A defensive claim?
20 The appellant seeks to invoke the principle 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": Willey v Synan (1935) 54 CLR 175 (Willey v Synan) at 184; see also at 179-180 and 187.
21 In Maatschappij Voor Fondsenbezit v Shell Transport and Trading Company [1923] 2 KB 166, Scrutton LJ said (at 177):
The Court always, as I understand, endeavours to be guided by the substance and not by the form of the matter, and orders security for costs against the foreign attacker, not against the foreigner defending himself or his property from attack. Thus in interpleader, the defendant to the issue may be ordered to give security to the plaintiff if the defendant is really the aggressor: Tomlinson v. Land and Finance Corporation and Rhodes v. Dawson.
(Footnotes omitted.)
22 Earlier, Scrutton LJ said (at 177):
… but the position, I think, extends to every case where the person against whom security is sought is really defending himself against attack, even if he be nominally a plaintiff, but really defending himself against defendants' previous action against him.
23 In the course of oral submissions, I was taken to a number of Australian authorities that discuss this principle: Willey v Synan; Re Travelodge Australia Ltd (1978) 21 ACTR 217; Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324; Sumatra Tobacco Trading; Global Access Limited v Educationdynamics, LLC [2010] 1 Qd R 525 (Global Access). It will be necessary for me to say something more about Sumatra Tobacco Trading because, like the present case, it concerned an application for security for costs in an appeal brought from a decision of the Registrar in successful opposition proceedings.
24 The appellant's argument is that, in circumstances such as the present, the respondent is to be regarded as the aggressor, not the appellant. Thus, as a matter of discretion, an order for security should not be made against it.
25 The appellant submits that, given acceptance by the Registrar under s 33 of the Trade Marks Act, each trade mark application would have proceeded to registration but for the oppositions filed by the respondent. The Registrar's acceptance conferred valuable rights on the appellant. However, the respondent's commencement of the opposition proceedings prevented those rights maturing into the rights conferred by trade mark registration. The appellant submits that had it not commenced the present appeal, its trade mark applications would have been refused and it would have lost the rights it had gained by virtue of acceptance. It says that it has, in effect, been forced into initiating the appeal in order to prevent its rights being extinguished by the respondent's actions.
26 The appellant places reliance on the fact that the Registrar's decision under appeal was an exercise of executive power, not judicial power. The "appeal", so-called, to this Court is an entirely original proceeding. It is, for the first time, an inquiry involving the exercise of the judicial power of the Commonwealth.
27 In Jafferjee v Scarlett (1937) 57 CLR 115, Dixon J observed (at 126) that, in such an "appeal", the Court is to determine judicially whether the application for trade mark registration should succeed on the merits, not whether the administrative officer (here, the Registrar) has lawfully discharged his or her duties. There is no presumption in favour of the correctness of the decision appealed from, although weight will be given to the Registrar's opinion as that of a skilled and experienced person in the subject matter of the appeal: see also, in this connection, Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at 377. Thus, the appellant says, the parties in the present appeal are in the same position as they were before the Registrar; the respondent bears the onus of satisfying the Court that the trade marks should not be registered by reason of some available ground of opposition.
28 In Sumatra Tobacco Trading, the appellant (NVS) applied to register a trade mark under the Trade Marks Act. The respondent filed a notice of opposition. The Registrar's delegate reached a decision under s 55(1) to refuse registration. NVS appealed to the Court under s 56 of the Trade Marks Act. Greenwood J described the nature of the appeal at [9]:
[9] On the hearing of an application to the Federal Court by way of an appeal under s 56 of the Act from the delegate's decision, the court may do any one or more of the following, admit evidence orally or on affidavit or otherwise; permit the examination and cross-examination of witnesses, including witnesses who gave evidence before the registrar; order an issue of fact to be tried as it directs; affirm, reverse or vary the registrar's decision or direction; give any judgment, or make any order, that in all the circumstances it thinks fit; order a party to pay costs to another party: s 197 of the Act. The appeal proceeding is a hearing conducted "afresh" or de novo on material properly placed before the court: Rowntree plc v Rollbits Pty Ltd (1988) 10 IPR 539 at 545 per Needham J; Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365; 45 IPR 411; [1999] FCA 1020 at [32]-[37] per French J; Pioneer Electric Corporation v Registrar of Trade Marks (1977) 137 CLR 670 at 672-3; 17 ALR 43 at 46; 1A IPR 520 at 523 per Aickin J; Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 at 59; 40 IPR 498 at 506-7; [1998] FCA 440 per Branson J; Kowa Company Ltd v NV Organon (2005) 223 ALR 27; 66 IPR 131; [2005] FCA 1282 at [7] per Lander J; Pfizer Products Inc v Karam (2006) 23 ALR 787; 70 IPR 599; [2006] FCA 1663 at [5] per Gyles J; and Scotch Whisky Association v De Witt (2008) 75 IPR 280; [2008] FCA 73 at [18] per Jessup J. Although the appeal is conducted as a de novo hearing, the scope of the controversy to be resolved in the appeal is determined by the issues framed by the parties. Order 58, r 5(2) requires a party initiating an appeal to identify each ground relied upon to support the orders sought and particulars of each ground. Similarly, by O 58, r 5A(2) a cross-appellant must state and thus frame the specific grounds relied upon in support of the orders the cross-appellant seeks. In that sense, an appeal from the registrar's decision is not simply at large. In this case, NVS seeks to vary the decision by agitating the merits of the matters raised by s 44 of the Act. BAT seeks to agitate all of the matters on which it was unsuccessful.
29 NVS was an Indonesian corporation carrying on business from Indonesia. The respondent applied for an order under s 56 of the Federal Court Act that NVS provide security for costs. NVS resisted the application on a number of grounds, including that the respondent, as the opponent in the opposition before the Registrar, should be characterised as the aggressor and instigator of the controversy, with the consequence that, in an appeal to the Court from the Registrar's decision, the respondent should equally be regarded as the aggressor.
30 His Honour rejected that submission, finding (at [33]):
[33] The parties have had the benefit of a hearing before the registrar's delegate. A decision has been reached which is now subject to challenge. The appellant raises defined grounds of appeal and the cross-appellant raises a broader range of grounds which, in the judgment of the cross-appellant, calls for a particular class of evidence to be assembled. It seems to me inappropriate to characterise the cross-appellant as an aggressor which has put the applicant for the trade marks in a position before this court in any way analogous to the circumstances in Willey v Synan (1935) 54 CLR 175; [1936] ALR 1 or Re Travelodge Australia Ltd (1978) 21 ACTR 17 as discussed by Wilcox J in Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324; 88 ALR 63. In this case, NVS has elected to appeal from an adverse decision of the delegate and the cross-appellant has elected to formulate broader grounds upon which the delegate's decision was correct. Each party has had the benefit of a hearing before the delegate and each party has chosen to take a course of appealing aspects of that decision.
31 The appellant submits that I should not follow Sumatra Tobacco Trading. It submits that Greenwood J's reasoning was not informed by an argument that the "appeal" is an original proceeding in the Court which represents the first occasion on which the respondent's opposition will be determined judicially.
32 I am not persuaded that his Honour's judgment can be so readily distinguished. Having regard to his Honour's observations that I have quoted at [28] above, it is very clear that his Honour was mindful of the true nature of the "appeal" before him. His Honour's essential point was that, the parties having had the benefit of a determination before the Registrar's delegate, it would not be appropriate to characterise the successful respondent as an aggressor in an appeal initiated by the unsuccessful trade mark applicant to establish its rights.
33 The circumstances of the present case are relevantly indistinguishable from those considered by Greenwood J. Considerations of comity, consistency and certainty in judicial decision-making constrain me to exercise real and deliberate caution before refusing to follow a decision of the Court which has been given in such circumstances. It is normally said that the earlier decision should be followed unless the Judge called upon to apply it considers it to be wrong in the sense of "plainly wrong" or "clearly wrong": see the discussion in BHP Billiton Iron Ore Pty Ltd v National Competition Council (2007) 162 FCR 234 at [83]-[89].
34 In the present case, the Court is called upon to exercise a broad discretion, particularly under s 56 of the Federal Court Act, to award security for costs. Regard must be had to all the circumstances of the individual case so as to achieve a just outcome in resolving that question. Nevertheless, on the question of whether the present appeal is to be regarded as a defensive proceeding, I am persuaded that I should follow Greenwood J's decision in Sumatra Tobacco Trading. I do not consider his Honour's decision to be wrong such that I should depart from it.
35 Indeed, somewhat similar reasoning, albeit in different circumstances, was adopted by Applegarth J in Global Access when ordering security for costs against a plaintiff who had commenced proceedings for declaratory relief in respect of its entitlement to a domain name (for which it was the registrant) following a decision of the National Arbitration Forum to transfer the domain name to the first defendant in that proceeding. The plaintiff had voluntarily submitted to the processes of the Uniform Domain Name Dispute Resolution Policy adopted by the Internet Corporation for Assigned Names and Numbers. The plaintiff argued that the proceeding was commenced by it 'defensively'. This argument was rejected by Applegarth J who described the position as follows (at [57]):
[57] ... Rather than being, as the plaintiff submits, clearly in the nature of "defensive proceedings", the proceedings seek to avoid consequences for the registration of the Domain Name that arise by reason of the plaintiff's contractual acceptance of an adjudication process. That process contemplates that a party may seek to submit a matter in dispute to a court of competent jurisdiction for independent resolution. This is what the plaintiff seeks to do. The plaintiff is the plaintiff in both form and substance. It is not really defending itself from attack. It seeks a judicial determination of its rights. In the words of Dixon J in Willey v Synan, the plaintiff is "the person invoking or resorting to the jurisdiction for the purpose of establishing rights or obtaining relief".
36 Similar reasoning, albeit once again in different circumstances, was also adopted by Hodgson JA in Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd (No 2) [2006] NSWCA 147 at [5]-[11] when ordering security for costs against an appellant who had instituted a court proceeding to challenge an adjudicator's determination under the Building & Construction Industry Security of Payment Act 1999 (NSW) in respect of progress payments. Hodgson JA reasoned (at [10]):
The clear intention of the Building & Construction Industry Security of Payment Act is that progress claims made under the Act be dealt with quickly and without court proceedings, in circumstances where payments made pursuant to such claims are only provisional and the ultimate rights of the parties can be determined in ordinary court proceedings as contemplated by s.32 of that Act. In those circumstances, in my opinion, a party instituting court proceedings to challenge an adjudicator's determination or a judgment pursuant thereto is fairly regarded as being in substance a plaintiff, rather than merely defending a claim made against it. In that respect, it is unlike a company challenging a statutory demand, which is itself a document directed towards the institution of court proceedings against the company.
37 In all the circumstances, I am satisfied that it is appropriate that the appellant be ordered to provide security for the respondent's costs in the present appeal.