panes nrerce op pe Pn ae Practice and procedure - security for costs - whether applicant suing for own benefit or for benefit of some other person - creditors of applicant forbearing - whether proceedings brought for benefit of creditors and not applicant - no assignment of benefit of litigation - Federal Court of Australia Act 1976 5.56 Federal Court Rules 0.28 R.3 ROSINA FLORENCE UPTON and LESLIE CHARLES UPTON v. IVW ENTERPRISES LIMITED and HODD WILKINS Pry LTD No. WA G103 of 1984 TOQHEY J. PERTH 12 December 1984 ce IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA ( DISTRICT REGISTRY GENERAL DIVISION No. WA G103 of 1984 we we BETWEEN: ROSINA FLORENCE UPTON and LESLIE CHARLES UPTON Applicants and TVW ENTERPRISES LIMITED First Respondent and HODD WILKINS Pry LTD Second Respondent OQ R D E R " JUDGE _ MAKING ORDER Toohey J. DATE OF ORDER 12 December 1984 WHERE MADE Perth oe THE COURT ORDERS THAT: 1. Paragraph 2 of the first respondent's notice of motion filed on 23 November 1984 is dismissed. 2. Paragraph 2 of the second respondent's notice of motion filed on 30 November 1984 is dismissed. 3. The costs of the hearing be the applicants' costs in the cause. ere nt ye TE Neem me IN pe tent a SD Sa MAME TE AT a nN mere re TN meg en ry we ek = Sats. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA Gl103 of 1984 ed BETWEEN: ROSINA FLORENCE UPTON and LESLIE CHARLES UPTON -~ Applicants and TVW ENTERPRISES LIMITED First Respondent and HODD WILKINS PTY LTD Second Respondent CORAM: TOOHEY J. 12 December 1984 REASONS FOR JUDGMENT By separate motions each respondent seeks an order that the applicants give security for the costs of these proceedings. Counsel for the respondents acknowledged the principle that impecuniosity on the part of an applicant is no ground for ordering him to give security for costs. See Barton v. Minister for Foreign Affairs (1984) 54 ALR 586 at 592 where the cases are mentioned. Nor did they rely upon the general provisions of 8.56 of the Federal Court of Australia Act 1976. They took their stand on Order 28 Rule 3 of the Federal Court Rules, in particular 2. sub-r.(1)(b) which empowers the Court to order security where it appears: "(b) that an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so". There is no doubt that the applicants in the present case will be unable to pay the costs of the respondents if their application is unsuccessful. Thus the question for determination is a narrow one - does it appear that the applicants are suing, not for their own benefit, but for the benefit' of some other person? The catalyst for the present motions was an affidavit sworn by the applicants' solicitor in support of an application to expedite the hearing of this matter. In the course of that affidavit the solicitor referred to the many debts of the applicants referred to in the statement of claim in connection with particulars of damage alleged to have been suffered by the applicants as a result of the misleading and deceptive conduct of the respondents. The affidavit mentions in particular three debts for which the creditors have obtained judgment against the applicants. Two of these debts are to Custom Credit Corporation Ltd and the National Commercial Banking Corporation of Australia Ltd, each of which is secured by a mortgage over the applicants' home. The affidavit recites that these creditors have agreed to postpone execution until the outcome of the proceedings in this fa NET EP OO JT Oe Can Oe Onan ee Sr Cae ' 3. Court is known. The affidavit includes this passage: "5. The applicants are presently completely dependent upon the good graces of Custom Credit and the National Bank for the retention of their home. There is no consideration for the forbearance of the companies and their decision could be . reversed at any time". In the light .-of these statements the respondents submitted that any damages obtained against them have been committed by the applicants to the two secured creditors and that, in the absence of any explanation from the applicants, this Court should infer that an assignment (formal or informal) has been made of the fruits of litigation. Counsel referred to Andrews v. Caltex Oi] (Australia Pty Ltd (1982) 40 ALR 305 in which Lockhart J. considered the meaning of "benefit" in Order 28 Rule 3. His Honour rejected the argument that "benefit" should be confined to financial benefit in the context that the applicants claimed an infringement by the respondent of a provision of the Petroleum Retail Marketing Franchise Act 1980. At p.308 he said: "In my view, the meaning of 'henefit' is to be gleaned from the character of the particular case before the court. It derives its complexion from the specific statute involved and the circumstances of the case. Its meaning is ambulatory". But in the present case no benefit is asserted by the respondents other than financial benefit to particular creditors. nme What his Honour did emphasise was that: ",.. there are two aspects of 'benefit' namely, first that the proceeding is not brought for the benefit of the applicant and second, that it is brought for the benefit of some other person. Proof of the former does not necessarily establish the latter" (at p.309). Equally, proof that a proceeding was brought for the benefit of another does not necessarily establish that it was not brought for the benefit of the applicant. Sub-paragraph (1)(b) of Order 28 Rule 3 is directed to the situation where an applicant sues, not for his own benefit, but for the benefit of some other person. In my view the use of the expression "for" is not accidental. It is a word which, in many contexts, carries the notion of purpose. In my view it carries that notion in para (b) in the sense that the rule is concerned with proceedings brought in order to benefit someone other than the applicant. No doubt in any case in which an applicant has creditors (and the impecunious applicant may have many), the creditors stand to benefit from a money award in favour of the applicant. But it is afar cry from that proposition to say that the proceedings are brought for the benefit of the creditors and not for the benefit of the applicant. I am quite unable to infer from the evidence before the Court that there has been an assignment of the fruits of this litigation to Custom Credit or the National Bank or that any arrangement has been made by the applicants to give those creditors some preference in the ee et "y 5. disposition of any award of damages obtained. Any such arrangement would, in any event, be open to attack under the provisions of the Bankruptcy Act 1966. Mr. Bennett, counsel for the first respondent, referred to Semler v. Murphy (1968) 1 Ch. 183 in which a plaintiff, claiming damages for breach of contract, charged the fruits of the action to his brother. In.an application for security for costs under the Rules of the Supreme Court Order 23 Rule 1, the Court of Appeal held that the plaintiff was "a nominal plaintiff ... suing for the benefit of some other person". In the course of his judgment Lord Denning MR said at p.192: "It comes to this. If the action succeeds, the plaintiff's brother will go off with the whole of the proceeds and let the other creditors 'whistle' for their money: whereas if the action fails, the plaintiff will not be able to pay the costs of the defendant. It is the very kind of case in which security for costs should be ordered. It may be noted that in Semier v. Murphy Harman L.Jd. had grave doubts that the plaintiff was in truth a nominal plaintiff suing for the benefit of another. But in any event the decision in that case turned on its particular facts, facts which are quite different from those in the present case. The basis of the Court''s decision that the plaintiff was a nominal plaintiff was that he had expressly charged the fruits of the action and therefore, it was said, was suing for the benefit of another. In Riot Nominess Pty Ltd v. Suzuki Australia Pty Ltd (1981) 34 ALR 653 at 655, Keely J. considered the English rules of eer ee 6. court and concluded that Order 28 Rule 3(1)(b) "does not show an intention to depart from the common law position andis not intended to apply to a proceeding instituted by a trustee, whose duty it is to carry out the terms of a trust". With respect, I have some reservations about that statement as a general proposition. The use of the words "not for his own benefit" and a comparison of them with the expression "nominal plaintiff" may, in a particular case, require a reconsideration of the English authorities. But in the present case I am satisfied that the application is brought for the benefit of the applicants and that Order 28 Rule 3(1)(b) is not applicable. In so far as each motion seeks an order for security for costs, it will be dismissed. T shall hear from counsel on the question of costs. I certify that this and the five preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Toohey Lear, Grane Co Associate c/ Dated: 12 December 1984