//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2001] VSC 46
procedural. Further security for costs of $30,000 was ordered before commencement of trial. Together with the earlier security, the total was $120,003.24 ([47], [50]).
The insurer had already received two security-for-costs orders totalling just over $80,000 and asked for substantially more. The judge considered the general factors governing security, including the plaintiff's ability to pay and whether another order would prevent it from continuing the case. The plaintiff's alleged connection with a group of companies was not treated as proof that the group would fund it. The judge nevertheless ordered a further $30,000, rather than the full amount sought, so there would be some additional security without making the burden so high as to stultify the proceeding.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2,041 words · generated 30/09/2026
New Zealand Pelt Export Company Limited brought a proceeding in the Supreme Court of Victoria against Trade Indemnity New Zealand Limited. Its claim was for indemnity under a trade debtor insurance policy concerning sales of animal hides between June and August 1998. The insurer denied liability under the policy and disputed whether the debts arose from sales covered by it. It also alleged that the sales were made by Kidort Limited, an associated company, rather than by the plaintiff ([7]).
No linked legislation citations have been extracted yet.
The proceeding began on 15 May 2000. The defendant initially sought security for costs of $141,820. On 9 June 2000, the parties consented to an order for $20,000. A further consent order on 15 September 2000 required another $60,000 up to and including the first day of trial ([10], [13]). The plaintiff had therefore provided a total of $80,003.24 by the time of this application ([16], [47]).
By February 2001, the matter was described as virtually ready to be fixed for trial, although the court ordered additional discovery by both sides. The defendant sought another $146,946. Its estimate included about $105,000 in party-and-party costs to date and estimated further costs through a ten-day trial of about $121,000. The estimate was supported by an affidavit from the defendant's solicitor ([16], [19]).
The plaintiff did not rebut the amounts in that costs estimate. Its position was that the court should refuse further security under the usual discretionary principles, particularly because an order would unduly stultify its ability to pursue the proceeding ([19]). The defendant relied on the plaintiff's incorporation in New Zealand, its lack of Australian assets, and its alleged association with the Kidort Group. It argued that the plaintiff had not shown that other group members or people who might benefit from the litigation could not provide security ([44]).
Warren J ordered a further $30,000 before trial. Added to the earlier security, this brought the total to $120,003.24 ([47], [50]).
The court treated the issue as an exercise of discretion, not as an automatic consequence of the plaintiff being a foreign company or having no assets in Australia. Warren J stated that the discretion to order security for costs was “unfettered” and identified a range of potentially relevant factors ([28]). These included the bona fides and prospects of the claim, whether the defendant caused or contributed to the plaintiff's lack of funds, whether the case was a response to “self-help” measures, the risk of stultification, the possible availability of support from creditors or shareholders, delay, and whether the company was a “true plaintiff” ([28]).
The judgment also addressed the fact that the defendant was an insurer. Being an insurer resisting a claim under a policy did not, by itself, make an order for security inappropriate ([22]). But the insurer's voluntary contractual relationship with the plaintiff was relevant to the discretion ([25]). That consideration mattered in the setting of a claim seeking to enforce an insurance contract, but it did not determine the application by itself.
A central practical issue was whether further security would stultify the plaintiff's proceeding. The insurer argued that the plaintiff had not shown that the people behind it, or members of the Kidort Group, lacked means. Warren J rejected the group-based submission in the circumstances of the application. Her Honour said, “I must look at the plaintiff as the individual litigant” ([44]). The court accepted evidence that the plaintiff had no assets to support more security and that Westpac Banking Corporation, which was supporting the litigation, would provide no further resources ([44]).
The judge then balanced that evidence against the defendant's request and the stage and nature of the litigation. The existing $80,000 was not insignificant, particularly considering the proceeding, its allegations and discovery. But the court considered it appropriate that the defendant receive some additional security for trial ([47]). The amount was fixed at $30,000, rather than the $146,946 sought. The judgment's stated aim was to provide further security without imposing an amount that would stultify the plaintiff's ability to continue ([47]).
The decision does not set out a separate finding that the plaintiff would certainly be unable to proceed if the full amount sought were ordered. Nor does it make a final finding on the merits of the insurance dispute. Its reasoning is confined to the balance required in deciding the further security application on the material before the court.
The judgment presents the security-for-costs discretion as already governed by a set of established considerations. It does not say that it is creating a new test or changing the law. At [28], Warren J describes the discretion as unfettered and lists considerations drawn from cited authorities. The decision is therefore best read as an application of that discretionary framework to a request for a third security order.
The insurance relationship is framed as one relevant consideration, not an exemption. At [22], the court says that the defendant's status as an insurer resisting a claim under a policy does not in itself make security inappropriate. At [25], it says that the voluntary contractual relationship remains relevant to discretion. Read together, those passages indicate that neither the insurer's position nor the insurance contract alone resolves the question.
The judgment also addresses how the plaintiff's corporate-group connections were treated in this case. The court did not accept that an alleged association with a group established that funding was available. Instead, it assessed the plaintiff as the individual litigant and considered the evidence about its own assets and available support ([44]). This is a contextual application rather than an express general ruling about every corporate group or every security application.
The practical result was a partial grant of the requested additional security. The defendant sought $146,946, but the court ordered $30,000 more, bringing the total to $120,003.24 ([16], [47]). The decision thus illustrates a calibrated order based on the court's assessment of the circumstances, rather than an all-or-nothing response to the application.
The judgment itself does not provide a comprehensive account of the law before the cited authorities, and the supplied text does not contain later developments. Any broader statement about how the law changed after this decision would require sources beyond this judgment.
At [28], Warren J says the discretion to order security for costs is “unfettered”, then lists factors that may matter. In plain English, the court is not applying a single mechanical rule. It considers the circumstances together, including the claim's bona fides, the source of financial difficulty, the risk of preventing the case from proceeding, possible financial support, delay, and whether the company is genuinely pursuing its own claim.
At [22], the court states that an insurer's involvement does not, by itself, make a security order inappropriate. In plain English, the fact that the dispute concerns an insurance policy is important context, but it does not automatically decide whether security can be ordered.
At [25], the court treats the voluntary insurance relationship as relevant to discretion. In plain English, the insurer's prior contractual relationship with the plaintiff is part of the balance, but not a conclusive answer.
At [44], Warren J says, “I must look at the plaintiff as the individual litigant.” In plain English, the court did not assume that alleged connections with other companies meant money was available to the plaintiff. It considered evidence about the plaintiff's own assets and the identified source of support.
At [47], the court says it needed to balance further security against the risk of stultifying the plaintiff's ability to continue. In plain English, the order had to provide some additional protection for the defendant without setting the amount at a level the court considered would prevent the case from proceeding.
The decision is relevant to applications seeking security for costs where a corporate plaintiff has limited assets and the defendant says costs may not be recoverable if the plaintiff loses. It is particularly informative where the defendant asks for further security after earlier orders have already been made and complied with. Here, the plaintiff had already provided just over $80,000, and the defendant sought another $146,946 at a stage when the matter was close to being fixed for trial ([16], [47]).
It may also be relevant where the defendant is an insurer and the plaintiff's proceeding seeks indemnity under a policy. The judgment makes clear that the insurer's status is not an automatic bar to security, while the voluntary contractual relationship is relevant in exercising discretion ([22], [25]).
A further potentially relevant feature is a defendant's reliance on a plaintiff's association with a corporate group as evidence that funds are available. In this case, the court did not treat the alleged association as sufficient and instead assessed the plaintiff as the individual litigant, having regard to evidence that it had no assets and would receive no further resources from Westpac ([44]).
These are features of the case, not a complete checklist guaranteeing the same result in another dispute. The judgment emphasises an overall discretionary assessment and makes its order in the particular procedural and evidentiary setting before it ([28], [47]).
The supplied judgment contains no decisions after 19 February 2001 and no account of how later courts treated this case. It therefore does not provide a basis to say that later courts followed, distinguished, approved or criticised its reasoning.
The judgment does cite a number of earlier authorities. It refers to Tenth Anemot v Colonial Mutual Insurance, Prime Forme Cutting Pty Ltd v Baltica General Insurance Co, Frankston Ambassador Pty Ltd v Cigna Insurance Australia Ltd, and Irwin Alsop Services v Mercantile Mutual Insurance Co Ltd on the relevance of an insurer's contractual relationship with its insured ([25]). It also cites authorities in support of the general discretionary factors, including Sydmar Pty Ltd v Statewide Developments Pty Ltd, J & M O'Brien Enterprises v The Shell Company of Australia Ltd (No 2), Southern Cross Exploration NL v Fire and All Risks Insurance Ltd, and McLaughlin v Daily Telegraph Newspaper Co Ltd ([28]).
At [44], the judgment discusses the defendant's reliance on Ariss v Express Interiors Pty Ltd (in liq), in which the defendant said there was an onus on a plaintiff relying on stultification to show a foundation for that claim. Warren J considered that submission misconceived in the context of this matter, because the alleged group association was not a basis to assume the plaintiff had access to funds. That is the treatment shown in this judgment; the supplied text does not establish how any later court treated either Ariss or New Zealand Pelt Export.
The judgment does not finally determine the merits of the insurance claim. It records that the insurer denied liability and disputed whether the debts were covered, including on the basis that another associated company made the sales ([7]). The security decision should not be read as deciding whether the policy responded or which company made the relevant sales.
The decision also does not resolve the parties' substantive dispute about the plaintiff's financial position beyond the evidence relevant to this application. It records the court's satisfaction, on the affidavits, that the plaintiff had no assets to support further security and that Westpac would not provide further resources ([44]). It does not provide a broader analysis of all possible funding arrangements or make findings about the financial capacity of every Kidort Group company.
The judgment does not explain in detail how the precise amount of $30,000 was calculated. It gives the court's balancing rationale, refers to the existing security, the nature of the proceeding and the costs estimates, and concludes that a further “modest sum” was appropriate ([16], [47]). It does not set out a formula for calculating security in other cases.
Finally, the supplied text does not provide the later procedural history, the trial outcome, or subsequent appellate consideration. Those matters remain outside what can be concluded from this judgment alone.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have it checked by a qualified Australian lawyer.
SECURITY FOR COSTS - further order sought - two previous orders.
(a) whether the plaintiff's claim is made bona fide and has reasonable prospects of success; J & M O'Brien Enterprises v The Shell Company of Australia Ltd (No 2) [1983] FCA 96; (1983) 70 FLR 261 at 263.
(b) whether the plaintiff's lack of funds has been caused or contributed to by the conduct of the defendant: Southern Cross Exploration NL v Fire and All Risks Insurance Ltd [1985] 1 NSWLR 114, [1986] 4 NSWLR 491.
(c) whether the plaintiff's proceedings are merely a defence against "self-help" measures taken by the defendant;
(d) whether the making of the order would unduly stultify the plaintiff's ability to pursue the proceedings;
(e) the extent to which it is reasonable to expect creditors or shareholders to make funds available to satisfy any order for security which is made;
(f) whether the defendant has delayed in making the application for security: McLaughlin v Daily Telegraph Newspaper Co Ltd [1904] HCA 5; (1904) 1 CLR 143.
(g) whether the company in question is "a true plaintiff" or not: Sydmar Pty Ltd op cit; Tenth Anemot op cit.
"Of relevance also, in my view, is the fact that the defendant [insurer] voluntarily entered into a commercial relationship with the plaintiff. It did this knowing that the plaintiff was a proprietary company. This is not a situation where the plaintiff who seeks relief against the defendant is otherwise a stranger to the defendant and one who the defendant has not been prepared to or who has not entered into a commercial relationship with. Where such a voluntary commercial or contractual relationship exists, it is open to a person such as the defendant to provide protection for itself against the risk of being sued as part of its enterprise. Such is particularly so when that party is an insurer. The plaintiff's claim is to enforce the agreement which was voluntarily entered into between the parties. That agreement is not disputed, nor is it disputed that the defendant has refused to indemnify the plaintiff under the same. The defendant, while contending that it is not obliged to indemnify the plaintiff, has put forward no evidence in this application in substantiation of its claims that the plaintiff was in breach of its duty to disclose facts material to the risk or that the plaintiff is guilty of making a fraudulent claim under the policy. Where a defendant insurer as in this case does put forward some evidence to substantiate its defence as pleaded in this case, the mere allegations made by its pleadings cannot cause the court to conclude that the claim made on the admitted policy is not a bona fide claim, nor one with a reasonable chance of success. The fact that the defendant has not sought in any way to substantiate its defence is a relevant consideration and weights in the balance against the granting of the order sought. Although on the evidence the claimed cause of the plaintiff's financial plight is the fire which occurred on 27 January 1992, it would appear from the evidence of Costikidis as contained in his said affidavit, the copy of which was tendered by the defendant, that the refusal of the defendant to indemnify the plaintiff for its loss under the terms of the admitted policy is a relevant factor as to why the plaintiff has not been able to resume trading and as to why it could not pay the defendant's costs if so ordered. The type of policy as issued in the subject of the proceedings was of a type to protect the plaintiff from suffering the risk of damage suffered which would have consequential effects on its business enterprise. It is the actions of the defendant in denying liability to the plaintiff which indirectly bring about the present financial difficulties of the plaintiff. It is such difficulties that the plaintiff sought to insure against."
(a) the defendant has already been the beneficiary of two orders for security;
(b) the defendant is an insurer resisting a claim under an insurance policy;
(c) the plaintiff's lack of funds has been caused or contributed to by the conduct of the defendant and the defendant's impecuniosity has at all material times been known to the defendant;
(d) the plaintiff's claim is made bona fide and on the pleadings has reasonable prospects of success;
(e) the making of an order would unduly stultify the plaintiff's ability to pursue the proceedings;
(f) the defendant has not adduced any real reason why it should be entitled to an additional order for security at such a late stage;
(g) the matters raised in the amended reply are not materially different from the matters raised in the plaintiff's earlier reply. The defendant was (or had the material available to it in order to be) in possession of all relevant information on 6 September 2000 to seek a higher award of security if it thought appropriate. It is too late to seek to "top up" that award now;
(h) the nationality of the plaintiff (New Zealand) is of slight, if any relevance.
New Zealand Pelt Export Company Ltd
Trade Indemnity New Zealand Ltd [2001] VSC 46
(1987) 73 ALR 289
(1983) 70 FLR 261
(1904) 1 CLR 143
(1996) 2 VR 507
Further security for costs of $30,000 was ordered before commencement of trial. Together with the earlier security, the total was $120,003.24 ([47], [50]).