His Honour, however, refused interlocutory relief on the balance of convenience.
5 I just do not know what opportunity his Honour had to consider the matter or what assistance he was given on the authorities. From the transcript it does not appear that he was given that much assistance by counsel due to lack of time because, at p 16 of the transcript it is recorded:
"At 3.57 his Honour stated that the injunction would be expiring in three minutes".
6 In any event, his Honour's decision was merely that there was an arguable case for the purpose of considering whether an interlocutory injunction should be granted. His Honour was not assessing the strength of that case.
7 The matter was set down for a two week hearing earlier this year but the hearing was aborted. One of the reasons for aborting the hearing was that the plaintiff wished to amend her statement of claim yet again, but it would seem there may have been other reasons as well.
8 The defendants say that this is a proper case for security for costs either under the Supreme Court Rules, particularly Pt 53 rule 2(a), or under the Court's inherent power. I am indebted to both counsel for their thorough preparation and presentation of the respective cases and although this is, as Mr Stack for the defendants/applicants conceded, a hard road for an applicant to ride, I have been able to give a reasoned oral judgment shortly after the conclusion of the argument.
9 The reason for invoking Pt 53 rule 2(a) is that the defendants live in Casino, New South Wales. That is where the drama took place. However the plaintiff has now moved over the border to Queensland and resides in Southport. This is no reason for granting security for costs. In Australian Building Construction Employees v Commonwealth Trading Bank [1976] 2 NSWLR 371, it was held that to confuse the rule as applying to people resident outside the State in another Australian State would be unconstitutional under section 117 of the Australian Constitution and, accordingly, the rule only applies outside Australia or query to a person who lives in a Territory. In the instant case it could not apply to the plaintiff who lives in Queensland.
10 Accordingly, the real thrust of the motion is under the Court's inherent power.
11 I believe it is important to say a few words about the nature of that inherent power. The authorities suggest to my mind that it comes about from the same roots as the inherent power to summarily dismiss actions as frivolous and vexatious. Lord Blackburn said in Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210, 220 to 221:
"… from early times the Court had inherently in its power the right to see that its process was not abused by a proceedings without reasonable grounds so as to be vexatious and harassing - the Court had the right to protect itself against such an abuse … and by summary order to stay the action which was brought under such circumstances as to be an abuse of the process of the Court … ".
12 There are early indications that this rule was applied in cases which today we would call applications for security for costs but in the 19th century were entitled "de-pauperisation". An example is Wagner v Mears (1829) 3 Sim 127; 57 ER 947, 948. In that case it appeared to Vice-Chancellor Shadwell that a pauper had taken proceedings in concert with her solicitor for the purpose of harassing the defendants and putting them to expense, and he ordered that the order giving the plaintiff leave to sue informally as a pauper should be discharged.
13 One gets the same view from the English Court of Appeal in Logan v Bank of Scotland (No 2) [1906] 1 KB 141 where again the test was whether there was a vexatious action in all the circumstances that were alleged in the pleadings and put before the Court. The Court said that whilst care should be taken before exercising the power, Lord Bowen in McHenry v Lewis (1883) 22 Ch D 397, 408 was correct when he said:
"… the general principle (is) that the Court can and will interfere whenever there is vexation and oppression to prevent the administration of justice being perverted for an unjust end".
14 It seems to me that when the Court is considering the inherent jurisdiction it must bear those principles in mind.
15 In argument, stress was laid on what is sometimes referred to as a general rule emanating from what Bowen LJ said in Powell v Taylor (1885) 31 Ch D 34, 38 that "the general rule is that poverty is no bar to a litigant". (I will refer to this as "the sub-rule"). Although it is accepted that that utterance has become considered to be a general rule because the case involved a plaintiff suing as trustee in bankruptcy, certain decisions, in particular the decision of Sheppard J when a judge of the Federal Court in Orr v Lusute Pty Ltd (1987) 72 ALR 617, suggested it is still a fundamental rule.
16 Mr Stack invited the Court to replace the former general or fundamental rule with a rule which provides that a defendant is entitled to obtain an order for security where a plaintiff is impecunious unless the plaintiff can demonstrate that he or she has suffered actual loss and damage and has a reasonably strong cause of action.
17 I do not believe I should do this for a fundamental reason and a practical reason.
18 The fundamental reason is that the so-called "poverty rule" is really just one of the factors that a Court looks at to consider the basic question of whether it would be vexatious to allow the proceedings to continue without security. It is seldom correct to limit the Court's jurisdiction and discretion under such a general proposition by honing down too finely a sub-rule or guideline.
19 The practical reason is that the suggested restatement is probably too restricted because it is directed too much to the circumstances of this particular case. The situations that cause the Court particular concern are cases where there is a litigant in person who is alleged by the defendant to have an obsession against the defendant and who brings very expensive proceedings against the defendant with little intervention by lawyers. One such case was Rajski v Computer Manufacture and Design Pty Ltd [1982] 2 NSWLR 443 and on appeal [1983] 2 NSWLR 122. The replacement rule suggested by Mr Stack would not to my mind adequately deal with that sort of situation, which is the more worrying situation than is the present one to the Court.
20 I should record that Mr Stack did submit that litigation in the year 2000 is a far more complex matter than it was in 1885, and that there may well be reasons why what was true in 1885 is not true in 2000. However, the judgment of Sheppard J to which I referred was from 1987, which is not that long ago. In any event, it is far better to concentrate on the general proposition rather than the sub-rule.
21 It is quite clear that when one is considering the general matter of vexatious conduct warranting security for costs under the inherent power, one of the matters that the Court takes into account is the question of the non-availability of funds on the part of the plaintiff. There are, of course, other matters that bear on this, such as whether the want of assets experienced by the plaintiff was caused by the default of the defendant, but that is not a matter which is at all relevant in the instant case. However the relevance of such a factor is clear from the leading cases where the usual guidelines have been laid down, namely, Tradestock Pty Ltd v TNT (Management) Pty Ltd (1977) 14 ALR 52 and M A Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97. See also Chang v Comcare Australia [1999] FCA 1677 at para 25 where Moore J said:
"While impecuniosity is not, by itself, sufficient to warrant an order for security, it is generally a relevant consideration".
22 It is also quite clear that in the proper case an order for security for costs may be made against the person even if this person is legally aided (see Rajski's case supra at page 452 and Fletcher v Commissioner For Taxation (1992) 37 FCR 288, 291).
23 The leading cases show that the factors a Court must take into account when considering the general question as to whether the inherent power should be exercised to order security for costs include: