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1. In January 2017, the plaintiff loaned $1 million to Keggins Estate Pty Ltd (Keggins) to fund a property development. The loan was repaid in part, and the plaintiff sues to recover the balance of the loan principal together with interest that has accrued over the years since the loan was made. Keggins was subject to a winding up order made on 4 October 2024.

2. The defendant is the ex-wife of Mr Wang, who was the sole director and secretary of Keggins at all material times. The plaintiff sues her on the basis of an asserted guarantee and indemnity provided by the defendant for the performance of Keggins under the loan agreement. There are three loan agreements relied upon by the plaintiff, the latter two of which are asserted to provide the basis for the guarantee claim. They were executed on 6 January 2017, 4 February 2017 and 23 February 2019 and the defendant is a signatory to the February 2017 and the February 2019 agreements. The plaintiff brings her claim on the basis of the terms of the 2019 agreement.

3. There is a dispute between the parties as to the meaning and effect of the clause that appears in each of the agreements that is relied upon by the plaintiff as providing the guarantee. The plaintiff says that in February 2017, and subsequently within the terms of the agreement of February 2019, the defendant signed a personal guarantee in relation to the January 2017 loan agreement. The defendant says there is no clarity in relation to how each of the documents sit together.

4. The defendant asserts a complete defence to the plaintiff’s claim on a number of bases, namely: (a) No money was advanced by the plaintiff under the 2019 agreement, and therefore no sum is due from the defendant, because each agreement, on its express terms, was a standalone agreement for the advance of $1 million. (b) Uncertainty of terms, on the basis that the period of interest accrual is not clearly fixed in the 2019 loan agreement in relation to a defined agreement date; on the basis that there are two competing figures for interest provided in cl 3 of the 2019 loan agreement; on the basis that the security arrangement set out in the 2019 loan agreement is not clearly defined and merely constitutes an agreement to agree; and on the basis that the guarantee clause of the 2019 loan agreement does not specify in whose favour the guarantee is provided. The defendant says the 2019 loan agreement is therefore unenforceable due to uncertainty. (c) Absence of consideration by the plaintiff to the defendant for the asserted guarantee, in the nature of either a forbearance or an extension of time on an existing debt. (d) Undue influence or unconscionable conduct, in circumstances where the defendant says she was significantly reliant on Mr Wang to manage Keggins and that she was the victim of physical violence and verbal abuse by Mr Wang. The defendant says she was pressured into signing the 2019 loan agreement by Mr Wang and did not receive any explanation or opportunity to obtain independent advice in relation to the terms of the agreement. (e) Subsequent conduct, on the basis that the guarantee agreement became unenforceable and was discharged in 2024 because at that time, the plaintiff varied Keggins’ liability under the 2019 loan agreement or otherwise granted it a forbearance as to time for repayment, without the defendant’s consent. (f) Failure to mitigate, on the basis that the plaintiff was under an obligation to minimise her loss and failed to do so sufficiently by not caveating her secured interest in a residential unit referred to in the 2019 loan agreement. In the alternative, the defendant submits that it was an implied term of the 2019 loan agreement that the guarantee would be discharged by registration of the units plan pertaining to the units complex of which the subject residential unit formed part. The units plan was registered in around August 2020. (g) Termination of agreement by conduct, on the basis that there is evidence the plaintiff has admitted she found the first guarantee agreement of February 2017 in a drawer almost nine years after it was signed.

5. The defendant also says she has a partial defence to the quantum of the claim, on the basis that the plaintiff’s amended pleadings accept she was repaid part of the first loan sum by mid-2022.

6. Pleadings have closed and the defendant now makes an application for security for costs pursuant to r 1900 of the Court Procedures Rules 2006 (ACT). The defendant proposes a sum in the order of at least $200,000 by way of security, and up to $250,000 by its filed application in proceeding. The plaintiff opposes the application and submits that in the event the application is granted, a sum in the order of $40,000 to $60,000 would be more appropriate. The applicable rules

7. The terms of r 1900 make clear that the decision to award security for costs is an exercise of the court’s discretion. That discretion is fettered to some extent by the terms of r 1901, which provides: 1901 Security for costs—when court may make order The court may order a plaintiff to give security for costs under rule 1900 only if satisfied— (a) the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or (b) the plaintiff is suing for the benefit of someone else, rather than for the plaintiff’s own benefit, and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or (c) the plaintiff’s address is not stated, or is misstated, in the originating process, and there is reason to believe that the failure to state an address, or the misstatement of the address, was made with intention to deceive; or (d) the plaintiff has changed address since the start of the proceeding and there is reason to believe this was done to avoid the consequences of the proceeding; or (e) the plaintiff is ordinarily resident outside Australia; or (f) the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient fixed and permanent property in Australia available for enforcement to pay the defendant’s costs if ordered to pay them; or (g) a territory law authorises the order to be made; or Note A territory law includes these rules (see Legislation Act, s 98). (h) the justice of the case requires the order to be made.

8. In this case it is conceded that the plaintiff is ordinarily resident outside of Australia within the meaning of r 1901(e). As such, there can be no question that the discretion of the court is enlivened.

9. Rule 1902 provides a non-exhaustive list of discretionary factors the court may have regard to as follows: 1902 Security for costs—discretionary factors (1) In deciding whether to make an order for security for costs under rule 1900, the court may have regard to any of the following matters: (a) the means of the people standing behind the proceeding; (b) the prospects of success or merits of the proceeding; (c) the genuineness of the proceeding; (d) for rule 1901 (a)—the corporation’s lack of financial resources; (e) whether the plaintiff’s lack of financial resources is attributable to the defendant’s conduct; (f) whether the plaintiff is effectively in the position of a defendant; (g) whether an order for security for costs would be oppressive; (h) whether an order for security for costs would stop or limit the progress of the proceeding; (i) whether the proceeding involves a matter of public importance; (j) whether there has been an admission or payment into court; (k) whether delay by the plaintiff in starting the proceeding has unfairly prejudiced the defendant; (l) whether an order for costs made against the plaintiff would be enforceable within the jurisdiction; (m) the estimated costs of the proceeding. (2) This rule does not limit the matters to which the court may have regard. What are the principles governing exercise of the discretion?

10. The purpose of an order for security for costs is to protect a defendant to litigation from the prospect of successfully defending a claim and being without recourse to funds against which to recover its costs. Such an order is generally recognised as having a secondary purpose in discouraging frivolous or unnecessary litigation. It is well accepted that the discretion is broad and that the relevant matters will vary from case to case. As such the guidelines for its exercise cannot be stated absolutely: see All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Ltd [2020] FCA 840 at [42]-[44].

11. As Allsop CJ observed in All Class, the discretion is to be exercised judicially, guided always by the principle of achieving fairness as between the parties. A challenge of significance that often arises is in dealing with an impecunious plaintiff. The court is there called upon to balance a defendant's right to be protected from incurring unrecoverable costs against the risk of stifling access to justice for impecunious persons. Kirby J observed in Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 at [26], albeit in the context of appeal proceedings: Without any pretence to having conducted an exhaustive analysis of the decisions in this Court where orders for security for costs have been sought, in appeals, a number of propositions can be stated which it may be useful to collect: 1. There is no absolute rule to control the exercise of the discretion to order security for costs where that jurisdiction derives from the inherent power of the Court. The jurisdiction, as one reposed in a court, is to be exercised judicially and for the purpose for which it exists. An analogous discretion has been described as "absolute". It would be wrong to attempt to hedge the jurisdiction about by rules or practices, even where derived from a number of instances. This is because what should be done in each case depends entirely on the circumstances of the case. The governing consideration is what is required by the justice of the matter. (Footnotes omitted.)

12. His Honour went on to list a number of factors of potential relevance to the exercise of discretion in a particular case, recognising that the list was not exhaustive: (a) The ability or inability of a party to meet the costs of an unsuccessful proceeding. (b) The strength of the case of the party resisting an order for security and its prima facie prospects of success. (c) The degree of proximity to the date for final hearing of the matter, or any delay on the part of the applicant party. (d) Whether some or all of the parties are legally represented. (e) Whether the proceedings raise matters of general public importance. (f) Whether the nature of proceedings is such that an order of costs in favour of the winning party might not be made or is likely to be limited. (g) The course of previous cost orders in the matter, weighed against the likely course of future cost orders in the proceedings. (h) Whether a party to the proceedings is, or will be at judgment or be likely to be, absent from the jurisdiction and has few or no assets in the jurisdiction. (i) Whether the impecuniosity of the party resisting an order for security is itself a matter which the subject litigation may help to cure, where the grant of an order would effectively prevent the party from obtaining relief.

13. In Jornad Pty Ltd v Sapme Pty Ltd [2018] ACTSC 147, Burns J set out a number of matters which a court will typically take into account on a security for costs application at [17]: While the defendants’ application is based upon the provisions of both the CPR and the Corporations Act, it was accepted that the same principles apply to each of the sources of the power to order security for costs. In KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189, 196, Beazley J observed that while it is not possible or appropriate to list all of the matters relevant to the exercise of the discretion to award security for costs, there are a number of well-established guidelines which a court typically takes into account in determining any such application. These are: (a) that such application should be brought promptly; (b) that regard is to be had to the strength and bona fides of the plaintiff’s case, but, as a general rule, “where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success”; (c) whether the plaintiff’s impecuniosity was caused by the defendant’s conduct the subject of the claim; (d) whether the defendant’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate; (e) whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security; and (f) security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate. Submissions of the parties

14. The defendant relies on her affidavit affirmed 9 December 2025, which sets out various inquiries made by the defendant and her solicitors in relation to the plaintiff and her assets. She says that the unchallenged evidence from her inquiries is that the plaintiff is ordinarily a resident of the People’s Republic of China, does not own real estate in Australia, and owns and operates a vocational training business in Yunnan province. The defendant submits, relying on the decision in Li v Wang [2023] NSWSC 378 at [26], that the purpose of an order for security is protective, in that it recognises that it would be relatively easy to enforce a costs order against a resident defendant, but practically impossible to recover costs against a non-resident plaintiff considering the complexity and uncertainty of international enforcement actions.

15. The defendant submits that the defences she has put on have good prospects and that in any case, the amount sought by the plaintiff’s claim is inflated in circumstances where the plaintiff’s amended pleadings concede that she was already repaid a significant amount of money. She submits that the defendant has been prejudiced by the plaintiff’s delay in making her claim towards the end of the six-year limitation period for general contractual claims, in circumstances where Keggins is now in administration and the plaintiff, by her claim, contends that interest continued to run on the amounts owed by the defendant for nearly six years. By the plaintiff’s account, her right of action first accrued on 24 August 2019, when Keggins defaulted on the 2019 loan agreement.

16. The defendant submits that the plaintiff has put on no evidence to demonstrate a security for costs order would stifle proceedings, and that there is therefore a very strong case for ordering security be paid into court.

17. In responding to the application for security for costs, the plaintiff relies on the affidavit of Ningfeng Li, solicitor for the plaintiff, affirmed 3 February 2026. Mr Li attests that his client has been retired since 2015, does not have an active income and is currently paying for proceedings from her savings. In relation to the plaintiff’s links to Australia, Mr Li says that he was party to a conversation involving the plaintiff and the plaintiff’s son, in which the plaintiff said words to the effect that her son is in the process of relocating to Australia in 2026, that he will apply for her to obtain a permanent resident’s visa once he has relocated, and that she plans to also relocate to Australia if she is granted permanent residency.

18. Mr Li assesses that the claim itself is largely uncomplicated as the fact that money was lent to Keggins should not be in dispute, and that the only complication arises from the defendant’s allegations of undue influence and violence on the part of her husband.

19. In those circumstances, the plaintiff submits the court should not exercise its discretion to order security for costs, notwithstanding that she is ordinarily resident outside of Australia. She says she intends to be in Australia with her son and his family and does not intend to avoid any costs orders by not returning to Australia. The plaintiff further says that the proceeding brought is genuine, that she seeks to be repaid her retirement savings, and that she lacks financial resources as a result of not being paid the loan and interest she says is due to her by Keggins.

20. The plaintiff submits it would be unfair for her to be required to pay security in order to make a case to recover the debt claimed to have caused her impecuniosity. She submits that she could be made bankrupt if she were to not pay costs ordered against her, and that an order for security would be oppressive, in circumstances where the prima facie prospects of the plaintiff’s claim succeeding are submitted to be good and where it is in the interests of justice for the court to adjudicate on a claim involving the liability of a former director and the wife of the director as purported guarantors of a loan. The plaintiff submits that the risk that she could return to China to avoid paying costs is less significant given her son and his family reside (or are to reside) in Australia.

21. In reply, the defendant contends that the fact the plaintiff is retired is irrelevant, where the relevant inquiry is about the plaintiff’s assets and financial means (including passive income) rather than current employment income. She asserts that the evidence of the plaintiff’s intentions to relocate to Australia are of little help where those intentions are contingent on certain visa matters that may never occur.

Is an order for security warranted?

22. I accept that an order for security for security for costs is appropriate in this case. Although satisfied on the basis of the pleaded claim that there is an arguable case for the plaintiff, it is quite clear to me that there are a number of separate avenues of defence available to the defendant. Any one of those would be sufficient to defeat the claim.

23. In circumstances where the plaintiff is resident overseas and has identified no assets in Australia against which costs may be recovered, there is a real risk of the defendant, in the event of a successful defence of the claim, being left without funds against which to recover her costs. On any view of the material before me those costs have the potential to be very significant.

24. The plaintiff's counsel submits, on the basis of a conversation between the plaintiff and her solicitor, that there is a risk of stultifying the litigation if an order for costs in the quantum suggested by the defendant is made. The difficulty with that submission is that the plaintiff has elected to place no material before the court concerning her financial position. Whilst she asserts that she is a retired person, the fact of her retirement is of itself of no real assistance in assessing whether she has the financial means in Australia or overseas of meeting a costs order made against her, or of continuing this litigation if faced with an order for security for costs.

25. In all the circumstances. I consider it appropriate to make such an order.

What is an appropriate sum?

26. In relation to the quantum of security sought, the defendant relies on the affidavit of Phillip Davey, solicitor for the defendant, affirmed 3 February 2026. Mr Davey, a solicitor of considerable experience, estimates that the trial in this matter will require at least five days of hearing, including up to a day of closing submissions and a day of cross-examination of the plaintiff. He also notes that the parties have already exchanged notices to disclose, and that the defendant expects to also issue subpoenas and notices to produce. In total, Mr Davey estimates the defendant’s solicitor and client costs at the conclusion of trial will be approximately $265,000 including GST, and of that amount, around $80,000 including GST has been incurred in solicitor and counsel costs to date. He says that estimate does not include any contingency for dealing with non-compliance with directions by the plaintiff or third parties. In total, Mr Davey suggests that the defendant might reasonably expect to recover about 70% of that amount on a party/party basis, or approximately $185,500.

27. The defendant submits Mr Davey’s estimate is reasonable and conservative, in a case involving a commercial claim worth over $1 million, where the defendant has put on a number of legally and factually contentious affirmative defences and the parties have already issued discovery notices. The defendant says that she already has two outstanding costs orders against the plaintiff in these proceedings. She submits that it is open to the court to order security in the full amount of the party/party costs.

28. The plaintiff relies on Mr Li’s competing estimate of costs in his affidavit. Mr Li says that the matter is relatively simple and estimates it will involve only two or three lay witnesses, requiring two days of hearing at trial. He estimates that neither side’s legal costs and disbursements, at an indemnity level, should exceed $100,000.

29. The plaintiff contends that the higher estimate raised by Mr Davey appears to arise from issues raised by the defendant, and that such extensive work would not be raised by any complications in the plaintiff’s case. She says her case is largely based on the objective documentary evidence raised by the loan agreements. The plaintiff also says there is uncertainty on Mr Davey’s evidence as to how the defendant’s fees to date were calculated, or how the total estimate of party/party costs was quantified. She says that any amount ordered in security should be proportionate to the case that would be run by herself over two days, where any complications in the matter would arise from the defendant.

30. The plaintiff says that if she were required to pay the amount in security sought by the defendant within the 14 days sought, she would not have immediate access to the funds required and would be forced to discontinue proceedings. The plaintiff submits that an order for $250,000 in security would be akin to an indemnity costs order, in circumstances where the plaintiff says there is a lack of evidence as to the assessment of party/party costs. She submits that if the court is minded to order a security for costs greater than $60,000, then part payment of the sum ordered in tranches would be appropriate.

31. I note that the plaintiff has elected to place no evidence before me of the legal costs she has incurred in the proceedings to date.

32. In the decision of CDLC Pty Ltd v Capital Estate Developments Pty Ltd (No 4) [2024] ACTSC 345, McWilliam J stated at [45] that where an application for security for costs is successful, the court has discretion to order the amount to be paid in security it considers sufficient, and that the court does not need to give a complete indemnity for costs (although it may still do so). The court may provide for the payment of security to be made in tranches rather than all at once.

33. In considering the reasonable costs likely to be incurred by the parties for the purposes of fixing the quantum of security, the court may rely on a general estimate, although it is likely to be assisted by more detailed estimates provided by the solicitors for the parties: Anderson v Patersons Securities Ltd [2019] NSWSC 852 at [216]. In Civil & Civic Corporation Pty Ltd v Nova Builders Pty Ltd [2024] ACTCA 4, McCallum CJ noted that the court must be astute not to allow inaccurate estimates to create unfairness in the balancing between the interests of the applicant and the respondent, and should therefore avoid relying, without real consideration of what constitutes a reasonable estimate of costs, on the estimates provided by the parties.

34. In the England and Wales Court of Appeal decision in Procon (GB) Ltd v Provincial Building Co Ltd [1984] 2 All ER 368 at 376, Cumming-Bruce LJ refuted the proposition that the court should follow a “conventional approach” to fixing the amount in security (in that case, expressed as fixing the security at two-thirds of the estimated party/party costs). His Lordship considered the correct principle to be that “the security should be such as the court thinks in all the circumstances of the case is just”.

35. I accept the plaintiff’s submission that the estimating of costs by each of the parties involves some degree of speculation as to the likely course of the litigation from this point forward. Having regard to the pleaded claim and the evidence likely to be led in meeting and defending that claim, the suggestion of the plaintiff’s solicitor that a hearing estimate of two days is appropriate appears to me to be unrealistically low. I note from the material before me that some communication between the parties has occurred in Mandarin and there is a possibility that interpreters will be required for some of the evidence to be given at hearing. A three-to-four-day hearing appears to me to be realistic, based on the available evidence and the subject matter of the dispute. On that basis alone, I consider the costs estimate provided by Mr Li to be lower than is reasonably likely.

36. I do not accept that security should only apply to that portion of the hearing time necessary to present the plaintiff’s case. The defendant is entitled to marshal and present all defences that are reasonably necessary to meet the case brought against her, and in the event of a successful defence, to be compensated for the costs of doing so.

37. Whilst I accept generally the estimates provided by Mr Davey as more realistically reflecting the costs exposure following a fully contested hearing on all counts, I consider it appropriate to make some allowance for a narrowing of the issues with the passage of time and the benefit of exchanged evidence. I am also mindful of the capacity of the defendant to make further application for security, if necessary, at a later stage.

38. In all the circumstances, I am attracted to a staged order, with the first component payable within 28 days and the second component payable within a further 28 days. I consider an appropriate sum for security at this time to be $120,000, payable in two tranches of $60,000.

Orders

39. The orders of the Court are: (1) The plaintiff is to provide $120,000 in security for the defendant’s costs. (2) Such security is to be provided by payment to Court in tranches as follows: (a) $60,000 by 12 March 2026; and (b) $60,000 by 9 April 2026. (3) The defendant be granted liberty from 10 April 2026 to apply to the Court for further security for costs if she contends that the above security is inadequate. (4) In the event of failure by the plaintiff to pay the amounts required by these orders, the proceedings will stand dismissed. (5) The plaintiff has liberty to apply to seek an extension of the time for payment of any of the amounts as required by these orders.

I certify that the preceding thirty-nine [39] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Muller. Associate: Date: