55.7. Security for costs

Section 222 empowers the Registrar to require a person who

• gives notice of opposition under section 52 or subsections 65A(4), 83A(4) or 224(6), or
• applies under Part 9 for removal of a trade mark from the Register,

to give security for costs if that person neither resides nor carries on business in Australia. If security is not given the Registrar may dismiss the proceedings.

Reg 17A.73 is the equivalent provision for proceedings in relation to the protection of an International Registration Designating Australia or the cessation of protection of a Protected International Trade Mark.

The purpose of requiring security for costs is to provide funds, held in trust by the Registrar, to which the other party in the proceedings can have access if successful. At the end of the proceedings, if costs are not awarded against the party who was required to give security, the monies will be returned to that party in full.

In practice the Registrar does not require security for costs to be given unless a person applies for the Registrar to do so.

7.1 Procedure when application is made for Registrar to require security for costs

An application for exercise of the Registrar’s discretion under section 222 should be in writing and should include the following details:

• the trade mark number, name of the owner and name of the opponent or non-use applicant
• the facts on which the application is based, including confirmation that the opponent or non-use applicant does not reside or carry on business in Australia
• estimated amount for the security for costs - this amount should be calculated in accordance with Schedule 8 of the Trade Marks Act 1995 (current schedule for costs, expenses and allowances).

The Registrar considers the application before sending a copy to the other side, advising (in an appropriate case) that he or she intends to require security for costs. The sum required as security is at the discretion of the Registrar but is usually for the likely amount of costs taxed according to Schedule 8.  (This may be varied, depending on a number of factors such as the likelihood of the action collapsing before it is heard in which case a lower amount would be required). The opponent or non-use applicant is given an opportunity and time within which to comment on the application and on the amount proposed for security. If there are no representations within the time allowed, the Registrar may require the relevant party to give security for costs and specify a time within which the security must be provided. The requesting party will be informed that this has been done.

In the event that the Registrar intends not to require security for costs, the party requesting that security be given is entitled to be heard on that matter.

If security is not given within the time specified, which is usually two months, the Registrar may dismiss the proceeding.  Before doing so the Registrar will, in the interests of procedural fairness, give the relevant party an opportunity to be heard. (See Guess Europe SAGL v Nick Zisimopoulis and Mary Tucceri-Cimini [2010] ATMO 24.)  If the proceeding is dismissed the Registrar will notify the parties of the dismissal as per regs 5.20, 9.22, 17A.35 and 17A.48Y.

It is common in court proceedings for the court to accept a guarantee by a third party to accept responsibility for the costs in question. However, enforcement of such a guarantee may be burdensome for a successful party and, given that scale costs are only a very small part of actual costs, the Registrar would not normally accept the giving of a guarantee as an alternative to requiring payment of security unless the guarantee was also acceptable to the party requesting security.

7.2 Letter requiring security for costs

The Registrar advises the party required to provide security for costs by means of a letter which also advises that the money will be held until the end of the proceedings.

The information is usually expressed as follows:

The opponent/applicant for removal, nnnnnn shall give security for costs being the sum of $****, within two months from the date of this letter. In the event that the opponent/applicant for removal fails to provide the sum of $**** in a manner acceptable to the Registrar and within the time of two months as allowed, the opposition may be dismissed by the Registrar as section 222 of the Act provides.