By Stuart Eustice, Partner and Ashleigh Shankly, Lawyer

In February 2024, Sparks commenced proceedings in the Supreme Court seeking relief by way of specific performance of a contract entered into between Sparks NT Pty Ltd (Sparks) and the Angkerle Aboriginal Corporation (AAC), or, alternatively, damages. The claim arose out of a contract for the design and construction of a solar power plant. On 10 July 2024, the matter settled informally, and the parties entered into a settlement deed, however, on 30 September 2024, Sparks advised AAC that it did not consider the matter settled and sought leave to amend its Statement of Claim.

In November 2023, AAC conducted an ASIC search which revealed Sparks was in default to the ATO in the amount of $833,695.41, and on 6 December 2024, AAC requested they pay security for costs. This was refused by Sparks.

AAC made an application to the Court seeking an order for security for costs in the sum of $201,423.50 against Sparks. On 17 April 2025, the Court found a prima facie case that Sparks would be unable to pay AAC’s costs if AAC were successful in its defence and considered an order for security for costs in the sum of $90,000 warranted.

Sparks sought leave to appeal against the order to pay security costs. The application for leave to appeal and the substantive appeal were heard concurrently. Sparks submitted that there were errors of law made at each of the three stages of evaluation. Sparks further contended that its ability to pay the defendants costs cannot be determined without an assessment of those costs. No authority was cited to support this contention. AAC estimated its costs at $201,243.50, whereas Sparks estimated AAC’s costs at $18,765, notwithstanding their costs were at estimated to be $90,000.

When considering rule 62.02(1)(b) of the Supreme Court Rules 1987 (NT) and whether Sparks had sufficient assets to pay the costs of the defendant if ordered to do so, Sparks submitted that the primary judge erred in discounting the value of Sparks equipment, which was valued at $778,950.  There was no verification of the value of the assets in the form of an insurance policy or listing on a balance sheet. The evidence before the primary judge was:

1. sparks had to no property in the Northern Territory;
2. the amount of $833,695,41 had been payable to the ATO since May 2024;
3. in May 2024, Sparks’ tax default was entered into the public Creditor Watch database;
4. in November 2023, Sparks sold a generator and retained the proceeds, rather than paying them into Court;
5. the value of the assets claimed to be owned by Sparks was ‘baldly stated’ on information with no proof of valuation;
6. the income statement from 2022-2023 had no detail of its expenditure;
7. no substantial evidence of Sparks financial circumstances.

Sparks claimed that the primary judge’s decision was “unreasonable or plainly unjust”, and relied on six assertions, as follows:

1. There was an ‘unexplained’ delay of 10 months between the commencement of proceedings and the application for security costs. The appellant court found that the delay was not unreasonable on review of the proceedings and noting that an initially successful mediation was conducted in July 2024. It was further noted that the application for security costs did not prejudice the plaintiff’s late-stage trial preparation, nor was it made at a point where the greater portion of costs had already been incurred.
2. Sparks further asserted that the primary judge failed to give weight to the suggestion that AAC had adequate security in the form of the equipment which had been returned to Sparks. The appellate court considered the evidence of the value of the equipment, and agreed with the primary judge that a misleading or deceptive misrepresentation had been made that the equipment was worth $363,000, and considered no error had been made by the primary judge.
3. Thirdly, it was asserted that the primary judge did not properly consider the proximity to trial. The appellate court considered that the observation was made after the primary judge had canvassed and dealt with the other discretionary factors and that it was a final conclusion and did not purport to give that issue primacy and was not in error.
4. Sparks further asserted that the primary judge erred in concluding that the merits of its case were ‘somewhat neutral’. The appellant court considered the primary judge was correct to find the strength of the case a neutral factor, noting that the prospects of its successes was of little relevance, save that it was a bona fide case.
5. Sparks’s fifth assertion was that the order made by the primary judge was oppressive on the basis that it would require Sparks to sell all of its equipment and hinder its ability to earn income. This was not supported by direct evidence from Sparks and not accepted on appeal.
6. Sparks’s sixth assertion of error was that the primary judge gave undue weight to the absence of evidence from those who stand behind Sparks. The appellant court considered this was not decisive in the exercise of the primary judge’s discretion.

The application for leave to appeal was granted, however the appeal was dismissed. This decision again illustrating submissions without corroborative evidence will rarely be accepted on face value.