Is the applicant effectively a respondent?
37 The applicant submitted that the applicant is effectively a respondent "to the respondents' implied cause of action in alleged breach of contract" and the retention of the Deposit by the respondents constitutes a "self-help" procedure by the respondents, with the consequence that the applicant should not be required to provide security for the respondents' costs.
38 In Willey v Synan (1935) 54 CLR 175, Dixon J (as his Honour then was and with whom Rich J agreed) said at page 184:
The principle is that a party to judicial proceedings, who resides beyond the jurisdiction, should not be required to give security for costs unless, however the parties are arranged upon the record, he is the person invoking or resorting to the jurisdiction for the purpose of establishing rights or obtaining relief. If he does avail himself of the remedies the jurisdiction provides in order to obtain affirmative relief or redress, he may be ordered to give security, although he becomes a defendant in the action.
39 In that case, the plaintiff commenced a proceeding after the service upon him of a statutory notice by the defendant under the Customs Act 1901 (Cth), the effect of which required the plaintiff to commence an action for recovery of coins seized by the defendant, failing which the coins would be forfeited to the Crown.
40 At first instance, Starke J made an order requiring the plaintiff to provide security for costs. That order was set aside on appeal by the Full Court of the High Court of Australia (Latham CJ, Rich, Dixon and McTiernan JJ). Latham CJ at page 180 stated:
In this case the Collector really initiated legal process by giving a notice under sec.207 which would result in the exclusion of any right of the plaintiff unless the plaintiff himself took legal proceedings. If the Collector had not acted under sec. 207, it would not have been necessary for the plaintiff, in order to prevent the extinction of his right, to take any proceedings. If, no notice having been given, he took proceedings in conversion or detinue, he would be in the same position as any plaintiff who comes into the jurisdiction to complain of an act which he alleges to be wrongful. But, as the Collector has given him a notice under sec. 207, he is, in effect, forced into legal proceedings, not merely to enforce his claim, but to prevent his claim from being extinguished. He is therefore really in the position of a defendant.
41 Dixon J stated at pages 185-186:
It appears to me that the Collector is the actor. The notice is a step taken by him directed at obtaining a condemnation. It is a statutory substitute for judicial proceedings by the Crown against the goods. Its effect is to cast the onus of taking proceedings upon the owner or supposed owner.
42 A similar approach has been taken in some cases where a party has brought an action to set aside a statutory demand served under the Corporations Act 2001 (Cth) in circumstances where that party is in effect compelled to seek to set aside the statutory demand lest it suffer the consequences that flow from the service of such a demand.
43 Whilst it is necessary to consider substance rather than form, the question does not reduce to a consideration of who is "attacking" and who is "defending" at a commercial level. The relative positions of the parties are to be considered by reference to the commencement of proceedings, as is clear from the passages from the judgments of Latham CJ and Dixon J in Willey extracted above at paragraphs [40] and [41] above. This distinction was explained by Mossop J in Atarashii Stone Pty Ltd v Granite Transformations Ltd (No 3) [2017] ACTSC 198 at [15]-[19]:
[15] The plaintiff relied upon the decision in Willey and subsequent cases to support the proposition that because the defendant was in a commercial sense the aggressor by terminating the franchise agreement, the plaintiff, for the purposes of this application, should be characterised as being effectively in the position of a defendant. The decision in Willey was relied upon by Blackburn J in Re: Travelodge Australia (1978) 21 ACTR 17. It was also relied upon in Amalgamated Mining Services v Warman International Ltd (1988) 19 FCR 324 ('Amalgamated Mining').
[16] In each of these cases a step had been taken by the defendant which triggered or enlivened a statutory power which compelled, in a legal or commercial sense, the plaintiff to take the proceedings which it did. In Willey, it was the giving of the notice under s 207 of the Customs Act 1901 (Cth) which would result in the forfeiture of the goods the subject of the action. In Re: Travelodge Australia it was the service of a notice under the company's ordinance which would have required the respondent to acquire the applicant's stock. In Amalgamated Mining it was the assertion of breaches of copyright against a third party which was offering to supply the applicant's parts for the respondent's pumps. That gave rise to an entitlement under s 202 of the Copyright Act 1968 (Cth) to bring proceedings to obtain a declaration that threats of breach were unjustifiable. In such proceedings the respondent was statutorily entitled to make a counterclaim for relief for breach of copyright, which the respondent had done.
[17] An equivalent category of case would also be applications to set aside a statutory demand under the Corporations Act where, because a party is compelled to respond to the statutory process invoked by the defendant, it would be inappropriate to make an award of security for costs.
[18] So far as the researches of counsel have disclosed, these decisions have not been applied in cases where there is simply an allegation of a breach of contract. It is not appropriate on this application to apply the cases more generally so as to ask in the language of Scrutton LJ in Maatschappij voor Fondsenbezit v Shell Transport and Trading Co [1923] 2 KB 166 at 178, "[w]ho is the attacker and who the defender". If that was the case, then in any breach of contract case, notwithstanding the form of the action, an inquiry would need to be made having regard to the underlying commercial dealings of which party was appropriately characterised as attacker or defender.
[19] In this case, although it can be seen that in order to preserve its business the plaintiff was compelled to challenge the termination by the defendant of the franchise, that is not sufficient to put it in the category of case equivalent to that in Willey.
44 In the present case, the applicant has commenced a proceeding in this jurisdiction seeking relief from this Court. The applicant suggests that the respondents are the attacking parties because of their failure to return the applicant's Deposit. However, to the extent that it may be considered an attack at all (which is doubtful), it is an attack at a commercial level and is insufficient to attract the operation of the principle described in Willey. Put another way, the respondents have not taken any steps by way of initiation of a proceeding whether in fact or in substance (for example, by the service of a statutory notice) which has compelled the applicant to commence this proceeding.
45 The applicant relied upon three decisions of this Court in support of its argument that it is in substance a respondent, namely Rusca Bros Services Pty Ltd v DLaw Pty Ltd, in the matter of Rusca Bros Services Pty Ltd [2019] FCA 562 (Markovic J); Toolgen Incorporated v Fisher [2019] FCA 2158 (Nicholas J); and Energy City Qatar Holding Company v Hubstreet Equipment Pty Ltd [2020] FCA 1033 (Jagot J). None of these decisions advances the applicant's case or is inconsistent with the analysis of the principles set out above.
46 I also do not accept that the applicant is in substance a respondent who has been forced to bring the proceedings in response to a self-help measure taken by the respondents. No action on behalf of the respondents has compelled the applicant to bring this proceeding.
47 Further, the proceeding brought by the applicant is not limited to a case based on contract but extends to a case based upon allegations of unconscionable conduct in contravention of s 21 of the Australian Consumer Law (in the case of the first respondent) and involvement in such conduct (in the case of the second respondent). The applicant has chosen to open a new front and has included as a party to the proceeding the second respondent who is not a party to the contract. As such, the applicant's action in commencing this proceeding cannot be characterised as defensive: see Energy City Qatar at [9], citing Visco v Minter [1969] 2 All ER 714 at 716.
48 For the above reasons, I am not satisfied that the applicant should be treated as if it were a respondent for the purposes of the security for costs application.