Amiterre AG Solutions PTY LTD v Meliora Estates Pty Ltd.

Cases Cited: Bell Wholesale Co Ltd v Gates Export Corp (No 2) [1984] 2 FCR 1
Buckley v BennelI Design and Constructions Pty Limited (1974) 1 ACLR 301
Colorado Products Pty Limited (in prov liq) [2013] NSWSC 611
Coolangatta Property Pty Ltd v Emily Dyason [2011] NSWSC 929
Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2013] NSWCA 404
TC Build Pty Ltd v STM123 Pty Ltd [2023] NSWSC 322
Jazabas Pty Ltd v Haddad [2007] NSWCA 291
KP Cable Investments Ply Ltd v Meltglow Pty Ltd [1995] FCA 76
Sagacious Procurement Pty Limited v Symbion Health Limited [2007] NSWCA 205

Texts Cited: Nil

Category: Principal judgment

Parties: Amiterre AG Solutions Pty Ltd (Plaintiff)
Meliora Estates Pty Ltd (Defendant)

Representation: Counsel:
A Kaufmann (Plaintiff)
Y Truong (Defendant)
Solicitors:
BWT Legal (Plaintiff)
Herman Legal (Defendant)

File Number(s): 2022/00370193

Publication restriction: Nil

JUDGMENT

1. This judgment concerns an application for the order of further security for costs.

2. The applicant to this motion is Meliora Estates Pty Ltd (Meliora). It is the defendant/cross-claimant in the substantive proceeding. It is represented by Y Truong of counsel.

3. The respondent to this motion is Amiterre AG Solutions Pty Ltd (Amiterre), Amiterre is the plaintiff/cross-defendant in the substantive proceeding. It is represented by A Kaufmann of counsel.

4. Both parties relied on an agreed court book comprising of two volumes (Exhibit A1 and A2).

5. When the expert evidence reports have been served, the parties will attempt to resolve the matter by mediation.

6. In May 2023, by consent, Amiterre paid $50,000 into court as security for costs.

7. By Notice of Motion (NOM) filed 6 September 2024, Meliora seeks a further order for security for costs against Amiterre pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and s 1335 of the Corporations Act 2001 (Cth) (Corporations Act) in the sum of $396,678.71.

8. Meliora relied on four affidavits of its solicitor, Eric Herman (Mr Herman) (filed 5 September 2024; 14 November 2024; 22 January 2025; and 3 March 2025).

9. Amiterre relied on two affidavits of its solicitor Benajmin Tolson (Mr Tolson) (filed 24 December 2024 and 20 March 2025) and two affidavits of David Bonser (Mr Bonser), the sole director of Amiterre filed (22 November 2023 and 19 August 2024).

Background

10. Meliora, the applicant, is the registered proprietor of farmland at Peats Ridge, which is on the central coast and about a 90 minutes’ drive from Sydney.

11. Mr Bonser is the sole director of Amiterre, the respondent. Mr Bosner and his partner, Rosalind Bonser (Mrs Bonser), are Amiterre’s only shareholders. In an oral agreement, Meliora agreed to allow Amiterre to operate a composting facility on part of its land. Subsequent to the oral representations and promises made in the agreement between the parties, a written lease (the lease) was executed on 1 June 2016. The lease was of a two-hectare parcel of the land and for a term of 5 years with options to renew the lease periodically. Amiterre went into possession of the land.

12. Subsequently, the parties’ relationship deteriorated, resulting in termination of the lease by Meliora on 6 August 2018. Meliora asserted that the essential terms of the lease and oral agreement had been breached by Amiterre.

The pleading framework

13. The starting point is the pleading framework. The pleadings are convoluted and repetitive, so I will attempt to summarise them.

14. By Statement of Claim (SOC) filed on 8 December 2022, Amiterre commenced proceedings against Meliora for detinue and conversion of a compost turner left at the Meliora farm and for breach of the alleged lease and oral agreement between the parties.

15. On or about 6 August 2018, Meliora purported to terminate the agreement and the lease of the property by Amiterre by changing the locks to the gate at the property, such that Amiterre could not access the property, and asserted that the lease was not binding.

16. On or about 2 December 2022, Amiterre understood the exclusion by Meliora referred to in the paragraph above as a repudiation of the agreement and terminated the agreement.

17. Amiterre seeks damages for breach of the agreement in the quantum of $2,000,000–10,000,000 due to the loss of expected profits as well as $100,000 for alleged wasted expenditure in the reliance on the performance by Meliora of the agreement, the particulars of which are as follows:

18. $8,200 for the costs of obtaining the odour study;

19. $3,689 for soil certification and civil engineering costs;

20. $4,320 for obtaining a survey plan;

21. $16,500 in rent paid to Meliora between 30 May and 1 June 2018; and

22. $65,000 in purchasing and commissioning a pull type compost turner.

23. It is noted that the actual ambit of Amiterre’s claim for damages will only be ascertained when its expert report on damages is served.

Particulars of the agreement

19. The agreement was oral and occurred during conversations between Mr Bonser on behalf of Amiterre and Mr Tim Kemp (Mr Kemp). Mr Kemp is the son of Meliora’s directors and the operator of the farmland. By its SOC, Amiterre claims the following were the alleged terms of the agreement:

20. Amiterre would enter into a lease in respect of part of the property, and Meliora would allow Amiterre to occupy the leased premises of the property;

21. Amiterre would use the leased area of the property to manufacture and sell compost produced on the property (compost manufacture and sale term);

22. Amiterre would pay Meliora $7,500 per year for each hectare leased to it pursuant to the lease term, once Amiterre was able to use the leased area of the property to manufacture and sell compost produced on the property;

23. Meliora would obtain any necessary consent for the development of the property so as to allow Amiterre to manufacture compost on the property;

24. Amiterre would obtain any necessary licence to allow it to manufacture compost on the property;

25. Amiterre would advise Meliora as required in relation to the establishment of the leased premises of the property as a compost manufacturing site and use its machinery to manufacture compost at the leased premises of the property;

26. Amiterre would assist Meliora as required by Meliora with its application for consent pursuant to the development consent term (development consent assistance term); and

27. Meliora would obtain consent for and supply the clay for a pad on the leased premises at the property on which composting would be undertaken by Amiterre (clay pad supply term).

Part performance of the agreement according to Amiterre

20. In about late 2016, Amiterre assisted Meliora with the documentation necessary to make an application for development consent in respect of the development of the land at the property. Amiterre obtained an odour study for that purpose from a consultant based in Melbourne at a cost to Amiterre of $8,200. Meliora used the study in making an application for development consent on about 7 November 2016, so as to allow Amiterre to manufacture compost on the property, pursuant to the development consent term, the development consent assistance term and the compost manufacture and sale term.

21. On about 28 July 2017, Meliora obtained the consent necessary for the development of the property, so as to allow Amiterre to manufacture compost on the property, pursuant to the development consent term and the compost manufacture and sale term.

22. In about June 2016, a compost turner owned by Amiterre was delivered to the property and in about August 2017 Amiterre commissioned the manufacture of a pull type compost turner from AA Metals in St Mary's in Sydney at a cost of $65,000. The compost turner was delivered to the property.

23. On about 11 May 2018, Meliora issued an invoice for rent of the leased premises of the property to Amiterre, which was paid by Amiterre, pursuant to the payment term.

24. On about 29 June 2018, Amiterre obtained a licence to allow it to manufacture compost on the property, having employed a Geotech and soil engineer, pursuant to the composting licence term.

25. In about mid-2018, Meliora supplied the clay for a pad on the leased premises on which composting was to be undertaken by Amiterre pursuant to the clay pad supply term.

26. On about 8 September 2018, Meliora applied for a construction certificate to build the pad at the property from the Council pursuant to the clay pad supply term.

Conversion or detinue

27. Amiterre has subsequently demanded the return of the compost turner from Meliora that had been delivered to the property, but Meliora has failed, refused or otherwise neglected to return the compost turner to Amiterre.

28. Amiterre submitted that Meliora has detained and or converted Amiterre's compost turner for its own use. Amiterre claims the amount of $65,000 and seeks between $2,000.000 and $9,500,000 for damages.

The amended defence

29. On 14 July 2023 Meliora filed an amended defence where it admitted:

30. Amiterre negotiated with Meliora to enter into a lease which would enable Amitterre to construct and operate a compositing facility on a part of the property; and

31. the negotiations were between Mr Bonser on behalf of Amiterre and Mr Kemp on behalf of Meliora, but alleged that:

(a) Meliora did not have any necessary development consent or construction certificate from the Central Coast Council (Council) to construct or operate a composting facility on the Property (development consent); (b) Amiterre did not have any necessary licence from the Environment Protection Agency (EPA) to construct or operate a compositing facility on the Property (EPA Licence); and (c) Amiterre made promises and/or representations to Meliora that:

(i) Amiterre had obtained a grant from the NSW Government to construct and operate a composting facility and would access that grant once it had a suitable property for a composting facility; (ii) if Meliora entered into an agreement with Amiterre to construct and operate a composting facility at the property, it could be terminated by Meliora in the event that a requirement for the EPA licence could not be met through refusal or untenable complications; (iii) Amiterre would co-operate and act reasonably and in good faith toward Meliora, if Meliora entered into such an agreement with it; and (iv) once the composting facility was operational, Meliora would obtain some compost from Amiterre for use on its farm, at no cost to Meliora, but the quantity was not specified.

30. Meliora denied that:

31. it had agreed to obtaining a development consent from Council and alleged that the promises outlined in … above were made with the intention of inducing Meliora into a lease;

32. any negotiations concerning an agreement other than the lease agreement and related collateral agreement became a concluded legal agreement; and

33. the lease was binding at law or in equity, but if binding, it said:

(a) that on 1 June 2016, Meliora and Amiterre signed a lease document; (b) that the lease was prepared by Amiterre; (c) that the lease granted Amiterre an area of 2 hectares of the property for a period of 5 years and 1 day; (d) it refers to and relies on the terms of the lease for their full meaning and effect; and (e) said that the promises and representations referred to in [25](2)(c)(i)-(iv) formed the terms of a collateral agreement to the lease (collateral agreement) or alternatively, were implied terms in the lease.

31. Further, Meliora pleaded that:

32. a term of the lease was that the rent payable by Amiterre was $16,500 inclusive of GST per annum and that the rent term was an essential part of the lease;

33. it was an implied term of the lease that Amiterre would obtain the EPA licence to construct and operate a composting facility on the property, within a reasonable time;

34. it was a term of the lease that Amiterre would comply with all laws and directions or notices by authorities, including the EPA, relevant to constructing and operating a composting facility on the property; and

35. it was an implied term of the collateral agreement that Meliora could terminate the lease if the purpose of the lease could not be met within a reasonable time, including through refusal or untenable complications with the EPA licence application.

36. Meliora submitted the following as to the lease:

37. It denied that the purported lease was binding in law or equity either at any time or as at the date of Amiterre's purported acceptance in 2022 of Meliora's earlier alleged repudiation in 2018 for the reasons that:

(a) the lease was uncertain and unenforceable in that the area leased was undefined by any attached plan or other sufficient description; (b) the said lease was a 5-year lease (with a further 5-year option, never exercised) which was unregistered and not binding at law (ss 41 and 53 of the Real Property Act 1901 (NSW)); (c) specific performance would not or should not be granted of it in equity, because:

(i) it is unregistrable, due to the absence of a plan of the demised area, contrary to the Registrar General’s Guidelines in NSW; and (ii) the fact that the purported lease's period was more than 5 years (including any option) and:

(a) there was no subdivision of that part; and (b) the lease did not include a plan as required by the Registrar General's Guidelines read with ss 23F(1)(b), 23F(2)(a) and 23G(d)(i) of the Conveyancing Act 1919 (NSW); and

(d) the term of the lease had already expired in 2021 due to the non-exercise of the option in the purported lease by Amiterre; and (e) for other discretionary reasons, including:

(i) the breaches of the alleged lease by Amiterre (ii) the misrepresentations made by Amiterre as pleaded in the first cross-claim, which inter alia constitute unclean hands.

33. In relation to the development consent, Meliora pleaded:

34. on around 22 November 2016, Meliora submitted the application for development consent to Council;

35. Meliora's application for development consent was assessed by Council as an integrated development application, with the EPA requiring it to provide Council with any general terms of approval;

36. Amiterre assisted Meliora with its application for development consent to the extent that Council's assessment required the EPA to provide general terms of approval;

37. Amiterre supplied an odour study for the purpose of Amiterre's EPA licence application; and

38. the same odour study was supplied by Meliora to Council for the purpose of the development consent application.

The further amended cross-claim by Meliora

34. On 13 May 2024, Meliora filed a cross-claim against Amiterre seeking recission of any agreements found between them and damages of around $300,000 to remediate the farm.

35. Meliora sought the following relief:

36. Pursuant to ss 243(a)-(c) of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (ACL), that the lease and any related agreement pleaded in the SOC, be set aside and made void ab-initio (or from some other date), or be denied enforcement, if it or they would otherwise be binding;

37. Damages and/or compensation under ss 236-237 of the ACL, including by way of set-off of any claim in the SOC; and

38. On the basis of a breach of fiduciary duties:

(a) Recission ab initio of the alleged lease (if otherwise binding); and/or (b) Equitable damages or equitable compensation.

36. Amiterre relies on its SOC where it pleads that on or around 1 June 2016, Amiterre entered into a binding lease with Meliora relating to part of the property owned by Meliora and into a related agreement.

37. Meliora also relies on its denials and pleadings in its amended defence (and any later amendment) in relation to those claims by Amiterre.

38. The lease and agreement (if any) related to the proposed construction and operation of a compost processing facility at the premises.

39. To the knowledge of both parties, the successful construction and operation of the compost processing facility would depend, in part, on the successful obtaining from the EPA of:

(a) a construction licence; (b) an operating licence; and (c) other related permissions and approvals.

3. The conduct of Mr Bonser, including the representations as pleaded and particularised, is taken for the purpose of the ACL and at general law to have also been engaged in by Amiterre on the basis that Mr Bonser:

(a) was at all relevant times:

(i) a director of Amiterre and the sole director since 1 June 2015; (ii) an employee of Amiterre; and (iii) an actual or ostensible agent of Amiterre for the purposes of any transactions between Amiterre and Meliora; and

(b) had engaged in the conduct:

(i) on behalf of Amiterre; and (ii) within his actual or apparent authority as the sole director of, employee of, or agent of, Amiterre.

4. Prior to entry into the lease, and any related agreement between Meliora and Amiterre, Mr Bonser, on behalf of the Amiterre represented (expressly and/or impliedly and/or by silence) to Meliora's representatives that:

(a) the EPA would grant all the necessary approvals for the proposed composting facility; (b) it was unlikely that there would be any difficulty or delay in the EPA granting the necessary approvals; and (c) neither he nor Amiterre were presently in relevant conflict with the EPA, including in relation to the construction or operation of:

(i) composting facilities; or (ii) other facilities; and

(d) he and Amiterre had no reason to believe that neither he nor Amiterre would be in any further relevant conflict with the EPA.

Particulars of representations

38. Mr Bonser made the representations and emphasised his and Amiterre’s ability to secure the necessary licences without difficulties based on their past dealings with the EPA during conversations between him and Mr Kemp between December 2015 and June 2016.

39. Corroborative email communications with attachments transmitted by Mr Bonser to Mr Kemp in December 2015, which inter alia included an EPA logo, a NSW Government logo, and a NSW Environmental Trust logo and related notations, and, for example:

40. “(1) an attachment to the email dated 12 December 2015 stated: "All indications from the EPA point to being able to obtain any licences required to expand beyond the upper limit threshold trigger”;

41. an attachment to the email dated 12 December 2015 stated: "Having the NSW State Government as a participant greatly enhances the opportunity for others to see the robustness of the project and who will want to be involved;

42. an attachment to the email dated 12 December 2015 stated: “We have the methodology, experience, expertise and responsible environmental credentials to incorporate food and green waste into our compost production facility; and

43. an attachment to the email dated 12 December 2015 stated: "...our participation with the New South Wales Government under the organics, infrastructure grant will accelerate the project.”

44. Each of the representations above were continuing representations, which were not retracted or corrected by Amiterre.

45. In the context of the facts pleaded:

46. Meliora had a reasonable expectation that Amiterre would, and had a duty to disclose if any of the representations above became untrue or were misleading by virtue of silence, the cross-defendant had a duty to disclose if any of the representations above became untrue or were misleading by virtue of silence.

47. Each of the representations if made, was made in trade or commerce.

48. Each of the representations if made, was made by a corporation, namely Amiterre.

49. The representations were relied upon by Meliora in deciding to, and caused it to, enter into the lease (if proven, despite the denials in the amended defence) and into any other agreement or contract pleaded by Amiterre in its SOC.

50. Each of the representations was false, deceptive or misleading in contravention of s 18 of the ACL, because:

51. the representation that the EPA would grant all the necessary approvals was a representation wholly or partly about the future within the meaning of s 4 of the ACL, and Amiterre did not have reasonable grounds for such a prediction (s 4(2) of the ACL);

52. the representation that there would be unlikely to be any difficulty or delay in the EPA granting all the necessary approvals was a representation wholly or partly about the future within the meaning of s 4 of the ACL, and Amiterre did not have reasonable grounds for such a prediction (s 4(2) of the ACL);

53. Mr Bonser and/or Amiterre were in present conflict with the EPA in relation to the construction or operation of composting and/or other facilities; and

54. there were reasons to believe that he and/or Amiterre would be in further relevant conflict with the EPA.

55. Meliora then pleaded particulars of falsity that need not be reproduced here.

56. So far as relief is concerned Meliora pleads, the contravention of s 18 of the ACL caused it to enter into the lease (if it was binding), and into any other related contract or agreement with Amiterre that is pleaded by Amiterre and found to be binding (contrary to the pleadings in the amended defence). This caused loss and damage to Meliora, including:

57. expenditure in connection with the setting up of the composing facility;

58. expenditure that may be required in connection with the dismantling of the composing facility; and

59. any damages which would otherwise be ordered in favour of Meliora on its cross claim.

Meliora’s particulars of expenditure, loss and damage

45. Meliora’s claims include damage to the land, costs associated with disputation with the EPA, regulatory fees, construction costs, legal fees and other expenses and losses to be addressed in evidence.

46. Meliora believes it is entitled to the relief sought under Ch 5 of the ACL, including under ss 236, 237 and 243 of the ACL.

The prior application for security for costs

47. On 21 March 2023, Meliora made an application for security for costs (the first security application). As mentioned above, by way of consent Amiterre paid $50,000 in court as security for costs.

48. On 27 May 2024, Herman Legal, on behalf of Meliora, sent an email to BWT Legal, Amiterre’s solicitor, stating that Meliora's costs to date had far exceeded $50,000.00 and enquiring whether Amiterre would agree to provide further security. Later that same day, BWT Legal responded stating, that their client has a sufficient asset position to cover any potential costs orders made.

49. That application was resolved by consent, with Amiterre agreeing to pay $50,000.00 into court without prejudice to Meliora's right to seek further and additional security for costs.

The law – security for costs

50. UCPR r 42.21 reads:

42.21 Security for costs

(1) If, in any proceedings, it appears to the court on the application of a defendant--

...

(d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so

...

the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given.

The threshold issue

51. Under UCPR r 42.21(1) the circumstances that may enliven the Court's power to make an order for security for costs include, where there is reason to believe that a corporate plaintiff will not be able to satisfy any costs ordered in favour of the defendant. That is effectively the same test under s 1335 of the Corporations Act that was also relied upon by Meliora.

52. It is common ground between the parties that Amiterre is currently unable to pay the amount of costs sought for security for costs if ordered to do so. Therefore, the threshold issue has been satisfied.

53. As the threshold issue has been satisfied, the Court may then take into account the discretionary factors outlined in UCPR r 42.21(1A) and any other discretionary matters it considers relevant in determining whether security for costs should be ordered (see KP Cable Investments Ply Ltd v Meltglow Pty Ltd [1995] FCA 76 (Meltglow)).

54. Where a defendant relies on the impecuniosity of a corporate plaintiff, its inability to pay the defendant's costs is both a pre-condition to the exercise of the discretion to order security and a factor that is likely to play an important if not decisive role: (see Buckley v BennelI Design and Constructions Pty Limited (1974) 1 ACLR 301 at [304]; Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2013] NSWCA 404 at [18]).

55. UCPR r 42.21 reads:

…

(1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant—

(a) the prospects of success or merits of the proceedings,

(b) the genuineness of the proceedings,

(c) the impecuniosity of the plaintiff,

(d) whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct,

(e) whether the plaintiff is effectively in the position of a defendant,

(f) whether an order for security for costs would stifle the proceedings,

(g) whether the proceedings involves a matter of public importance,

(h) whether there has been an admission or payment in court,

(i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant,

(j) the costs of the proceedings,

(k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute,

(l) the timing of the application for security for costs,

(m) whether an order for costs made against the plaintiff would be enforceable within Australia,

(n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff.

…

(2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct.

(3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed

…

56. In addition to the discretionary factors outlined in r 42.21(1A) UCPR is the issue of whether there are other persons standing behind the plaintiff (as established in Meltglow). If others stand to benefit from the litigation, such as shareholders of funders, and especially if they are funding the litigation, the Court may consider whether they should be called upon to provide security or have offered to provide security.

57. If further security for costs is to be ordered, the court will consider several discretionary factors before assessing quantum. These include the timing of the application and any delay in bringing or progressing the proceedings. Additional considerations are whether Amitere’s impecuniosity has been caused by Meliora’s conduct, whether the order would be oppressive or stultify the proceedings, and whether Amitere is effectively in the position of a defendant due to the nature of the pleadings in the cross-claim. The court must also take into account the prospects of success or merits of the case, whether the amount of security sought is proportionate to the likely costs, and the existence and adequacy of any undertaking provided by the Bonsers in lieu of security.

(a) The discretionary factors

58. As the threshold issue has been satisfied, I will consider the following discretionary factors as outlined in r 42.21(1A) UCPR together with the other discretionary factors that the parties identify as being relevant:

59. delay in bringing this application and whether it is oppressive;

60. whether the order will stultify the proceedings;

61. whether the plaintiff’s impecuniosity was caused by the defendant’s conduct;

62. whether the plaintiff has a very strong claim against the defendants and the strength of the plaintiff's claim is a factor which the court ought to consider in not granting security;

63. whether plaintiff is effectively in the position of the defendant by virtue of the pleadings in the cross-claim by Meliora;

64. the undertaking proffered by Mr and Mrs Bonser in the sum of $100,000; and

65. proportionality.

Amiterre’s financial position

59. Before these discretionary factors are dealt with, it is convenient that I outline Amiterre’s financial position here as this is relevant to the discussion of the discretionary factors.

60. According to the parties’ evidence, Amiterre’s assets are as follows:

61. Amiterre has no real property in Australia.

62. Amiterre's financial reports and bank statements do not support its contentions that it would be able to meet an adverse costs order if it were unsuccessful in these proceedings. In particular:

(a) the 2023 Annual Report provided by Amiterre (for which Meliora never received the underlying documents despite requesting them) included:

(i) an income statement showing a loss of $35,729 in the 2023 financial year; (ii) a balance sheet showing a negative net equity position of $322,581 in the 2023 financial year; and (iii) a statement of cash flows – direct method showing cash and cash equivalents of only $55,286 for the 2023 financial year; and

(b) the bank statements produced by Westpac pursuant to subpoenas issued by Meliora disclosed that:

(i) Amiterre held two bank accounts with Westpac, being a “Westpac Agri-Business One account” and a “Westpac Business Max-I Direct account”; (ii) since 29 December 2020, the Westpac Agri-Business One account has held no more than $53,672.88 (on 30 September 2022) and has had a balance as low as $67.64 (on 26 May 2023). The most recent balance of that account is $4,698.83; (iii) since 30 November 2020, the Westpac Business Max-I Direct account has held no more than $551.89 (on 31 May 2021) and has had a balance as low as $1.89 (on 30 November 2020). That account has otherwise maintained a balance of only $51.89 since 20 July 2021; (iv) on the day that Amiterre commenced these proceedings on 8 December 2022, it only had an account balance of $6,680.16 in its business account; and (v) apart from the ad-hoc loans discussed below, Amiterre's only real source of income is a farm management agreement with Greenwich Pastoral Co Pty Ltd (Greenwich). Not only is that agreement set to expire shortly, on 15 August 2025, but there is no option to renew. In any event, if it there was such an option, the management fee under that agreement of $150,000 plus GST per annum is plainly insufficient to meet any costs order, given the balances stated in the Westpac accounts as discussed above; and

(c) it also appears from the Westpac bank statements that Amiterre has been relying on ad-hoc loans from the Bonsers (the family that own Amiterre) to fund its operations. Since proceedings commenced, there have been around 29 transfers by Amiterre's directors. The need for such loans to be made, in the amounts they were made and at the frequency at which they were made, strongly points to Amiterre's failure to fund its own operations independently; and (d) while the 2024 Annual Report annexed to the affidavit of Amiterre’s solicitor appears to show a better financial position than the 2023 Annual Report as discussed above, it still does not assist Amiterre. In particular:

(i) the income statement still shows a loss of $16,785.00 for the 2024 financial year; (ii) while the balance sheet now shows a positive equity position of $260,000, this appears to have arisen from a conversion of the shareholder loans to capital on 30 June 2024, relevantly, after Meliora had put Amiterre on notice of its intention to seek further security for costs. The timing of this conversion (for which there has been no explanation) is obviously convenient for Amiterre. In any event, it does not assist Amiterre because its ability to apply that capital to any adverse costs order is doubtful; (iii) there is real reason to doubt the reliability of the 2024 Annual Statement in determining Amiterre's financial position. Not only are the circumstances giving rise to the conversion of the shareholder debts to capital dubious, but Amiterre has not provided any reliable underlying documents which are used to substantiate the figures contained in it. For example, the depreciation schedule records a value of $65,000.00 for the compost turner. That appears to be the value that Mr Bonser has simply attributed to it, rather than any proper objective valuation see Mr Tolson’s affidavit filed 24 December 2024 at [20]. Not only this, but Mr Bonser's assertion as to the value of that machine is directly inconsistent with his assertions in the evidence filed in the substantive proceedings, where he claimed that the turner was only worth 20% of its initial value of $61,985.00 (see Mr Herman’s affidavit dated 22 January 2025 at [16(d)]); and (iv) the documents produced by Amiterre in response to Meliora's notice to produce do nothing to assuage Meliora's concerns about the reliability of the report. In particular:

(a) from 17 March 2020 to 21 February 2025, the Volvo XC60 vehicle (recorded in Amiterre's Depreciation Schedule for the period ending 30 June 2024) was actually insured to Mrs Bonser. A tree fell on the Volvo and Mrs Bonser received a total loss insurance payout.

3. Amiterre had been ordered to pay various judgment debts in other proceedings, including:

(a) in proceedings commenced in the District Court by the NSW Environmental Trust, which Amiterre settled for $177,280. Amiterre paid the judgment debt by way of monthly instalments of $5,909.33; (b) in proceedings commenced in the NSW Civil and Administrative Tribunal by Anne O'Brien and Emmanuela Prigioni, in which Amiterre was ordered to pay the applicants $1,870.00 on 22 January 2019. On its own evidence, Amiterre did not pay that debt in full until 16 December 2024, over 5 years later, despite the very modest amount (see Tolson Affidavit at [24]); and (c) in proceedings commenced in the NSW Civil and Administrative Tribunal by Aaron Brocken, in which Amiterre was ordered to pay Mr Brocken $5,540.00 (see Exhibit EYH-3, pp. 253 to 291). Despite the modest amount of the judgment debt, Mr Brocken was forced to commence enforcement proceedings against Amiterre, which unsuccessfully applied to repay that amount by way of $100.00 monthly instalments.

61. These judgments debts have now been satisfied.

62. In respect of the EPA claim, a judgment for which was in the sum of $170,000. Counsel for the plaintiff confirmed, during oral submissions, that that the amount had been fully paid off, over a two-and-a-half-year period with instalments of approximately $6,000 per month.

63. According to the affidavit of Mr Tolson filed 20 March 2025, the financial position of Mr and Mrs Bonser is as follows:

64. Mrs Bonser retired from her work at a post office in or about 2018. At that time, she had about $200,000 in superannuation, of which she has since used about $100,000 for household and other personal expenses, and the other $100,000 was paid as loans to the Amittere. She currently has no superannuation.

65. The only superannuation that Mr Bonser has is an unclaimed superannuation with the ATO of $5,191.30.

66. Mrs Bonser owns one motor vehicle, being a 2013 Renault Megane, which was purchased second hand in 2022, and is currently comprehensively insured at a value of $9,400.00.

67. In about 2020, the Bonsers sold the house they then lived in prior to moving into the Greenwich Park farm, due to financial pressure at the time, upon settlement of which they received $289,648.88. These funds have been spent in the course of the past 5 years on living costs and primarily lending money to Amiterre.

68. Apart from the account of Mrs Bonser referred to in the balance sheet for Amiterre, which is used to take wages from the company if and when there have been any, the only other account that either of them has is a one joint bank account, which has a balance of $17,757.26 as at 18 March 2025.

69. Their financial position is such that they did not have to lodge tax returns for the 2024 financial year.

70. They have no other assets.

71. This evidence demonstrates that Amiterre is impecunious. It is relevant to the discretionary factors of stultification and proportionality and is also relevant to quantum, if ordered.

Meliora’s general submissions – further security

65. On 6 September 2024, following Amiterre's failure to provide documents which support its ability to meet any adverse costs order, Meliora filed this current NOM for further and additional security for costs.

66. In Mr Herman’s affidavit (the Herman affidavit) filed 5 September 2024, Meliora’s solicitor at [65] sets out Meliora's legal fees in defending these proceedings in the amount of $334,523.50 (ex GST) and not including unbilled work and disbursements which total a further $41,289.43 excluding GST. Mr Herman, deposed that Meliora's future costs are expected to include a further $133,575.00 excluding GST. Meliora's application for further security takes into account the $50,000.00 already paid by Amiterre by way of security and the appropriate discounts for costs likely recoverable on assessment (at [77] of the Herman affidavit). As to the reasonableness of these costs and disbursements is a subject to which I will return.

67. I shall deal with each discretionary factor in turn although I acknowledge that some of these factors overlap. I shall deal with discretionary factors two, three and four together as they largely cover the same evidence.

Timing of application and delay

68. So far as the timing of this further application for security for costs, Black J stated the following in In the matter of Colorado Products Pty Limited (in prov liq) [2013] NSWSC 611 (Colorado) at [69]:

“It is well established that an application for security for costs should be brought promptly and, where that is done, an order for security for costs may extend not only to future costs but also to costs already incurred: Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 1 FCR 311; (1984) 8 ACLR 818 at 820*; Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd* (1987) 16 FCR 497 at 514; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 563 at [35]ff; Szanto v Bainton [2011] NSWSC 985. Conversely, the Court is less likely to order security for past costs where there has been significant delay in bringing the relevant application: Karl Suleman Enterprises Pty Ltd (in liq) v Pham [2010] NSWSC 886 at [50]. There has been significant delay in this matter in progressing the Defendants' application for further security for costs, filed over 7 months ago, and substantial costs have been incurred during the period of delay. The Defendants submit that the Plaintiffs have been on notice of the Defendants' intention to apply for further security for costs since the further security for costs application was made on 31 August 2012. While that is correct, it is not an answer to the proposition that that application should have been, and was not, pursued promptly. That delay tends strongly against an order in respect of past costs and I do not consider that security should extend to past costs in the matter.”

Amiterre’s submissions

69. The delay by Meliora in bringing this application is extraordinary and unexplained. The delay resulted in significant costs being incurred, which ought to disentitle it to security for past costs on any view.

70. Amiterre relied upon Sagacious Procurement Pty Limited v Symbion Health Limited [2007] NSWCA 205, where Mason J stated at [55]:

“… It is well established that delay in seeking an order is a factor that may be taken into account as a discretionary reason for refusing it.”

71. Amiterre also relied upon Coolangatta Property Pty Ltd v Emily Dyaso**n [2011] NSWSC 929 where Brereton J held at [14]:

“The final - and, in my view, very important - discretionary consideration, is that this case has been on foot - in one form or another - since mid-2009, and in April this year was set down to be heard in August this year. This application is made much too late. It is well established that applications for security for costs, if they are to be made, should be made at an early stage [Litmus Australia Pty Ltd (in liq) v Paul Brian Canty and Ors [2007] NSWSC 670, (White J) [25]]. No explanation has been put before the court as to why this application is made so belatedly.”

Meliora’s submissions

72. There was nothing improper in the timing of Meliora's application for further security. It had previously brought an application that was resolved by Amiterre's payment of $50,000.00.

73. This application was brought promptly after giving Amiterre the opportunity to provide sufficient evidence to allay Meliora's concerns to avoid unnecessary costs being incurred.

74. In Meliora’s further submissions, reference was made to Meliora’s past and future costs, and that a security for costs order may apply to both. Meliora submitted that a genuine complaint regarding delay cannot be made against it when:

75. it first brought an application for security on 21 March 2023, less than 3 weeks after it received a response to its request for further and better particulars from Amiterre. That application was resolved without prejudice to Meliora's ability to seek further security. Amiterre was always on notice of the intention to seek security at a later time; and

76. Meliora raised its intention to seek further security for costs within the next stage of the proceedings, and the application was made promptly after appropriate time was given to Amiterre to satisfy Meliora of its ability to meet an adverse costs order. In any event, Amiterre has not established any prejudice in the timing of Meliora's application. Even after Mr Herman put on his affidavit outlining the quantum of future and past costs, Amiterre continued to assert it had the means to meet an adverse order. It changed its position at the eleventh hour.

Amiterre’s submissions

75. Critically, on 21 March 2023, Meliora filed an application for security for costs. With respect, that was an appropriate time for it to have done so, early in the proceedings (CB 19).

76. Importantly, in the affidavit in support of the motion, Meliora's solicitor deposed to then estimating its costs of the entire proceedings at $137,546 plus GST. Further, the earlier motion sought $50,000 as security for its costs of the proceedings, and the directors of Amiterre arranged for that money to be lent to Amiterre so that it could pay that amount into Court, which it did on 23 May 2023.

77. Since that time, Amiterre has incurred more than $50,000 in legal costs.

78. In those circumstances, the statement by Heydon JA (with whom the Court agreed) in Morris v Handley & Ors [2001] NSWCA 374 was recently cited with approval by Schmidt J in Karl Suleman Enterprizes Pty Limited (in liq) v Pham & Ors [2010] NSWSC 886 at [56] (Suleman) as follows is directly applicable here:

“[56] ... Had security been sought in a more timely way, it may be that the litigation would never have proceeded to the point that it now has. In the circumstances, considerations of oppression plainly arise, in a context where it is settled that long and unexplained delay may be fatal to any security application (see for example Morris v Hanley [2001] NSWCA 374 at [30]).”

79. Counsel for Amiterre submitted in oral argument that Meliora caused significant delays in the proceedings:

“There's evidence of the delays, amendments to pleadings and costs orders made against the defendant, including importantly a guillotine order made against it on 29 April”. (T 38 [45])

80. In his affidavit filed on 24 December 2024, Amiterre’s solicitor Mr Tolson set out Meliora’s non-compliance with court orders. He deposed at [3]-[15] as follows:

“Delays, amendments and costs orders against the Defendant

3. There have, during the course of these proceedings, been instances of significant delay by the Defendant and even costs orders made against them, as set out below.

4. On 15 February 2023, the Defendant was ordered to file a Defence by 29 March 2023. They did not, and instead filed an earlier Notice of Motion for Security for Costs, which entailed multiple appearances before a Defence was filed.

5. On 6 June 2023, the Defendant was ordered to file an Amended Defence and any Cross-Claim by 14 July 2023. The Defendant's Cross-Claim was filed on 14 July 2023.

6. On 7 September 2023, the Defendant's Solicitors indicated to me via email that the Defendant wished to amend its Cross-Claim. At the listing on 12 September 2023, the Defendant was granted leave to file an Amended Cross-Claim, and was also ordered to pay the Plaintiffs costs thrown away by reason of the amendment.

7. On the same day, orders were made inter alia that;

a) The Plaintiff serve its lay evidence in chief by 14 November 2023.

b) The Defendant to serve its lay evidence in chief, and its response to the Plaintiffs evidence, by 19 December 2023.

8. There was a short delay in the service of the Plaintiff's evidence, which was served on 23 November 2023.

9. The Defendant, however, had still not filed its evidence by the time of the next listing date of 27 February 2024. On that occasion, orders were made extending the time for the Defendant to serve its evidence to 12 March 2024.

10. The Defendant did not serve its evidence by 12 March 2024. On 26 April 2024, while still having not served its evidence, the Defendant's Solicitors indicated to me via email that the Defendant wished to amend its Cross-Claim again.

11. At the next listing on 29 April 2024 (which listing was requested by the Plaintiff as the Defendant's evidence, originally due 19 December 2024, had still not been served), orders were made inter alia that;

a) the Defendant was to pay the Plaintiff's costs thrown away by reason of the further amendment to its Cross-Claim.

b) The time for the Defendant to serve its evidence be extended to 13 May 2024.

c) The Defendant shall not be allowed to rely on any evidence served after 13 May without leave of the Court.

d) The Defendant pay the Plaintiff's costs of relisting the matter.

12. On 6 September 2024, the Defendant filed this current, further, Notice of Motion for Security for costs.

13. On 18 September 2024, orders were made that the Defendant serve any further evidence in respect of the Motion by 27 September 2024.

14. The Defendant had not served its evidence by the time of the next listing on 8 October 2024, which necessitated an amendment to the timetable and a further listing for directions.

15. The Defendant finally served the evidence in respect of the Motion, originally due on 27 September 2024, on 14 November 2024.”

81. In further oral submissions, counsel for Amiterre submitted that what the Court should take into account in considering Meliora’s delay is what was done, when and how much it cost because the bulk of it appears to come between the period 29 April and 13 May, when Meliora was under a guillotine order. Meliora had Amiterre’s affidavit from 23 November 2023, so it had five months to put on their evidence. Meliora defaulted a number of times, but at no point did they raise the issue of security until after, and that seems to be when the bulk of the costs were incurred. Amiterre cannot point with precision to when the costs were incurred by Meliora, which is something that Meliora should have explained with affidavit evidence.

Resolution

82. The way Meliora’s submission portrayed its conduct is at odds with my view. As was discussed in Colorado, a significant amount of time has elapsed from 21 March 2023 when the first application security for costs was made the filing of this current NOM. In that time, an application should have been made and pursued promptly. In that regard, the delay and the substantial quantum of costs claimed by Meliora, will work strongly against an order in respect to past costs.

83. Meliora has been responsible for gross delay in not complying with court orders. So much so that Meliora was under a court guillotine order to comply with directions. After it finally complied with court directions, Meliora brought this application for further security for costs. Meliora did not comply with Court orders on 15 February 2023, 6 June 2023, 7 September 2023, 27 February 2024, 26 April 2024 and on 18 September 2024. It is of particular concern that Meliora had a guillotine order made against it on 29 April 2024 and even more importantly, defaulted on the timetable set on 18 September 2024 where it was ordered to serve any further evidence in relation to its current NOM.

84. The only period of delay that was acceptable was the 3-month period when Meliora was waiting for financial records to be supplied by Amittere.

85. It is my view that most of the delay was caused by Meliora’s lack of compliance with the Court’s timetables before bringing this application. This in turn necessitated more directions hearings being required, with some orders for costs made against Meliora. As a result, legal costs for both parties were increased. It is not clear if these costs orders were taken into account by Meliora when assessing its past costs.

86. It is my view that as in Colorado, security for costs should not extend to past costs, if I decided that Amiterre should be requested to pay security for costs.

87. This discretionary factor is most favourable to Amiterre.

Oppression, stultification and whether Meliora’s conduct caused Amiterre’s impecuniosity

88. In order to have a consideration of stultification weigh in its favour, Amiterre bears the onus of establishing that an order for security for costs would stultify the proceedings: see, for example, Bell Wholesale Co Ltd v Gates Export Corp**oration (No 2) (1984) 2 FCR 1 at 4.

Amiterre’s submissions

89. Amiterre's impecuniosity was caused by Meliora's conduct the subject of the claim so the order for further security for costs sought is oppressive. The timing of the application, after such significant costs had been incurred, appears to have been designed by Meliora to shut Amiterre out of its right to litigate its claim. Any further order for Amiterre to pay security for costs will also cause stultification of the proceedings.

90. The reasons why the order sought is oppressive, particularly given the timing of the application, well after security for costs was paid into Court and significant further costs were incurred by Amiterre, has largely been addressed on the issue of Meliora’s delay in filing the current NOM, that has been referred to above.

91. On 21 March 2023, when Meliora filed its first application for security for costs its solicitor in his affidavit deposed that he estimated Meliora's costs of the entire proceedings at $137,546 plus GST. That motion sought $50,000 as security for its costs of the proceedings. The directors of Amiterre arranged for that money to be lent to Amiterre so that it could pay that amount into Court, which it did on 23 May 2023.

92. The ordering of the further security now sought would stultify the further conduct of the proceedings. The security paid into Court now almost 6 years ago, and the costs incurred by Amiterre since, will be wasted, particularly where Mr and Mrs Bonser are obviously unable to provide the further security now sought by Meliora belatedly without any explanation for the delay.

93. The reasons for the delay in bringing this application have not been explained at all, so the plain inference is that there is no proper explanation.

94. Rather, the irresistible inference from the circumstances in which this application has been bought by Meliora is that it is now seeking, by design or otherwise, to prevent Amiterre from proceeding with a meritorious claim against it.

95. Mr and Mrs Bonser, the shareholders of Amiterre, rely on the earlier evidence as to their financial position to establish that they cannot meet the security order now sought by Meliora. It follows that, on any view, the order sought would stultify the claim.

96. Their evidence as to Amiterre’s financial position to establish Amiterre’s insolvency was set out earlier in this Judgment.

97. Meliora has caused, or at the very least contributed significantly to Amiterre's impecuniosity, by detaining its compost turner without any proper basis for some 5 years.

98. Amiterre claims that Meliora had no basis to refuse to allow the return of Amiterre's compost turner to it for more than 5 years, and in so doing deprived Amiterre of the opportunity to earn $80,000 rent from it from August 2018 to December 2023. The date of any losses caused by Meliora’s conduct are from the date of the alleged breach (T 58 [3]-[38]). The compost turner was delivered to Amiterre in November 2023.

99. Amiterre's company tax return for the 2015 financial year, reveals that it was trading profitably before its dealings with Meliora.

100. There is next to no money in the company accounts. There is very little money in the Bonsers’ accounts. As to the Bonsers’ joint accounts the current balance is $17,000.00 (Ex. B).

Meliora’s submissions

101. Meliora submitted in oral submissions (T 15-16 [5]-[50]) that the Bonsers’ had failed to disclose their interest in two other companies namely ‘AMITERRE HSC PTY LTD’ and ‘AVIAN AG PTY LTD’ (see ASIC extracts Ex 1). However, the evidence reveals that one share is worth $4 paid up capital and the other share is worth $8 paid up capital. Counsel for Amiterre proffered an explanation that the Bonsers may have “inadvertently missed reference to those shares” (T 46 [15]), but that did not take matters any further.

102. Amiterre is still able to generate income from providing management services, as it has with Greenwich. The fact that it has not been able to generate a higher income, or to obtain other management contracts, has nothing to do with Meliora.

103. Nowhere in that evidence is it suggested that Amiterre's impecuniosity is attributable to Meliora. Even if Amiterre now seeks to advance such an argument, it is not supported by the evidence. As to stultification, it is a neutral factor, because of the mere fact, that the receipt alone is not definitive proof that the compost turner is owned by Amiterre, especially when considering that the Bonsers had a government grant in relation to the project, so there is a third-party interest (T 57 [45]).

Resolution

104. It seems that for the financial year 2015 Amiterre was trading profitably, before Meliora took possession of the compost turner. But since then, Amiterre has struggled to stay afloat. Amiterre’s financial position was affected by Meliora depriving Amiterre of $80,000 of income by (to use a neutral term) holding onto its compost turner for more than 5 years. By doing so, Meliora contributed significantly to Amiterre’s impecuniosity.

105. An order for further security in the sum of $396,678.71 would be oppressive.

106. If Amiterre is ordered to pay even one third of the amount of security for costs it will stifle its proceedings. The Bonsers have put all their assets (with the exception of living expenses) towards funding the company. To order any further security for costs will stultify these proceedings.

107. The discretionary factors of oppression, stultification and whether Meliora’s conduct cause Amiterre’s impecuniosity favour Amiterre.

The prospects of success or merits of the proceedings

Meliora’s submissions

108. Meliora did not provide written submissions addressing Amiterre’s prospects of success or merits of the proceedings other than to say Amiterre’s case was not hopeless. This submission is correct.

Amiterre’s submissions

109. Amiterre submitted that it is difficult to see how Meliora can have any proper defence to the first part of Amiterre's claim for breach of their Agreement, in circumstances identified in the pleadings.

110. Regardless, Amiterre accepted that the Court should not embark on a detailed consideration of the merits on this application, such that the merits ought properly be regarded as a neutral factor.

111. Amiterre submitted, however, that the second part of its case, which related to the circumstances in which Amiterre's compost turner was detained by Meliora at its property, after it changed the locks, was never defensible.

112. On any view, Meliora had no basis to refuse to allow the return of Amiterre's compost turner to it for more than 5 years, and in so doing deprive Amiterre of the opportunity to earn $80,000 rent from it between August 2018 and December 2023.

113. The fact that Amiterre had to commence proceedings in order to obtain the return of the compost turner, and it was only returned by Meliora a year after the proceedings were commenced, leaves Meliora exposed to damages and costs in relation to that part, at least, of Amiterre's claim. Amiterre's prospects on that part of the case, at least, can only be described as strong.

114. This conduct by Meliora, in improperly detaining Amiterre's compost turner is also relevant to other discretionary factors.

Resolution

115. Amittere’s claim for breach of contract and detinue is based on a complex factual matrix, particularly as the first agreement was an oral one, although the latter lease was written. The claim of breach of contract will require some considerable evidence and in particular, evidence of oral agreements, as will Meliora’s case for Amiterre’s alleged misleading or deceptive conduct pursuant to s.18 (1) ACL. However, the detinue claim seems straight forward. I have no reason to think that Amiterre’s claims are hopeless.

116. In any event, it is not the role of this Court for the purpose of this application to conduct a detailed analysis of the prospects of Amiterre’s case. Rather, as expressed in Fiduciary v Morningstar Research [2004] NSWSC 664 at [37]-[39], and in Meltglow the Court should view these factors as neutral especially in the early stages of litigation where there is only a minimal opportunity for the Court to make thorough examination of evidence. Hence, I regard these factors as neutral.

Are Amiterre’s claims defensive such that it is effectively in the position of a defendant?

Meliora’s submissions

117. The nature of the claims brought by Amiterre are not defensive in nature such that it can properly be said to be effectively in the position of a defendant.

Amiterre’s submissions

118. In oral submissions, counsel for Meliora argued that a defendant who makes a cross-claim can claim security for costs, including in relation to the cross-claim, insofar as it is defensive; and that includes for any work that would otherwise be duplicated between defending the primary claim and advancing the cross-claim. The Court has to consider who is the true aggressor and in the present case, it cannot seriously be suggested that Meliora’s cross-claim is anything but defensive. Meliora would not pursue its cross-claim if the primary claim is not further prosecuted by Amiterre, where Amiterre seeks damages for breach of an alleged lease agreement between the parties (T 30 [30]-[44]).

Resolution

119. I am not satisfied that Meliora has incurred additional defensive costs in bringing the cross claim. In my view much of the evidence will be given in Meliora’s proceedings and will largely overlap with the evidence to be given Amiterre’s proceedings.

120. Meliora’s proceedins and will largely overlap with the evidence to be given Amiterre’s proceedings.

Personal undertakings

121. In Jazabas Pty Ltd v Haddad [2007] NSWCA 291 at [74], the Court of Appeal approved the summary of relevant principles regarding security for costs as set out in Meltglow. Relevantly, those cases identified that, in determining whether to award security, it was relevant to consider:

122. whether there were persons standing behind a company that were likely to benefit from the litigation; and

123. if so, whether those persons had offered the necessary security or a personal undertaking to be liable for those costs.

124. Mr and Mrs Bonser offer their personal undertaking to guarantee Meliora's estimated future costs up to $100,000.

Amiterre’s submissions

123. The Bonsers advanced loans to the company, but they have also converted these loans into share capital. There can be no doubt that, in any judgment in favour of Amiterre, the Bonsers will stand to benefit.

124. Mr and Mrs Bonser are content to offer an undertaking in respect of future costs only.

125. On the basis of the estimate provided by Meliora as to its future costs, $100,000 ought to be more than adequate in this regard, and they offer to Meliora and the Court their personal undertaking to personally guarantee the payment to Meliora by Amiterre of any amount to which Meliora ultimately becomes entitled in respect of its future costs of the proceedings up to that amount.

126. They have already exchanged their loans to share capital, they have on any view done all that can be expected of them in the circumstances.

127. Their willingness to put themselves personally at financial risk in this way ought to weigh the balance even further against the security sought by Meliora.

Meliora’s submissions

128. Meliora submitted that the Court should afford no weight to the undertaking given by the Bonsers. Amiterre's own evidence casts serious doubt as to the ability to meet that undertaking, such that it should be accepted as an alternative to ordering security. In oral submissions counsel for Amiterre accepted that:

“That also seems to be common ground in that my learned friend said the undertaking was worthless; which, to some extent, it is of limited worth, I can accept that.” (T 55 [10])

Resolution

129. While Mr and Mrs Bonser have come out from behind the company and have given a personal undertaking to pay $100,000 should they lose the proceedings and be ordered to pay the costs of the defendant, when counsel for Amiterre was asked by this Court whether the Bonsers’ would actually be able to pay that amount should they be ordered to do so, the following exchange took place:

“HER HONOUR: But then your learned friend says that, well, you won't even - how can you give an undertaking of - how can the shareholders give an undertaking of 100 grand?

KAUFMAN: They can only give an undertaking to guarantee the plaintiff's payment of that amount. In other words, that's all they can do. They can't agree to put $100,000 into court.

HER HONOUR: I know. Sorry, we're at crossed purposes. How do I know, how could I be confident, they have - they will be able to have 100 grand?

KAUFMAN: Your Honour can't. I accept that. Now, there's always the possibility they will, because they say they expect the company to return to profitability in 2025. But your Honour can have no certainty about that.

HER HONOUR: Okay. That's the explanation for it. All right.

KAUFMAN: Yes. But I do accept your Honour can have no certainty that they will be able to do it. But the fact is, these are shareholders who stand to benefit, and that's all they can offer. They come out from behind the company, which, of course, is­­ …” (T 46 [30]-[50])

130. So, on one hand the Bonsers have come out from behind the company and are likely to benefit from these proceedings if they are successful, but on the other hand there is little evidence that they could meet any undertaking that they offer. Hence, I regard this discretionary factor as neutral.

Proportionality

131. At [76] of Mr Herman’s affidavit filed 5 September 2024, he estimates the costs of the proceedings is $509,387.93 ex GST. He estimates the future costs to be expended by Meliora to be $133,575 ex GST. He also sets out past costs at [65]-[66], the key tasks and the associated lawyers costs and counsel costs at [68]-[74] and future costs at [75]-[77]. Included in this sum is Mr Herman’s attendance at Court at a cost of $22,000 ex GST and Mr Bowe, a solicitor in the employ of Herman Legal, attendance at Court at a cost of $21,250 ex GST (at [70] and [72]). It seems unnecessary to have two solicitors and counsel in attendance at the hearing.

Result

132. In conducting an analysis of the discretionary factors as follows, I find that they weigh substantially in Amiterre’s favour.

133. The delay in bringing this application is a factor that weighs strongly against an order in respect to past costs and overall, favours Amiterre.

134. Whether the effect of the order will stultify the proceeding is a factor that favours Amiterre.

135. Whether the plaintiff’s impecuniosity was caused by the defendant’s conduct is a factor that favours Amiterre.

136. Whether the plaintiff has a very strong claim against the defendants and the strength of the plaintiff's claim is a factor that is regarded as neutral.

137. Whether plaintiff is effectively in the position of the defendant by virtue of the pleading of the cross claim by Meliora is a factor that is neutral.

138. Mr and Mrs Bonser’s personal undertaking to guarantee estimated future costs of up to $100,000 is a neutral factor.

139. The amount sought is disproportionately high, does not make any allowance for the costs associated with Meliora's cross-claim of $300,000, and, regardless, Meliora has not discharged its onus on this issue. This factor is neutral.

Quantum

133. Earlier in this judgment I expressed the view that Meliora is only entitled to future costs, if any.

Amiterre’s submissions

134. Amiterre's claim against Meliora comprises of a $100,000.00 claim for wasted expenditure and a claim for expectation damages in the amount of between $2,000,000 to $10,000,000.

135. In oral submissions Amiterre made submissions as to actual prejudice because Amiterre has already paid into Court $50,000 in security for costs and that since then, it has incurred $50,000 or 75% of its legal costs. If the proceedings are stultified because the company cannot pay now and the direct shareholders cannot pay, Amiterre suffers actual prejudice because that money will go to the defendant if the proceedings cannot proceed.

136. Amiterre also submitted that for the reasons already identified, to be required to pay $500,000 for a $2,000,000 claim is disproportionate in terms of the quantum of the claim while Meliora submitted that it is a $9,500,000 claim but the pleaded particulars in the cross-claim refer to $2,000,000. Mr Bonser deposed that he estimates his future profits as being $9,500,000 over five years. But you cannot get that as expectation loss without subtracting from it the costs incurred to get it (T 55 [17]-[34]). While Mr Bonser has set out his opinion as to expectation of loss, as I mentioned earlier, an expert report needs to be obtained before Amiterre can properly calculate its loss. The sum of $500,000 for a $2,000,000 claim is disproportionate. Meliora’s solicitor’s estimates of costs make no allowance for the part of the cross-claim that is not defensive, that is estimated to be $300,000 (T 55 [40]-[50]; T 56 [1]-[5]).

137. The Court ought to be satisfied that it is not appropriate to grant security for Meliora's costs in the amount sought for, at least, the following reasons:

138. The amount is disproportionate to what has occurred in the case to date, and is, in effect, about $400,000 more than the initial estimate of costs for the entire proceedings provided by Meliora's solicitor.

139. There has been significant delay caused by Meliora in the proceedings, a number of amendments to pleadings by Meliora with costs orders against it, and a guillotine order has been made against it in respect of its evidence. Not only does Meliora's evidence say nothing about these matters, it also does not provide any proper evidence as to its past costs and contains duplication in respect of its estimated future costs.

140. Further, no allowance has been made for the part of Meliora's cross-claim by which its submissions say it seeks $300,000 in damages against Amiterre, which is plainly not defensive.

141. As an example of the excessive costs, Meliora's costs estimate allows for two solicitors to appear at a five-to-six-day hearing at the cost of $20,000.00 each, plus counsel.

142. Meliora's unexplained past costs of approximately $400,000 appear excessive for what has occurred in the case. That is a matter between it and its lawyers, but it would be manifestly unjust for those costs to be borne by Amiterre.

Meliora’s submissions

138. Given the quantum claimed and the nature of the proceedings, the security sought is proportional to the importance and complexity of the dispute. In TC Build Pty Ltd v STM123 Pty Ltd [2023] NSWSC 322 per Rees J stated at [74]:

"… In the absence of evidence from a costs consultant, the Court has been prepared to accept that 70% of solicitor/client costs and all of counsels’ fees are likely to be recoverable on assessment: Re Pioneer Energy Holdings Pty Limited [2013] NSWSC 1366 at [25] (per Black J)”.

139. In the present case, the amount sought is entirely proportionate as it takes into account costs likely recoverable on assessment, namely by:

140. taking 70% of likely solicitor/client costs (being $356,571.55 excluding GST);

141. adding to that figure counsel's likely costs (being $49,500 excluding GST); and

142. deducting from the above figures the $50,000.00 already paid on behalf of Amiterre by way of security.

Resolution

140. If I am wrong and Meliora is entitled to further security for costs, I have already set out Amiterre’s financial position. The solicitor for Meliora estimates the total cost which Meliora will incur defending these proceedings is $509,387.93 ex GST with past legal fee costs estimated at $334,537.50 but does not include a further $41,289.43 ex GST unbilled work in progress and unbilled disbursements. So far as I can best understand Meliora’s future costs and disbursement are estimated to be around $137,561.00, these are only for expert reports to be obtained, preparation for trial and payment of counsel’s fees for the trial estimated to be five to six days. I take into account what was said by Black J in Colorado, I consider that the further amount for future security for costs sought by Meliora is excessive. In these circumstances, I would allow only the sum of $50,000 to be ordered as security for further costs.

Result

141. The Notice of Motion filed by Meliora on 6 September 2024 is dismissed.

Costs

142. Costs are discretionary. Normally, costs follow the event. Meliora is to pay Amiterre’s costs on an ordinary basis.

The Court Orders that:

1. The defendant’s Notice of Motion filed on 6 September 2024 is dismissed;
2. The defendant is to pay plaintiff’s costs on an ordinary basis.

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