a declaration pursuant to UCPR r 16(b) that service of the claim and statement of claim on the defendants was ineffective, and that the defendants had not been properly served; and
the plaintiff pay security for the first defendant's costs of the proceedings in the sum of $100,000 (including GST) or any such sum that the Court considers appropriate.
[2] At the hearing of the application on 9 September 2025, counsel for the defendants abandoned the application for a declaration that service on the defendants was ineffective. As a result, that issue does not need to be further considered.
[2]
[3] The plaintiff's claim is for an amount of US $96,434.67 said to be owing by the defendants for breach of contract.
[4] By its amended statement of claim filed 5 September 2025, the plaintiff alleges there was a verbal agreement pursuant to which the plaintiff agreed to sell and the first and second defendants agreed to buy perishable goods, namely peeled garlic and garlic shoots, to be supplied by the plaintiff from China to Australia.
[5] The plaintiff alleges that the parties had been engaged in the international business of importing and exporting perishable products from China to Australia for approximately three years until the end of June 2024. The second defendant is the sole director of the first defendant.
[6] The plaintiff alleges that it was agreed between the three parties that once goods were cleared from the Melbourne Port in Australia, the first defendant would pay the plaintiff by telegraphic transfer.
[7] It is further alleged that from April to June 2024, 11 containers were cleared from the port of Melbourne. It alleged the first defendant paid for eight of the containers in full but only partially paid for three containers.
[8] As of the date of the application, given the issue of service, the defendants had only filed a conditional notice of intention to defend. There is no formal pleading before the court detailing the response of the defendants to the substantive claim.
[9] In the letter of instructions from the solicitors for the defendants to Adam Bloom of Bloom Costs, the costs assessor requested to provide an estimate of costs to the first day of trial, it was said that the first defendant's defence is that the products delivered by the plaintiff were defective so that the first defendant was not liable to pay. In terms of the second defendant, in the letter it was said that the second defendant did not have any dealings with the plaintiff in his personal capacity.
[10] On the hearing of the application, no affidavit was filed by the defendants detailing their response to the claim.
[3]
Application for removal of the second defendant
[4]
[11] In support of the application for the removal of the second defendant pursuant to r 69(1) UCPR, reliance was placed solely upon the pleaded case against him. Particular reference was made to paragraph 9 of the amended statement of claim where it is expressly pleaded that the verbal agreement was for the first defendant to pay the plaintiff; not for the first and second defendants to pay the plaintiff.
[12] Paragraph 9 of the amended statement of claim provides:
[5]
"The verbal agreement among the parties was once the goods were cleared from the Melbourne port in Australia, the first defendant would pay the plaintiff by T/T."
[6]
[13] In paragraphs 10 and 11 of the amended statement of claim it is pleaded that the plaintiff delivered goods to the first defendant who cleared 11 containers containing the goods from the Melbourne Port and paid the plaintiff for the goods in eight containers pursuant to the agreement and only partially paid for the goods which were the subject of three Sea Waybills; identified more fully in paragraph 11 of the amended statement of claim.
[14] No claim is made that the second defendant was required to and has failed to make payment to the plaintiff for any goods.
[15] In the circumstances, I am satisfied that the second defendant has been unnecessarily included as a party and that it is appropriate an order be made that the second defendant be removed from the proceedings.
[17] In proceeding with an application for security pursuant to r 670 of the UCPR, the court is required to treat the preconditions for making an order for security as contained in r 671 separately from the discretionary factors set out in r 672 of the UCPR.
[8]
[18] In making submissions on behalf of the defendants, it was said:
[9]
(a) the plaintiff is a corporation and there is reason to believe that it will not be able to pay costs if it is ordered to do so (subrule (a));
(b) the address of the plaintiff is not stated... unless there is reason to believe this was done without intention to deceive (subrule (c)); and
(c) the plaintiff is ordinarily resident outside Australia (subrule (e)).
[10]
[19] In support of the application, the defendants relied upon:
[11]
(a) the plaintiff being an overseas corporation with no assets in Australia; and
(b) the solicitors for the defendant having written to the plaintiff's solicitors stating their belief that the plaintiff is unlikely to be able to satisfy an adverse costs order and the plaintiff's solicitor not providing any assurances in response.
[12]
[20] It was submitted that the preconditions in r 671 of the UCPR were met and the court therefore had an unfettered discretion as to whether or not to order security. Furthermore, it was submitted that the above matters also satisfied the test set out in s 1335(1) of the Corporations Act.
[13]
[21] In making submissions, it was accepted that r 672 of the UCPR sets out the discretionary factors to which the court may have regard where the jurisdiction is enlivened by r 671 of the UCPR.
[22] In r 672, a discretionary factor of relevance is the enforceability of any adverse costs order against the plaintiff within the jurisdiction.
[23] On the hearing of the application, the plaintiff relied on affidavits affirmed by Mr Yu Zhao, as the owner and director of the plaintiff, and an affidavit of Mr Kai Cheng, as the director, secretary and registered holder of 60 percent of the issued capital of Bingo Fresh Pty Ltd.
[24] The affidavit of Mr Zhao confirms that the plaintiff is a corporation registered under the law of the People's Republic of China. Mr Zhao affirmed that he is director and shareholder of the plaintiff and that he holds 99% of the shares in the issued capital of the plaintiff. Mr Zhao confirms the arrangements he has made with Bingo Fresh Pty Ltd, as detailed in the affidavit of Mr Cheng.
[25] Mr Zhao does not suggest that the plaintiff otherwise holds any assets in Australia.
[26] Mr Cheng exhibited to his affidavit a true copy of a historical company search for Bingo Fresh Pty Ltd. The ASIC search confirmed that the issued share capital of Bingo Fresh Pty Ltd was 250 ordinary fully paid shares paid to $1 each and that Mr Zhao is the registered holder of 40 percent of the issued capital of Bingo Fresh Pty Ltd.
[27] Mr Cheng affirmed that Bingo Fresh Pty Ltd acts as an agent of Bingo Fresh International Company Ltd for its commercial activities in Australia.
[28] Mr Cheng affirmed that:
[14]
"Bingo Fresh Pty Ltd on behalf of Bingo Fresh International Company Ltd as the plaintiff in this proceeding undertakes to be responsible for any adverse costs ordered Bingo Fresh International Company Ltd might incur or suffer in connection with this proceeding if Bingo Fresh International Company Ltd fails to satisfy or meet any such adverse costs order in this proceeding."
[15]
[29] He further affirmed that he understands the nature and seriousness of the undertaking being given to the court.
[30] Mr Cheng attached to the affidavit a screenshot of an ANZ bank account maintained by Bingo Fresh Pty Ltd recording that as at 2 September 2025 the balance of the account was $113,136.73. Mr Cheng further affirmed that "this account is used for ordinary business and trading transactions of Bingo Fresh Pty Ltd."
[31] As was submitted on behalf of the defendants, the problem with the undertaking given by Mr Cheng is that at no point does he say that the money in the account will not continue to be used for the ordinary business and trading transactions of the company and nor does he undertake to maintain the account at a certain level.
[32] In the circumstances, I do not consider the undertaking offered by Bingo Fresh Pty Ltd to be a satisfactory undertaking in terms of securing the costs by the plaintiff to the defendants.
[33] In circumstances where it is not disputed that the plaintiff is a corporation not ordinarily resident in Australia and nor is it suggested that the plaintiff has any assets within Australia, it is appropriate that an order be made for security.
[16]
[34] The question then becomes one of quantum. The task for the Court is to set a sum that is "appropriate" under r 670 of the UCPR or "sufficient" under s 1335 of the Corporations Act. It is accepted that the amount need not be determined "with mathematical precision and the process does not require a full assessment of costs, but by its nature requires a 'broadbrush' assessment."[1]
[35] In terms of quantum, the defendants filed an affidavit by the costs assessor, Adam Bloom. Mr Bloom considers that an amount of $125,000 could be spent by the first defendant in the matter up to the first day of trial.
[36] In considering the appropriate quantum, it is relevant to have regard to the quantum of the claim and whether an order for security would be oppressive. Further, it is relevant that the plaintiff has expressed a willingness to participate in mediation.
[37] In considering the cost assessor's estimate of costs, it is relevant to have regard to some of the allowances which seem excessive including an amount of over $10,000 for disclosure in a claim said by the plaintiff to be based on a verbal agreement and an amount of over $15,000 for the preparation of the statement of the defendant.
[38] Given the early stage of the proceedings, it is impossible to make any assessment of the prospects of success or merits of the proceeding; except to say that the payment made in full in relation to eight containers of goods and a refusal to pay in full for the other three containers is suggestive of a genuine dispute in relation to the quality of goods in those three containers.
[39] I consider the appropriate amount of security at this stage of the proceedings is $50,000.
[40] Accordingly, there will be an order that the plaintiff provide security for the first defendant's costs in the amount of $50,000 (in a form to be agreed between the parties, or failing agreement, in a form satisfactory to the registrar).
[17]
[1]Lanai Unit Holdings P/L v Mallesons Stephen Jacques[2016] QSC 2 at [43], citing DIF III Global Co-Investments Fund L P v BBLP LLC[2015] VSC 484 at [141].
Parties
Applicant/Plaintiff:
Bingo Fresh International Company Ltd
Respondent/Defendant:
Adam Fresh International Pty Ltd & Anor [2025] QDC 181