The provisions of the Customs Act, in effect, enable the officers of the Crown to take the preliminary steps by simple notices out of the Court so that it is the claimant who must issue process. But when he does issue a writ he does so to protect his supposed ownership. In substance he is not the attacker, actor or person seeking redress.
For these reasons I think he is not liable to give security for the costs of the action.
Latham C.J. said that the plaintiff was really in the position of the defendant: "as the collector has given him a notice under s.207, he is, in effect, forced into legal proceedings, not merely to enforce his claim, but to prevent his claim from being extinguished": p.180. McTiernan J. said that the action "was truly instituted by way of defence" to a claim by the Collector for condemnation of the plaintiff's goods, and that the rule that a plaintiff out of the jurisdiction should give security "should not be applied to the plaintiff in this action": p.187.
In Re Travelodge Australia Ltd. (1978) 21 A.C.T.R. 17 the applicant held stock in a company which had been the subject of a takeover offer. The applicant did not accept the offer and thus became a "dissenting offeree" within the meaning of the Companies Ordinance 1962. He was served with a notice the effect of which would have been that, if nothing more occurred, the respondent would have been entitled and bound to acquire the applicant's stock units. See s.180X(5). In an endeavour to prevent this happening the applicant commenced proceedings for an order under that sub-s.(5) was inapplicable to him. The respondent applied for security. In refusing it, Blackburn C.J. said that the case came within the general principle illustrated by Willey v. Synan:
The applicant is a person who invokes a special statutory procedure in order to preserve to himself a right which he considers a valuable one, which by the combined effect of a statute and the actions of the respondent may be taken away from him. The respondent asserts that the applicant
is the owner of the stock units and relies on the statute to effect a transfer of these stock units to himself.
The principle was again applied by Wilcox J. in Amalgamated Mining Services Pty. Ltd. v. Warman International Ltd. (1988) 19 F.C.R. 324. Warman's solicitors had written to Queensland Mining Supplies ("QMS") complaining that QMS had been offering to supply parts made by Amalgamated Mining Services ("AMS") for Warman pumps, thus infringing Warman's copyright in the drawings of those parts. The letter concluded by saying that unless QMS desisted, Warman would take proceedings. AMS commenced proceedings against Warman for a declaration that the threats made by Warman were unjustifiable within the meaning of s.202 of the Copyright Act 1968. Warman applied for security for costs under s.56 of the Federal Court of Australia Act 1976. The application was dismissed. Wilcox J. said that although the case was not as strong as Willey v. Synan, where the plaintiff was forced to take proceedings or lose any claim to the coins, "in a practical sense, the present applicant has been forced to take legal action". His Honour concluded:
If one applies the homely test adopted by Scrutton L.J. of asking who, in the litigation, was the attacker and who was the defender, I think it must be said that the first attack came in the letter from Phillips Fox. Although the letter was not written directly to Amalgamated Mining, it is that company which has an interest in defending and, in a commercial sense, probably has very little alternative other than to take that course. I think that it is an accurate analysis of the matter to say, therefore, that it is the respondents to the principal proceeding who are the attackers and that Amalgamated Mining is, in substance, the defender.
In my view the principle illustrated by these cases is applicable to the present case. As the statutory demand pointed out, non-compliance would give rise to a ground upon which the applicant could be wound up. Unless it paid the respondent money it contends is not due,
the only way the applicant could avoid that detriment was to apply under s.459G to have the demand set aside. To use the words of Wilcox J., "in a practical sense" the applicant was forced by the respondent to take legal action.
Counsel for the respondent contended that the cases I have mentioned are distinguishable on the ground that in each of them the plaintiff/applicant had to institute proceedings in order to protect a proprietary interest. Had proceedings not been taken, property in the coins, the stock and the right to copyright would have been lost. That is true of the coins in Willey v. Synan and the stock in Re Travelodge, but it is not true of Amalgamated Mining, where the detriment to be avoided was simply the possible loss of sales. Nor was it the case in Maatschappij, which is the foundation of the Australian cases I have mentioned.
The applicant's counsel relied upon a somewhat different ground from the principle the respondent's counsel sought to distinguish. He referred to Heller Factors Pty. Ltd. v. John Arnold's Surf Shop Pty. Ltd. [1979] A.C.L.C. 32,446 where Mitchell J., with whom King C.J. and Legoe J. agreed, said that the trial judge was entitled, in the exercise of his discretion, to take into account whether the plaintiff was a true plaintiff or had been forced into the position of a plaintiff because the defendant was empowered to take self help procedure. No reference was made to the Willey v. Synan line of cases. These cases appear to establish that security is not to be ordered where a litigant, though technically a plaintiff, is in substance a defendant. None of them treats the "reality" as merely a matter to be taken into account together with others in the exercise of the court's discretion. Heller Factors was considered by Ormiston J. in Interwest Ltd. v. Tricontinental Corporation (1991) 9 A.C.L.C. 1,218. At p.1,228 his Honour said: