31 ChD 34 at 38; Pearson v Naydler [1977] 1 WLR 899 at 902; Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463 at 469.
Case: Gentry Bros Pty Ltd v Wilson Brown &amp; Associates Pty Ltd (1992) 8 ACSR 405
Outcome: followed
other cases too the view has been taken that provided the individual behind the corporate litigant or the trust of which the corporate litigant is trustee assumes liability for the costs, the purpose of the statutory provision is served: see Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 at 306 (Byrne J); Gentry Bros Pty Ltd v Wilson Brown &amp; Associates Pty Ltd (1992) 8 ACSR 405 at 415 (Cooper J) ( Gentry Bros ) and Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325 at 328 (WASCFC) ( Clyde Industries ). In Gentry Bros Cooper J said that the making of an order which secures the personal liability of the shareholders "is in itself the provision of security" (at 415). In Erolen v Baulkham Hills Shire Council (1993) 10 ACSR 441 Powell J disagreed with the views expressed by Byrne J in Mantaray and by Cooper J in Gentry Bros to the effect that once the shareholders had agreed to accept personal liability for any judgment for costs, the statutory purpose of s 1335 was fulfilled. His Honour considered (at 456) that that approach would be "a fetter" on the Court's discretion. The respondents rely on KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 ( KP Cable ) and Avspares Pty Ltd v Skywest Aviation Pty Ltd (1997) 24 ACSR 272 ( Avspare s). In KP Cable , Beazley J, when a judge of this Court, reviewed the authorities, expressed disagreement with Powell J, and noted her concurrence with what was said by Byrne J in Mantaray and by Cooper J in Gentry Bros . Her Honour did so on the basis that all that was being said in those two cases was that "the offer of security by way of a guarantee from the directors or shareholders or other persons interested in the outcome of the litigation was a factor, which could be decisive in a given case, to be considered in determining whether any other form of order for security for costs should be made" (at 204). Beazley J concluded that the question for her to decide was whether the respondents should be deprived of the provision of security such as cash or a charge over assets merely because such an offer had been made. She thought that they should not be, noting that one of the individuals concerned had rugs and antiques which that individual valued at $30,000 and which were not necessary for the individual's daily living needs or for the purposes of her earning a living. Her Honour observed that there was no reason why they should not be charged to the extent of the security that her Honour proposed to order. It would be possible to order Instyle to provide security in the form of a deed of guarantee (executed by Mr Fitzsimons) as has happened in certain other cases, such as Appleglen and Gentry Bros . The respondents would have to sue Mr Fitzsimons on the guarantee. In this respect they would not be in as a favourable a position as they would be if Mr Fitzsimons, rather than Instyle, had been the applicant.
Case: Harpur v Ariadne Australia Limited [1984] 2 Qd R 523
Outcome: followed
Harpur v Ariadne Australia Limited [1984] 2 Qd R 523 ( Harpur ), the Full Court of the Supreme Court of Queensland considered the application of s 533(1) of the Companies (Queensland) Code (a predecessor of s 1335(1) of the Corporations Act ) to circumstances in which there were four plaintiffs, three of them companies and the other an individual, and in which the defendants sought an order for security. The Master ordered the companies to provide security. On appeal, Connolly J, with whom Campbell CJ and Demack J agreed, noted that: there was reason to believe that none of the three corporate plaintiffs would be able to pay the defendants' costs if they were successful; and if any of the plaintiff companies failed, the individual plaintiff must also fail. His Honour said (at 532) with reference to s 533(1): The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play. If however he is already available for whatever he is worth, the object of the legislation is seen to be satisfied. [My emphasis] Importantly for present purposes, and consistently with the sentence just emphasised, Connolly J added (at 533) that on the view he took of the case the question of the individual plaintiff's worth was "not really relevant". In Cameron's Unit Services Pty Ltd v Kevin R Whelpton &amp; Associates (Australia) Pty Ltd (1986) 13 FCR 46 , Burchett J was faced with circumstances similar to those in Harpur in that the individual who was the only shareholder in the applicant company with a substantial interest in any proceeds of the litigation, was also an applicant. It was common ground that both he and the company were insolvent. Nonetheless, his Honour declined to order the company to provide security. His Honour referred to the dictum of Connolly J to the effect that in such circumstances the individual's worth was "not really relevant". What was relevant, his Honour said, was that the company was "not a stalking horse to enable someone else to evade personal responsibility" (at 53). Burchett J said that if the individual accepted responsibility, he or she, even though impecunious, was entitled to rely on the general rule that poverty is no bar to a litigant.
Case: Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306
Outcome: cited
my opinion the cases to which Powell J referred show only that ordinarily it is to be expected that the discretion will be exercised in favour of the company. I can conceive of circumstances in which it may be appropriate to insist on more than the personal liability of those who stand to benefit from the company's proceeding. An example would be where they had misappropriated to themselves and dissipated the company's property, and therefore destroyed its capacity to pay. I accept that the fact that the shareholder or other person who stands to benefit from the action takes on a personal liability does not necessarily conclude the question against an order for the provision of any further security: cf Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306.
Case: Knight v F.P. Special Assets Limited [1992] HCA 28 ; (1992) 174 CLR 178
Outcome: cited
Court has power to order a non-party to pay costs under a general provision of the kind found in s 43 of the FCA Act: see Knight v F.P. Special Assets Limited [1992] HCA 28 ; (1992) 174 CLR 178. Such an order was made in Oz B and S Pty Ltd v Elders IXL Ltd [1993] FCA 371 ; (1993) 117 ALR 128 , but there were special circumstances in that case. As far as I am aware, there would be no proper basis on which to make such an order against Mr Fitzsimons in the present case, in the absence of a submission to such an order by him.
Case: KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189
Outcome: discussed
respondents rely on KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 ( KP Cable ) and Avspares Pty Ltd v Skywest Aviation Pty Ltd (1997) 24 ACSR 272 ( Avspare s). In KP Cable , Beazley J, when a judge of this Court, reviewed the authorities, expressed disagreement with Powell J, and noted her concurrence with what was said by Byrne J in Mantaray and by Cooper J in Gentry Bros . Her Honour did so on the basis that all that was being said in those two cases was that "the offer of security by way of a guarantee from the directors or shareholders or other persons interested in the outcome of the litigation was a factor, which could be decisive in a given case, to be considered in determining whether any other form of order for security for costs should be made" (at 204). Beazley J concluded that the question for her to decide was whether the respondents should be deprived of the provision of security such as cash or a charge over assets merely because such an offer had been made. She thought that they should not be, noting that one of the individuals concerned had rugs and antiques which that individual valued at $30,000 and which were not necessary for the individual's daily living needs or for the purposes of her earning a living. Her Honour observed that there was no reason why they should not be charged to the extent of the security that her Honour proposed to order.
Case: Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377
Outcome: followed
solicitor who had the benefit of professional indemnity insurance sought security in Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 ( Livingspring ). The plaintiff urged the court to take the insurance into account. Maxwell P and Buchanan JA stated: [67] We can see no reason in principle why an insured defendant should be in any different position from an uninsured defendant for this purpose. Let it be assumed that the insurer has agreed to indemnify the defendant against the plaintiff's claims. The insurer should be regarded as having exactly the same entitlement as the insured defendant to protection against the risk that the plaintiff will be unable to meet an adverse costs order (cf [ Prime Forme at p 32]). [68] On this view, the fact that a defendant is insured is irrelevant to an application for security for costs. If, as [the plaintiff] argued, the judge had in fact been expressing that view, there would have been no error in doing so. I do not sustain Instyle's submission and follow Prime Forme, Remm and Livingspring. It may be noted, incidentally, that if Instyle's submission had been sustained, the respondents could have relied on s 56 of the FCA Act which is not subject to the same limitation. Offer made by Michael Peter Fitzsimons Instyle Instyle relies on an offer made by Michael Peter Fitzsimons. It is first necessary to note his role in relation to Instyle. The issued share capital of Instyle comprises 10,000 Class A shares, 100 Class C shares and 110,000 Ordinary shares (according to a company extract in evidence, there were previously Class B shares but they no longer form part of the share structure). Mr Fitzsimons holds all 100 Class C shares and 62,000 (56.36%) of the Ordinary shares. A company called Cylinder Investments Pty Limited (Cylinder) holds all 10,000 Class A shares and 48,000 (43.64%) of the Ordinary shares. Mr Fitzsimons is the sole director of Instyle and has been described in the evidence as its founder and Managing Director.