Background
The recent case of Builtcom Properties 15 v Maxida International Alexandria Property Australia confirmed the depth of discretionary matters the Supreme Court of New South Wales (the Court) can take into account in ordering security for a party's costs.
The matter concerns a transaction dispute regarding the Defendant's sale of a property to the Plaintiff conditional upon final approval from the Defendant's Board. The Defendant's Board ultimately did not approve of the sale to the Plaintiff.
In this case, the Defendant filed an application seeking security for costs from the Plaintiff who were a shell company devoid of assets.
Security of costs order
The Court held that the Defendant's evidence met the requirements stipulated under r42.21 UCPR and s1335(1) of the Corps Act.
However, it was noted that an order pursuant to these provisions remained discretionary and that the Court was to consider the following established principles in determining whether such an order should be made:1
- An application for security for costs should be brought without undue delay;
- Regard may be given to the apparent strength of the Plaintiff's case;
- Whether the application is oppressive so as to nullify a right to sue;
- Whether there are persons standing behind the Plaintiff who could provide security and who are likely to benefit from the litigation.
In this case, the Court found that these factors had been satisfied. Importantly, the Court considered a new category in determining whether such an order should be made, namely the Defendant's amenability in meeting the requests of the Plaintiff, including confidentialty of financial circumstances, to no avail, and this fact was considered to be favourable to the Defendant's application for security for costs.
Implications
This case confirms the wide breath of discretionary considerations the Court can take into account in determining an application for security of costs. Nevertheless, it is important to note that the discretionary factors listed here are in no way exhaustive or limited.
Footnote
1 Referring to Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
