Determination
13The court's inherent jurisdiction to order security for costs against a natural person is clearly established. That there is no absolute rule to control the exercise of discretion where the inherent jurisdiction is invoked was authoritatively stated in Merribee Pastoral Industries Pty Ltd v ANZ Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502 by Kirby J:
"26 Without any pretence to having conducted an exhaustive analysis of the decisions in this Court where orders for security for costs have been sought, in appeals, a number of propositions can be stated which it may be useful to collect:
1 There is no absolute rule to control the exercise of the discretion to order security for costs where that jurisdiction derives from the inherent power of the Court. The jurisdiction, as one reposed in a court, is to be exercised judicially and for the purpose for which it exists. An analogous discretion has been described as 'absolute'. It would be wrong to attempt to hedge the jurisdiction about by rules or practices, even where derived from a number of instances. This is because what should be done in each case depends entirely on the circumstances of the case. The governing consideration is what is required by the justice of the matter.
2 There is therefore no absolute rule (applicable statute apart) that the impecuniosity of a party will entitle its opponent to an order for security for its costs. Where the power to so provide exists in uncontrolled terms, it would be to fetter the jurisdiction impermissibly to adopt such a rule or even a prima facie entitlement. By the same token, the inability of a party to meet the costs of an unsuccessful proceeding is not irrelevant to the exercise of the jurisdiction. Litigation is inevitably expensive and burdensome. To add to the burdens of a party successful in the outcome, those of paying its costs with little or no prospect of recovery under an order for costs may, in particular circumstances, be a reason for offering a measure of protection to that party by way of security for costs.
3 Another consideration that has sometimes been judged to be relevant is the strength of the case of the party resisting an order that it provide security for costs and an evaluation (necessarily tentative) of its prospects of success. Thus, the fact that a party has secured special leave to argue its case on appeal has been thought a relevant consideration in some circumstances. Similarly, if a proceeding appeared hopeless and such as was bound to fail, the lack of apparent merit in a party's case might be a reason for ordering it to provide security for the costs to which, it appears, it is needlessly putting its opponent. Such a consideration would need to be exercised with care, given that the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security for costs. Furthermore, if a party asserts that its opponent's proceedings are manifestly lacking in legal merit, other remedies are available to it to protect it from needless vexation ...
Doubtless there are as many further considerations as there are cases."
14As a guideline, the authorities show that the poverty of the plaintiff is no reason by itself for the making of an order. Nevertheless it is a relevant factor to be taken into account in the exercise of discretion. In Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75 French CJ, Gummow, Hayne, and Crennan JJ said:
"39 Because security for costs will not always be ordered against an impecunious plaintiff, it cannot be said that a defendant, faced with proceedings by such a plaintiff, can always obtain the protection of security for costs. There are cases where successful defence of an action will come at a considerable cost to the defendant. But the extent to which that possibility exists and the extent to which there is a resultant "unfairness" to a defendant is a product of the provisions and principles that govern security for costs ..."
and Heydon J said:
"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)."
15In my assessment the judicial task requires the exercise of discretion with regard to the particular facts and circumstances of the case at the time the application is heard. Other cases sometimes afford helpful, but not determinative, guidance for the approach to be taken. They establish that the power to order security may be exercised whenever the circumstances of justice demand, and its exercise is not confined to particular, or closed, categories or circumstances. Nevertheless, the common thread appears to be that to obtain a discretionary order for security for costs it is necessary for the defendant to establish the existence of some factor or factors additional to the plaintiff's impecuniosity.
16I turn first to the plaintiff's failure to pay costs in earlier proceedings. The proceedings were Grant v Baulkham Hills Shire Council [2000] NSWSC 28; (2000) 10 BPR 18,155, and Grant v Baulkham Hills Shire Council [2001] NSWCA 107. They concerned the plaintiff's claim for possession of a cottage known as "Berkeley" erected on the bank of the Hawkesbury River at Upper Half Moon Bend, Lower Portland.
17The plaintiff was unsuccessful and, on 11 April 2000, was ordered to pay the council's costs. The costs remained unpaid. The council issued a bankruptcy notice, the failure to comply with which resulted in the making of a sequestration order against the plaintiff's estate on 5 March 2001. Her application to the Federal Court of Australia to review the order was dismissed with costs by Beaumont J on 10 April 2001.
18It was accepted by the first defendant (T p 17) that the plaintiff had not become bankrupt in order to avoid paying the costs. It was submitted that the plaintiff might follow a similar course if unsuccessful in these proceedings, with the risk that the first defendant would be unable to recover her costs. Counsel's submission was (T p 25, l 36-l 44)):
"... it is submitted that those judgments demonstrate that the plaintiff has a history of bringing what could be described advisedly as opportunistic claims of title over the land of others leading to very complicated and expensive hearings and, having failed in those claims, the costs orders were not satisfied and that is, given the broad similarity between the facts of that past litigation and the speculative and opportunistic nature of the claim made against the first defendant, a relevant matter for your Honour to take into account in determining whether an order for security should be made."
19The apprehension of the first defendant is founded on the plaintiff's failure to meet costs orders in other, unrelated proceedings, decided about 10 years ago. Such failure is little, if any, indication of an inability to meet an adverse costs order in these proceedings. I am unpersuaded that it is a factor which should tell against the plaintiff in this application. It has not been demonstrated that either the earlier, or the present, proceedings should be described as speculative or opportunistic, or that the failure to meet the costs orders in earlier proceedings adds any weight to the significance of the plaintiff's present impecuniosity. The situation is markedly distinguishable from that which arose in Bhagat v Murphy [2000] NSWSC 892 where the plaintiff against whom an order for security for costs was made had failed to meet various costs orders obtained by the defendants in many sets of related interlocutory proceedings brought by the plaintiff. Similarly, the present case is distinguishable from Chang v Comcare Australia [1999] FCA 1677 in which the existing liability to the respondent arising from costs orders was a factor which supported an order for security against the impecunious applicant.
20The next factor for consideration is the financial position of the first defendant. It was put that in this application the real question (as formulated by Young J, as he then was, in Morris v Hanley [2000] NSWSC 957, par 18: Bhagat par 28) is whether it would be vexatious and oppressive to the first defendant, in all the circumstances, to permit the action to continue without security. Accordingly, it was submitted that to prevent injustice and hardship likely to be suffered by the first defendant if the plaintiff was unsuccessful and unable to pay an adverse costs order, security should be ordered.
21It may be readily accepted that the first defendant will be put to cost, inconvenience, and stress by these proceedings. However, as explained in Jeffery & Katauskas (par 39) the possibility of resultant unfairness to a successful defendant in proceedings by an impecunious plaintiff is a product of the provisions and principles that govern security for costs. These sentiments were echoed by Hodgson JA in Green v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105:
"46 In my opinion, it would be an oversimplification to say that underlying these guidelines is a broader principle that defendants should be protected against being unable to collect costs ordered against plaintiffs unless this would stultify the litigation. Certainly, these are relevant considerations; but in my opinion also relevant are the considerations that there should not be undue inhibitions on less wealthy persons from seeking vindication of their rights against more wealthy persons, and that there could be such inhibitions if it was in every case open to defendants to apply for security for costs on the basis of some evidence (or even on the basis of fishing notices to produce) suggesting inability to pay costs, and to claim that security should be given unless the plaintiff can prove it would stultify the litigation. In my opinion these considerations make it desirable that guidelines be adhered to, even though the question is ultimately for the court's discretion."
22With regard to these principles, I have come to the view that the possibility that the first defendant may suffer some degree of hardship should she successfully defend these proceedings at a cost not recoverable from the plaintiff is a factor to be given neutral weight in the exercise of discretion.
23It was next submitted that the weakness of the plaintiff's case was a factor which provided strong support for the order sought. It was not contended that her case is hopeless and bound to fail. Nor was it suggested that the case has been brought to harass the defendants.
24Ordinarily, a court will not enter into a close evaluation of the competing strengths and weaknesses of each party's case. In Merribee, (par 26) Kirby J cautioned against a court embarking upon an evaluation of the merits of a party's case in an application such as this given "... that the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security for costs".
25To date, the proceedings have not progressed very far. Directions for the provision of evidence have been made, including a direction that the plaintiff provide further and better particulars of the pleaded allegations, and evidence which identifies precisely the boundaries of Area A. The challenge to the plaintiff's prospects of success was based upon the prayers for relief as pleaded in the amended statement of claim.
26For present purposes it is unnecessary to recite the detailed competing submissions on this issue. The first defendant has demonstrated that the plaintiff faces a real difficulty in attempting to question the validity of the plan she claims to be flawed, having regard to the provisions of s 195J Conveyancing Act 1919, and to establish some exception to the indefeasibility of the first defendant's title to Lot 140. However, in response, the plaintiff contends that the outcome of her claims necessarily turns on the proper construction and application of a number of statutory provisions, including s 195H and s 195J Conveyancing Act 1919, and ss 138(1) and (3)(a) Real Property Act 1900 which provide for the circumstances in which the court may order the Registrar General to cancel a folio of the register. It is reasonable to expect that the determination of the issues of statutory interpretation raised on the pleadings is likely to affect questions of admissibility and relevance of evidence to be led at the trial. The pleadings show that the plaintiff has put a case which, at least, is arguable. This is not the occasion to prognosticate on its outcome.
27On the limited material before me, it is simply too early to reach a conclusion as to the plaintiff's prospects on the various claims which, of course, include the claim formulated as an estoppel. In the circumstances, the first defendant has failed to establish that there is a weakness in the plaintiff's case of such a degree as to tell against the plaintiff in this application.
28The fourth factor suggested was that the first defendant's prospects of recovery of costs against the plaintiff was put at risk if the other defendants also sought to pursue the plaintiff for their costs. In my opinion it is a factor which seems so vague and speculative that no weight should be given to it.