//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2002] FCA 1269
Federal Court of Australia
2002-10-16
French J
Original judgment source is linked above.
REASONS FOR JUDGMENT ON MOTION FOR SECURITY FOR COSTS
Introduction 1 On 7 February 2002, the Russian fishing vessel, Volga, was stopped in the Southern Ocean and boarded by members of the Royal Australian Navy from the Royal Australian Navy frigate, HMAS Canberra. An Australian Fisheries Officer also boarded. The vessel was said to have had a catch of Patagonian Toothfish and to have been fishing in the Australian Fishing Zone contrary to the provisions of the Fisheries Management Act 1991 (Cth). It was apprehended and directed to proceed to Fremantle. Subsequently, a notice of seizure of the vessel, its nets, traps, equipment and catch, was given under s 106C of the Fisheries Management Act on the basis that the vessel had been forfeited to the Commonwealth pursuant to s 106A of the Act. The owner of the vessel was later given a further notice requiring it to institute proceedings against the Commonwealth within two months for recovery or for a declaration that the vessel was not forfeited. Absent such action, the vessel, equipment and catch would be condemned. 2 The Russian company which owns the vessel, Olbers Co Ltd (Olbers), commenced proceedings accordingly in this Court. They are brought against the Commonwealth and against the Australian Fisheries Management Authority. The respondents move for an order that the company provide security for the costs of the application.
Factual and Procedural Background 3 Olbers is a company said to be domiciled in Russia. It claims to be the owner of a Japanese built long-line fishing vessel called Volga. The vessel is registered in the Shipping Registry of the Russian Federation and is entitled to fly the Russian flag. 4 On 7 February, the Volga was boarded in the Southern Ocean by members of the Royal Australian Navy and an Australian Fisheries Officer. The boarding parties are said to have been transported to the vessel by helicopter from the Royal Australian Navy frigate, HMAS Canberra. Volga having been thus apprehended was directed to proceed to Fremantle for the investigation of offences against the Fisheries Management Act. The ship's Master was served at the time with a document entitled "NOTICE OF APPREHENSION" signed by the Commander of the Canberra and by a boarding party officer. It was countersigned by the Master. The notice was in the following terms: "NOTICE OF APPREHENSION Your vessel was today boarded by the Royal Australian Navy for the purpose of determining if it has been conducting illegal fishing operations in the Australian Heard Island/McDonald Island Exclusive Economic Zone. Officers of the Royal Australian Navy and the Australian Fisheries Management Authority have now determined that your vessel has in fact been illegally fishing in the EEZ and your vessel has therefore been apprehended under the Australian Fisheries Management Act of 1991. A Naval Steaming Party will be embarked in your vessel with orders to proceed to an Australian port and you are directed to comply with the orders of the Officer in Charge of the Steaming Party. You will remain in Command of your vessel, subject to the directives of the OIC Steaming Party. The conduct, compliance and discipline of your crew will remain your responsibility and you should note that you may be called to account for the actions of yourself and your crew in any subsequent proceedings. You should be in no doubt that it is the Royal Australian Navy's intention that your vessel will be taken to an Australian port. This will be achieved in the safest and most expeditious manner and your co-operation in achieving this is requested." 5 The vessel was taken to the port of Fremantle where it arrived on 19 February 2002. On 20 February 2002, the Master of the vessel was served by a representative of the Australian Fisheries Management Authority with a notice under s 106C of the Act which was in the following terms: "Australian Fisheries Management Authority FISHERIES MANAGEMENT ACT 1991 NOTICE PURSUANT TO SECTION 106C To the Master of the boat VOLGA, I THOMAS J MORRIS, an officer as defined in Section 4 of the Fisheries Management Act 1991 (the Act), hereby give notice pursuant to Section 106C of the Act, that the following things have been seized:
Statutory Framework - The Power to Order Security for Costs 10 Section 56 of the Federal Court of Australia Act 1976 (Cth) confers upon the Court the power to order security for costs in the following terms: "56(1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him. (2) The security shall be of such amount and given at such time and in such manner and form, as the Court or Judge directs. (3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given. (4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed. (5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security." 11 Provision is also made by the Federal Court Rules for security for costs. Order 28 rule 3 provides: "3(1) Where, in any proceeding, it appears to the Court on the application of a respondent - (a) that an applicant is ordinarily resident outside Australia; … the Court may order that applicant to give such security as the Court thinks fit for the costs of the respondent of and incidental to the proceeding. … 4. Where the Court orders an applicant to give security for costs, the security shall be given in such manner, at such time, and in such terms (if any), as the Court may by order direct." Order 28 r 5 provides for the stay of proceedings pending the provision of security or their dismissal if security is not provided within a time limited by order. The Court may also set aside or vary an order so made. Statutory Framework - The Fisheries Management Act 1991 12 Section 106A of the Fisheries Management Act provides for the forfeiture to the Commonwealth of foreign boats used in offences against various provisions of the Act relating to fishing without appropriate licences in the Australian Fishing Zone. It also provides for the forfeiture of nets, traps, equipment or fish on such boats. An officer who has reasonable grounds to believe that a boat or equipment or fish is forfeited under s 106A may seize all or any of those things under s 84(1)(ga). In so doing the officer must, pursuant to s 106C, give written notice of the seizure to the person who was the master of the boat immediately before the seizure or whom the officer has reasonable grounds to believe was the master of the boat immediately before the seizure. 13 Section 106E provides: "106E(1) By force of this subsection, the thing is condemned as forfeited to the Commonwealth 30 days after notice of seizure of the thing has been given under section 106C, unless: (a) within the 30 days the owner of the thing or the person who had possession, custody or control of it immediately before it was seized gives the Managing Director of AFMA a written claim for the thing; and (b) the claim is in English; and (c) the claim sets out an address for service on the person making the claim. (2) A person may claim the thing even if it is disposed of or destroyed before or after the claim." The giving of the claim does not involve the institution of proceedings. Proceedings may be required to establish title where a claim has been made and by notice it may be required that they be instituted within a period of two months of the notice in default of which the things seized will be condemned. The power to require the institution of proceedings on this basis is set out in s 106F: "106F(1) If the thing is claimed as described in section 106E: (a) an officer may retain possession of the thing without starting any proceedings for the condemnation of the goods; and (b) the Managing Director of AFMA may give the claimant a written notice stating that the thing will be condemned if the claimant does not institute proceedings against the Commonwealth within 2 months; (i) to recover the thing; or (ii) for a declaration that the thing is not forfeited." Subsections (2), (3) and (4) of s 106F deal with the process for giving notice pursuant to s 106F.
The Court's Discretion The Court has a discretion to order an applicant to provide security for the costs of the action in the event that it is unsuccessful. Factors taken into account by the Court in determining whether an application for security for costs were set out by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 and include: 1. Whether there has been any delay in making the application; 2. The strength and bona fides of the applicant's case; 3. Whether any impecuniosity on the part of the applicant was caused by the respondent's conduct the subject of the claim; 4. Whether the application for security is oppressive in that it is being used merely to deny to an impecunious applicant a right to litigate; 5. Whether, in the case of a corporate applicant, there are persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security; 6. Whether the persons standing behind the company have offered any personal undertaking to be liable for the costs and, if so, the form of any such undertaking; Her Honour also observed that security will only be ordered against a party who is in substance a plaintiff. An order ordinarily should not be made against parties who are defending themselves and thus forced to litigate. 14 In this case the application has been brought promptly. The applicant is a corporate entity. Those who stand behind the applicant have not indicated their willingness to provide security for costs. On the other hand, Mr Sizov, a director of the applicant, deposes, without contradiction but also without disclosing the financial details of the company, that the applicant is solvent and able to pay any costs awards that may be made against it in the proceedings which it has been obliged to bring by virtue of the requirements of s 106G of the Fisheries Management Act. He points out that bail money was provided by the applicant for the officers of the vessel who were charged with offences under the Fisheries Management Act on 21 March 2002. The company has provided bail moneys of $225,000 for those officers and a further $20,000 in respect of the fishing master of the vessel. The respondents themselves say there is no suggestion that the applicant is impecunious. It is also rightly contended, and not subject to dispute, that the respondents' application for security is not oppressive in any relevant sense. 15 The respondents rest much of their argument upon the merits of the applicant's case. They seek, by reference to statements of evidence from various witnesses to be called in the criminal proceedings, to establish that at a relevant time the vessel was within the Australian Fishing Zone and engaged in long-line fishing there in contravention of the Act. In my opinion, however, it is not appropriate, on this motion, that I make any findings of fact, whether provisional or otherwise on that issue which is central to the pending criminal proceedings. The witness statements relied upon are untested. They do not constitute evidence of a kind upon which I could feel confident about forming a view as to the strength of the applicant's case. It can be said, however, that there is no reason to doubt the bona fides of the application. 16 The present case is one in which the applicant brings the proceedings perforce to avoid condemnation of the vessel by the Commonwealth pursuant to the provisions of the Fisheries Management Act. In that sense, they are defensive. The position of the applicant is analogous to that of the plaintiff in Willey v Synan (1935) 54 CLR 175. In that case 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. The plaintiff, who was not ordinarily resident within the Commonwealth, commenced an action against the Collector of Customs for the recovery of the coins. In the High Court it was held, on appeal from Starke J, that by reason of the defendant's notice requiring the commencement of proceedings and the statutory forfeiture which would have resulted from failure to do so, the plaintiff was in substance in the position of a defendant and that security for costs should not be ordered. Dixon J said at 185: "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." Similar reasoning was essayed by Latham CJ. Rich J agreed with Dixon J. McTiernan J agreed in short separate reasons. 17 At the very least, the status of an applicant as a de facto defendant is a significant factor weighing against an order for security. Ormiston J said in Interwest Ltd (Receivers and Managers Appointed) v Tricontinental Corporation Ltd (1991) 9 ACLC 1,218 at 1,229: "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." 18 A stronger position was taken by Sundberg J in Aquatown Pty Ltd v Holder Stroud Pty Ltd (1995) 13 ACLC 1,847 at 1,850, where his Honour said in relation to an application to set aside a statutory demand: "… 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." 19 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. The respondents' motion will be dismissed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.
Solicitor for the Respondent: Australian Government Solicitor
Olbers Co Ltd
Commonwealth of Australia
(1995) 56 FCR 189
(1935) 54 CLR 175