This is the second in a series of articles which we will be publishing over the coming months concerning security for costs in civil disputes. The first article (available here) summarised the legal basis for these types of applications and the tests and consideration applied by the courts in determining them.
In this article we consider the circumstances in which a plaintiff can resist an application for security for costs on the basis that the defendant is, in substance, the aggressor of the litigation, and whether it is possible in those circumstances for the plaintiff to bring an application for security for costs against a defendant.
As we noted in our first article in this series, one rationale behind making security for costs orders is to ensure that a defendant is not unduly exposed in respect of its costs of defending the claim given that, ordinarily, the plaintiff has effectively ‘forced’ the defendant to participate in the proceedings and to incur legal costs in defending the plaintiff’s claim.
However, it is sometimes the case that the plaintiff has been compelled to commence proceedings by some act or omission of the defendant, such that the defendant is the legal “aggressor” and the plaintiff is, in substance, in the position of defendant. Some examples of this are provided further below.
If a plaintiff demonstrates that they are effectively in the position of a defendant, this will be a persuasive reason to oppose any security for costs application brought by the named defendant in the proceedings. This discretionary factor is expressly incorporated into the UCPR at r.42.21(1A)(e).
Whilst the UCPR includes this circumstance as “a” matter to be considered, Sundberg J in Aquatown Pty Ltd v Holder Stroud Pty Ltd (1995) 18 ACSR 622 (at 623 and 626) (Aquatown) remarked that this factor is “more than a matter to be taken into account” in the exercise of the Court’s discretion and that it would be sufficient, alone, to defeat any application seeking security for costs brought by a defendant.
The following examples illustrate the types of circumstances in which security for costs applications are likely to be dismissed on the ground that the plaintiff / applicant is really in the position of a defendant, and is the “party attacked” rather than the “party attacking”.
In Willey v Synan (1935) 54 CLR 175, a ship crewmember travelling from New Zealand to Melbourne found some valuable coins on board the ship. When the ship arrived in Melbourne, the Collector of Customs took possession of the coins. The Collector issued a statutory notice under the Customs Act to the crewman which required him to commence proceedings to recover the coins, and stated that if the crewman did not commence proceedings, the coins would be forfeited to the Crown. The crewman commenced proceedings against the Collector to recover the coins. The Collector made an application for security for costs against the crewman.
Dixon J considered the relevant provisions of the Customs Act, and commented: “It appears to me that the collector is the actor. The notice… 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.” [emphasis added]
Latham CJ made similar remarks and the High Court rejected the application for security for costs on the basis that the plaintiff was effectively in the position of the defendant.
Similarly, in Re Travelodge, Australia Ltd (1987) 21 ACTR 17, the applicant was a shareholder in a company that had received a takeover offer. The shareholder refused to accept the offer, and as a result, was served with a notice under the Companies Ordinance 1962, the effect of which was that if the shareholder did not commence proceedings, the respondent would have been entitled to forcibly acquire the applicant’s shares. The shareholder commenced proceedings in the ACT Supreme Court to prevent this from happening, and the respondent applied for security against the shareholder.
Blackburn CJ refused the application for security, and found that the case came within the principle espoused in Willey v Synan, in that the applicant commenced proceedings “in order to preserve to himself a right which he considers a valuable one, which by the combined effect of a statute and the actions of the respondent may be taken away from him”.
In Aquatown, the respondent served a statutory demand on the applicant company under section 459E of the Corporations Act, which required the applicant to pay the sum demanded within 21 days of service, or apply to the Court for an order setting aside the demand within that time, failing which a statutory prescription of insolvency would arise which the respondent could rely upon to have the applicant wound up.
The applicant applied to the Court to have the demand set aside, and the respondent made an application for security under section 1335 of the Corporations Act.
The Court found that the applicant was, in a practical sense, ‘forced’ into initiating the litigation in order to avoid a ground upon which it could be wound up. In those circumstances, the Court dismissed the respondent’s application for security, with costs.
In Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 19 FCR 324, the defendant (“Warman”) wrote to one of Amalgamated Mining Services’ (“AMS”) customers alleging that the customer had been offering to supply replacement parts for Warman pumps to AMS, thereby infringing Warman’s copyright in the drawings of those parts. The letter stated that unless AMS’ customer provided an undertaking to cease and desist from such conduct within 21 days of the letter, Warman would “take such action as it may consider necessary to protect its rights”.
AMS commenced proceedings against Warman for a declaration that the threats made by Warman against AMS’ customer were ‘unjustifiable’ under section 202 of the Copyright Act 1968, which provides that a person aggrieved by ‘unjustifiable threats’ of copyright infringement can apply to the court for (among other things) an injunction preventing any further threats, and damages for loss caused by the threats.
Warman applied for security for costs against AMS. AMS resisted the application on the basis that it was really in the position of being a “party attacked” rather than a “party attacking“.
Importantly, the court commented that Warman’s letter put AMS “in the position either of suffering losses of sales… or of going to court to assert its rights”. In other words, had AMS done nothing, it would have lost its customer’s sales. Accordingly, the Court refused to grant Warman’s application for security for costs.
The decisions summarised above demonstrate that a plaintiff who can establish that it is, in substance, the defendant or the “party being attacked” will be well placed to defeat any attempt by a defendant to obtain security for its costs against the plaintiff.
The decision of Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 13 ACSR 263 (Classic Ceramic) takes the issue one step further – it suggests that it is possible for a plaintiff to bring an application for security for costs against a defendant.
In Classic Ceramic, the plaintiff (“CCI”) commenced proceedings seeking to set aside a statutory demand issued by the defendant (“Antiga”). CCI then brought an application seeking an order that Antiga, a company incorporated in Spain which did not have any business or assets in Australia, provide security for costs. This was an unconventional application because security was being sought by the plaintiff and not the defendant.
In Classic Ceramic, Young J confirmed (at 267) that:
“Commercially speaking, the person who issued the statutory demand is the attacker and an applicant for an order under s 459G is responding to that attack…”
Accordingly, the Supreme Court of NSW stated that because Antiga was the ‘legal aggressor’, CCI had standing to bring an application for security for costs.
Whilst CCI failed to persuade the Court that it ought to exercise its discretion in making an order requiring Antiga to provide security, the decision is a meaningful confirmation that a plaintiff who is compelled to bring proceedings by reason of some action or inaction of the defendant, may be able to obtain security for their costs in prosecuting claims against ‘legal aggressor’ defendants (in appropriate circumstances).
The above illustrates that where a plaintiff can demonstrate that it has been ‘forced’ to proceedings, and is in substance the party being attacked as opposed to the party attacking, this will be a strong ground to resist an application to security for costs, and may even be grounds for the plaintiff to bring its own application for security against the defendant.
Parties to litigation should understand that for the purposes of considering whether their opponent should be required to provide security for costs, the real character of a party’s role in the context of the dispute over the form and how they are named in the court documents.
If you would like any further information regarding the above or any of the other articles in this series or if you have any feedback generally we welcome you to contact us.
In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph , Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph , Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph : "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.
The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane  NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty. The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.
The recent decision in New Aim Pty Ltd v Leung  FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.