Global Access Ltd v Educationdynamics, LLC & Anor

PROCEDURE - COSTS - SECURITY FOR COSTS - RESIDENCE OUT OF JURISDICTION - GENERALLY - where the plaintiff is registered as owner of the domain name 'elearner.com' and operates the 'elearner.com' website - where the first defendant lodged a complaint pursuant to the Uniform Domain Name Dispute Resolution Policy - where the independent adjudication of the complaint was in favour of the first defendant - where the plaintiff's registration agreement with the second defendant, a domain name registrar, provided for transfer of the domain name in the event of such an adjudication - the terms of the dispute resolution process incorporated by the registration agreement required the plaintiff to initiate court proceedings or the domain name would be transferred by the second defendant - whether the jurisdiction for the court to order security for costs is enlivened - whether the plaintiff is effectively in the position of the defendant - whether the proceedings are defensive or seeking to establish rights by judicial determination

Uniform Civil Procedure Rules 1999 (Qld), r 671, r 672(f)

Aquatown Pty Ltd v Holder Stroud Pty Ltd [1995] FCA 1667; (1995) 18 ACSR 622, cited

Amalgamated Mining Services Pty Ltd v Warman International Ltd [1988] FCA 309; (1988) 19 FCR 324, considered

Branir v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424, cited

Castillejo v Botella [2008] QSC 333, cited

Energy Drilling Inc v Petroz NL (1989) ATPR 40-954, cited

Equity Access Ltd v Westpac Banking Corporation [1989] FCA 361; (1989) ATPR 40-972, cited

In re Little Olympian Each Ways Ltd [1995] 1 WLR 560, cited

Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621, considered

Maatschappij voor Fondsenbezit v Shell Transport & Trading Co Ltd [1923] 2 KB 166, cited

Monte v Gianni Versace SpA [2003] FCA 956, cited

Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd [1999] FCA 764, cited

Olbers Co Ltd v Commonwealth [2002] FCA 1269, considered

PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321, cited

Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd (No 2) [2006] NSWCA 147, cited

Re Travelodge Australia Ltd (1978) 21 ACTR 17, considered

Willey v Synan [1935] HCA 76; (1935) 54 CLR 175, considered/applied

Bennett & Philp Lawyers as town agents for Wrays Lawyers for the plaintiff/respondent

[1] The first defendant seeks an order for security for costs against the plaintiff. The plaintiff was incorporated in the Isle of Man and has its registered office there. Its directors, its secretary and its sole shareholder all have addresses on the Isle of Man. The jurisdiction to order security for costs against it is engaged because it is "ordinarily resident outside Australia".[1] This is because its "central management and control" is located outside Australia.[2] There is also reason to believe that it will be unable to pay the first defendant's costs if ordered to pay them.[3] This is because there is no evidence that it has assets in Australia or, indeed, anywhere else. If the first defendant is successful at trial it will be difficult for it to enforce any costs order against the plaintiff in the Isle of Man, given the evidence that there is no treaty or reciprocal arrangements between Australia and the Isle of Man that would facilitate enforcement of a costs order.[4] The plaintiff has a paid up capital of £2. Its principal trade or business is described on its annual company return for 2009 as "Direct Navigation Using Internet".

[2] On or about 28 May 2009 the plaintiff acquired the registration of the domain name "elearner.com" for valuable consideration from a third party ("the Domain Name"). The Domain Name was first registered with the .com registry on or before 30 November 1999. It has been used for website referencing, amongst other things, educational resources, since 2002, if not earlier.

[3] The first defendant is incorporated in Delaware in the United States of America. It has US registered trademarks for ELEARNERS and ELEARNERS.COM.

[4] The second defendant is an Australian company with its registered office in Queensland. It is a domain name registrar providing domain name registrations and associated services. It became the registrar of the Domain Name in around January 2009. The second defendant, on behalf of the plaintiff, operates a website using the Domain Name. When it became the registrant of the Domain Name, the plaintiff and the defendant entered into a Registration Agreement that incorporated the Uniform Domain Name Dispute Resolution Policy (UDNDRP) adopted by the Internet Corporation for Assigned Names and Numbers (ICANN).

[5] On 28 May 2009 the first defendant filed a complaint in respect of the Domain Name in accordance with the UDNDRP. The plaintiff filed substantial responses. In essence, the plaintiff contended that the term "elearner" is an inherently descriptive term, that the first defendant should not be entitled to rely upon the trademark registrations in the United States of America and that the plaintiff's use of the Domain Name was bona fide, legitimate and in good faith.

[6] On 22 July 2009 a panel of the National Arbitration Forum handed down its decision. A majority of the three member panel concluded that the Domain Name should be transferred from the plaintiff to the first defendant. It concluded that:

(a) The Domain Name registered by the plaintiff is identical or confusingly similar to a trademark or service mark in which the first defendant has rights;

(b) The plaintiff has no rights or legitimate interests in respect of the Domain Name; and

(c) The Domain Name had been registered and was being used in bad faith.

[7] The UDNDRP incorporated by the Registration Agreement relevantly provided that the mandatory administrative proceeding did not prevent either the plaintiff or the first defendant from submitting the dispute to a court of competent jurisdiction for independent resolution after such a proceeding was concluded, and that if a panel decided that the Domain Name registration should be cancelled or transferred a period of 10 days would be allowed before implementing the decision. Under clause 4(k) of the UDNDRP the decision would be implemented unless official documentation showed that the plaintiff had commenced a lawsuit against the first defendant in a jurisdiction to which the first defendant had submitted under the relevant paragraph of the Rules of Procedure. That jurisdiction is either the location of the registrar's principal office or the address of the plaintiff. The first defendant in filing its complaint submitted to the jurisdiction of the principal office of the second defendant, namely Queensland.

[8] On 7 August 2009 the plaintiff commenced proceedings in this Court seeking, amongst other things:

(a) an order restraining the second defendant from transferring the registration of the Domain Name;

(b) a declaration that it is the owner of the registration of the Domain Name;

(c) a declaration that the first defendant has no legal rights to, or interests in, the registration of the Domain Name;

(d) a declaration that the first defendant has no legal rights to, or interests in, the Domain Name;

(e) a declaration that the first defendant has no right to become the registrant of the Domain Name unless and until authorised by the plaintiff.

[9] The plaintiff opposes the first defendant's application for security for costs on the basis that it is effectively in the position of a defendant, having commenced defensive proceedings to avoid the second defendant from transferring its Domain Name, elearner.com, to the first defendant. It invokes the principle that a party to judicial proceedings, which resides beyond the jurisdiction, should not be required to give security for costs unless, however the parties are arranged upon the record, it is the party invoking or resorting to the jurisdiction for the purpose of establishing rights or obtaining relief.

[10] Rule 672(f) of the UCPR provides that one of the matters to which the Court may have regard in deciding whether to make an order for security for costs is "whether the plaintiff is effectively in the position of a defendant".

[11] The first defendant responds that the plaintiff is not only the plaintiff as a matter of record. It is the plaintiff as a matter of substance. The first defendant submits that the decision in its favour by the National Arbitration Forum is analogous to an arbitration, adjudication or other "first instance legal decision which operates according to its terms". It submits that the principles that apply to losing litigants that file an appeal or a challenge to an adjudicator's determination apply by way of analogy. As a result, it submits that the plaintiff should be seen as seeking further resolution of the dispute by litigation against the first defendant and is "thereby the aggressor".

[12] The mere circumstance that a plaintiff is resident outside the jurisdiction does not necessarily invite an exercise of discretion in favour of ordering security, the question being how justice will best be served in the particular case.[4] However, the fact that a plaintiff is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a "circumstance of great weight in determining whether an order for security for costs should be made".[5] As McHugh J stated in PS Chellaram & Co Ltd v China Ocean Shipping Co,

_"_the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction."[6]

[13] In summary, the jurisdiction of this Court to order security for costs is engaged. The issue for my determination is whether, as a matter of discretion, and in accordance with the principles that the plaintiff seeks to invoke, I should decline to order security for costs because the plaintiff is effectively in the position of a defendant, having commenced defensive proceedings to avoid the second defendant from transferring the Domain Name to the first defendant.

The discretionary factor of whether the plaintiff is effectively the defendant

[14] The discretionary factor in r 672(f) of "whether the plaintiff is effectively in the position of a defendant" is invoked by the plaintiff as a significant factor weighing against an order for security, notwithstanding that it is ordinarily resident outside Australia, on the basis that it has commenced "defensive proceedings". The plaintiff relies upon an established body of authority, including Willey v Synan.[7] In that matter the Collector of Customs had given notice to the plaintiff requiring him to commence an action for the recovery of certain coins stating that in default of bringing such action the coins would be condemned without further proceedings pursuant to the provisions of the Customs Act 1901 (Cth). The plaintiff, who was not ordinarily resident in Australia, commenced an action against the Collector of Customs for the recovery of the coins. The High Court ruled that because the statutory notice would have resulted in statutory forfeiture had proceedings not been commenced, the plaintiff was in substance in the position of a defendant and that security for costs should not be ordered.

[15] Dixon J (with whom Rich J agreed) stated the principle as follows:[8]

"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. ... The principle was considered in Maatschappij voor Fondsenbezit v Shell Transport and Trading Co,[9] where a number of the illustrative cases are collected in the judgment of Scrutton LJ. He said: '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.'"

"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. ... The provisions of the Customs Act, in effect, enable the officers of the Crown to take the preliminary steps by simple notices out of 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."

Judgments to the same effect were delivered by Latham CJ and McTiernan J. Latham CJ stated:[11]

"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. ... [the plaintiff] is, in effect, forced into legal proceedings, not merely to enforce his claim, but to prevent his claim from being extinguished."

[17] The principle in Willey v Synan has been applied in a number of authorities. In Re Travelodge Australia Ltd[12] Blackburn CJ referred to the principle stated by Scrutton LJ in Maatschappij and stated:[13]

"The court always, as I understand, endeavours to be guided by the substance and not 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."

The principle was applied by Blackburn J in a case in which the nominal plaintiff was defending his rights to stock units against a party who was seeking to compulsorily acquire them pursuant to a notice under companies legislation. The effect of the statute was to entitle the party who issued the notice to acquire the units if nothing further occurred. The case was found to resemble Willey v Synan, namely a party seeking to preserve a valuable right "which by the combined effect of a statute and the actions of the respondent may be taken away from him".[14]

[18] In Amalgamated Mining Services Pty Ltd v Warman International Ltd[15] Wilcox J applied the principle stated by Scrutton LJ in Maatschappij voor Fondsenbezit v Shell Transport and Trading Co and Willey v Synan. 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. The application was dismissed. Wilcox J ruled that the case was "not as strong as Willey v Synan, where the plaintiff was forced to take proceedings or lose any subsequent claim to the money which had been taken from him by the Customs Department. However, in a practical sense, the present applicant has been forced to take legal action".[16] His Honour concluded:[17]

"If one applies the homely test adopted by Scrutton LJ 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."

[19] Aquatown Pty Ltd v Holder Stroud Pty Ltd[18] considered Willey v Synan in the context of a statutory demand which the plaintiff applied to set aside. Sundberg J refused an application that the plaintiff provide security, and stated:[19]

"... I am of the view that the principle to apply in the present case is that espoused in Willey v Synan, and that the fact that a plaintiff/applicant has been forced into litigation so as to be a true defendant is more than a matter to be taken into consideration in the exercise of the discretion whether to require security. In the present case the applicant was in a practical sense forced into initiating litigation in order to avoid a ground upon which it could be wound up coming into existence. In those circumstances, security is not to be ordered."

[20] The same principle was applied by French J in Olbers Co Ltd v Commonwealth of Australia.[20] The plaintiff company owned a fishing ship that was intercepted in the Southern Ocean by Australian authorities. The ship was alleged to have had a catch of Patagonian Toothfish contrary to the Fisheries Management Act 1991 (Cth). A notice of seizure and forfeiture of the ship was given under s 106C of that Act. The ship's owner was later given notice requiring it to institute proceedings against the Commonwealth within two months for recovery or a declaration that the vessel was not forfeited, otherwise the ship would be condemned.

[21] French J noted[21] that the proceedings brought by the plaintiff were defensive and analogous to Willey v Synan because the proceedings were brought to avoid condemnation of the vessel pursuant to statutory provisions. His Honour said[22] "At the very least, the status of an applicant as a de facto defendant is a significant factor weighing against an order for security". His Honour referred to the judgment of Ormiston J in Interwest Ltd (Receivers and Managers Appointed) v Tricontinental Corporation Ltd[23] who stated:

"Principally it would appear necessary to characterise the proceedings in respect of which security is sought. If they are 'defensive' proceedings, either directly resisting proceedings already brought or seeking to 'halt self-help procedures', it would seem that to require security would be oppressive, or at least would provide serious grounds for refusing to make an order. At the least, it is a factor to be considered in the exercise of the discretion."

"The present case is one, in my opinion, in which the applicant is in truth in the position of a defendant resisting a statutory claim to its property. Whether as a factor weighing in the discretion or attracting the application of a principle that security should not be granted in such a case, I am of the view that it is inappropriate to order security in this case."

[23] The plaintiff submits that the facts of this case are analogous to the facts of the cases relied upon by it. The plaintiff is said to have been forced to commence the proceedings pursuant to the Registration Agreement which incorporated clause 4(k) of the UDNDRP or face losing the Domain Name which it had acquired for valuable consideration and in relation to which it earns revenue. If the plaintiff had not commenced the proceedings and served the originating process on the second defendant by 10 August 2009, the second defendant would have transferred the Domain Name to the first defendant in accordance with the terms of the Registration Agreement.

[24] The plaintiff submits that these are "defensive proceedings", that the first defendant is "the aggressor" and that the first defendant chose Queensland as the jurisdiction in which the plaintiff could commence a proceeding of the kind contemplated by clause 4(k) of the UDNDRP.

[25] In response, the first defendant submits that the plaintiff is not responding in a defensive way to some precipitous action by it, such as issuing a statutory notice (as in Willey v Synan, Re Travelodge or Olbers) or a statutory demand (as in Aquatown), making a threat of infringement proceedings (as in Amalgamated Mining Services) or some act of self help. Rather, this is a case where there has already been an adjudication, involving detailed and extensive written submissions by counsel for both parties, and a carefully considered decision by an independent panel consisting of three experts.

[26] The first defendant seeks to characterise the adjudication of the panel as akin to a hearing at first instance, from which the plaintiff is seeking to appeal. In doing so it relies upon a line of authority that this principle in Willey v Synan does not ordinarily apply in relation to security for costs of an appeal.[25] The position was summarised by Tamberlin J in Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd:[26]

"The thrust of the authorities is to the effect that where a party has a choice as to whether proceedings are initiated or not, then it is normally appropriate such party, if it is impecunious, should provide security as to costs. I think the position is considerably different in the case of an appeal to that in the case of a trial where a cross-claim does no more than raise the same issues as raised in the defence. That appears to have been the position at trial in the present case. However, once one comes to the question of an appeal, it seems to me that the initiating party having the carriage of the matter and forcing the other party into the litigation, or into the continuance of the litigation, is the appellant. In such circumstances, I agree with the conclusions expressed by Jenkinson J in Riv-Oland and also the English Court of Appeal in Dence, that in an appeal the position is different. In an appeal the appellant ought, where it is impecunious, provide security for costs unless there are particular circumstances which support a contrary conclusion. Moreover, on an appeal the respondent has the benefit of a considered judgment in his favour unlike the position before trial." (emphasis added).

[27] I do not consider that the plaintiff's proceeding is in the nature of an appeal unless that term is used in a very loose sense. It has some resemblance to an "appeal" from a decision made by the Registrar of Trade Marks in respect of opposition to a trade mark, in that the proceeding follows an earlier determination and will result in a judicial determination on the merits. The current proceeding certainly does not involve a proceeding in the nature of an appeal from a judicial determination of the parties' rights in which error in the decision being appealed from must be shown.[27] The proceeding seeks a judicial determination of rights, not by way of appeal, but by way of the initiation of proceedings in a court for the first time. The first defendant did not submit that the proceeding is an appeal, but relied upon the cases involving appeals by way of analogy. The principles relating to appeals were submitted to apply by analogy in that the plaintiff should be seen as now seeking further resolution of this dispute by litigation against the first defendant, and is thereby the aggressor. The effect of the panel's decision was submitted to be no different for present purposes to a first instance legal decision which operates according to its terms, requiring a transfer of the domain name, unless the losing litigant files an appeal and obtains a stay of execution.

[28] The first defendant also relied by way of analogy on challenges to an adjudication decision, and cited the decision of the New South Wales Court of Appeal in Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd (No 2)[28] which concerned an adjudication under the Building & Construction Industry Security of Payment Act 1999 (NSW). An adjudication under the legislation left "the ultimate rights of the parties" to be determined "in ordinary court proceedings".[29] Hodgson JA stated that:[30]

"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."

[29] Whilst an adjudicator's decision under such legislation has statutory recognition, the first defendant's argument by way of analogy has considerable force. However, rather than proceed by way of analogy, strained or otherwise, it is preferable to have regard to the character of the adjudication decision and the nature of the proceeding that the plaintiff was obliged to commence if it wished to avoid its consequences.

The character of the adjudication decision and the nature of the challenge to it

[30] The adjudication decision that resulted in consequences for the future registration of the Domain Name arose because the plaintiff submitted by agreement to such an adjudication process and those consequences.

[31] The Registration Agreement entered into between the plaintiff and the second defendant incorporates the UDNDRP adopted by ICANN. Clause 4.2 of the Registration Agreement provides:

"For the adjudication of disputes concerning or arising from use of the Registered Name, you shall submit, without prejudice to other potentially applicable jurisdictions, to the jurisdiction of the courts of both your domicile and where Fabulous.com is located."

[32] Clause 16.2 of the Registration Agreement provides:

"16.2 Your Registered Names are subject to suspension, cancellation, transfer or modification by Fabulous.com, pursuant to the terms of any applicable rules, policies or procedures adopted by;

(b) any domain name registrar (including Fabulous.com) or any central domain name registry operator (including the Registry) to the extent that they are not inconsistent with those of or adopted by ICANN, for the purpose(s) of:

(i) correcting mistakes by Fabulous.com or any central domain name registry operator (including the Registry) in registering, renewing and/or transferring the Registered Names; or

(ii) resolving disputes concerning the Registered Names."

[33] The Registration Agreement incorporated the UDNDRP, clause 3 of which provides:

"We will cancel, transfer or otherwise make changes to domain name registrations under the following circumstances:

(a) subject to the provisions of paragraph 8, our receipt of written or appropriate electronic instructions from you or your authorized agent to take such action;

(b) our receipt of an order from a court or arbitral tribunal, in each case of competent jurisdiction, requiring such action; and/or

(c) our receipt of a decision from an Administrative Panel requiring such action in any administrative proceeding to which you were a party and which was conducted under this Policy or later version of this Policy adopted by ICANN (See paragraph 4(i) and (k) below).

We may also cancel, transfer or otherwise make changes to a domain name registration in accordance with the terms of your Registration Agreement or other legal requirements."

[34] Clause 4(a) of the UDNDRP required the plaintiff to submit to:

"a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of Procedure, that:

(i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

(ii) you have no rights or legitimate interests in respect of the domain name; and

(iii) your domain name has been registered and is being used in bad faith.

In the administrative proceeding, the complainant must prove that each of these three elements are present."

"The complainant shall select the Provider from among those approved by ICANN by submitting the complaint to that Provider. The selected Provider will administer the proceeding, except in cases of consolidation as described in paragraph 4(f)."

"The mandatory administrative proceeding requirements set forth in paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded. If an Administrative Panel decides that your domain name registration should be cancelled or transferred, we will wait ten (10) business days (as observed in the location of our principal office) after we are informed by the applicable Provider of the Administrative Panel's decision before implementing that decision. We will then implement the decision unless we have received from you during that ten (10) business day period official documentation (such as a copy of a complaint, file-stamped by the clerk of the court) that you have commenced a lawsuit against the complainant in a jurisdiction to which the complainant has submitted under paragraph 3(b)(xiii) of the Rules of Procedure. (In general, that jurisdiction is either the location of our principal office or of your address as shown in our Whois database. See paragraphs 1 and 3(b)(xiii) of the Rules of Procedure for details.) If we receive such documentation within the ten (10) business day period, we will not implement the Administrative Panel's decision, and we will take no further action, until we receive (i) evidence satisfactory to us of a resolution between the parties; (ii) evidence satisfactory to us that your lawsuit has been dismissed or withdrawn; or (iii) a copy of an order from such court dismissing your lawsuit or ordering that you do not have the right to continue to use your domain name."

[37] On 28 May 2009, the first defendant filed a complaint concerning the plaintiff's use of the Domain Name (elearner.com) with the National Arbitration Forum ("NAF") in accordance with the UDNDRP.[31] The complaint refers to the first defendant as the "Complainant" and the plaintiff as the "Respondent".

"EducationDynamics owns and operates the website www.elearners.com where it uses "ELEARNERS and ELEARNERS.COM trademarks in connection with providing information about degree programs and online education, and also disseminating advertising for others".

"To solidify some of its common-law trademark rights, EducationDynamics has obtained United States trademark registrations for ELEARNERS (Reg. No. 2,470,525, registered on July 17, 2001) and ELEARNERS.COM (Reg. No. 2, 537, 155, registered on February 5, 2002), for '[d]issemination of advertising for others via an on-line electronic communications network.'"

"The Complainant will submit, with respect to any challenges to a decision in the administrative proceeding cancelling or transferring the domain name to the location of the principal office of the concerned registrar (ICANN Rule 3(b)(xiii))."

As a result the first defendant submitted to any challenge to a decision in the administrative proceeding being filed in Queensland.

[41] The complaint addressed the three essential grounds for such a complaint, namely:

1. that the Domain Name is confusingly similar to the first defendant's two US trade marks, ELEARNERS and ELEARNERS.COM;

2. the plaintiff has no rights or legitimate interests in respect of the Domain Name; and

3. the Domain Name was registered and is being used by the plaintiff in bad faith.

[42] On 29 June 2009, the plaintiff filed a comprehensive submission in response. After additional submissions from the first defendant filed on 6 July 2009, the plaintiff filed a supplementary response on 10 July 2009.

[43] That proceeding resulted in a considered decision by the panel issued on

22 July 2009 which canvassed a range of legal and factual issues. By majority, the panel decided that the first defendant having established all three elements required under the policy, relief should be granted and ordered that the Domain Name be transferred from the first defendant to the plaintiff. The other member gave a strong dissenting opinion.

[44] In accordance with paragraph 4(k) of the UDNDRP, the second defendant was required to implement that decision of the panel if proceedings by way of submission of that dispute to a court of competent jurisdiction were not commenced within 10 business days.

[45] These proceedings were commenced by the plaintiff by claim and statement of claim filed on 7 August 2009. The plaintiff's claim includes an order restraining the second defendant from transferring the Domain Name to the first defendant. The plaintiff also claims declaratory relief including declarations that the first defendant has no legal rights to, or interests in, the Domain Name or the registration of the Domain Name. In particular, the plaintiff claims that under the laws of Queensland and/or Australia, the first defendant has no rights to, or interests in, the registration of the Domain Name or the Domain Name by virtue of NAF's decision or otherwise.[33] Paragraph 29 of the statement of claim gives the following particulars:

"(i) The first defendant has no valid claim against the plaintiff under the Trade Marks Act 1995.

(ii) The first defendant has no valid claim against the plaintiff under the Trade Practices Act 1974.

(iii) The first defendant has no rights against the plaintiff under the general law of passing-off."

[46] A defence was filed on 7 October 2009. In essence, the first defendant complains that what the plaintiff seeks to do in the statement of claim is to obtain negative declarations that, under the laws of Queensland and/or Australia, the first defendant has no rights to or interest in the registration of the Domain Name, or the Domain Name itself, under the Trade Marks Act, the Trade Practices Act or the general law of passing off. The first defendant pleads in paragraph 29 of its defence:

"(a) (i) the first defendant has not, in the Complaint or otherwise, ever asserted any claim against the plaintiff under the Trade Marks Act 1995 (Cth), the Trade Practices Act 1974 (Cth), or the general law of passing off;

(ii) in the premises alleged in subparagraph 29(i) hereof, there is no current or real dispute between the parties in which the first defendant has claimed relief against the plaintiff by legal process, demand or otherwise, under the Trade Marks Act, the Trade Practices Act, or the general law of passing off;

(iii) accordingly, this Court is being asked to give an advisory opinion on a hypothetical case;

(iv) in the premises alleged in subparagraphs 29(i) - (iii) hereof:

1. the declarations sought in paragraphs 5, 6 and 7 of the claim lack utility;

2. the plaintiff is not entitled to the negative declarations sought in paragraphs 5, 6 and 7 of the claim;

(i) the plaintiff's claim herein does not dispute, or relate to a dispute or allegation;

(A) that the Domain Name is identical or confusingly similar to trade marks in which the first defendant has rights, namely ELEARNERS (United States registered trade mark No.2,470,525) and ELEARNERS.COM (United States registered trade mark No.2,537,144); and

(B) that the plaintiff has no rights or legitimate rights in respect of the Domain Name; and

(C) that the Domain Name has been registered and is being used by the plaintiff in bad faith;

(ii) in the premises pleaded in subparagraphs 29(b) and 21(d) hereof, the plaintiff's claim herein is not within the meaning of the term "the dispute" as used in paragraph 4(k) of the UDRP".

[47] In reply, and in response to a request for further particulars of the allegation in paragraph 29 of the statement of claim, the plaintiff's reply filed on 21 October 2009 pleads:

"(i) the Domain Name is not identical or confusingly similar to any trade marks in which the first defendant has rights;

(ii) the plaintiff has rights or legitimate interests in the Domain Name;

(iii) the Domain Name has been registered and is not being used by the plaintiff in bad faith."

[48] In short, in this way the plaintiff seeks to litigate, amongst other issues including fiduciary duties that the second defendant is alleged to have owed to it, the three issues litigated before the panel. It is uncertain upon what basis an Australian court could adjudicate on issues relating to United States trade marks. For present purposes it is sufficient to note that the plaintiff seeks a judicial determination in this Court of its rights, and seeks the determination of at least the three issues adjudicated upon by the panel.

Is the plaintiff effectively in the position of a defendant?

[49] Unlike other cases upon which the plaintiff relies, the plaintiff is not responding by way of defensive proceedings to the issuing of a statutory notice or statutory demand, being a unilateral act that has consequences for a party's rights or property by force of statute. The plaintiff is responding to the threat that the Domain Name will be transferred to the first defendant. However, its need to respond by initiating proceedings arises as a result of a voluntary submission by it to the processes of the UDNDRP, and agreeing that the Domain Name would be transferred if certain events happened. These events include a decision of the kind made by the panel. The determination of the panel is different to a unilateral decision by an authority to issue a notice. It followed contested proceedings and was in the nature of an independent adjudication.

[50] The plaintiff's voluntary submission to the UDNDRP process meant that a complainant might submit, as the first defendant did in respect of its complaint, with respect to any challenge to a decision to transfer the Domain Name to the jurisdiction of the courts of Queensland,[34] being the principal office of the second defendant with which the plaintiff contracted. The complainant was in effect put to a choice of submitting to that jurisdiction or the jurisdiction of the Domain Name holder's address, namely the Isle of Man. Although, as the plaintiff contends in this application, "the first defendant itself chose Queensland as the jurisdiction in which the plaintiff could commence proceedings concerning the transfer of the Domain Name", its choices under the UDNDRP process were limited. In any event, this is not a case in which a party is forced into a foreign court as the initiator of litigation to protect itself from attack in the form of self-help or a unilateral act, such as the issuing of a statutory notice that has legal consequences that do not depend upon an independent adjudication.

[51] The plaintiff was obliged to initiate proceedings[35] if it wished to avoid the consequences that it agreed would follow from an adverse panel adjudication. The panel's adjudication did not have the statutory recognition of an adjudication decision of the kind considered in Procorp Civil Pty Ltd,[36] and the panel's decision did not have a statutory basis, unlike a decision of the Registrar of Trade Marks in proceedings involving registration of a trade mark. However, I do not consider that the absence of such a statutory basis for the decision is a significant consideration for present purposes. The proceedings before the panel were proceedings which the plaintiff agreed would affect the registration of the Domain Name. The proceedings that it initiated in this court were responding to the kind of adjudication which the plaintiff, by its acceptance of the terms of the Registration Agreement, agreed would lead to the transfer of the Domain Name if it did not initiate proceedings. The consequences that the plaintiff seeks to avoid by initiating these proceedings are not consequences that arise by force of statute. They arise by force of the contractual terms to which the plaintiff voluntarily agreed.

[52] Those consequences were triggered by the first defendant's complaint. However, the first defendant's "attack" in the form of the complaint did not directly lead to a transfer of the Domain Name. The threatened transfer depended on an independent adjudication.

[53] The proceedings in this Court are not in the nature of an appeal from that adjudication.[37] However, the plaintiff seeks to prevent the adjudication taking effect according to the terms to which the first defendant agreed. The suggested analogy with a challenge to an adjudicator's decision in Procorp Civil Pty Ltd has some attraction. A point of difference is that such a challenge seeks to have the adjudication decision set aside due to its invalidity as a matter of law. In the present proceeding, the plaintiff does not, strictly speaking, seek to have the adjudication decision set aside. Instead, it has initiated proceedings for the purpose of establishing its rights, and to halt consequences that otherwise would flow from an adjudication.

[54] In doing so, the plaintiff is not responding in a defensive way to a unilateral act that directly affects his rights. To adopt the words of Dixon J in Willey v Synan, it is "invoking or resorting to the jurisdiction for the purpose of establishing rights or obtaining relief". The jurisdiction is one that the plaintiff agreed to invoke in the event of an adverse adjudication if it wished to avoid the consequences of the adjudication.

[55] It is possible to contend that the plaintiff is "really defending [itself] against attack" and that, as a result, it is not a "foreign attacker". It is more accurate to say that it is defending itself from legal and practical consequences that the plaintiff voluntarily accepted, and which flow not directly from the first defendant's attack on its registration, but from an independent adjudication.

[56] In the circumstances, the plaintiff does not have a strong basis to invoke the discretionary consideration recognized in Willey v Synan. It is true that if it wished to retain registration of the Domain Name it had very little alternative than to take the course of initiating proceedings in this Court. However, the matter is one in which the plaintiff has initiated proceedings to obtain a judicial determination of its and the first defendant's rights. In doing so it seeks to stop the consequences of an independent adjudication.

[57] Whether or not these proceedings are characterised as "defensive proceedings" depends upon ones perspective. From the standpoint of the plaintiff, it has been forced to litigate, and to defend its registration, as a result of the first defendant's attack in the form of the complaint. From the standpoint of the first defendant, it has been forced to defend its interests in a foreign court in litigation commenced by the plaintiff because the plaintiff did not wish to accept the consequences of an independent adjudication. From this Court's standpoint, the current proceedings are not easily characterised as "defensive proceedings". They certainly are not resisting the consequences of an attack in the form of self-help or the issuing of a notice that has legal consequences by virtue of statute. They were not initiated in a defensive way in the face of threatened proceedings. 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 Wallis v Synan, the plaintiff is "the person invoking or resorting to the jurisdiction for the purpose of establishing rights or obtaining relief."

[58] Accordingly, the plaintiff has a weak claim upon the discretionary consideration that it "is effectively in the position of a defendant." The weight to be accorded to that consideration is substantially outweighed by the weight that should be given to the fact that the plaintiff is resident out of the jurisdiction and has no assets here, and the difficulty that the first defendant will encounter in enforcing any costs order in its favour.

[59] The first defendant invites consideration pursuant to rule 671(b) and (c) of the plaintiff's prospects of success or merits in the proceeding, and the genuineness of this proceeding.

[60] I have previewed the issues raised by the pleadings as to whether the jurisdiction of the court was invoked by the submission of "the dispute", and whether there is a dispute that entitles the plaintiff to obtain negative declarations to the effect that, under the laws of Queensland and/or Australia, the first defendant has no rights to or interest in the registration of the Domain Name, or the Domain Name itself, under the Trade Marks Act, the Trade Practices Act or the general law of passing off. The reply appears to raise the three issues determined in the panel's adjudication. To the extent that the plaintiff seeks a determination of entitlement to US Trade Marks, an issue arises about this court's jurisdiction to adjudicate such a matter. The plaintiff's arguments on the three issues cannot be said to be without merit, given the dissenting opinion in the panel's adjudication.

[61] On applications for security for costs it is often unnecessary or inappropriate to embark upon a detailed consideration of the merits. It is sometimes sufficient to be satisfied that the plaintiff has an arguable case.[38] Provided the plaintiff can engage the jurisdiction of this Court to make the declarations that it seeks, its case with respect to the three issues raised by it cannot be described as frivolous or vexatious.

[62] I am not persuaded that the proceedings are not genuine. The first defendant submits that the plaintiff might have sought to protect its rights by legal proceedings in the USA, where the panel's adjudication occurred and the first defendant is based. It submits that, instead, the plaintiff chose to proceed in this forum (which does not have exclusive jurisdiction), where additional unnecessary expense will be incurred by the first defendant in defending the proceeding. However, to halt the transfer of the registration as a consequence of the adjudication, the plaintiff was required to initiate proceedings in this jurisdiction, being the jurisdiction to which the first defendant agreed to submit when it filed its complaint. I decline to find that this proceeding is not genuine.

[63] I conclude that the discretion to order security for costs should be exercised.

[64] The quantum of security sought by the first defendant appears in the affidavit of Mr Alexander, who is an experienced solicitor with extensive experience in litigation. Mr Alexander has estimated the first defendant's standard basis costs as between $63,968 and $77,231. These include the costs of a two day trial. There was no contest to Mr Alexander's estimate, and I regard it as reasonably conservative, given the potential for interlocutory hearings. I intend to fix security up to and including the first day of the trial in the amount of $60,000.

[65] The appropriate form of security is by way of payment into Court, or alternatively, an irrevocable and unconditional bank guarantee from a major Australian trading bank; and the proceeding should be stayed until security is provided.

[66] The order of the court will be in terms of the draft order, save for the figure of $60,000 being inserted in paragraph 1 in lieu of the figure $77,000, and the date for the provision of security will be within 21 days.

[1] Uniform Civil Procedure Rules 1999 (Qld) ('UCPR') 671(e).

[2] In re Little Olympian Each Ways Ltd [1995] 1 WLR 560 at 566 - 567.

Affidavit of Mr Alexander filed 22 October 2008 para 15.

[4] Energy Drilling Inc v Petroz NL (1989) ATPR 40-954.

[5] PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 at 323.

[6] Ibid; see also Castillejo v Botella [2008] QSC 333 at [17].

[7] [1935] HCA 76; (1935) 54 CLR 175.

[8] [1935] HCA 76; (1935) 54 CLR 175 at 184 - 185.

[9] (1923) 2 KB 166 (footnote in original).

[10] [1935] HCA 76; (1935) 54 CLR 175 at 185 - 186.

[12] (1978) 21 ACTR 17.

[13] [1923] 2 KB 166 at 177.

[14] (1978) 21 ACTR 17 at 19.

[15] [1988] FCA 309; (1988) 19 FCR 324.

[18] [1995] FCA 1667; (1995) 18 ACSR 622.

[19] [1995] FCA 1667; (1995) 18 ACSR 622 at 626.

[20] [2002] FCA 1269.

[21] [2002] FCA 1269 at [16].

[23] (1991) 5 ACSR 621 at 627.

[24] [2002] FCA 1269 at [19].

[25] The authorities cited include Re Riv-Oland Marble Company (Vic) Pty Ltd v Settef SpA [1988] AIPC 90-503 at 38,334 and Monte v Gianni Versace SpA [2003] FCA 956 at [19].

[26] [1999] FCA 764 at [6].

[27] Branir v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at 434 [20] - 435 [21].

[28] [2006] NSWCA 147 at [5] - [11].

[30] [2006] NSWCA 147 at [10].

[34] See Clause 3 (b)(xii) of the Rules for Uniform Domain Name Dispute Resolution Policy and its definition of "Mutual Jurisdiction" JC-1 Tab 8.

[35] Whether the proceedings were by way of submitting "the dispute" to a court of competent jurisdiction for independent resolution, or simply by way of a "lawsuit against the complainant" in the jurisdiction in which the complainant had submitted is a matter that I am not required to decide on the present application, but is raised in the first defendant's defence.

[37] Although the adjudication was by the National Arbitration Forum, it was not an arbitration which comprises a contract to honour the decision of the arbitrator and a mandate to the arbitrator to make a binding determination of the legal rights of the parties: Mustill and Boyd Commercial Arbitration 2nd ed, Butterworths p 42.

[38] Equity Access Ltd v Westpac Banking Corporation [1989] FCA 361; (1989) ATPR 40,972 at 50,636; Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 514.