Litig8: Security for costs: considerations of the court

July, 2016

By Claire Limbach, Lawyer

Each month as a part of Mills Oakley’s Litig8, we bring to you snapshots of eight key cases, legislative changes or other legal events. The summaries are not comprehensive and do not constitute legal advice. You should seek professional advice before taking any action based on the content of this email.

Part 3 of Litig8 Edition 3

An application for security costs pursuant to section 1335 of the Corporations Act 2001 (Cth) was recently heard by the New South Wales Court of Appeal. It provides a useful reminder of the matters taken into consideration by the Court in dealing with security for costs.

An application for security for costs was recently considered in the case of Aquatic Air Pty Ltd v Siewert (2016) NSWCA 130.

In granting the security for costs order, the Court considered the impecuniosity of the appellant, whether the appeal would be stifled if a security order were made, and whether an undertaking should be accepted.

The court found, on the evidence available to it, the following:

  1. The Appellant was indeed impecunious;
  1. The appeal would not be stifled by an order for security because the sole director of the Appellant showed a net asset position of $1,090,000 (it was likely the security would be provided out of his resources);
  1. An undertaking in place of security for costs was not appropriate in the circumstances because there were doubts about the reliability of the undertaking proposed.

The Appellant was ordered to provide security for the costs of the appeal in the amount of $80,000.

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