Consideration
8 The purpose of an order for security for costs is well known. It is to protect the efficacy of the exercise of the Court's jurisdiction to award costs, and to ensure that a defendant is protected against the risk that a costs order be of no value because the order cannot be met by the applicant/plaintiff. The jurisdiction to award security for costs recognises the principle that injustice would result to a respondent/defendant by the impecuniosity of the applicant/plaintiff, being the moving party in the proceedings. (cf Capital Webworks Pty Ltd v Adultshop.com.Ltd [2008] FCA 40 at [13], Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 at [52], Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 5) [2006] FCA 1672 at [28]-[30]).
9 The legislation upon which the second respondent relies, and which is consistent with familiar principles articulated in the authorities, is clear - the Court may order payment security for costs by an applicant or plaintiff in respect of proceedings at the suit of a respondent or defendant.
10 In this proceeding it is not in dispute that the first and second respondents are, indeed, respondents to the principal application filed by The National Mutual Life Association of Australasia Ltd. The second respondent contends that the first respondent is in substance the applicant in the proceedings, so as to warrant consideration by the Court of an order for security for costs against it.
11 It is clear that the second respondent bears the onus of proof in establishing that the position of the first respondent should be characterised as such.
12 Notwithstanding the view expressed in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at [39] that security will only ordinarily be ordered against a party who is in substance a plaintiff, no authority has been cited by the second respondent for her contention that a person in the position of the first respondent in this proceeding can be the subject of a security for costs order. In my view, the legislation does not contemplate circumstances such as the present, where two parties have made a claim to an estate and are both respondents to one proceeding, and the very question whether one of them is in some way acting as an "applicant" is in dispute.
13 However in any event, I am not persuaded that the position of the first respondent can be characterised in substance as that of applicant or plaintiff as submitted by the second respondent.
14 First, the second respondent claims that s 55(2) of the SIS Act validates the act of Mr Cox in nominating the second respondent, and that the first respondent seeks to impugn that action. Sections 55(1) and (2) of the SIS Act provide:
(1) A person must not contravene a covenant contained, or taken to be contained, in the governing rules of a superannuation entity.
(2) A contravention of subsection (1) is not an offence and a contravention of that subsection does not result in the invalidity of a transaction.
15 Whether or not s 55(2) of the SIS Act provides a definitive answer to the competing claims of the first and second respondents remains to be seen in this proceeding. One of the contentions of the first respondent is that the absence of authority of Mr Cox to, on behalf of the first respondent, nominate the second respondent as the beneficiary of the proceeds of the policy insuring his life, is not answered by s 55(2). However it appears that the applicant similarly takes this view, because it is the applicant which:
was required to obtain a sufficient discharge in respect of the proceeds of a life insurance policy over the life of Mr Cox;
has determined that the purported nomination of the second respondent as beneficiary of the Mr Cox's life insurance policy on 16 December 2009 is invalid;
considered that the prior nomination by the first respondent of Mrs Cox (the third respondent) remains the only valid nomination of beneficiary; and
significantly, took the view that accordingly the "only appropriate action" was for the applicant to pay the relevant moneys into Court pursuant to s 215 of the Life Insurance Act.
16 This is clear from the affidavit of Ms Vicki Carter filed 1 October 2010 paragraphs 27, 38, 39 and 40. Indeed, as the first respondent submits (in my view correctly) - even if the first respondent were precluded from advancing its contentions, the Court would still be required to determine the same issues in adjudicating the second respondent's claims.
17 Second, it is not in dispute that the first respondent was joined to the proceeding by the applicant. In KP Cable Investments at [39] Beazley J observed that an order for security for costs ought not to be made against parties who are defending themselves and thus forced to litigate. Contentions of fact and law, as well as the form of declaratory relief the respondents contend ought be made by this Court, were filed by the respondents in this proceeding pursuant to the orders of Bromberg J of 20 October 2010. The second respondent contends that the first respondent is not in a defensive role in respect of any actions of the second respondent, and that the first respondent is acting of its own volition because without overturning the definitive declaration of validity imposed by the SIS Act it would have no entitlement to the proceeds of the life policy (TS 15 November 2011 p 12 ll 30-33). However, while it is clear that the first respondent takes the same position as the applicant as to the form the declaration should take, this does not mean that the first respondent is "the applicant" in the context of the second respondent's security for costs application, either in substance or otherwise.
18 Finally, the first respondent clearly has a position it wishes to assert. So does the second respondent. Both respondents are entitled to do so, and have done so. It is clear from the Amended Contentions of Fact and Law filed 4 February 2011 that the second respondent itself bears the onus of proof in respect of a number of matters before the Court. This is the case in particular in respect of paragraphs 26, 27, 28, 31, 32(g), (h) and (i), 34, 35, 36, 37 and 38 of the second respondent's Amended Contentions of Fact and Law. It is questionable whether these circumstances, in turn, mean that the second respondent is, in substance, an "applicant" for the purposes of the relevant legislation, any more than the contentions of the first respondent so characterise it as a moving party to this litigation.
19 In my opinion a security for costs order ought not be made against the first respondent on the motion of the second respondent. Accordingly, it is not necessary for me to consider whether the first respondent is in a position to satisfy any costs order it might incur in this proceeding.
20 The notice of motion in respect of paragraphs 2, 4 and 5 should be dismissed with costs.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.