Inglis v English Language Company Australia Pty Ltd

Supreme Court of NSW|2019-10-10|Before: Ierace J

Solicitors: Carter Capner Law (Plaintiff/Respondent) H&H Lawyers (Defendant/Applicant) File Number(s): 2019/19254

Judgment

HIS HONOUR: The defendant, English Language Company Australia Pty Ltd, known as "ELC", filed a notice of motion on 28 February 2019 seeking an order for security for costs against the plaintiff, Stephanie Inglis, pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). If the first order is made, then the defendant seeks an order that proceedings be stayed until the security for costs is given. The defendant also seeks an order as to costs for these proceedings.

The plaintiff's claim

The plaintiff, who is 31 years of age, resides in Scotland. In a statement of claim filed on 18 January 2019, she alleges the following, by way of background to her claim.
The defendant is a business incorporated in New South Wales, with a registered office in Sydney. In 2015 and 2016, the defendant operated a business that was engaged in marketing international teaching internships to persons to teach English as a foreign language ("TEFL") in various countries, including Vietnam. It also provided training and instruction to such TEFL-qualified interns: "… in health, safety, transport and cultural features of living and working in Vietnam and the risks in relation thereto that they may encounter [and] provided accommodation and daily transport to and from same to the schools in which such TEFL qualified English language teachers taught …"
An agent of the defendant, for the purpose of selling its English language Vietnam teaching internships, was a company located in the United Kingdom, known as Teach and Travel Group Ltd, trading as "i-to-I" ("TTG").
On 3 November 2015, the plaintiff made an application to TTG via an internet facility, to enrol in a TEFL course to be provided by TTG, and to purchase an English language Vietnam teaching internship from the defendant, paying TTG the sum of GDP£1,405.
On 5 November 2015, TTG sent the plaintiff an email notifying its acceptance of her enrolment in the TEFL course and providing her with instructions for making an enrolment application with the defendant, for its January 2016 Paid Teaching Vietnam Internship Program ("the defendant's 2016 internship program"). A one-page attachment to the email, titled "Application procedure", provided a checklist for making the application and included a hyperlink to the defendant's online application form. Further attachments comprised a 20 page booklet titled "ELC Paid Vietnam Internship Program January 2016 Key Information and FAQs" ("the information memorandum") and a seven page booklet titled "ELC Teaching internships - Vietnam Health and Safety information and guidelines" ("the Health and Safety guidelines"), all of which the plaintiff read.
Between 5 and 19 November 2015, the plaintiff downloaded and read the ELC Teaching Internship Vietnam Handbook 2016 (the "Handbook"), and submitted her online application for the defendant's 2016 internship program. The defendant emailed to the plaintiff two documents for her to print, read and sign, which were titled "Key internship information", and "ELC Teaching Internship Vietnam Program: Terms and Conditions" (the "Terms and Conditions").
The plaintiff uploaded the duly signed documents to the defendant's website. The plaintiff was notified in December 2015 that her application for the "Vietnam Internship January 2016 Program" had been "accepted". The plaintiff pleaded that her signing and uploading of the documents and the defendant's acceptance of her online application in New South Wales, and emailing to her an Internship Letter of Acceptance, constituted a contract.
The plaintiff arrived in Hanoi, Vietnam, on 9 January 2016. The defendant provided Safety and Cultural training to the plaintiff until 17 January 2016. The training included instruction that it was a cultural requirement to dress modestly while engaged in teaching, by wearing long dresses or skirts, and to behave modestly, including by seating herself in a side-saddle pillion position when being transported by motorcycle. She was also advised that motorcycle taxi transport was a safe form of transport and that drivers would provide her with a safety helmet.
The plaintiff was deployed to teach in three primary schools and a high school in Ha Long City, Vietnam, approximately 150km East of Hanoi, which were conducted by the Rainbow English Centre and SJ Vietnam (the "Ha Long partners"). The plaintiff pleaded that the Ha Long partners were English language teaching providers in Ha Long, that they were in a partnership or joint venture relationship with the defendant, alternatively, they were held out by the defendant as being in a partnership relationship with it.
The plaintiff was provided with transport between her place of accommodation and the schools, at the beginning and end of the school day and at the beginning and end of lunchtime. The form of transport was motorcycle taxi, "and if so directed by the driver, in a side-saddle position".
On 10 May 2016, shortly prior to 12:30pm, the plaintiff concluded teaching her morning classes at Ha Long Primary School. She was wearing a floor length, loose-fitting skirt. She was met at the school by the motorcycle driver who handed her a helmet, which is described in the statement of claim as "suitable only for use in low velocity, low impact activities such as skating ('Skate Hel-met')". The driver directed her to seat herself on the motorcycle in a side-saddle pillion position. During the course of the trip, the plaintiff's skirt became ensnared in the spokes of the rear wheel of the motorcycle, as a result of which, she fell onto the road ("the accident").
The plaintiff alleges that, as a result of the accident, she suffered a traumatic brain injury, severe diminution of her cognitive and reasoning facilities, changes to her personality, loss of her sense of smell, vision impairment, depression and anxiety. The plaintiff alleges that she has continuing disabilities as a result of the accident, including seizures that render her unable to drive a car, memory loss and cognitive disabilities.
In her statement of claim, the plaintiff sought damages from the defendant for the following: 1. Negligence at common law; 2. Breach of contract at common law; 3. Misrepresentation, or alternatively false representation either at common law or pursuant to Pt VIB of the Competition and Consumer Act 2010 (Cth); 4. Breach of statutory guarantees either at common law or pursuant to Pt VIB of the Competition and Consumer Act 2010 (Cth).
The latter two claims stated above were pleaded partly pursuant to Sch 2 of the Competition and Consumer Act 2010 (Cth), in particular, s 61, being actions in Australian Consumer Law ("ACL"). The plaintiff submitted that the defendant provided "services", being the training and transport, which was not fit for purpose.
The negligence claims arose from the failure to provide a proper helmet and the defendant advising the plaintiff that it was a cultural requirement to behave and dress modestly, which meant wearing long dresses or skirts and sitting in a side-saddle position if transported by motorcycle.
In an affidavit sworn on 13 August 2019 and read at the hearing of this application, the plaintiff elaborated on the instructions she claimed she received from the defendant concerning motorcycle transport, the circumstances of the accident and her injuries.
The plaintiff stated that she had no prior experience being pillioned on a motorcycle and, although she was told that transport between her accommodation and the schools would be by way of motorcycle taxi, she was given no advice as to what attire she should wear when being conveyed by that means. The type of helmet worn by the drivers was usually full-face helmets, as was the case on the occasion of the accident.
The helmet provided to the plaintiff at that time by the driver, which she described as like a child's skating helmet, was "worn, old and was too small to fit my head properly such that I needed to steady it with one hand". She stated: "68 As I began to hitch up my skirt to get on the back of the motorcycle and sit directly behind the driver, he told me to sit in a side saddle position. I think he did this because some nearby students and parents were looking disapprovingly at us as I did so. 69 This was the first time I had been asked to sit in that position but I knew it was common practice. … 71 I was never aware of the danger of my long skirt becoming entangled in the spokes of a motorcycle wheel and the possibility never occurred to me. 72 That danger was not something that the defendant's training covered or something that its partners in Ha Long or the taxi riders, ever mentioned. 73 As we were en route, my long skirt became caught in the spokes of the rear wheel of the motorcycle and as a result, I was dislodged from my seating position and fell off the motorcycle and onto the road pavement, hitting my head on the ground. 74 As a result of the accident, I was unconscious for many weeks and was hospitalised in Vietnam and Thailand and underwent surgery …"
The plaintiff stated that she was hospitalised continuously from that time until 28 July 2016, initially in Vietnam, then Thailand and finally Scotland. She added that she now also suffers from epilepsy and has been advised that she will be on anti-seizure medication for the remainder of her life.

The defendant's defence

In a defence filed on 30 April 2019, the defendant denied liability in respect of each of the alleged bases. The defendant denied that there existed a contract between the parties or that the Australian consumer law applied to the claim.
The defendant denied that TTG was its agent or that the "Ha Long partners" were in a partnership or joint venture with the defendant, or that they had been held out by the defendant as being so.
The defendant pleaded, in the alternative, that if there existed a contract between the parties, then the plaintiff's alleged injuries, loss and damage were contributed to or caused by her own negligence. Further, that the plaintiff breached the terms of the contract.
Annexed to an affidavit sworn by the defendant's solicitor, Tin-Lok Shea, on 28 June 2019, was a copy of the terms and conditions signed by the plaintiff. The following conditions were relied upon by the defendant: "8. I have purchased/will purchase a travel insurance package. … 32. I will not hold ELC, its officers, affiliates, agents, or employees liable for any loss, damage, personal liability, delay or expense suffered or incurred by me for any reason. … 34. Indemnity: I indemnify, without limitation, ELC, its officers, affiliates, agents and employees, against any loss or damage suffered by any of them, or any claims made against any of them as a result of any breach or negligence by me during my participation in the Program."
Mr Shea stated that the Rainbow Language Centre was the sponsor of the plaintiff's work permit and business visa in Vietnam and, at the time of the accident, it was both the plaintiff's employer and the employer of the motorcycle driver. He stated that Vietnamese police had determined that at the time of the accident the driver was licenced, was not under the influence of alcohol, had been obeying the speed limit and that both he and the plaintiff had been wearing helmets "in accordance with the law in Vietnam".
Mr Shea further stated: "The Defendant's role was to provide initial training and information … which was delivered during the period 9 January 2016 to 17 January 2016."
However, Mr Shea denied that the defendant had instructed the plaintiff to wear long dresses or skirts or that it was a cultural requirement to do so. On the contrary, he stated that the defendant had advised, via a Facebook group for the internship cohort, that trousers were acceptable and, during the orientation, a document was provided by the defendant to the plaintiff stating that interns should "reduce their risk while overseas by 'wearing practical attire'". Further, photographs of the plaintiff taken while she was in Vietnam included images of her wearing a short skirt with leggings while teaching at one of the schools. Mr Shea stated that the defendant denied instructing the plaintiff to ride side-saddle and that it was a cultural requirement to do so.
One of the ways in which the defendant alleged that the plaintiff breached the terms of the contract was by not holding a valid travel insurance package. In her affidavit, the plaintiff responded that she had complied with para (6) of the defendant's "Health and Safety guidelines", a copy of which was annexed to Mr Shea's affidavit. I note the opening paragraph reads: "The following guidelines indicate the measures taken to ensure the health and safety of our interns whilst in Vietnam. The guidelines cover the responsibilities of all parties involved to help ensure a safe and healthy internship experience overseas."
Paragraph 6 is, in part, as follows: "6. … [ELC Vietnam] insists upon interns holding suitable international travel and medical insurance and requires a copy of insurance to be sent to ELC prior to departure and held in case of emergency. ELC requests permission to contact insurance companies and next of kin on intern's behalf in case of emergency."
The plaintiff stated: "82 I did this through Debenhams Travel Insurance and as required by paragraph 6 of the [Health and Safety] guidelines sent a copy of the travel insurance document to the defendant for its approval. 83 Cover was denied to me for the accident by the travel insurer on the basis that the policy it issued to me was of a type that allowed a maximum travel of 30 days, something of which I was unaware. 84 I was not advised by the defendant that the policy I copied to it as required, was insufficient for my internship with it."
Coincidentally, the defendant is also not covered by an insurance policy. Mr Shea stated: "The Defendant's Insurer QBE has declined to indemnify the defendant in respect of the plaintiff's claims for the reason that the claims are based on a breach of contract in circumstances where work was performed outside Australia or New Zealand."
I note there is no evidence as to whether the defendant has the financial capacity to satisfy a successful claim by the plaintiff. In further material provided to the Court subsequent to the hearing, the plaintiff clarified that QBE's denial of indemnity is in respect of all three bases of the plaintiff's claim and that: "The defendant, having obtained appropriate advice, has provided instructions that it does not intend to pursue the indemnity claim against QBE."

History of the proceedings

The plaintiff stated that she filed her statement of personal injury particulars on 18 March 2019 and provided further and better particulars to the defendant on 27 March 2019, which was in response to a request made by it on 28 February 2019. She further stated that medico-legal assessments of her injuries have been completed and reports have been provided to the defendant.

The quantum of security sought

The defendant has not proposed a particular amount by way of security, accepting that it is a matter for the discretion of the Court if its application succeeds. The defendant has tendered affidavit evidence as to its likely legal costs, identified below, which would clearly inform that decision, if it is required. The defendant submitted that if such an order is to be made, a follow-up hearing could hear further evidence as to a suitable quantum.

The relevant legal principles

Rule 42.21 of the UCPR provides: "42.21 Security for costs (1) If, in any proceedings, it appears to the court on the application of a defendant - (a) that a plaintiff is ordinarily resident outside Australia, or (b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or (c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or (e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, or (f) that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given. (1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant - (a) the prospects of success or merits of the proceedings, (b) the genuineness of the proceedings, (c) the impecuniosity of the plaintiff, (d) whether the plaintiff's impecuniosity is attributable to the defendant's conduct, (e) whether the plaintiff is effectively in the position of a defendant, (f) whether an order for security for costs would stifle the proceedings, (g) whether the proceedings involves a matter of public importance, (h) whether there has been an admission or payment in court, (i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant, (j) the costs of the proceedings, (k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute, (l) the timing of the application for security for costs, (m) whether an order for costs made against the plaintiff would be enforceable within Australia, (n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff. (1B) If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given."

Court's discretion to order security for costs

The Court has broad and unfettered discretion as to whether to order security for costs, although this discretion is to be exercised judicially and for the purpose for which it exists: see Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group (1998) 193 CLR 502; [1998] HCA 41 at [19] and [26], per Kirby J.
Rule 42.21(1A) provides a list of factors that may be taken into account in exercising the Court's discretion. As noted in Morris v Hanley [2000] NSWSC 957 at [24] per Young J, this list is not exhaustive, and other relevant factors may be taken into account. In exercising the power to order security for costs, the Court is engaging in a balancing process, and attempting to do justice between the parties: Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 at [47].

Precondition: Plaintiff ordinarily resident outside Australia pursuant to r 42.21(1)(a)

Security for costs can only be ordered where one of the preconditions in r 42.21(1) is established. Relevantly, the parties are agreed that precondition in r 42.21(1)(a) is satisfied.

Timing of the application r 42.21 (1A)(l)

Security for costs applications should be brought promptly. It should be noted at the outset that it is uncontroversial that there is no delay in bringing the application, as the defendant's application was made within two months of the commencement of proceedings.

Plaintiff's prospects of success: r 42.21(1A)(a)

While at the Federal Court, Beazley J stated the following in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; [1995] FCA 76 at 197: "As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success."

Plaintiff's impecuniosity and attribution to the defendant: rr 42.21(1A)(c) and (d)

Rule 42.21(1B) reflects the well-settled principle that poverty "is no bar to a litigant": Cowell v Taylor (1885) 31 Ch D 34 at 38; Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11. However, it may be a relevant factor in terms of the balancing process between the parties: r 42.21(1A)(c).
The defendant bears the evidential burden of establishing a prima facie entitlement to a security for costs order due to the plaintiff's impecuniosity. Once the defendant has established that there is reason to believe that the plaintiff would be unable to pay the cost of litigation if unsuccessful, an evidentiary onus then falls on the plaintiff to establish why, taking into account all relevant factors, the court's discretion should be exercised by refusing an order for security: Idoport Pty Ltd v National Australia Bank Ltd at [62] and [65].
A related consideration, as highlighted in r 42.21(1A)(d), is whether the plaintiff's impecuniosity can be attributed to the defendant. The plaintiff bears the onus in establishing this, and must demonstrate a real causal connection between the defendant's conduct and the plaintiff's impecuniosity: see Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276; [2007] NSWCA 291 at [94]-[95] (McClellan CJ at CL, with Mason P agreeing); The Owners - Strata Plan 87265 v Saaib [2019] NSWSC 289 at [44] per Stevenson J.

Stultification of proceedings: r 42.21(1A)(f)

The plaintiff bears the onus of proving that financial support is not available to her, as she is the one who stands to benefit from the litigation. This was expressed by the Full Court of the Federal Court in Bell Wholesale Co Pty Ltd v Gates Export Corp (No 2) (1984) 2 FCR 1; [1984] 2 FCR 1, at 4: "In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts."

The parties' evidence and submissions on the application

As noted, the parties agree that the plaintiff is "ordinarily resident" outside Australia, within the meaning in r 42.21(1)(a), and that threshold requirement is met.
Ultimately, the plaintiff contended that the Court should not exercise its discretion to impose the order despite the plaintiff residing overseas, as it would be unfair to her when the balancing exercise between the parties is undertaken, and given the substantial injury sustained by the plaintiff that has had a material effect on her life. The parties submitted on a number of factors for consideration in this balancing exercise, which are summarised below.

The defendant's likely legal costs

As of 24 May 2019, the legal costs incurred on behalf of the defendant, by a firm which represented it until then, were $25,504.15, including disbursements but excluding GST. Inquiries made by that firm as to the likely cost of medico-legal reports in Scotland were to the effect that it would be in the region of £15,000 plus VAT, which as of 6 June 2019, was approximately equivalent to AUD $27,267.77. The defendant's current legal firm, of which Mr Shea was an employee, estimated the total cost of work for defending the plaintiff's claim, including trips to Vietnam for the purpose of interviewing witnesses and briefing counsel, would be in the order of $229,000. Mr Shea concluded: "I am of the view that the defendant will be able to recover somewhere between 65 and 80% of the estimated cost if it successfully defends the proceedings and obtains a cost order in its favour on a party/party basis."
The plaintiff submitted that a more likely proportion is between 55 per cent and 65 per cent.

Enforceability of any costs order: rr 42.21(1A)(m) and (n)

The defendant submitted that there would be great uncertainty in the enforcement of a costs order in a foreign country, and this is a relevant consideration in determining whether security for costs should be ordered.
The plaintiff submitted that, while it would ordinarily be difficult to enforce an order for costs overseas against a non-resident, in this case, there is a reciprocal right of enforcement in the relevant foreign jurisdiction, as Sch 2 of the Foreign Judgments Regulations 1992 (Cth) includes the Sheriff Courts of Scotland as a jurisdiction with a right of enforcement. Hence, the plaintiff argued, "any judgment for costs obtained by a defendant in an appropriate [c]ourt in NSW is enforceable by registration in the appropriate Scottish Court". However, the plaintiff's counsel conceded during the course of the hearing that no enquiries had been made as to what difficulties might be encountered, or what costs might be incurred, in seeking enforcement of a costs order in Scotland.
The plaintiff further submitted that, since the products provided by the defendant are targeted towards native English speakers from a multitude of countries and jurisdictions, including Scotland, it would be: "… unreasonable for [the defendant] to … request a security for costs order due to the residence of their consumers being overseas in circumstances where they targeted those very consumers for their own pecuniary benefit."
It is specifically this that characterises the nature of their business, and the matter was only brought in New South Wales because the plaintiff believes it is the appropriate forum to bring an ACL claim against the defendant, who operates out of this jurisdiction.

The plaintiff's impecuniosity and attribution to the defendant: rr 42.21(1A)(c) and (d)

Counsel for the plaintiff submitted that the plaintiff would likely have "a limited capacity" to pay costs, and currently had none. In her affidavit, the plaintiff provided some detail of her career plans prior to the accident and her current financial and family circumstances. At that time, the plaintiff was an accomplished athlete, stating in her affidavit: "I am a former British Commonwealth Games Silver Medallist, and took part in the 2014 Commonwealth Games in judo. I had intended to return to judo and train for the 2018 Commonwealth Games, the 2020 Olympics and finally, the 2022 Commonwealth Games in England. I am now unable to return to judo, which I have been involved in since age 4 and have received sponsorships for. … I used to do motivational talks for schools and businesses which could often pay fairly well. I have not conducted such talks since the accident."
As to her employment career, the plaintiff stated: "I … began employment with Enterprise Rent-A-Car in April 2017 as a Graduate Management Trainee. I was confirmed on the graduate program before the Vietnam position came up and they agreed to put off my start date until I returned. Having completed a Master of Arts in business management from Heriot-Watt University prior to the Vietnam internship, my vision as to work my way up the ladder at Enterprise, it being a large modern company to which I believed my talents were probably well suited."
On the plaintiff's resumption of employment with Enterprise, she was positioned at Edinburgh airport, working a 50 hour week and commuting with public transport, since she did not qualify for a driver licence until February 2019. She struggled with the long hours and was unable to be promoted without a driver licence or become involved in marketing or attending meetings.
The plaintiff left the company in May 2019 and at the time of her affidavit, she worked on contract, for "Sportscotland", which I understand is the national agency for sport in Scotland, as an active schools' coordinator, working a 37 hour week for a salary (after tax) of £23,500. Her partner earns £29,812.56 (after tax), which I note is a combined monthly income of £4,628. Her outgoings, shared with her partner, are £2,223.55 per month, which I note leaves a balance of £2,404.45. Affidavit evidence from a solicitor in the firm representing her, sworn the day before the hearing of the application, was to the effect that proposed further physical therapy, training and massage would entail certain weekly and monthly costs, coming to a total of £3,251.67 per month, which I note is more than their current monthly balance, after outgoings.
The plaintiff and her partner reside in a home that they purchased in June 2018 for the sum of £194,000, of which they borrowed £164,000 by way of a bank loan. The deposit of £30,000 came from a gift from her parents and a contribution from her partner, in equal amounts.
The plaintiff's only assets are her interest in her home and her car. She has no savings. She stated: "But for the injury sustained in the accident in May 2016 … I believe I would have a greater income earning potential then I currently possess. I have no means of paying or raising the sum that the defendant seeks be paid to secure payment of its legal expenses in the event an order is made that I pay its legal costs to it."
It was accepted that the plaintiff is legally represented by a law firm in her action on a "no win no fee" basis and evidence tendered on behalf of the defendant to the effect that the plaintiff has no real property in Australia, was not contested.
The defendant submitted that since the plaintiff is impecunious, and there is therefore reason to believe she would be unable to pay the costs of litigation if unsuccessful, the onus shifts to her to establish reasons as to why security should not be granted. Further, the plaintiff failed to discharge this evidentiary onus, because she simply pleads that she is impecunious, and that is not a factor that should be counted in her favour in the balancing process. In Jeffery and Katauskas v SST Consulting (2009) 239 CLR 75; [2009] HCA 43 Heydon J said, at [91]: "Mere impecuniosity is not an absolute barrier to ordering security for costs against a natural person, although it is a factor against doing so. In particular, there are instances additional to those listed in r 42.21(1)(a)-(c) and (e) where it can be done. They include the vexatious conduct of litigation by a plaintiff who had failed to set aside an earlier judgment, instances where the plaintiff has dissipated assets and/or not paid previous costs orders (particularly costs orders in favour of the defendant), instances where the plaintiff brings a weak case to harass the defendant and instances where the plaintiff brings a case for the benefit of others, but not solely for that benefit. Hence the supposed 'general principle … that poverty is no bar to a litigant' is a severely qualified one. So is the 'overriding principle of open access to justice' (or, more realistically, at least access to the courts)." (citations omitted)
The plaintiff conceded that, if she is unsuccessful in her claim, she would have limited capacity to pay the costs. However, she submitted that, because this is a personal injury claim, there should be "close consideration" of whether the costs order should be made, in light of the Court of Appeal's decision in De Groot (an infant by his tutor Van Oosten) v Nominal Defendant [2004] NSWCA 88. In that decision, Handley JA said, at [29], referring to the practice of security for costs orders not normally being made simply on account of a person's impecuniosity: "The practice referred to has certainly applied, in my experience, in personal injury cases and it is practically unheard of for a plaintiff appellant to be ordered to provide security in such a case."
However, the defendant had submitted that, with respect to that passage, Handley JA was referring to the ordering of security for costs on appeal.
The plaintiff submitted that the case of O'Keefe v Seafresh Holdings Pty Ltd trading as Westmore Seafoods [2009] NSWSC 1090 is analogous to the present case, as it also concerned a personal injury claim where the plaintiff was resident in a foreign jurisdiction. Rothman J stated in that case: "15 There is a wide range of considerations that are relevant to the exercise of the discretion to order security for costs. In this case, while liability is in issue, the plaintiff's claim has been made in good faith and appears to be reasonably arguable. There is no doubt that the plaintiff lacks funds to meet most of any costs order that may be made against him, if he should be unsuccessful. However, largely, that lack of funds has been caused or contributed to by the alleged conduct of the defendants. Moreover, the plaintiff's impecuniosity, brought about by the accident, would mean that, if security for costs were to be ordered (and the proceedings stayed pending the payment), the plaintiff would be unable to pursue these proceedings. While the plaintiff has some funds in New South Wales, it is not appropriate to require the plaintiff to cease spending that money on the maintenance of his child and his attempts at rehabilitation and re-education. 16 The foregoing factors outweigh the difficulty associated with the plaintiff currently residing in Ireland. Given the rules of enforcement under the common law (see RDCW Diamonds Pty Ltd v DA GLORIA [2006] NSWSC 450), and modern communication and travel, the fact that the plaintiff lives outside the jurisdiction, but in a jurisdiction that is operating under a common law system and amenable to mutual service and enforcement (even if not under the relevant international treaties and legislation implementing them), does not outweigh the other factors, which the Court has addressed. Nor does the existence of a conditional costs agreement, or the combination of both."
The plaintiff's counsel further submitted that the plaintiff's impecuniosity is "largely attributable to the alleged conduct of [the defendant] in reducing her prospects of gaining promotions, and negativing the possibility for her to earn extra income", which is relevant in the weighing exercise undertaken by the Court.
The defendant submitted that the plaintiff bears the onus in establishing that her impecuniosity was attributable to the defendant's conduct, by demonstrating a real causal connection between the defendant's conduct and the plaintiff's apparent impecuniosity: see [43] above. The defendant submitted that "there was little evidence as to the plaintiff's likely earnings uninjured", with the plaintiff failing to specify potential loss and instead acknowledging that she is currently working a 37-hour week, earning £23,500 per annum. The defendant submitted that the plaintiff's previous ambitions of participating in the 2020 Olympics and 2022 Commonwealth Games would also have had the effect of curtailing the plaintiff's income due to training and competition requirements as an amateur.

The plaintiff's prospects of success: r 42.21(1A)(a)

The defendant's counsel submitted that the strength of the case "should be the ultimate focus of the Court's attention". The defendant contended that, looking at the merits of the plaintiff's claim, the plaintiff has limited prospects of success. Referring to the work contract signed between the plaintiff and the Rainbow English Centre, defendant's counsel submitted that it was clear that the Rainbow English Centre was responsible for arranging and paying for transportation between the schools and her accommodation, and there was no connection to the defendant. The plaintiff had pleaded that TTG engaged the Rainbow English Centre, and that TTG was an agent of the defendant, despite a paucity of evidence to that effect. The fact that the plaintiff had paid the fees for the internship to TTG in British pound sterling and to no one else also demonstrated a lack of connection to the defendant.
The plaintiff's pleadings concerning negligence and breach of contract are predicated on certain documentation received by the plaintiff which related to the defendant, and which is alleged to constitute a contract with implied terms. The defendant submitted that such a claim has little prospects of success, as any such implied terms are imprecise, and in any event New South Wales law would not apply, because: "a. The plaintiff was resident in the United Kingdom at the time of the alleged formation of the contract; b. The alleged contract involved the exchange of documents between Scotland and Australia; c. The execution of any alleged contract by the plaintiff occurred in the United Kingdom; d. The performance of any contract was to occur in the Republic of Vietnam; e. Any alleged breach of contract occurred in the Republic of Vietnam; and f. The only connection with the forum is the defendant was incorporated in Australia and had its registered office in New South Wales."
The defendant submitted that the plaintiff's ACL claim is "similarly problematic", in light of the following factors: "i. The jurisdiction in which the claim is brought has no connection to the dealings between the parties apart from the fact that the defendant is registered in New South Wales. ii. Whether the defendant was carrying on a business in Australia as required by the Competition and Consume[r] Act 2010 (Cth). iii. The relevant services were provided in the Republic of Vietnam; iv. The plaintiff (consumer) was at all times a resident of the United Kingdom; v. Whilst the defendant's registered office is in Australia, the services claimed to have been provided by the defendant to the plaintiff were services provided in the Republic of Vietnam."
The defendant's counsel stated during the hearing that there is "no neat square hole or round hole that one can simply put this case into under ACL".
Further, the defendant submitted that the plaintiff does not plead her cause of action "according to the law of the lex loci delicti", as the alleged tort occurred in Vietnam, and the cause of action must accordingly be pleaded in accordance with Vietnamese law. According to the defendant: "The claim as pleaded in tort is of no legal consequence or relevance. Given this fundamental flaw, the court would disregard any cause of action pleaded in this regard."
The plaintiff submitted that the claim is made in good faith (though the defendant had not submitted to the contrary) and is reasonably arguable, with no indication that there has been an abuse of process. Further, the claim is "prima facie regular on its face and discloses a cause of action", with absence of evidence to the contrary. This is further reinforced by the fact that a statement of claim must be certified by a solicitor to have "reasonable prospects of success", which is a higher bar than merely having "prospects of success" under r 42.21(1A)(a). Therefore, it is a "bona fide and arguable claim" in accordance with rr 42.21(1A)(a) and (b) that should be weighed in favour of the plaintiff.
Going to the substance of the claim, in response to the defendant's submissions, the plaintiff further submitted that ACL applies to the defendant's conduct as the defendant carries on business in Australia. They are registered in Sydney, and: "… provide a large suite of products to their consumers, including language courses and overseas teaching experiences of the kind [the plaintiff] participated in."
The plaintiff contended that "[t]here is a very strong argument under the Australian Consumer Law because it has a broad import".
Further, there have been a number of successful ACL claims where the defendant was not based in the same country as the plaintiff. In Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196, the defendant was based in Washington but was held to be carrying on a business in Australia. Similarly, in Insight Vacations Pty Ltd v Young (2011) 243 CLR 149; [2011] HCA 16, the plaintiff bought a European tour package from the defendant company, which was an Australian-based company. The plaintiff fell on a coach in Poland and sustained injuries, with the coach having been arranged by a local service provider that was partnered with the defendant. The defendant was ultimately held liable for the plaintiff's injuries sustained in that accident. In Scenic Tours Pty Ltd v Moore [2018] NSWCA 238, ACL was also found to have broad application and apply to conduct engaged in outside Australia by bodies carrying on a business in Australia.
In respect of the implied terms of contract, the plaintiff submitted that it is clear from the terms of the contract the plaintiff signed with TTG that TTG were an agent for the TEFL course and the provider, with the provider being the defendant. Further, the money paid by the plaintiff to TTG, but a reasonable inference can be drawn that at least part of the money was then passed on to the defendant for the services they provided, and that an agency relationship did exist.
The plaintiff accepted that negligence would be determined according to Vietnamese law and that it would involve reports being prepared by experts in Vietnamese law as to whether it was made out. The plaintiff submitted that it had not been suggested by defendant that expert evidence as to Vietnamese law was not available within Australia, and therefore the cost of such expert evidence should not be assumed to be significant.

Costs of the proceedings and the proportionality of security: rr 42.21(1A)(j) and (k)

In an affidavit sworn on 28 June 2019 by Mr Shea, the defendant's costs in the event the matter proceeded to judgment were estimated to be $229,027.44. The defendant submitted that this estimate is not unrealistic, due to: "… the complexity of the proceedings, the fact that the defendant's witnesses reside in the Republic of Vietnam (with all the antecedent costs) and the extent of the plaintiff's claim".
At the hearing, the defendant cited the need to fly to Vietnam to interview witnesses, including the need to obtain evidence about communications made locally to the plaintiff, the terms of local engagement, local clothing habits, the availability of helmets, and more. Further, the costs of the trial would be increased by the need to engage a Vietnamese law expert.
In respect of proportionality, the defendant submitted that the proceedings: "… will impose on the defendant a very significant financial burden, in circumstances where the prospect of recovery is remote and the defendant is uninsured." For those reasons, an order for security for costs is proportionate to the complexity of the proceedings. The lack of public liability insurance also renders the claim "so far away from the normal personal injury action" that it is not within the category of personal injury actions for which a security for costs order should not be granted, as suggested by Handley JA in De Groot v Nominal Defendant: see [62] above. The defendant's lack of insurance covering the plaintiff's activities in Vietnam is confirmed in the affidavit of Mr Shea sworn 15 October 2019.

Stultification of proceedings: r 42.21(1A)(f)

The plaintiff submitted that the making of a security for costs order would stifle proceedings for the plaintiff. The plaintiff is impecunious, and does not have financial support available. She previously had a "Go Fund Me" page, set up immediately following the accident, which raised £327,892; however, all of those funds were used to pay for the plaintiff's flights back to Scotland and her various medical treatments, such that there are no funds available to fund the litigation.
Further, the plaintiff submitted that it would not be "appropriate" to require the plaintiff to source funds pursuant to a security for costs order when she has "no means of paying or raising the sum", and also has "no other assets … [or] savings". Further, according to an affidavit sworn by the plaintiff's solicitor on 9 October 2019, the plaintiff would like to: "… increase the frequency of her physical therapy, personal trainer and massage sessions to what she believes will be a more beneficial level, when her and her partner's finances permit it."
In support of this submission, the plaintiff provided a summary breakdown of her and her partner's current salary and expenses, to demonstrate that a security for costs order would stifle her proceedings "by rendering them financially impractical and unduly burdensome".

Consideration

I note that the application for security of costs has been brought promptly: r 42.21(1A)(l), and that a threshold requirement for such an application has been established, namely, that the plaintiff is ordinarily resident outside Australia: r 42.21(1)(a).
In light of the evidence led by the defendants in seeking to establish a prima facie entitlement to an order for costs, in particular, the plaintiff's impecuniosity, the question becomes whether, taking into account all relevant factors, the Court's discretion should be exercised by refusing the order sought for security: Idoport Pty Ltd v National Australia Bank Ltd at [62] and [65]. See also Wollongong City Council v Legal Business Centre Pty Limited [2012] NSWCA 245 at [29], [30]. I am mindful that in exercising this power, the Court is engaging in a balancing process and attempting to do justice between the parties: Idoport Pty Ltd v National Australia Bank Ltd at [47]. It is open to the Court to give greater or less weight to relevant factors, depending on the circumstances of the case.
The plaintiff's impecuniosity is established. Her only assets are her car and an equitable interest of £15,000 in the residence owned by her and her partner. Although they are both employed, their outgoings and her continuing therapy more than account for their salaries. It is a factor that is relied upon by both parties; the plaintiff submits that it mitigates against making an order, because she would be unable to comply with it, whereas it is the primary reason for the defendant's application.
I note UCPR, r 42.21(1B), namely, that an order for security for costs cannot be made merely on account of the plaintiff's impecuniosity. The defendant relies upon the observations of Heydon J in Jeffery and Katauskas v SST Consulting, quoted at [61] above, to the effect that the supposed general principle that impecuniosity is no bar to a litigant is "a severely qualified one". I note that the instances in that passage cited by Heydon J that illustrate the qualification involved a degree of fault on the part of the litigant; vexatious or harassing conduct, the dissipation of assets and/or not having paid previous costs orders, particularly in favour of the defendant. There is no such behaviour on the part of the plaintiff that is alleged by the defendant on this application.
I accept the plaintiff's submission that there is a nexus between her impecuniosity and the defendant's behaviour in the sense that, but for the accident which was consequent to the pleaded defendant's failings, she would be earning a higher income, she would not have lost ten months of her earning life in hospital and she would not be presently incurring therapy and associated expenses. However, if her employment trajectory had been unaffected by the accident, it is not clear that she would have been able to meet all the party/party costs involved if she loses her action. Accordingly, her submission is partly made out.
I accept that QBE's denial of indemnity to the defendant is a relevant consideration on the application, pursuant to UCPR, r 42.21(1A), but note that, in the absence of evidence as to the defendant's financial capacity, it is of limited relevance.
As to the strength of the plaintiff's case, I note that the defendant intends to vigorously defend the claim and, although it does not submit that the claim was not made in good faith, it submits that "this is not a case where one can say comfortably that the plaintiff's claim is one that has good prospects".
A key aspect of the hearing will be the terms of instruction provided to the plaintiff as to how she was to dress and travel, whilst employed as a teacher/intern. In its filed defence, the defendant denied that it provided the training to the plaintiff on her arrival in Vietnam, from 9 to 17 January 2016, during which, the plaintiff pleaded, she was instructed on what clothing to wear and what transport arrangements were arranged for her. However, the defendant's solicitor, in his affidavit sworn 28 June 2019, stated: "The defendant's role was to provide initial training and information which was delivered during the period 9 January to 17 January 2016."
At the hearing, counsel for the defendant appeared to concede that this was the case, stating: "… there is no issue in this case that the defendant undertook or performed some training of the plaintiff before … the plaintiff was sent to her particular placement."
The defendant disputed, however, that transportation was the defendant's responsibility, relying on the terms of the employment contract between the Rainbow English Centre and the plaintiff, which referred to which parties would bear the cost of daily transportation of the employee to and from work.
I conclude that the plaintiff's claim is bona fide and has a reasonable prospect of success. It is unnecessary to consider the strength of the plaintiff's case beyond that point, for the purposes of this application. As Henry J observed in Pun v Poon [2019] NSWSC 918, at [26]: "It is an unusual case where a court is able to form any view as to the strength of a party's case on an application for security for costs, which would influence its discretion in ordering security for costs."
Although the plaintiff resides outside Australia, her domicile in the United Kingdom is unlikely to pose significant issues in terms of enforcement, should the defendant succeed in its defence and obtain a costs order.
This application brings to light the competing concerns of financial vulnerability of both parties, but more so that of the plaintiff, and, at its heart, a personal injury claim that, if a pleaded fault is found, has the potential to significantly financially compensate a severe injury affecting a young adult life. On the evidence before me, the plaintiff would be unable to comply with a costs order that was the equivalent of even a third of the defendant's likely party/party costs, even if calculated on the ratio proposed by the plaintiff, with the inevitable consequence that she would lose the opportunity to pursue her action. On the other hand, if an order is not made, and in due course her action is unsuccessful, the defendant may be left financially exposed to his costs, without remedy.
Having regard to all the relevant matters, and affording particular weight to two factors, being the consequences to the plaintiff of an order for security for costs of any significant amount and her arguable case, I have concluded that it is appropriate to decline the application altogether.
For these reasons, I decline to order security.

Orders

I make the following order: 1. The defendant's notice of motion is dismissed with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 August 2020

Competition and Consume[r] Act 2010(Cth)

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Judgment (23 paragraphs)

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Cases Cited (23)