Deangrove Pty Ltd v Buckby

REASONS FOR JUDGMENT 1 By motion filed on 26 September 2002, the respondents seek an order for security for costs against the applicant. 2 The motion has been adjourned on two occasions at the request of the applicant. On the second occasion (1 November 2002), directions were made for the applicant to file and serve affidavits and written submissions in opposition to the motion. Those directions were not complied with. I declined to permit the applicant to read an affidavit that was produced at the hearing without prior notice to the respondents. 3 The respondents rely on s 1335(1) of the Corporations Act 2001 (Cth), which provides as follows: "Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, requires sufficient security to be given for those costs and stay all proceedings until the security is given". 4 The evidence of Mr Coves satisfies me that there is reason to believe that the applicant (which is in receivership) will be unable to pay the costs of the respondents if they are successful in their defence: see Beach Petroleum NL v Johnson (1992) 7 ACSR 203, at 205, per von Doussa J. 5 The matters to be taken into account in the exercise of the discretion conferred by s 1335(1) of the Corporations Act include (although they are not limited to) the six matters identified by Hill J in Equity Access Ltd v Westpac Banking Ltd [1989] ATPR 40-972, at 50,635, as follows: · the chances of success of the applicant; whether the applicant's claim is bona fide or a sham; · the quantum of risk that the applicant cannot satisfy a cost order; · whether the use of the power will shut out a small company from making a genuine claim against a large company, ie is the power being used oppressively; · whether the impecuniosity arises out of the [act] in respect to which relief is sought; · whether there are aspects of public interest which weigh in the balance of making an order; · whether there are any particular discretionary matters peculiar to the circumstances of the case. 6 I am prepared to accept that the applicant's claims are bona fide and that it has an arguable case against the respondents. I cannot be any more precise as to the applicant's chances of success in the proceedings. 7 Against this, there are a number of factors that suggest that the applicant should be required to provide security for costs.