Plaintiff v First Defendant

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, require sufficient security to be given for those costs and stay all proceedings until the security is given.

1. The Court's inherent jurisdiction exists separately to r 62.02 of the Rules and s 1335 of the Act.[3] The inherent jurisdiction may be exercised whenever the interests of justice require in all of the circumstances of the case.[4]
2. The first matter requiring consideration is whether the exercise of the power to order security is enlivened. That is to say, is there credible evidence that there is reason to believe that the plaintiff will be unable to pay the defendants' costs if the defendants are successful. That condition must be satisfied before the discretion to order security is enlivened.
3. In Livingspring Pty Ltd v Kliger Partners,[5] the Victorian Court of Appeal held:

The phrase 'reason to believe' is the touchstone of jurisdiction. It requires a rational basis for the belief - and no more. The wording adopted may be contrasted with other familiar formulations such as 'If the court is satisfied that ... ' or 'If in the view of the court it is likely that ...'. The section requires the making of a judgment, a risk assessment: is there a risk that the corporation will be unable to pay? (It adds nothing, in our view, to say that it must be a "real risk".) A risk assessment is, of necessity, imprecise. The section calls for a practical, commonsense approach to the examination of the corporation's financial affairs.

It may be said, with justification, that this is a low threshold. But the test simply reflects the policy of the provision, which is to protect a defendant against the risk of the plaintiff corporation's impecuniosity. The provision equips the court with the means to require that the defendant be secured against that risk.

The power being enlivened, the court must consider whether it should be exercised. Foremost amongst discretionary considerations will be any contention on behalf of the plaintiff that an order for security would work an injustice. We turn to consider the question of onus.

1. In assessing whether there is a 'reason to believe', the Court is not required to make an assessment on the balance of probabilities of whether there will be a default in the payment of a costs order. Rather, the Court must consider whether there is a risk that a costs order will not be paid. It is necessarily a low threshold where it is sufficient to identify a risk.
2. Once the jurisdiction is enlivened, the Court has a discretion as to whether security ought to be awarded. That discretion is unfettered, although it must be exercised judicially, having regard to all of the circumstances.[6] Exercising the discretion involves the Court carrying out a balancing exercise between the injustice to the plaintiff if the grant of security prevents them from pursuing proper claims, and the injustice to the defendants if no security is ordered and the defendants are ultimately successful but unable to recover their costs.[7]
3. In Colmax Glass Pty Ltd v Polytrade Pty Ltd,[8] ('Colmax Glass') Derham AsJ (as his Honour then was) identified some of the prominent discretionary factors discussed and considered in the authorities as follows:

(a) The plaintiff's prospects of success: Whether the plaintiff's claim is made bona fide and has reasonable prospects of success. In this regard, the authorities make the following points:

(i) 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 reasonable prospects of success;

(ii) Assessing the plaintiff's prospects of success is not really a practicable test in any case of reasonable complexity: Interwest Ltd v Tricontinental Corp Ltd; Although it will ordinarily not be practicable to reach any clear view about the merits of the plaintiff's claim, that is not to say that the merits are always irrelevant (unless totally lacking) or that the bona fides of the claim may be disregarded: Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd;

(iii) The court is not obliged to consider at length the merits of the claim, and to do so would ordinarily be a waste of resources: Impex Pty Ltd v Crowner Products Ltd;

(b) Plaintiff's impecuniosity caused by defendant: Whether the plaintiff's lack of funds has been caused or contributed to by the conduct of the defendant in relation to the transaction the subject of the claim: Sir Lindsay Parkinson & Co Ltd v Triplan Ltd. In this regard, the authorities make the following points:

(i) The plaintiff carries the burden of persuasion on the question whether the conduct of the defendant was the cause of the plaintiff's financial difficulties: BPM Pty Ltd v HPM Pty Ltd;

(ii) There must be a solid foundation for that conclusion: Right Home Improvements International Pty Ltd v Imperial Alarm Screens (Aust) Pty Ltd, referred to in Sandl Trading Pty Ltd v North American Oil Co;

(iii) The plaintiff carries the onus of satisfying the court on the basis of admissible evidence, see Ninan v St George Bank Ltd;

(c) Plaintiff's proceeding merely defensive: Whether the plaintiff's proceeding is merely a defence against "self-help" measures taken by the defendant: Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq); Sydmar Pty Ltd v Statewise Developments Pty Ltd; Interwest Ltd v Tricontinental Corp Ltd. Each case must be looked at to see whether in substance the claim set up is by way of defence such that the plaintiff's claims are properly characterised as defensive;

(d) Security order would stultify pursuit of legitimate claim: Whether the making of the order would unduly stultify the ability of the plaintiff to pursue an arguable case legitimately instituted: See MA Productions Pty Ltd v Austarama Television Pty Ltd; Drumdurno Pty Ltd v Braham; Ariss v Express Interiors Pty Ltd (in liq); Excelsior Run Pty Ltd (in liq) v Nelius Pty Ltd;

(e) Contribution by shareholders or creditors to security ordered: The extent to which it is reasonable to expect shareholders or creditors (or beneficiaries, if the company is a trustee) to make funds available to satisfy any order for security which is made: National Bank of New Zealand Ltd v Donald Export Trading Ltd; Pacific Acceptance Corp Ltd (t/as Flack & Flack) v Forsyth (No 2); Drumdurno Pty Ltd v Braham; Newtons Travel Services Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd;

(f) Delay in applying for security: Delay in applying for security may be ground for refusing to order security. The company, which can be assumed to be in financial difficulties, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it makes a substantial financial commitment toward litigating the claim. See B_uckley v Bennell Design & Construction Pty Ltd_; Smail v Burton; Re Insurance Assocs Pty Ltd (in liq);

(g) Defendant's cross-claim raising same facts: where the defendant has raised a cross-claim, whether substantially the same facts are likely to be canvassed in determining the claim and cross-claim. The court would ordinarily seek to avoid the situation where the claim is stayed because of the inability of the plaintiff to provide security while the defendant's cross-claim covering the same factual areas proceeds: Sydmar Pty Ltd v Statewise Developments Pty Ltd.

1. The terms of s 1335(1) of the Act direct the Court to consider a plaintiff's lack of means and its likely inability to meet an order for costs.[9]
2. The authorities indicate that a corporate plaintiff's impecuniosity is both a threshold condition to the making of an order and also a substantial factor to be weighed in the exercise of the Court's discretion as to whether to award security for costs. The Victorian Court of Appeal in Ariss v Express Interiors Pty Ltd,[10] stated:

Although of course, like any discretion inferred upon a court, it must be exercised judicially, the discretion confirmed by s. 1335 should be accepted now as altogether unfettered, but upon the footing that the very fact of which there must be credible evidence in order to enliven the jurisdiction in the first place may itself be a factor, even a most significant factor, in the exercise of the discretion.

1. Before me, there was no dispute as to the following factual matters pertaining to the plaintiff:

(a) it is a proprietary company registered in Victoria on 15 May 2017;

(b) at the date of registration, the shareholders were:

(i) Adel Yaslam Karama Awad Alkatheeri, who held 1 ordinary share;

(ii) Fayez Yaslam Karama Awad Alkatheeri, who held 1 ordinary share;

(iii) Mohammed Yaslam Karama Awad Alkatheeri, who held 1 ordinary share;

(iv) Salem Yaslam Karama Awad Al Kathiri, who held 1 ordinary share;

(v) Adib Elmasri who held 1 ordinary share; and

(vi) Mr Raed (Ryan) Elmasri, the sole director who also held 1 ordinary share;

(c) on 17 September 2019, 2 ordinary shares were issued to existing members, being Adib Elmasri and Mr Elmasri, bringing the total of ordinary shares held by each of them to 2;

(d) on 23 December 2025, a Form 484 (signed by Mr Elmasri bearing a date of 17 December 2025) was lodged with the Australian Security and Investments Commission ('ASIC') which recorded the issue of 9,409,633 preference shares to an existing member and ordinary shareholder, Adel Yaslam Karama Awad Alkatheeri at an amount of $1.00 per share;

(e) it is the owner and operator of a crane and truck hire business known as 'Victorian Crane Hire';

(f) its registered office is Level 10, 530 Collins Street, Melbourne in the State of Victoria, which appears to be the offices of 'SW Accountants & Advisors';

(g) its principal place of business is 35 Colemans Road, Dandenong South in the State of Victoria;

(h) it owns no real property in Victoria; and

(i) it has granted 33 security interests pursuant to the Personal Property Securities Act 2009 (Cth) ('PPSA'), including 22 purchase money security interests ('PMSI') and one all present and after acquired property security interest in favour of National Australia Bank ('AllPAAP'). Before me, there was some debate as to which of the PPSA and PMSI registrations were current.

Is the jurisdiction enlivened to order security

1. Before me, the defendants contended that there were twelve factors that supported the proposition that the jurisdiction to award security was enlivened and that there was reason to believe that the plaintiff, which is a corporation, would be unable to satisfy an adverse costs order, if unsuccessful at trial. I turn now to deal with each of the factors identified by the defendants.
2. First, the defendants submitted that the plaintiff owned no real property assets.
3. Second, the defendants contended that, since mid-2025, the plaintiff has been winding down its crane-truck business.
4. Third, the defendants stated that the plaintiff had recently deregistered 21 vehicles.
5. Fourth, it was submitted that the plaintiff had repeatedly failed to provide any documentary evidence as to its revenue, profit and net asset position. It was submitted, relying on the Victorian Court of Appeal's decision in Wu v Bi ('Wu'),[11] that an inference of impecuniosity can be partially founded on a refusal to provide requested information and is more readily drawn where the evidence suggests that the applicant's refusal to disclose is motivated by a wish to hide an insufficiency of assets but it will be less readily drawn if there is a benign alternative explanation or other evidence which is inconsistent with impecuniosity.[12]
6. Fifth, it was contended that when the proceeding was commenced, the defendants had no real concerns as to the plaintiff's ability to meet an adverse costs order but that this had changed. It was submitted that the plaintiff's case had been the subject of multiple amendments and there had been three mediations, the effect of which was that the defendants had incurred substantial legal fees.[13] In making this submission, counsel conceded that the last amendment to the plaintiff's pleading was on 18 July 2023 and that the first occasion when the issue of security was raised was 22 November 2024. Counsel further conceded that there was no evidence before the Court which addressed any apparent concerns of the defendants during this 16-month period. Turning to the letter sent on 22 November 2024, counsel also conceded that the letter did not address the basis for why the defendants had an alleged concern in November 2024 as to the plaintiff's financial position. It is useful to set out the relevant text of the letter:

For the reasons set out below, our clients are concerned that your client will not be in a position to meet an adverse costs order in the proceeding in the event that its claims are ultimately unsuccessful at trial.

Having undertaken searches of your client, this concern arises in circumstances where your client:

(a) does not appear to own any real property in Victoria;

(b) has nominal paid-up share capital of $8; and

(c) has granted 34 security interests pursuant to the Personal Property Securities Act 2009, including 22 PMSI and 1 All PAP.

In addition:

(a) Our clients understand that your client has also commenced proceedings against Victorian Investment Group Pty Ltd, previously known as Victorian Crane Trucks Pty Ltd; and

(b) you have informed us that your client will be filing:

(i) a supplementary report by Mr Lewis; and

(ii) a separate expert report from a valuer.

Once those reports are received, our clients will most likely need to instruct their expert to expand his report to address Mr Lewis's supplementary report, and to engage a further expert to provide a report in response to your client's valuer's report.

To date, our clients have incurred costs of approximately $408,955.79 in the proceeding, with considerable further fees to be incurred up to and including a final hearing.

Given the concerns outlined above, our clients request that, within 14 days of the date of this letter, your client provides our office with evidence of your client's ability to meet any cost order made against it after the trial of the proceeding. This would include but is not limited to a current balance sheet, profit and loss statement and asset register.

In the absence of satisfactory evidence of an ability to pay being provided, please confirm that your client undertakes to provide security for costs in the sum of $300,000 in a form satisfactory to our clients, such as a bank guarantee.

1. Counsel conceded that the searches and matters identified in sub-paragraphs (a) to (c) of the letter had subsisted for the duration of the proceeding.[14]
2. Sixth, the plaintiff's own evidence disclosed that it had undergone a process of realigning its fleet due to the closure of its interstate business two years ago such that cranes and trucks have been deregistered. There was also an attempt to grow a presence in the rail industry. The defendants' counsel submitted that this evidenced an 'admission' that the plaintiff had wound down its interstate business and replaced it with business storage and rail storage.[15] The defendants further contended that the alleged revenue streams (being storage and rail crane services) are potential or hypothetical and were, in any event, being conducted by another entity, Rail Cranes Australia Pty Ltd (ACN 663 266 313) ('RCA') which was registered in 2022 and is not connected to the shareholding of the plaintiff.
3. Seventh, the plaintiff's asset register which valued the plaintiff's assets as in excess of $10.9 million was lacking in detail because whilst it provides information as to the insured value, the likely sale values were omitted meaning that the defendants were unable to 'understand the value ascribed to each of the vehicles'.[16] Further, the asset register included 16 deregistered vehicles. Additionally, the books and records of the plaintiff did not disclose an asset value of $10 million but rather have a plant value 'at cost' of $7.5 million against which NAB has an AllPAAP security of $1.3 million. The defendants' counsel submitted that given the age of the plant, the asserted value of $7.5 million was unrealistic. Additionally, and as the veracity of those figures, the defendants' counsel noted that the plaintiff's balance sheet recorded that plant and equipment was valued at $7.68 million with depreciation recorded at $6.3 million, leaving a net depreciated figure of approximately $1.3 million which is in line with the quantum of NAB's debt.[17] Counsel went further and submitted that the 'profit and loss [was] dressed up to look like there's a profit to December 2025, and the only way [Mr Elmasri has] generated that profit is to stop depreciating the plant and equipment that [has] been depreciate[ed] for the two years before [the plaintiff] was on notice of this application'.[18]
4. Eighth, the defendants' counsel submitted that the only basis upon which the plaintiff appeared to have a net asset position was due to a 'correction' to its accounts on the day after the Summons was issued and the inclusion of an unsubstantiated goodwill value of $5.4 million, in the face of substantial retained losses on the balance sheet.[19] The defendants contended that no explanation for the goodwill figure had been provided and that without a profit and loss statement, the defendants could not be satisfied of the foundation of this goodwill figure. It was submitted that if the goodwill valuation was based upon a multiple of earnings, (which the defendants could not ascertain from the evidence available), then the $5.54 million in retained losses disclosed in the October 2025 balance sheet was suggestive of a goodwill figure that may be wholly unrealistic and inflated. To this end, counsel for the defendants submitted that the balance sheet exhibited to Mr Elmasri's affidavit affirmed 5 March 2026 recorded a retained loss of $5.6 million not a retained profit.[20]
5. Ninth, the plaintiff did not provide the defendants with a current cash position and current liability position (including as to business activity statements ('BAS') for the period ending 31 December 2025 and any payable pay as you go tax instalments).
6. Tenth, whilst the plaintiff provided a letter from NAB dated 21 January 2026 confirming the plaintiff's total bank balance as being $1,029,365.93 on that date, and a further letter from NAB dated 2 February 2026 disclosing the 'VCH Total Bank Balance' on two additional anniversaries (i.e., 21 January 2024 and 2025), 'the plaintiff has not provided sufficient information to satisfy the court of the plaintiff's interest in that cash, whether the balance has fluctuated between the stated anniversaries, whether the current cash will be available to satisfy an adverse costs order in more than 12 months' time - particularly in the event of a liquidation when related party debts will be called in, whether this cash will be used to fund [the plaintiff's] own legal costs of the upcoming 14-day[21] trial, and whether future revenue streams will continue to maintain a cash balance of this order (noting [the plaintiff] appears to have been trading at a loss historically and has not provided a profit and loss or cashflow statement).[22] I otherwise note that there were other criticisms made in the defendants' written outline of submissions concerning the provision of up to date trade debtor and trade creditor figures that were superseded by the filing of further affidavit material by the plaintiff after the date of the defendants' submissions.
7. Eleventh, Mr Fakhra deposed to the existence of $2.14 million in related party debts which he asserted were not currently subject to repayment demands. However, Mr Fakhra did not give evidence on behalf of those related party creditors as to their attitude toward recovery and/or repayment and those debts would rank equally with the defendants' claim for adverse costs in the event of a liquidation of the plaintiff.
8. Twelfth, on 23 December 2025, a Form 484 was lodged recording the issue of 9.4 million preference shares to Mr Adel Alkatheeri for $1 each. Mr Fakhra deposed that the shares were issued to 'correct' the plaintiff's books concerning the treatment of what Mr Fakhra understood was an equity investment from Mr Alkatheeri six years ago and which was recorded as 'loans' in the plaintiff's books and records. The defendants' counsel submitted that no details of this alleged equity investment had been provided. The defendants' counsel further submitted that the timing of this 'correction' was suggestive of an attempt by the plaintiff to show a positive net asset ratio in the plaintiff's balance sheet, which, but for the transition of $9.4 million from the plaintiff's liabilities to equity, would appear to otherwise be negative.2[23] It was further submitted that it was troubling that the preference shares appeared on the 31 October 2025 balance sheet exhibited to the affidavit of Mr Fakhra filed 30 January 2026, notwithstanding that the Form 484 was lodged two months after that balance sheet was allegedly prepared.

1. In pressing these submissions, the defendants relied on the following evidence.

1. Mr Orchard's sworn evidence was to the effect that he is familiar with the operation of crane trucks, forklifts and large machinery associated with the NSG business and financial records of the NSG business. He deposed to having driven trucks (including crane trucks) for approximately 32 years and to operating the NSG business at, he alleges, a profit, for 15 years prior to its sale. Mr Orchard claimed that through operating the business, he had become familiar with the financial aspects involved in running a crane-truck business including, in conjunction with his wife and Hi-Way's accountant, interpreting financial documents, such as balance sheets, profit and loss statements and BAS. It is against this backdrop, that Mr Orchard sought to express an opinion as to the financial wherewithal of the plaintiff.
2. Mr Orchard deposed that at the time of acquiring Hi-Way, Mr Elmasri informed him that the plaintiff was purchasing the NSG business, and another similar crane-truck business, with cash. Because of this, at least in the first year or two of the litigation, Mr Orchard claimed that he did not think that the plaintiff was in any financial difficulty. Mr Orchard's evidence was that, in these circumstances, when the proceeding was commenced in August 2022, and for the first few years of its conduct, he did not have reason to suspect the plaintiff might lack capacity to meet an adverse costs order.
3. However, Mr Orchard's evidence was that after two years of litigation, multiple amendments to the statement of claim and two mediations - through which the defendants had incurred substantial legal fees - he started to become concerned about the plaintiff's ability to fund their own case, and any adverse costs orders. This concern allegedly prompted his solicitors to send the 22 November 2024 letter. Mr Orchard deposed that, in response to the 22 November 2024 letter, the plaintiff requested the defendants' agreement to defer any response until after mediation, which the parties attended on 15 May 2025. The matter did not resolve at mediation.
4. Mr Orchard's evidence was that in early to mid-2025,[24] he claims that he started to learn from 'former employees and former customers' of the plaintiff that the plaintiff's crane-truck business appeared to be deteriorating and that it was losing customers and that the plaintiff had sold a significant proportion of its fleet. He deposed that the type of information he was receiving at 'around this time' was that:

(a) employees were experiencing cuts in their hours and were spending increasing amounts of time waiting around at the yard for work to do;

(b) employees had been told that the plaintiff was looking to undertake more railway work, which would provide more hours of work, but this increase in work for employees did not eventuate;

(c) the plaintiff was losing customers and not replacing them with new customers which provided a similar level of work;

(d) customers were complaining to Mr Orchard about the lack of service, responsiveness and efficiency from the plaintiff (in some case in relation to urgent work allegedly not being undertaken by the plaintiff);

(e) that the plaintiff's trucks were not operating as regularly as they used to; and

(f) the plaintiff had sold and/or failed to re-register a significant proportion of its fleet.

1. Mr Orchard deposed that this information caused him to search the VicRoads website to determine whether trucks registered to the plaintiff had been deregistered. His evidence was that in around late September 2025, he and his wife undertook searches of registrations of fleet trucks registered to the plaintiff, including those sold to them as part of the sale and that he identified that the plaintiff had deregistered at least 21 vehicles. He says that it was not until he conducted these searches that he had serious concerns about the plaintiff's solvency and ability to fund any award for costs or judgment in favour of the defendants.
2. Mr Orchard deposed that, on unidentified dates, he visited the plaintiff's premises and observed that the yard did not appear to be in full operation, as he would expect having run the business, as plant and equipment was sitting idle and had weeds and grass growing around it, indicating, in his opinion, that it had not been moved in some time.
3. Mr Orchard's evidence was that he then became more concerned about the plaintiff's capacity to meet an adverse costs order and on 24 October 2025, his solicitor wrote to the plaintiff's solicitor seeking further information in light of the apparent winding down of the plaintiff's business and sale of fleet stock. The letter requested that the plaintiff's solicitor provide a current balance sheet and profit and loss statement, and asset register and demanded that, in the absence of satisfactory evidence of the plaintiff or another party on its behalf's capacity to pay a costs order, $400,000.00 be provided by way of security for costs. On 24 October 2025, the plaintiff's solicitor responded to the demand and refuted any suggestion of a winding down of its business, noting that:

[VCH] has undergone a process of realigning its fleet with its overarching business strategies, [including] the closure of its interstate business two years ago, such that the crane trucks and trailers in the state have been deregistered, including old trailers, which were replaced with storage hire for our client's clients; the minimal use case of some vehicles due to their limited lifting capacity and age; and [VCH]'s desire to grow its presence in the rail industry to compete with more lucrative contracts.

1. The plaintiff's solicitors' letter of 24 October 2025 also asserted that the gross asset value of the plaintiff's fleet was $10.9 million, against which NAB had a secured debt of $1.3 million and provided a list of assets. In relation to that list of assets, Mr Orchard's evidence was that it did not disclose the value of each asset, nor sufficient information for him to form an opinion as to value (including mileage or condition).

1. The defendants also relied on the evidence of Mr Ladanyi, a crane truck operator for approximately 25 years who is a former employee of the plaintiff, during the time the crane-truck business was being operated by the first defendant.
2. Mr Ladanyi's evidence was that between 2006 and 31 November 2017, he worked at Hi-Way under the supervision of Mr Orchard, and also knew Mr Orchard's wife, Delene, who also worked in the business. Mr Ladanyi deposed that in around December 2017, following the sale of Hi-Way to the plaintiff, he began working for the plaintiff under the supervision of Mr Elmasri, who he understood was the sole director of the plaintiff. Mr Ladanyi claimed that, in December 2017, when it was first announced that Hi-Way had been purchased by the plaintiff, he attended a meeting where Mr Elmasri said, amongst other things, that the plaintiff planned not to have vehicles that were more than 10 years old. Mr Ladanyi's evidence was that this came as a surprise to him, as he was aware that some of the vehicles the plaintiff had purchased from the defendants were more than 10 years old. He said he remembered thinking at the time, that if this was Mr Elmasri's plan, he wondered why the plaintiff purchased a fleet of older vehicles.
3. Mr Ladanyi's role at the plaintiff was driving and operating crane trucks. Generally, this involved driving a rigid truck, but he occasionally drove a semi-trailer truck. In response to evidence filed by Mr Elmasri, Mr Ladanyi said that although it is correct that he often preferred to drive the same truck, it is not correct to suggest that he was unwilling to operate other vehicles or that he turned down work for that reason.
4. Mr Ladanyi's evidence was that he first noticed business at the plaintiff had slowed after the COVID-19 pandemic, in or about 2020. Mr Ladanyi claimed that after 2020, the hours available to drivers dropped dramatically due to the lack of work. Due to the work drying up, he had roughly 2 days off a week. Mr Ladanyi claimed that this was also the experience with other drivers and that it caused a lot of anger and distress.
5. In response to an affidavit filed by Mr Elmasri, Mr Ladanyi deposed that the only occasions on which he would refuse to carry out a job was where he believed it was unsafe such as jobs where crane operations were too close to power lines, where outriggers could not be properly deployed or stabilised, where ground conditions were too muddy for safe operation, or where there was a real risk of a vehicle becoming bogged.
6. On one occasion during his time working at the plaintiff, Mr Ladanyi deposed that he had a conversation with Mr Elmasri during a period that business was slow. Mr Ladanyi claimed that Mr Elmasri said words to the effect that the plaintiff was chasing work and contracts from the bigger companies such as Coates Hire, Onsite Rentals and John Holland and did not want work from the smaller companies. Mr Ladanyi's evidence was that this was different to when he worked for Hi-Way, as it was the smaller companies who often engaged Hi-Way for jobs which kept the drivers busy.
7. On 8 December 2025, Mr Ladanyi resigned from the plaintiff, effective immediately. His evidence was that this was due to the lack of available work hours at the plaintiff and injuries to both shoulders sustained at work. Mr Ladanyi's evidence was that his shoulder injuries were not the cause of the reduction in his hours, as he was still able to work his usual hours in his usual role.
8. In the 12-months leading up to his resignation, with the exception of September 2025 (which is peak season), Mr Ladanyi's evidence was that:

(a) during the times of the year that were previously reliably busy:

(i) he was sitting at the plaintiff's yard located at 35 Colemans Road Dandenong South for up to 4 to 6 hours per day (Monday to Friday);

(ii) there were regularly approximately 15 trucks that sat in the yard for more than 4 hours per day, which was almost unheard of during his time at Hi-Way;

(b) a number of vehicles in the yard had not been used for months, which was never the case during his time at Hi-Way;

(c) the plaintiff had lost contracts or discontinued their services under other contracts;

(d) approximately 6 drivers resigned from the plaintiff, and they each told him it was due to the reduction in working hours per day; and

(e) although his hours picked up in September 2025, due to the motorcycle racing and other spring carnivals and events, the hours worked during this period were nonetheless significantly reduced in comparison to the hours he worked during other September months while at Hi-Way.

1. In response to paragraphs 41 and 42 of the affidavit of Mr Elmasri filed 3 February 2026, Mr Ladanyi's evidence was that:

(a) it was not correct to suggest that he resigned simply because of the rejection of his WorkCover claim. There were other reasons including the lack of work and injuries;

(b) when he resigned, he expected to be required to work out a notice period of approximately one month. Instead, the following day he was informed that he was not required to work his notice period while another driver was found; and

(c) towards the end of his employment, he was looking for a better work-life balance as his mother was seriously ill. As such, it suited him to work reduced hours. However, that does not mean more hours were otherwise available to him and other drivers. He experienced a 'drop off' in work at the plaintiff, and says that he observed that other drivers were not fully utilised and was told by other drivers that they were leaving due to reduced hours.

1. In support of the defendants' application for security, the defendants' solicitor Mr Welling, swore four affidavits. In his primary affidavit, Mr Welling's evidence was to the effect that the plaintiff had been unable to substantiate the true value of its unencumbered assets in order to meet its liabilities; it had refused to provide information demonstrating its actual financial position, in particular its overall liabilities and profits (or losses); there had been a recent decline in the plaintiff's business and a reduction of work undertaken by the plaintiff over the last 12 months indicating a reduction in profit and cashflow available to meet any adverse costs order; and there was evidence of the plaintiff disposing of assets (including the deregistration of more than 20 vehicles) including a number of the vehicles the subject of this proceeding which would otherwise be available to satisfy a costs order. Save for his evidence as to procedural steps, and the correspondence and documents passing between his firm and the solicitors for the plaintiff, and him putting into evidence, ASIC searches and the like, Mr Welling's evidence was, in large part, sworn on information and belief from matters disclosed to him by Mr Orchard.
2. Mr Welling's evidence was that although the plaintiff (via its solicitors, Colin Biggers & Paisley ('CBP')) had provided some relevant documentation which continued to be provided up to the date prior to the hearing), it had refused to provide the following documents or information:

(a) evidence of the plaintiff's financial position and ability to meet any adverse costs order made against it including a FY2024 balance sheet and profit and loss report;

(b) details of liabilities other than equipment finance, including any other unsecured debts with which any claims for costs by the defendants would rank equally; and

(c) the recorded values of its assets (in particular its crane trucks and other vehicles) and/or an explanation of the vehicle values and/or methodology used to calculate the asserted gross asset value of the plaintiff's fleet.

1. As to NAB's security interests listed on the PPSR, Mr Welling's evidence was that on 13 November 2025, CBP provided a letter from NAB which listed 6 PPSR registrations as discharged, and 9 active PPSR registrations. This, Mr Welling deposed, should be contrasted with an earlier letter from CBP dated 24 October 2025 in which CBP advised that the NAB security interests listed on the PPSR were limited to 5 encumbered vehicles as security, and that the other secured interests from NAB had been settled some time ago, and would be removed. Mr Welling deposed to having raised the inconsistency with CBP in response to which CBP advised, on 24 November 2025, that it was a condition of NAB's financing that it be granted security over the encumbered vehicles and over all of the plaintiff's other assets. Mr Welling asserted that no explanation was given for the earlier 'misleading assertion that only 5 vehicles were subject to a security interest'.
2. Mr Welling deposed that the only information provided in respect of the value of the plaintiff's assets, and amounts owed to NAB, were statements by CBP made on instructions in correspondence in which it had been asserted that the market value of the plaintiff's fleet was $10,933,666.00, and the amount owing to NAB was approximately $1,300,000.00.
3. Mr Welling's evidence was that the only document provided was an asset register, which included the year of manufacture, description, registration number, engine number/serial number, and any 'interested party'. He deposed that the asset register failed to ascribe any value to each asset. Mr Welling says that he was informed by Mr Orchard that the asset register did not contain enough information in order for Mr Orchard (or a valuer) to estimate the current value of the assets, as it does not set out the condition of the vehicles (including but not limited to the kilometres driven by the trucks or hours worked by the cranes, any existing damage or work required, or service history).
4. In respect of the assets recorded on the register, Mr Welling's evidence was that 16 vehicles had either been deregistered or had their registrations cancelled and eight of the deregistered vehicles were crane trucks, which represents almost a third of the plaintiff's crane truck fleet listed in the asset register. Mr Welling noted in his evidence that the plaintiff did not dispute the deregistration of the vehicles, but that the plaintiff had said, save for three vehicles purchased from the first defendant, this was due to the plaintiff 'realigning its fleet with its overarching business strategies', due to:

(a) the closure of its interstate business in 2023, and associated deregistration of crane trucks and trailers, and replacement by storage hire;

(b) minimal use of some vehicles due to their limited lifting capacity and age; and

(c) the plaintiff's desire to grow its presence in the rail industry to compete for more lucrative contracts.

1. In response to the plaintiff's advice, Mr Welling's evidence was that:

(a) no evidence had been provided by the plaintiff that the revenue from the interstate storage hire was similar to that provided by the now closed interstate crane hire business, or that the storage hire revenue was actually received by the plaintiff as opposed to a related entity (noting the plaintiff is a crane hire business, not a storage hire business);

(b) insufficient further work was apparently obtained following the end of a contract the plaintiff says it entered into in 2021 for which it purchased 4 vehicles, leading to the sale of 4 vehicles;

(c) none of the vehicles listed as 'new assets' in the asset register appeared to be for specialised use in the rail industry;

(d) RCA was registered on 20 October 2022, with Mr Constantinos Abusalem as the sole director, secretary and shareholder. Mr Orchard informed Mr Welling that Mr Abusalem was the financial controller of the plaintiff at the time of the sale of the business, and that the plaintiff and RCA shared the same registered office; and

(e) Mr Welling's firm put to CBP that the obvious implication of the registration of RCA was that it was the entity set up to be responsible for any planned expansion into the rail industry (and not the plaintiff), a conclusion that was not stated to be incorrect by CBP.

1. Mr Welling's evidence was that the defendants had made multiple requests for documentation from the plaintiff which could quickly and cost effectively establish the financial position of the plaintiff, and its ability to meet any adverse costs order, namely: a FY2024 balance sheet; a profit and loss report; details of liabilities other than equipment finance, including any other unsecured debts with which any claims for costs by the defendants would rank equally; and the recorded values of its assets (in particular its crane trucks and other vehicles) and/or an explanation of the vehicle values and/or methodology used to calculate the asserted gross asset value of the plaintiff's fleet. Mr Welling deposed that the plaintiff had refused to provide the information requested without providing any explanation and that the information that was provided was 'incomplete, unsubstantiated, and in respect of the security position, misleading'.[25]
2. Mr Welling further deposed that following the unsuccessful mediation, the defendants did not immediately press their request for security, as they were not aware at that time of the matters which now form the basis for the application. His evidence was that in the period from May to October 2025, the defendants had become aware of the deregistration of vehicles, that Mr Orchard had made observations of the plaintiff's yard and that:

Mr Orchard was informed by multiple former employees of the plaintiff that their hours had been significantly reduced and that, outside certain peak periods (e.g. horse racing carnival, motorsport events), the Plaintiff had experienced a significant downturn in business.[26]

1. Mr Welling's evidence was that between 9 October 2025 and 24 November 2025, the parties exchanged correspondence in respect of the plaintiff's ability to meet an adverse costs order. On 27 November 2025, Mr Welling's firm wrote to CBP with a request, in accordance with paragraph 8.1.1 of the Supreme Court of Victoria Practice Note SC CC1 (19 September 2025) ('Practice Note') for the parties to confer with each other in relation to the defendants' foreshadowed security for costs application. CBP responded on 10 December 2025 noting its position remained unchanged.
2. Mr Welling deposed that as at 30 September 2025, the defendants had incurred legal fees and disbursements in the amount of approximately $800,000.00. He further deposed that between December 2025 and the trial in April 2026, he estimated that his clients would incur a further amount of $757,639.00 for costs. Mr Welling's evidence was that the sum of $568,229.25 was sought as security (being 75 per cent of the future estimated costs), noting that no claim had been made in respect of past costs by reason of the passage of time prior to issuing the summons.

1. Contrary to the submissions of the defendants, the plaintiff contended that the jurisdiction to order security had not been enlivened and that, at best, there was mere speculation as to the plaintiff's financial position.
2. The plaintiff submitted that the defendants' evidence amounted to a poor attempt to cobble a number of inadequate speculative assertions together into the semblance of a basis to enliven the power to award security for costs. Specifically, the plaintiff submitted that the defendants alleged 'credible evidence' of a reason to believe the plaintiff would not be able to pay a costs order was unpersuasive for ten key reasons:

(a) first, the paid up capital of a company will generally be irrelevant in an assessment of the ability to meet an order for costs in the security for costs context;

(b) second, a lack of land ownership in Victoria does not establish any impecuniosity or financial difficulty;

(c) third, the existence of PPSA interests registered over the fleet vehicles had been amply explained by the plaintiff's evidence and, it was submitted, a normal state of affairs and a consequence of funding in a business which owns and operates equipment as part of its undertaking. It was submitted that the existence of PPSA interests did not establish any basis to question the plaintiff's means or ability to meet a costs order and might in fact be said to demonstrate, rather, that the plaintiff has good commercial credit;

(d) fourth, as to the alleged failure to provide detailed commercially sensitive information in response to the requests by the defendants, it was submitted that there was no obligation to do so when the defendants had not demonstrated any sound basis or need for such additional information. The plaintiff emphasised that it had provided its asset register, balance sheet together with comprehensive evidence from Mr Fakhra concerning the state of the plaintiff's finances and the PPSA registrations;

(e) fifth, mere speculation as to impecuniosity or insolvency is insufficient to enliven the Court's discretion;

(f) sixth, the defendants' evidence concerning the supposed downturn in the plaintiff's undertaking - even after the late introduction of direct evidence from Mr Orchard reiterating that put as hearsay in the First Welling Affidavit - did not rise to a level which allows a reasonable inference or prima facie conclusion that the plaintiff is in financial difficulty or has or will have any problem meeting a costs order in due course;

(g) seventh, the defendants' speculation that the plaintiff's business and income has declined is based on hearsay observations of the plaintiff's yard undertaken by the second defendant and the disputed evidence of Mr Ladanyi that he and other drivers resigned for lack of work. Even at its highest, this evidence did not provide any rational basis to infer that the plaintiff is suffering financial hardship or an inability to pay costs such as would enliven the discretion;

(h) eighth, the attempt by Mr Welling to suggest that the plaintiff bears significant indebtedness is without substance or substantiation and should be disregarded as mere assertion;

(i) ninth and similarly, the amorphous reference to the incorporation of RCA to undertake specific rail related work does nothing to establish any financial difficulty on the part of the plaintiff nor does it establish any intention on the part of the plaintiff to cease operating or trading or to transfer its assets or undertaking. It was submitted to be an entirely speculative and unsubstantiated assertion by the defendants; and

(j) tenth, the conclusory, argumentative, and it was submitted, objectionable statements contained in the defendants' evidence as to the 'successful' and 'profitable' nature of the business sold by them to the plaintiff by the defendants, ought to be viewed with doubt given the actual status of that business and its true value were central questions in the proceeding. Further, the defendants' evidence was in direct conflict with the agreed conclusions regarding the fleet sold by the defendants and the warranties and representations given to the plaintiff at the time of the sale. It was submitted that the credibility of the defendants' evidence should be viewed with scepticism in light of that conflict with its own evidence.

1. In advancing those submissions, the plaintiff relied on the affidavits of Mr Elmasri and Mr Adham Fakhra.

(a) holds a Bachelor of Commerce from the Monash University;

(b) is a chartered accountant, and has, since 2015, been a member of the chartered accountants Australia and New Zealand;

(c) served as Chief Financial Officer ('CFO') of the plaintiff since November 2019;

(d) is now a contractor, acting as the CFO of the plaintiff and has been in that role since 7 January 2025; and

(e) also operates a business, Cupola Partners Pty Ltd ('Cupola'). Through Cupola, he has provided the plaintiff with full suite outsourced CFO, accounting and bookkeeping services, effectively delivering a turnkey finance function including accounts payable, accounts receivable, collections, payroll, tax compliance, and full CFO oversight. Under this arrangement, he acts as CFO in an advisory capacity, as needed.

1. In his role as CFO of the plaintiff, Mr Fakhra's evidence was that some of his responsibilities have included:

(a) ensuring that the organisation has enough cash to pay its debts as and when they become due; and

(b) keeping the organisation's financial records and preparing the organisation's financial reports, budgets and forecasts.

1. Mr Fakhra deposed to knowing that the trial in this proceeding is listed to commence in April 2026, with an estimated duration of 14 (now 15) days. His evidence was that he understood the likely time period in which a judgment might be received, and in contemplating the plaintiff's ability to pay an adverse costs order, he had considered the plaintiff's recent financial position, as well as its likely financial position over the next 18 to 24 months.
2. Mr Fakhra deposed that the plaintiff is a 'small proprietary company defined in s 45A(3) of the Act. The plaintiff is therefore not required to prepare, audit, or lodge annual financial reports under Part 2M.3 of the Act, unlike other companies of a larger scale. However, the plaintiff does prepare ongoing financial documents in accordance with its general obligations arising under the Act, along with its taxation obligations.
3. Mr Fakhra's evidence was that the financial documents for the quarter ending 31 December 2025 were being prepared, and were yet to be finalised. The most recent financial statement available was the plaintiff's balance sheet as at 31 October 2025. Mr Fakhra made the following observations in relation to the balance sheet:

(a) as at 31 October 2025, the plaintiff's net asset position was $3,867,975.93;

(b) as at 31 October 2025, the plaintiff held approximately $1.066 million in cash and $827,000.00 in trade debtors, compared with current liabilities of $1.005 million reflecting a positive working capital position of approximately $888,000.00;

(c) in relation to its cash position, Mr Fakhra produced a letter from the plaintiff's bank, NAB dated 21 January 2026 which confirmed that the plaintiff's cash balance remained substantially similar to that which had been reported over the prior two years and that the plaintiff's outstanding debt with NAB had been reduced significantly over a four year period; and

(d) as at 31 October 2025, the plaintiff had various loan facilities totalling $2,144,267.84 with related entities. The entity to which each facility relates was an entity within the larger group structure. These loans were not subject to repayment demands, and, in practical and commercial terms, do not give rise to liquidity or solvency risk for the plaintiff. These related entities, and the relevant drawdowns, were:

(i) Al Reef Capital Pty Ltd - $1,523,715.93;

(ii) EI Group CPM Pty Ltd - $740,891.27;

(iii) Rail Cranes Australia Pty Ltd - ($119,431.66); and

(iv) RM Capital Holdings Pty Ltd - ($907.70);

(e) the remaining liabilities, including depreciation provisions, lease and rent accruals, and trade creditor balances, are within ordinary operating items that arise in the normal course of business and are typical for a company of the size and nature of the plaintiff;

(f) when appropriate adjustments are made (including adjusting for debt owing to related entities), the underlying net asset position of the plaintiff is materially higher than $3,867,975.93, and is estimated to be in the order of $6 million;

(g) as at 31 October 2025, the balance sheet demonstrated that the plaintiff has two material external third-party financial liabilities: a facility with NAB with an outstanding balance of approximately $1,500,000.00 ($171,668.24 + $1,330,428.86), and the funding of an insurance premium via a loan of approximately $140,000.00. These facilities are appropriately supported by the company's asset base and operating cash flows;

(h) the plaintiff has historically applied depreciation rates at a more conservative (higher) rate than the minimum required. The reason for the discrepancy between the 'Plant and Equipment - At Cost' figure in the balance sheet and the figure in the asset register exhibited to Mr Welling's affidavit was that the balance sheet reflected the cost price of the plant and equipment, whereas the asset register reflected the indicative market value of each asset. Mr Fakhra's evidence was that he believes that the figure of $7,581,236.81 in the plaintiff's balance sheet undervalued the true value of plaintiff's plant and equipment because the plaintiff had consistently made a profit on the sale of plant and equipment;

(i) as to the equity section of the balance sheet, and in particular the retained profits balance of ($5,541,663.07), the negative balance arose predominantly from historical non-cash accounting charges, principally depreciation. Depreciation recognised since Mr Fakhra's commencement totalled $6,911,168.92. This level of depreciation generally exceeded the economic depreciation of the underlying assets, as evidenced by the plaintiff's consistent generation of profits on the sale of equipment. Accordingly, the retained losses were largely attributable to accounting depreciation rather than underlying cash outcomes. These accounting changes reduced reported accounting profits but did not give rise to corresponding cash outflows; and

(j) the majority of the plaintiff's regular cash inflows and revenue were generated from storage fees, crane hire operations and contract lifting work. These revenue streams can vary month to month but are generally stable, aside from shut down periods. This is a fundamental feature of the plaintiff's operating model which Mr Fakhra says he does not expect to change in the foreseeable future.

1. Based on current operational settings and historical trading performance, Mr Fakhra's evidence was that he did not expect the plaintiff's cashflow position to materially change in the financial year ending 30 June 2026 or over the next 3 to 5 years. Mr Fakhra's evidence was that he reached this view as:

(a) the plaintiff's baseline revenue is supported by blue chip customers including Coates Hire, Onsite and other notable industry participants, as well as recurring storage revenue;

(b) the plaintiff's cost base is predictable, particularly in relation to motor vehicle costs, wages and costs of sale;

(c) the plaintiff has undertaken, and continues to undertake, cost-efficiency measures, including integration of new systems, staff restructuring, automation of finance processes and fuel-efficiency measures; and

(d) the plaintiff has the operational flexibility to scale its fleet utilisation and staffing levels in alignment with demand.

1. Mr Fakhra's evidence was that he expected the current financial year, and the financial year ending 30 June 2027, to be a strong financial period for the plaintiff having regard to his discussion with the plaintiff's management and the following circumstances:

(a) current operations and recurring work, including the Australian Grand Prix;

(b) full utilisation of the plaintiff's storage facilities, which generated $22,000.00 per month as of 31 October 2025. Mr Fakhra deposed that he had spoken to the plaintiff's management who expected this amount to increase to $60,000.00 per month at full utilisation;

(c) active hi-rail operations (operated through RCA but with overall control remaining with the plaintiff), which he expected to expand in FY2026; and

(d) continued investment in systems, automation, and artificial intelligence within the finance function, including the plaintiff's recent system upgrades, workflow automations, and data-tracking improvements, which are expected to reduce administrative overheads and improve invoicing efficiency.

1. Mr Fakhra further deposed that the plaintiff's peak trading period for the first half of the calendar year occurs between February and April. He said that this period includes a concentration of higher-volume work, including major events such as the Australian Grand Prix, as well as other significant contracted and project-based activities. The expected revenue and cash inflows during this peak period further strengthen the plaintiff's liquidity position and provide additional support for its ability to meet any cost order payable at a later point in the calendar year.
2. Mr Fakhra also deposed that during 2021-2022, the plaintiff sought to expand its operations interstate. Mr Fakhra stated that the plaintiff's interstate operations were initially profitable but were, over time, a low margin return on investment due to those operations being capital-intensive and enduring elevated maintenance requirements and operational risk due to remote deployment. Since 2024 and 2025, and following feedback from the board and management, Mr Fakhra says that the plaintiff has targeted a strategic exit from interstate transport operations, and focused on logistics in Victoria, and the progressive redeployment of capital into storage hire.
3. Mr Fakhra's evidence was that storage hire generates stable, contracted revenue, requires minimal incremental operating cost, is aligned with demand from existing clients of the plaintiff and compliments the plaintiff's core Victorian metropolitan operations. His evidence was that this new business stream generates higher margins on the basis that it requires comparatively little operational oversight, lower occupational health and safety risks, lower capital and has higher scale potential than interstate operations. Mr Fakhra's evidence was that the plaintiff has located industrial land in Dandenong South and Laverton North, comprising approximately 22,000 square metres. Of those parcels of land, he stated that approximately 14,000 square metres have been allocated for storage hire. Over the past 24 months, the plaintiff has progressively exited interstate operations while onboarding storage clients. Mr Fakhra's evidence was that approximately 6,000 square metres are currently utilised by existing clients. The plaintiff currently receives $22,000 per month as of 31 October 2025 being 6,000 square metres at $40 to $50 per meter resulting in an annualised return of between $240,000 to $300,000 or approximately $20,000 to $25,000 per month. Mr Fakhra says, based on discussions with the board, the he expects revenue from storage to grow to approximately $60,000 per month and that from a financial and risk-adjusted return perspective, this transition has been deliberate, planned, and value-accretive.
4. On 23 December 2025, the plaintiff lodged an ASIC 'Change to Company Details' Form 484 for the purposes of effecting a change in share structure, being the issue of 9,409,633 new preference shares to Adel Yaslam Karama Awad Alkatheeri. Mr Fakhra's evidence was that the issuing of the preference shares represented a long-standing accounting correction required to rectify an error made by the plaintiff's former tax accountant. He deposed to an understanding that the plaintiff obtained an equity investment from investors approximately six years ago that carried no rights to dividends or voting, but which ranked in priority to ordinary shareholders ('Alkatheeri Investment'). The Alkatheeri Investment was, he said, always properly characterised as preference equity, and the current accounting treatment reflected a correction of that historical misclassification. Mr Fakhra's evidence was that when he assumed responsibility for the plaintiff's finance function, he identified that the preference-equity component had not been correctly recorded in the plaintiff's balance sheet. This misclassification, he said, appeared to have arisen due to the former accountant incorrectly recognising amounts as loans, instead of preference shares. Mr Fakhra's evidence was that, in substance, however, the Alkatheeri Investment had always been preference equity. Mr Fakhra's said was that whilst the issue had been identified earlier, referring to an email dated 19 June 2023 in evidence before me, it was addressed in 2025 because the plaintiff had been required to prioritise higher-priority matters, including automations, improved financial reporting projects, building out the finance function and expansion. His evidence was that the change in share structure did not reflect any alteration in the rights of shareholders or any change in the underlying nature of the investment. Instead, it was an accounting alignment to accurately reflect the legal and commercial position which had existed since the investment was originally made.
5. Additionally, Mr Fakhra's evidence was that the issuing of the preference shares did not affect the plaintiff's cash position, its liquidity, or its ability to meet any cost order. He claimed that the balance sheet now reflected:

(a) the correct proportion of equity attributable to preference shareholders; and

(b) the correct priority of payment in a winding-up scenario.

1. As to the defendants' evidence concerning the deregistration of vehicles, Mr Fakhra's evidence was that the plaintiff had undertaken a review of its local fleet and had progressively retired and disposed of older, under-utilised equipment, much of which exceeded 20 years of age. His evidence was that deregistration and the sale of equipment was purely driven by a fleet modernisation initiative and that many of the retired assets had been replaced with newer, state of the art assets, signalling expansion, not retraction. Mr Fakhra said that this also coincided with the plaintiff's entry into the rail (specifically, hi-rail crane) sector, following completion of all required compliance and certification. He deposed that the rail sector offered higher margins but with strict compliance enforcement. Mr Fakhra claimed that the redeployment of capital from legacy equipment into hi-rail assets was consistent with prudent asset management and long-term value creation.
2. Based on his role and knowledge as CFO, Mr Fakhra concluded by stating that the plaintiff is financially solvent, well-capitalised, and operationally sustainable. Mr Fakhra deposed that, in his opinion, the plaintiff is able to comfortably meet any potential cost order of $568,229.25.

1. Mr Elmasri deposed that the defendants first raised the issue of security for their costs in November 2024, two years after the proceeding commenced. The defendants took no step to formalise or pursue that any further until late in October 2025. In that period, work in preparation for the trial including preparation of witness outlines and a lengthy court book, an agreed statements of facts and other trial related documentation had proceeded at considerable expense to the plaintiff in the sum of approximately $625,000.00.
2. Mr Elmasri's evidence was that the plaintiff has a strong credit rating and had consistently met all of its financial obligations since inception. Mr Elmasri deposed that the plaintiff had always paid its taxes on time, met all wage and superannuation obligations, and paid suppliers and lenders in accordance with their terms. Where the plaintiff had taken out loans, he said, it often repaid them early.
3. Further, Mr Elmasri's evidence was that this was the only litigation proceeding in which the plaintiff is incurring legal costs and he denied any suggestion by Mr Welling that the plaintiff carried high levels of debt. Mr Elmasri's evidence was that the plaintiff is not heavily indebted and that its ratio of debt to assets is extremely good and that the plaintiff has healthy cash reserves.
4. As to the First Welling Affidavit, Mr Elmasri denied the inference that the plaintiff was heavily indebted due to the existence of 33 securities listed on the PPSR. Mr Elmasri deposed, with examples, that the majority of those securities related to trade suppliers and did not evidence loan defaults or financial distress. Mr Elmasri's evidence was that the remaining securities relate to NAB equipment finance, and that the total amount owing to NAB is approximately $1,500,000.00, which comprised a sum of approximately $170,000.00 to be paid over the next 12 months and a non-current component of $1,300,000.00. While there was also a loan of approximately $140,000.00 for the funding of an insurance premium, the amount owing to NAB is the plaintiff's principal liability and is well covered by its asset bases - even if that is estimated at the most conservative level where a low value of approximately $50,000.00-$60,000.00 was ascribed to each vehicle meaning the asset pool would be valued between $3.5 million and $4.2 million - a more than adequate figure to meet a costs order in the range of the security sought by the defendants.
5. To the extent that the First Welling Affidavit seeks to criticise the asset register or suggest that it lacks details, Mr Elmasri's evidence was that the defendants requested the plaintiff's asset register, which was provided. That register does not record kilometres or operating hours. However, in relation to the condition of the vehicles, Mr Elmasri's evidence was that the plaintiff maintains a high level of compliance in fleet servicing and maintenance and employs a dedicated service manager, two mechanics, and has trained two apprentice diesel mechanics. The plaintiff is also the first - and currently the only - crane truck company represented on the Crane Council for Victoria and Tasmania. All other board members are mobile crane operators. Mr Elmasri says that this is inconsistent with any suggestion of poor maintenance or non-compliance.
6. Mr Elmasri refuted Mr Orchard's claims about the appearance of the yard and said that Mr Orchard's evidence was unreliable and that the description given by Mr Orchard suggested that Mr Orchard did not access the operational yard at all.
7. As to the storage business, Mr Elmasri's evidence was that storage hire at the plaintiff's yard is provided exclusively to 'VIP clients', and not to the general public. Each storage arrangement is controlled, allocated, and connected to an existing commercial relationship. The plaintiff does not operate an open or indiscriminate storage facility, nor does it permit unrelated third parties to place goods on site. Accordingly, any suggestion that storage hire is unrelated to the plaintiff's transport and crane operations, or that it reflects a lack of operational focus, is based on a misunderstanding of the nature of those arrangements. Mr Elmasri's evidence was that the storage use forms part of the plaintiff's broader logistics and client-service offering and is managed in a structured and controlled manner. He says that the plaintiff's site has steel barriers around its parking bays for its trucks, yellow concrete pathways for pedestrians safe walk passage. It has speed limit signs and speed bumps. It is a well organised safe site, it has a boom gate for truck entry. In short he claimed that it is a far safer, more organised and superior site than that which he observed Mr Orchard to have maintained at his Seaford depot when he was in business a decade ago.
8. In addition to existing storage hire arrangements, Mr Elmasri's evidence was that he made the decision to introduce storage hire gradually over two periods, following an ongoing review of the plaintiff's interstate transport operations, which involved operating semi-trucks transporting freight around Australia. Whilst the interstate business was profitable and generated good returns, he said it was also highly intensive to operate, requiring long-distance travel, complex scheduling, fatigue management, and extended periods away from base. Over time, the interstate fleet was ageing, and continuing that operation would have required significant capital expenditure to renew trucks at considerable cost. During this period, a number of long-standing local 'VIP clients' began asking whether the plaintiff offered storage services. These clients were aware that the plaintiff operated from a large, secure yard of approximately five acres, parts of which were not required for daily operations, and they enquired whether storage could be provided. Mr Elmasri said that the plaintiff assessed the viability of offering storage hire alongside the existing interstate operations and determined that storage hire would be significantly easier to manage, would make efficient use of existing secured land, and would generate stronger and more consistent profits than renewing the ageing interstate fleet. As a result, Mr Elmasri said that the interstate operations were progressively wound back and storage hire was introduced and expanded. Ultimately, Mr Elmasri's evidence was that he made the decision not to renew the interstate fleet and to replace that activity with storage hire instead.
9. Mr Elmasri's evidence was that this approach avoided substantial capital expenditure, reduced operational intensity and risk, and allowed the plaintiff to generate higher returns from existing assets. The introduction of storage hire was, he said, a deliberate and staged commercial decision, driven by client demand and operational efficiency. Mr Elmasri deposed that the plaintiff had been steadily phasing out older, low‑utilisation equipment, much of which had been in service for more than two decades. He said the decision to de‑register and sell these units was part of a broader fleet‑modernisation strategy with the retired assets are being replaced with newer, state‑of‑the‑art equipment, which reflected growth and investment rather than any reduction in capability.
10. Mr Elmasri deposed that the First Welling affidavit incorrectly stated that Con Abu Salem was the plaintiff's financial controller. Mr Elmasri's evidence was that at one point, Mr Abu Salem assisted with limited administrative and payroll tasks only but that he was never employed as a financial controller, he did not manage or control the plaintiff's finances, and held no decision-making role in relation to financial matters. He was not qualified as a bookkeeper, let alone a financial controller, and was a salesman for another company within the broader group.
11. As to the establishment of RCA, Mr Elmasri's evidence was that it was deliberately established as a separate entity due to the poor compliance reputation of the crane truck industry. He deposed that many in the industry operate illegally without 'vehicle assessment signatory scheme' plates or annual inspections under the relevant crane safety standard 'AS 2550', allowing them to undercut compliant operators. Despite the plaintiff maintaining the highest level of compliance in the industry - including being the one of very few crane truck companies with green stickers across its entire fleet and Mr Elmasri being a member of the Victorian and Tasmanian Steering Committee of the Crane Industry Council of Australia, Mr Elmasri's evidence was that the plaintiff was still excluded from major infrastructure and union sites due to the industry's overall reputation. Accordingly, he says that RCA was created after extensive consultation with industry professionals to operate exclusively in the rail sector. RCA was established as a separate operating entity due to the specific regulatory, accreditation, and compliance requirements of the rail sector. However, the hi-rail crane remain owned and registered by the plaintiff and even though RCA operates the asset within the rail environment, ownership, capital investment and overall control remain with the plaintiff. Mr Elmasri deposed that RCA is an accredited supplier to: Metro Trains; V/Line; John Holland Rolling Stock; Aquipa; Avetta; the CFMEU; and RTBU sites (membership pending) and has also been selected as the Metro Tunnel service and maintenance contractor for Flinders Street Metro Tunnel works, and has entered into a long term hire, service and maintenance agreement with John Holland. RCA's first job was completed in July 2025. Mr Elmasri said that when deployed, this equipment generated levels of turnover materially exceeding standard operations. His evidence was that over the course of a typical month, a single hi-rail crane can generate turnover equivalent to approximately five to six standard operations, while delivering materially higher margins.
12. Mr Elmasri claimed that RCA's setup by the plaintiff as a discrete entity was a strategic determination and did not reflect any collateral intention to wind down the plaintiff. Further, his evidence was that the defendants' assertions to that effect were unfounded and that the plaintiff's strategy was not to wind down operations but rather, to retain the majority of its existing assets, progressively replace older equipment and continue expanding into high-barrier rail markets. In addition to its site storage operations, Mr Elmasri's evidence was that the plaintiff continues to successfully operate its core business of hiring out its crane-truck fleet holding supplier contracts with major operators such as Coates Hire.
13. In addition, Mr Elmasri's evidence was that the plaintiff annually supplies extensive transport and barrier placement services to the Victorian Formula 1 Grand Prix organisers and had done so to the Phillip Island Moto Grand Prix. During the preparation for the hearing of the security for costs application, it emerged that Victoria had lost the rights to host the Phillip Island Moto Grand Prix. To the extent that the defendants suggested the:

(a) Phillip Island Moto Grand Prix contract was one of the most lucrative contracts for Hi-Way; and

(b) Phillip Island Moto Grand Prix contract would account for approximately $500,000.00 in annual revenue such that its loss would impact on the plaintiff's profitability or weigh in favour of the grant of security for costs,

Mr Elmasri's evidence was that he did not expect that it would have a material impact on the plaintiff's revenue or general profitability because:

(c) the Phillip Island Moto Grand Prix will remain in Victoria for this year's event. Accordingly, the plaintiff has a period of approximately 18 months in which to secure replacement revenue which is a significant period of time;

(d) the plaintiff has derived revenue of between $80,000.00 to $100,000.00 from work related to the Phillip Island Moto Grand Prix which represents a small percentage of the business' annual turnover;

(e) the annual Phillip Island events include both the Phillip Island Moto Grand Prix and the World Superbikes ('WorldSBK'). While the Phillip Island Moto Grand Prix event is going to Adelaide in 2027, the WorldSBK event remains. The plaintiff anticipates obtaining revenue of approximately $40,000.00-$50,000.00 from the WorldSBK event; and

(f) the discontinuation of the Phillip Island Moto Grand Prix contract will increase capacity for the plaintiff's workforce to satisfy demand on other jobs.

1. As to Mr Ladanyi evidence, Mr Elmasri deposed that:

(a) Mr Ladanyi was employed by the plaintiff for approximately eight years;

(b) Mr Ladanyi had a strong preference to drive only one vehicle and was generally unwilling to operate others. He would also refuse certain jobs he did not wish to undertake;

(c) Mr Ladanyi resigned following the rejection of his WorkCover claim as well as a desire to have more work/life balance. His contemporaneous communications with Mr Ladanyi make no reference to insufficient work;

(d) Mr Ladanyi made a WorkCover claim on 11 September 2025 and his last day working at the plaintiff was 19 September 2025. On 3 November 2025 Mr Ladanyi's WorkCover claim was rejected;

(e) Mr Ladanyi claims there were approximately six other drivers who resigned from the plaintiff due to a lack of work is incorrect. Mr Elmasri exhibited letters of resignation from former employees who resigned for reasons unrelated to work availability including: because a requested pay rise was declined and because he wished to operate only one vehicle; because of allegations of misconduct and because of a failure to complete a probationary period; and

(f) the plaintiff has hired a new full-time driver, and now has multiple drivers permanently allocated to a national client, including a replacement for Mr Ladanyi.

1. Mr Elmasri further deposed that the plaintiff had been modernising its systems and the way it operates for several years. His evidence was that this included improving automation across the business and, more recently, introducing AI-based systems in finance, administration and logistics. These changes, he said, have allowed the plaintiff to streamline how the business runs and reduce staffing in those areas while still maintaining service levels and operational capacity. That has delivered real cost savings and made the business more efficient.
2. Mr Elmasri also deposed to the fact that the plaintiff has significant assets and access to cash. At no time has the plaintiff failed to meet its financial obligations, and there is nothing to suggest it would not be able to meet any costs order if one were made after trial.
3. As to the application and its timing, Mr Elmasri's evidence was that this proceeding has been on foot for over four years. During that time, no application for security for costs was brought before December 2025. The decision to raise this issue now, around eight weeks before trial, comes very late in the process, after the business has planned its operations and growth well in advance. He deposed that if the plaintiff were required to provide security at this stage, it would mean pulling funds away from the business at a time when they are continuing to expand and renew the fleet for rail work. In practical terms, the effect of the security for costs order requested by the defendants' solicitors at this point would be to interfere with the planned growth of the business, including the plaintiff's continued expansion and renewal of its fleet into the rail sector. Mr Elmasri's evidence was that rail operations required significant forward planning and strict compliance with rail authority and safety requirements to meet accreditation, engineering, and operational standards. Diverting funds at this late stage, he said, would impact the plaintiff's ability to continue that planned expansion into rail, which is one part of the business strategy already underway.
4. While not disagreeing with Mr Fakhra's assessment of the plaintiff's means to pay an eventual costs order, Mr Elmasri deposed that in the short term, the plaintiff having to source bank guarantee or cash deposit in the order of hundreds of thousands of dollars, on top of the expenditure in this case, would impact on the cash at bank of the plaintiff and its operating capacity. His evidence was that it would also potentially prejudice its liquidity and likely reduce the ability of the company to readily fund this case to and through trial.

1. The defendants bear the onus of establishing that the Court's jurisdiction is enlivened.[27]
2. Section 1335(1) of the Act provides that there 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 its defence, the Court may require sufficient security to be given for those costs and stay all proceedings until the security is given.
3. Under r 62.02(1)(b), the Court may order security if 'there is reason to believe that the plaintiff has insufficient assets in Victoria to pay' the defendants' costs.
4. Whilst these provisions differ, the applicable principles have been developed and applied on the assumption that they apply equally to both.[28]
5. In assessing whether there is a 'reason to believe', the Court is not required to make an assessment on the balance of probabilities of whether there will be a default in the payment of a costs order. Rather, it requires a rational basis for the belief - and no more. The section requires the making of a judgment or a risk assessment: the Court must ask is there a risk that the corporation will be unable to pay? A risk assessment is, of necessity, imprecise. The section calls for a practical, common sense approach to the examination of the corporation's financial affairs.[29] It is necessarily a low threshold where it is sufficient to identify a risk.
6. Notwithstanding that low threshold, I am not persuaded that the jurisdiction to order security has been enlivened. A common sense approach to an examination of the plaintiff's financial affairs does not lead to a conclusion that there is a 'reason to believe' that the plaintiff will be unable to pay the defendants' costs if ordered.
7. I have reached this conclusion having regard to the following matters.
8. First, the absence of ownership of real property does not in and of itself lead to the conclusion that a plaintiff will not be able to pay an adverse costs order if required to do so. Similarly, the paid up capital of a company will generally be irrelevant in an assessment of the ability to meet an order for costs in the security for costs context.
9. In FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd,[30] ('FFE Minerals') the Court of Appeal of the Supreme Court of Western Australia considered an appeal from a decision refusing to grant security for costs. The applicants for security led evidence that demonstrated that the plaintiff corporation had paid up share capital of $4,001.00, was not the registered proprietor of any land in the Western Australian land register and its historical financial statements showed that the company did not have assets which would allow it to meet a costs order. In assessing the evidence, Pidgeon and Owen JJ held that 'the absence of land combined with the low share capital does give rise to an appearance that there is reason to believe that there are no assets in this area to meet the costs.' However, and relevantly, in FFE Minerals, Pidgeon and Owen JJ went on to observe:[31]

Here the applicant is not seeking to prove the state of the company's finances. The applicant is required to do no more than place on the record credible testimony and the exercise of the court at this stage is in judging the testimony and its quality rather than seeing if a matter has been proved by inference. The company, at this stage, is not being asked to explain or contradict something for the purposes of avoiding an inference being drawn. If there is credible testimony, then the court has jurisdiction to make the order and a company which called no evidence to show it could meet a costs order would run the risk of having an order made against it.

1. Their honours viewed that it was 'open to the company' to negate such a belief, which, in that case, the company did not do.[32] As I will come to, the position before me was entirely different with the plaintiff filing extensive material as to its financial position.
2. In submissions before me, counsel for the defendants contended, in reliance on the decision in Wu that an inference of impecuniosity can be partially founded on a refusal to provide requested information and is more readily drawn where the evidence suggests that the applicant's refusal to disclose is motivated by a wish to hide an insufficiency of assets but it will be less readily drawn if there is a benign alternative explanation or other evidence which is inconsistent with impecuniosity.[33] Respectfully, the entire passage from Wu provides:

Secondly, sometimes (but not always) an inference that the applicant is impecunious may be at least partially founded on an applicant's refusal to provide to the respondent requested evidence as to their financial position and ability to meet an adverse costs order. But the fact that the applicant declines such a request does not mean that the inference must be drawn. The inference may be more readily drawn where other evidence suggests the applicant's refusal to disclose is motivated by a wish to hide an insufficiency of assets_._ But it will be less readily drawn if there is a benign alternative explanation for the refusal to disclose, or if there is other evidence inconsistent with impecuniosity.[34]

1. I consider that the decision in Wu conforms with the principles in FFE Minerals, namely that the respondent to an application for security can negate any presumption or inference which may arise by calling evidence.
2. Second, I reject the submission by the defendants that since mid-2025 the plaintiff has been winding down its crane-truck business. That submission was advanced (in part) based on the disputed 'observations' of one of the defendants of the plaintiff's yard (which observations were vague and uncompelling at best) and the hearsay evidence of a former employee who recounted assertions made by other unnamed people to him as to their apparent experience in seeking hours and work with the plaintiff. That evidence is of no persuasive value and I accept counsel for the plaintiff's submission that it does not rise to a level which allows a reasonable inference or prima facie conclusion to be made as to the plaintiff's ability to meet a costs order, should one be made, in due course.
3. Third, and relatedly, to the extent that some point was to be made by the defendants because of the plaintiff's deregistration of 21 vehicles, that occurrence was explained comprehensively in a letter from the plaintiff's solicitors dated 24 October 2025 and in the plaintiff's evidence before me. In any event, it is not unexpected that since the sale of the business in 2017, some 9 years ago, that the plaintiff might have deregistered and decommissioned some of the vehicles that formed part of the sale, particularly in circumstances where the plaintiff maintains a fleet of 78 vehicles. Similarly, to the extent that the defendants sought to point to the existence of PPSA interests registered over the fleet vehicles as a basis for there being a concern as to the plaintiff's ability to meet an adverse costs order, I reject that submission. Not only did the plaintiff's evidence carefully address the existence, nature and extent of the PPSA registrations, it is entirely unsurprising that they exist in a business which owns and operates funded equipment as part of its undertaking.
4. Fourth, to the extent that it was suggested that the plaintiff repeatedly failed to provide any documentary evidence as to its revenue, profit and net asset position, I reject that submission and make the following observations:

(a) on 22 November 2024, the defendants' solicitors requested that the plaintiff provide 'evidence of [the plaintiff's] ability to meet any cost order made against it after the trial of the proceeding including, but is not limited to, a current balance sheet, profit and loss statement and asset register';

(b) on 9 October 2025, some 5 months after the mediation was conducted, the defendants' solicitors again requested that the plaintiff provide 'evidence of [the plaintiff's] ability to meet any costs order made against it after the trial of the proceeding including but is not limited to a current balance sheet, profit and loss statement and asset register'. The letter also set out the details of 20 vehicles which the defendants asserted had been deregistered, in relation to which the defendants asserted that the deregistrations could not 'credibly be characterised as coincidental, or part of routine fleet management. The letter claimed that the scale of deregistrations were indicative that the plaintiff may be winding down its business and/or selling off a significant proportion of its assets which would otherwise be available to satisfy a costs order;

(c) on 24 October 2025, the plaintiff provided an asset register which recorded each vehicle in the plaintiff's 78 vehicle fleet and recorded that 73 of those vehicles were unencumbered and wholly owned by the plaintiff. The vehicles that were encumbered were subject to security interests in favour of NAB whose loans were in the sum of approximately $1.3 million. The letter also provided information concerning the 'other goods' notations on the PPSR searches;

(d) not content with that information, on 13 November 2025, the defendants' solicitor sought further information as to the asset register, made observations as to the defendants' belief that RCA was set up to be the entity responsible for any planned expansion into the rail industry, made assertions about an alleged drop off in work being undertaken by the plaintiff and asserted that the plaintiff had 'refused' to provide:

(i) the profit and loss report which would confirm or refute the alleged fall off in work;

(ii) any supporting evidence for the alleged value of the assets recorded in the asset register; and

(iii) any details of other liabilities of the plaintiff, and had only provided, in the asset register, the alleged gross asset value of the plaintiff's fleet,

again insisting that the plaintiff provide its most recent balance sheet and profit and loss report as well as information as to whether RCA was connected to the plaintiff. Specifically the letter demanded that by 20 November 2025, the plaintiff provide:

(iv) a breakdown of the values and/or methodology used to calculate the gross asset value of the plaintiff's fleet;

(v) confirmation that deregistered/ cancelled vehicles (listed in the letter) remain owned by the plaintiff;

(vi) the FY2024 current balance sheet and profit and loss statement of the plaintiff; and

(vii) written confirmation of the withdrawal of the NAB AllPAP;

(e) on 13 November 2025, the plaintiff provided the defendants with a copy of a letter from its bank, NAB, which recorded the asset finance contracts that had been paid out and in respect of which PPSR's had been discharged and the 9 PPSR's that were linked to one equipment finance contract;

(f) on 24 November 2025, the plaintiff provided a letter with an updated asset fleet register in respect of which it made the following observations:

(i) the fleet comprises 75 vehicles comprising various asset classes including crane trucks, prime movers, trailers, and large crane trucks;

(ii) 70 of the vehicles are unencumbered;

(iii) 5 of the vehicles are encumbered and financed to NAB;

(iv) the total market value of the fleet is $10,933,666.00;

(v) the amount owing to NAB in respect of the encumbered assets is approximately $1,300,000.00; and

(vi) on that basis, the gross value of the fleet is approximately $9,030,000.00;

(g) the 24 November 2025 letter also addressed the defendants' assertions as to an alleged reduction in work by the plaintiff, the deregistration of vehicles and further information concerning NAB's AllPAP;

(h) not satisfied by that information and the explanations received, but having not filed any application for security, on 27 November 2025, the defendants' solicitor sent a letter purportedly in accordance with paragraph 8.1.1 of the Practice Note;

(i) on 22 December 2025, the defendants filed this application. Notwithstanding that, further requests for information concerning the plaintiff's financial position followed with the defendants issuing a letter on 16 February 2026 seeking that the plaintiff furnish the following information pursuant to s 26 of the Civil Procedure Act 2010 (Vic) ('CPA'):

(i) the FY2024 to FY2025 tax returns and statements of financial position lodged with the Australian Taxation Office ('ATO');

(ii) all BAS lodged with the ATO for the four most recent completed quarterly periods preceding 16 February 2026;

(iii) profit and loss statements prepared for FY2024 and FY2025;

(iv) the most recent aged debtor and creditor reports;

(v) all working papers relied upon in the preparation and valuation of the asset register, recording assets with a stated value of $10,933,666.00;

(vi) working papers and/or ledgers relied upon for the valuation of goodwill in the balance sheet exhibited to Mr Fakhra's evidence;

(vii) all documents constituting or evidencing the investment referred to in Mr Fakha's evidence, including agreements, share purchase or transfer documents, shareholder resolutions, board minutes, share registers, valuation materials, correspondence, and/or payment records; and

(viii) all documents evidencing, recording or relating to the issue of 9,409,633 new preference shares on or about 23 December 2025 (noting the stated effective date of 17 December 2025);

(j) for reasons that were not explained, the defendants embarked on and persisted with an excruciatingly wide ranging interrogation of the plaintiff and its financial position. That occurred notwithstanding that the burden does not shift to the plaintiff because it chooses (or chooses not) to provide information about its financial status. It remains a matter for the defendants to establish that there is a requisite reason to believe.[35] If the defendants held genuine reason to believe in 2024 when their request for security was first raised, it was open to them to simply make their application having made one request for information. This did not occur;

(k) instead there were no less than four demands for extensive information, including demands after the application was made. Having been furnished with detailed explanations from the plaintiff as to its workflows, the deregistration of vehicles, a copy of the plaintiff's asset register (and a subsequent updated document), correspondence from the plaintiff's bank concerning NABs security interests and then furnished with affidavits, balance sheets, profit and loss records, details from the plaintiff's bankers confirming the plaintiff's cash holdings (both now and for the prior two years), the defendants nevertheless made repeated criticisms of the plaintiff for what was termed the 'drip feed' of information in response. I reject that submission and the criticisms sought to be levelled by the defendants. As I have indicated, it remained open to the defendants to file this application at any time after 22 November 2024 (or indeed before that date had they held a genuine concern). Instead, the defendants elected to wait more than a year after raising the issue of security for costs, until 23 December 2025 to make their application all the while incurring substantial legal expenses in the order of approximately $800,000.00. The incurring of such substantial legal expenses in the absence of the making of an application for security for costs, speaks against there being a 'reason to believe' or genuine concern.

111 Fifth, the defendants' focus on the incorporation of RCA to undertake specific rail related work is not persuasive of establishing financial difficulty on the part of the plaintiff nor does it establish any intention on the part of the plaintiff to cease operating or trading or to transfer its assets or undertaking. I accept the plaintiff's counsel's submission that the defendants contentions in this regard are speculative and unsubstantiated.

1. Sixth, I do not accept that defendants' submissions that the plaintiff 'corrected' its accounts on the day after the Summons was issued. Before me, was unchallenged evidence of the plaintiff's CFO, Mr Fakhar, together with a contemporaneous document dated 19 June 2023 recording the existence of the investor loans and their conversion to preference shares. Ultimately, that led to the revision being made to the accounts on 17 December 2025 and recorded by ASIC on 23 December 2025. I further reject the plaintiff's criticisms of the 'unsubstantiated' goodwill value of $5.4 million.
2. Seventh, and most critically, before me, the plaintiff's financial records revealed that:

(a) as at 31 December 2025, the plaintiff had cash at bank of $1,106,550.28. That sum alone is sufficient to meet an adverse costs order;

(b) in a letter dated 2 February 2026 from the plaintiff's bank, NAB, confirmed that the plaintiff had maintained similar cash balances over the two prior years with cash balances on 21 January 2024 of $1,190,095 and 21 January 2025 of $1,475,238. I reject the defendants' submission that in order to perform the necessary risk assessment, I require evidence as to whether 'the balance has fluctuated between the stated anniversaries, whether the current cash will be available to satisfy an adverse costs order in more than 12 months' time - particularly in the event of a liquidation when related party debts will be called in, whether this cash will be used to fund [the plaintiff's] own legal costs of the upcoming 14-day trial, and whether future revenue streams will continue to maintain a cash balance of this order (noting [the plaintiff] appears to have been trading at a loss historically and has not provided a profit and loss or cashflow statement'.[36] I also note that in pressing this submission, counsel for the defendants also submitted, in the context of seeking to persuade the Court that the making of an order for security at such a late point in time would not cause prejudice to the plaintiff, that:

Now, we can see that the cash at bank hasn't changed throughout this company's trading period, it's around $900,000 to $1.1m every month in the information that we've been provided. If security were ordered in the amounts that we are seeking, there's nothing showing from this profit and loss showing that this company wouldn't be able to meet its trade creditors, its trade debtors and its trade creditors are current, we can see that from the information we got this week.[37]

(c) It is difficult to reconcile the defendants' submissions. On the one hand, the defendants' counsel conceded that the plaintiff holds substantial cash assets and that these had not fluctuated though the trading history and that the trade creditors and debtors were largely current, yet at the same time, submitted that there was reason to believe that there was a risk that an adverse costs order would not be met. In circumstances where the plaintiff has in excess of $1 million in cash, has held similar cash reserves for the two prior years, and when the trade debtors and creditors are current, I need not be troubled with the excoriating minutiae sought to be pressed by the defendants' counsel;

(d) for six months ending 31 December 2025, the plaintiff's:

(i) trading income was $3,118,011.09;

(ii) operating expenses were $2,987,502.17;

(iii) net profit was $130,418.01;

(iv) net assets were $3,887,679.57;

(e) as at 31 January 2026, 55.4 per cent of aged receivables were current and a further 35.6 per cent were less than a month old. These levels are broadly consistent with the plaintiff's historical aged receivables as at 31 March 2025 where 65 per cent of aged receivables were current, a further 34.7 per cent were less than a month old;

(f) as at 31 January 2026, 31.5 per cent of aged payables were current and a further 67 per cent were less than a month old. These levels are broadly consistent with the plaintiff's historical aged payables as at 31 March 2025 where 38.7 per cent of aged payables were current, a further 20.8 per cent were less than a month old and 35.9 per cent were one month old;

(g) since 2022, the plaintiff has paid down substantial levels of debt with a letter dated 21 January 2026 from NAB confirming that as at January 2022, the plaintiff had an aggregated debt of approximately $5.3 million, primarily consisting of equipment finance loans and that the current outstanding debt was approximately $1.3 million, which remains comprised of equipment finance facilities; and

(h) its BAS and tax returns were regularly lodged and up to date.

1. Clearly, the plaintiff holds cash reserves at bank of more than $1million which is sufficient to pay an adverse costs order so as not to warrant the exercise of the jurisdiction. Additionally, it has net assets of $3,887,679.57 with it taxation obligations up to date and its trade receivables and payables largely operating within a 30 day term or less. On the face of the evidence before me, there does not appear to be a reason to believe that the plaintiff will not be able to meet an adverse order for costs.
2. If I am to take a 'practical, common sense approach' to the examination of the plaintiff's financial affairs, I accept the submission of the plaintiff's counsel that the defendants have taken an overly technical approach to this question. The continued and expanding requests for information by the defendants after they first foreshadowed a security for costs application in October 2024 amplify this point.
3. In Roth Morgan Kolomanski Pty Ltd v Candlebrush Investments Pty Ltd,[38] Mathews JR (as her Honour then was) commented, in the context of the security for costs application where the court determined that the jurisdiction was not enlivened, that:

It is not appropriate that I be placed in the position of needing to possess the skills of a forensic accountant or the assistance of an expert of that type in order to resolve the competing submissions about how I should interpret the 2016 Financial Statements. That is not the nature of the exercise. Some of those questions can only really be answered by reference to the relevant accounting standards. An example of this is how a current asset as opposed to a non-current asset is defined and whether the loan ... is correctly classified as a current asset. There was no evidence before the Court as to the accounting standards or how they should be interpreted. In the absence of that evidence, I do not consider it appropriate that I attempt to go behind the 2016 Financial Statements which have been prepared by an external accountant and which accompany a tax return which has been lodged. Further, I do not accept [the defendant's] submission that I should treat the 2016 Financial Statements with caution as they were not audited and the information upon which the statements were prepared was provided by [the plaintiff's] director.

1. Those observations are apposite here, particularly having regard to the defendants' submissions concerning the financial statements of the plaintiff.
2. Much of the defendants' submissions (and Mr Orchard and Mr Ladanyi's affidavits in respect of the plaintiff's financial position), did not go beyond speculation and conjecture informed by how a business was run many years earlier by different owners. Submissions without corroborative cogent evidence should rarely, if ever, be accepted. Counsel for the plaintiff submitted, and I accept, that the defendants have done no more than 'attempt to cobble a number of inadequate speculative assertions into the semblance of a basis to enliven the power to award security'. I am not persuaded by the evidence of either Mr Orchard or My Ladanyi. Their direct knowledge of the actual financial position of the plaintiff was absent and their evidence added little to the financial documents in evidence before me or the direct evidence of Mr Fakhra and Mr Elmasri.
3. The questions which have been raised about the plaintiff's financial position do not constitute the requisite 'reason to believe', and therefore the plaintiff is not placed in the position of having to negate that reason to believe by adducing further evidence to answer those questions. It nevertheless has done so and has done so comprehensively.
4. It follows from the above discussion that I do not consider that the defendants have satisfied the threshold question. In my view, the jurisdiction has not been enlivened and the application ought to be refused.

1. Prior to the application being heard, on 4 March 2026, the plaintiff made an open offer to the defendants to provide an undertaking to the Court in the following terms:

Upon the Plaintiff, by its counsel, undertaking to the Court that until such time as the proceeding is resolved by consent or the delivery of the judgment following the trial, the Plaintiff will provide no less than 5 business days' written notice if the aggregate credit balance of its two primary bank accounts (being the "Cash Reserve" account and the "Vic Crane" account as set out at Annexure A and Annexure B) is expected to fall below a credit balance of $650,000.

1. The open offer was communicated to my Chambers and otherwise provided for proposed orders that the Summons be dismissed with costs reserved.
2. Despite being informed that the Court would, if necessary, accommodate the urgent resumption of the security for costs application in the event that notice was given pursuant to the undertaking, the defendants declined to accept the undertaking proffered and insisted on pressing their security for costs application informing the Court that:

The difficulty with that is a number of things. First of all, it doesn't prevent the incurring of further liabilities that would, whether they're secured or unsecured liabilities, and it presents the problem where we are already on the back foot running a security for costs application so close to trial. If we are informed the week before trial, the day before trial, in the middle of the trial, that in five business days it is anticipated that the cash balance will drop below $500,000, I suspect that there won't be a judicial officer in this court who will offer up [a date to hear] security for costs in circumstances where the trial is part run...[39]

1. The orders sought by the defendants were that:
   1. Pursuant to rule 62.02 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic) and/or section 1335 of the Corporations Act 2001 (Cth), by 13 March 2026 the Plaintiff must provide security for the First and Second Defendants' costs of the proceeding up to and including the final hearing in the sum of $551,043.75 such security to be by way of payment into Court to the Senior Master in a form acceptable to the Prothonotary of the Court.
   2. The security provided by the Plaintiff in accordance with order 1 can only be released pursuant to a Court order or as agreed in writing between the parties.
   3. In the event that the Plaintiff fails to strictly comply with the above order 1, the Plaintiff's claims against the Defendants in the proceeding are stayed, with the effect that, subject to further order of the Court and the trial date will be vacated.
   4. The Plaintiff pays the Defendants' costs of and incidental to the Summons on a standard basis.

1. Given the findings I have made as to the jurisdiction of the Court not being enlivened, the rejection of the undertaking is, in my opinion, a remarkable position for the defendants to have adopted. The parties and their legal representatives have a statutory obligation pursuant to s 23 of the CPA to narrow the issues in dispute and to resolve by agreement any issues in the dispute which can be resolved in that way. At the time the undertaking was offered, the defendants had been provided with:

(a) substantial, fulsome accounting material from the plaintiff and its CFO, Mr Fakhra; and

(b) comprehensive affidavit material addressing the defendants' alleged concerns (including addressing the 'observations' of Mr Orchard and the information allegedly relayed to him by Mr Ladanyi from persons unnamed).

1. Despite acknowledging that they were on the back foot bringing the application so late and shortly before trial,[40] the defendants nevertheless elected to press on with their application and incur yet further costs. I do not consider that this conduct conforms with the obligations set out in the CPA.
2. Additionally, the parties and their legal representatives have statutory obligations pursuant to s 24 of the CPA to use reasonable endeavours to ensure that legal costs in connection with the proceeding are reasonable and proportionate to the amount in dispute. The defendants have incurred approximately $800,000.00 in costs, and Mr Welling deposed to the fact that the defendants are likely to incur a further $700,000.00 through to the end of trial defending a claim worth approximately $2.637 million. It will be a matter for the trial judge to consider whether costs of this magnitude are reasonable and proportionate having regard to the amount in dispute.

1. As I have found that the jurisdiction is not enlivened, it is unnecessary that I say anything about the discretionary factors. However, if I am wrong as to the jurisdiction being enlivened, for the sake of completeness, I turn to consider the relevant discretionary factors which, in this case, also militate against the grant of security.
2. Of the relevant factors identified in Colmax Glass to which I have referred earlier, the key factor focused on by both parties was delay. Additionally, the defendants touched upon stultification and the plaintiff addressed the merits of claim and the prospect of success. I turn now to deal with the parties' submissions and evidence with respect to delay.

1. The Defendants acknowledge that their application was filed at a late stage of the proceeding and that the proceeding has recently been set down for trial. However, they contend that this delay is not of the defendants' making. Security was first raised in correspondence about 15 months ago. Despite this, the defendants say that, having regard to their obligations under the CPA, they agreed to delay the issuing of the application until after mediation. They contend that they then promptly reagitated the issue in October 2025 upon allegedly learning new facts through early to mid-2025 which were not previously known to them (and of which they could not reasonably have known). They contended that the plaintiff further delayed the issue through November and December 2025 by declining to engage in the disclosure of adequate information to assuage the defendants' alleged concerns. Finally, they assert that the plaintiff made changes to its financial records within 24 hours of the application being filed and served, and its disclosure remained remarkably bare. For reasons that I will come to, I reject each of these submissions.

1. The plaintiff submitted that the Court should, in its discretion, refuse the defendants' application as being oppressive and unfairly prejudicial to the plaintiff, given:

(a) the undue delay in bring the application originally mooted 2 years ago but let lie until the proceeding was in advanced state and the plaintiff had incurred significant costs in preparing the case for trial to date; and/or

(b) the relative strength of the plaintiff's case in light of the parties' respective experts agreement that, at the time of the sale of the business the subject of this dispute, 12 of the 14 trucks forming the fleet purchased by the plaintiff from the first defendant "should not have been operated because there was no evidence of compliance" with the relevant Australian Standards and Victorian Road Regulations governing the modification, ongoing maintenance and use of heavy vehicles.

1. The plaintiff further submitted, in respect of the delay in bringing the application that:

(a) a plaintiff company, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it makes a substantial financial commitment toward litigating the claim;

(b) the prejudice includes the loss of the expenditure incurred by the company in the proceedings to the time of the application if security is ordered and cannot be provided;

(c) in the present case, while Mr Fakhra's evidence is that in due course the plaintiff could and will be able to meet any costs order, it was submitted that the Court should also have regard to the evidence of Mr Elmasri that having to find a significant sum on short notice in the shadow of trial fixed to commence in about 8 weeks' time. Mr Elmasri's evidence was in the following terms:

If VCH were required to provide security at this stage, it would mean pulling funds away from the business at a time when we are continuing to expand and renew our fleet for rail work. In practical terms, the effect of the security for costs order requested by the Defendants' solicitors at this point would be to interfere with the planned growth of the business, including VCH's continued expansion and renewal of its fleet into the rail sector. Rail operations require significant forward planning and strict compliance with rail authority and safety requirements to meet accreditation, engineering, and operational standards. Diverting funds at this late stage would impact VCH's ability to continue that planned expansion into rail, which is one part of the business strategy already underway.

While I do not disagree with Mr Fakhra's assessment of the means of VHC to pay an eventual costs order, in the short term, VCH having to source bank guarantee or cash deposit in the order of hundreds of thousands of dollars, on top of the expenditure in this case, would impact on the cash at bank of the Plaintiff and its operating capacity. It would also potentially prejudice its liquidity and likely reduce the ability of the company to readily fund this case to and through trial.[41]

(d) the imminence of a trial is also a factor that tends to militate against security being ordered; and

(e) while the defendants seek to justify the late revival of a claim for security in part on allowing mediation to progress, it was submitted, relying on the decision in Sandl Trading Pty Ltd v North American Oil Co,[42] that the participation of the parties in a mediation is not a justification for the defendants' delay in applying for security.

1. Without derogating from my view as to the jurisdiction not being enlivened, there is, in my opinion, such a significant delay by the defendants in bringing this application that it militates against the making of an order for security.
2. The basis for considering delay as a discretionary factor was set out by Sifris J in Oswal v Australia and New Zealand Banking Group Ltd,[43] as follows:

Delay is usually an important factor, and often a decisive factor in deciding whether to order security and in particular security for past costs. The main reason is that by such delay, the defendant has permitted the plaintiff, during the period of the delay, to incur costs, and often substantial costs, that may not have been incurred had the application been made promptly. If a plaintiff proceeds on the assumption that no such application will be made, it may be harsh and unfair to require security for such past costs. There are, of course, or may well be, other considerations which will excuse delay or balance the assumed and presumed prejudice that inevitably arises out of such delay.

1. Moreover, the relevant principles were summarised by Sifris J as follows:[44]

(a) delay in making an application for security for costs, or further security for costs, is a most important and often a critical factor, essentially because it unfairly allows a plaintiff to proceed and incur costs on the assumption that no application is to be made;

(b) delay is more significant, and often critical, in relation to security for past costs although it may also be a relevant factor in relation to security for future costs;

(c) prejudice to a plaintiff is assumed and presumed because of the delay. However, each side may adduce evidence in support of, or against, such prejudice; and

(d) despite delay, security may be granted for past costs (in whole or in part) where it is established that there is some conduct that negates the prejudice, harshness, or oppression, that is otherwise apparent when there is a delay, and substantial costs have been incurred. The Court retains a broad discretion which requires all relevant facts and circumstances to be taken into account. Each case must be decided in accordance with its own particular facts and circumstances.

1. Additionally, it is accepted that it is incumbent on a defendant who wishes to obtain security for its costs to apply promptly for that relief once it is, or ought reasonably be, aware that the plaintiff would be unable to meet an order for costs. In Christou v Stanton Partners Australasia Pty Ltd,[45] Newnes JA said:

Security for costs is not a card that a defendant an keep up its sleeve and play at its convenience. Delay is an important consideration in the determination of an application for security for costs because it is capable of causing prejudice or unfairness to the plaintiff. A plaintiff is entitled to know at the earliest opportunity, before it has committed substantial disruption or distraction in the conduct of the plaintiff's case, and if the plaintiff is unable to provide security, the greater the costs that will have been wasted.

The closer is the proximity of the hearing of the substantive proceeding to the time at which any application for security for costs is made, the more weight is likely to be given to the delay factor.[46]

1. Additionally, deferring an application for security in order to proceed to mediation, does not justify a delay in making an application.
2. In my view, the delay between the 22 November 2024 letter and the filing of the application for security for costs is a critical factor because, it has unfairly allowed the plaintiff to proceed and incur costs when there has been no indication that this application would be pressed. This is conduct which falls within the words in Christou 'before it has committed substantial disruption or distraction in the conduct of its case'.[47] It would be patently unjust to permit the defendants who stood by and allowed that work to be done to come to Court and to ask for security after such expenses have been incurred. Although no security was sought for past costs, it is well established by authority that applications for security for costs should be made promptly and before considerable expense is incurred.
3. In Avner Pty Ltd v Dimopoulos,[48] Young J said the following:

It is, of course, axiomatic that notice of an application for security for costs must be made promptly... The reason why delay may lead the court in the interests of justice, to refuse an application for security for costs, which is otherwise right and proper, is that it is unfair to lull a plaintiff into a situation where it invests a large sum of money in preparation for a hearing and then to frustrate that expenditure by a last minute application. However, the main cases where delay has been held to be fatal have been situations where the application has been made very close indeed to the hearing date. (See case referred to by Beach J in Aspendale Pastoral Co case and see also Buckley v Bennell Design and Construction Pty Ltd) (1974) 1 ACLR 301).

1. Here, the evidence was that the plaintiff incurred substantial expenses during a period where although flagged, the security for costs application was not pursued. The interests of justice do not, in those circumstances, lie in the grant of security when the plaintiff has continued to incur its own expenses running the litigation in the absence of security for costs being pressed.
2. In Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd,[49] Hodgson JA said that for a plaintiff to show prejudice from delay, it is not necessary to prove what the plaintiff would have done if the application had been made earlier; although if a plaintiff does prove that it would not have gone ahead with the proceeding if the application had been brought when it should have been, this would be a very powerful consideration against granting security. His Honour expressed the view that where substantial costs have been incurred since the time when an application for security should have been brought, it would be unreasonable to deny the existence of prejudice. Additionally, prejudice to the plaintiff is assumed and presumed because of the delay and the defendants have not adduced evidence against such prejudice. There is, in my view, no conduct established that negates the prejudice or oppression caused by the delay.
3. These matters should be viewed against the backdrop of the circumstances of this case. It has been within the power of the defendants to know, or find out, the relative strength of the financial position of the plaintiff for a substantial time now. Ever since the defendants were made aware of the claim, or at least from the filing of the writ and statement of claim in August 2022, it has been within the power of the defendants to unearth the detail of the plaintiff's financial position.
4. Specifically, it has been within the defendants' capability to identify the very facts and matters that they now rely on, previously. There was no reason why the ASIC searches, land data searches, vehicle registration searches and PPSR searches which appear to have been undertaken between November 2024 and September 2025 could not have been done shortly after the commencement of the proceeding. There is certainly no reason why the vehicle registration searches and PPSR searches could not have been undertaken prior to the 22 November 2024 letter. Enquiries in this regard would have given the defendants a basis for further inquiry so as to enable the application to be made long ago and without occasioning significant legal costs.
5. To this end, I consider that the relevant period of delay in bringing this application is from November 2024 to 22 December 2025, or at the very latest May 2025 after the failed mediation to 22 December 2025. The evidence establishes that:

(a) during the period November 2024 to mid-May 2025, the following documents were filed with the Court which necessarily would have occasioned significant legal expenses to both sides:

(i) on 11 November 2024, a witness statement of Troy Donnelly;

(ii) on 11 December 2024, an expert report of Ben Mahler;

(iii) on 11 December 2024, an expert report of Roger Lewis;

(iv) on 13 December 2024, an affidavit of Mr Welling;

(v) on 13 December 2024, an expert report of Roger Lewis; and

(vi) on 12 May 2025, an expert report of David Hartigan.

(b) during the period mid-May 2025 to December 2025, the following documents were filed with the Court which again would have necessarily occasioned yet further significant legal expenses to both sides:

(i) on 19 June 2025, an affidavit Mr Orchard;

(ii) on 1 July 2025, a further expert report;

(iii) on 2 July 2025, a joint chronology;

(iv) on 9 July 2025, a court book index;

(v) on 17 July 2025, a statement of facts;

(vi) on 22 July 2025, the plaintiff's outline of opening submissions;

(vii) on 22 July 2025, a list of real issues in dispute;

(viii) on 22 August 2025, the defendants' outline of opening submissions;

(ix) On 5 November 2025, a notice to admit;

(x) On 19 November 2025, a notice of dispute;

(xi) On 11 December 2025, an affidavit of Oskar Ian Watts;

(xii) 22 December 2025, an affidavit of Mr Welling; and

(xiii) On 22 December 2025, an affidavit of Mr Ladanyi.

1. In determining this application, I am also required by s 7(1) of the CPA to seek to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. In aid of that objective, ss 47-49 of the CPA relevantly provide:

Judicial powers of case management - overarching purpose and active case management

(1) Without limiting any other power of a court, for the purposes of ensuring that a civil proceeding is managed and conducted in accordance with the overarching purpose, the court may give any direction or make any order it considers appropriate, including any directions given or orders made -

(a) in the interests of the administration of justice; or

(b) in the public interest.

(2) A direction given or an order made under subsection (1) may include, but is not limited to, imposing any reasonable limits, restrictions or conditions in respect of -

(a) the management and conduct of any aspect of a civil proceeding; or

(3) Without limiting subsection (1) or (2), a court may actively case manage civil proceedings by -

(a) giving directions to ensure that the civil proceeding is conducted promptly and efficiently;

...

Court's power to order and direct pre-trial procedures

(1) In addition to any other power a court may have, a court may make any order or give any direction it considers appropriate to further the overarching purpose in relation to pre-trial procedures.

(2) Without limiting subsection (1), a court may give any directions or make any orders it considers appropriate with respect to -

(a) the conduct of proceedings;

...

Court's power to order and direct trial procedures and conduct of hearing

(1) In addition to any other power a court may have, a court may give any direction or make any order it considers appropriate to further the overarching purpose in relation to the conduct of the hearing in a civil proceeding.

(2) A direction or an order under subsection (1) may be given or made by the court at any time -

(a) before a hearing commences; or

(b) during a hearing.

(a) conscious of the impact on the plaintiff were security to be ordered, when the evidence before me was that it would have a significant impact on the operation of the plaintiff's business;

(b) concerned by the conduct of the defendants and their obligations under the CPA, in particular s 25 and the impact their delay in making this application might have on the plaintiff;

(c) mindful of the impact an order for security may have, if not met, on the business of the Court and other litigants. By their application, the defendants sought that, in the event security was not paid, the trial be vacated. The trial is in a judge managed list and has been allocated to Matthews J. The allocation of the trial before her Honour means that for the trial dates that have been allocated, no other party is presently able to have their matter listed on those dates before her Honour. If the trial is vacated, it will likely occur on the eve of its commencement. The result of that will be to deny other parties that listing date as it will, due to the proximity of the date, be incredibly difficult to expect or require other litigants before the Court to be prepared for trial on a days' notice (or very short notice). I must consider judicial resources and the interests of non-parties who are litigants in other cases wishing to get their proceedings on to trial. When I raised the operation of the CPA with counsel for the defendants, and its application, there were no submissions put in response;

(d) cognisant that the late filing of applications is not consistent with the overarching obligation upon parties and legal practitioners to use reasonable endeavours to act promptly and to minimise delay imposed by s 25 of the CPA. It is disruptive to the other parties to the proceeding when interlocutory applications are made late and on the cusp of trial where the responding party is placed in the difficult position of having to engage with a late application which often necessitates that they divert their attention from the trial, and on focussing on the resolution of the real issues in dispute. In Re Tarrawarra Yarra Valley Holding Pty Ltd,[50] Delany J made observations as to the impact of the late filing of evidence and submissions. In my view, those observations have equal force in relation to the making of late applications where they result in multiple rounds of often disjointed evidence and/or where the judicial officer is often required to deliver an urgent ruling. I respectfully adopt Delany J's observations as follows:

The late filing of evidence and submissions is not consistent with the overarching obligation upon parties and legal practitioners to use reasonable endeavours to act promptly and to minimise delay imposed by s 25 of the CPA. It is disruptive to other parties to litigation when orders for the filing and service of evidence and submissions are not complied with and yet the non-complying party serves evidence and submissions out of time upon which it seeks to rely at the hearing. In the absence of an order prohibiting reliance on those materials, the responding party is placed in a very difficult position and may have no real alternative but to respond to the materials filed out of time. That process often leads to a series of 'rounds' of evidence and submissions. It increases the volume of materials. It increases the costs. It does not serve to narrow the issues in dispute as parties and practitioners are obliged to do by s24 of the CPA. Because of the resulting increased volume and the disjointed nature of the materials when 'rounds' of evidence and submissions are filed, an undue burden is imposed on judicial officers charged with hearing and determining such applications.[51]

1. Had I reached a different conclusion in relation to the jurisdiction being enlivened, I would have considered the delay in this application to be so significant that it would have been dispositive of the application against the defendants. Accordingly, I do not propose to address the other discretionary facts of merits and stultification touched on by the parties.

1. It is necessary that I make some short observations as to the material relied on by the defendants in respect of the quantum of security sought. Had I been minded to order security, given the paucity of proper evidence led by Mr Welling on behalf of the defendants, I would have been restricted as to what amounts, if any, I would have been prepared to grant. Given that this application had been foreshadowed for over one year prior to being made, I do not accept that there was any reasons why Mr Welling required two attempts at evidence directed at quantum that conformed with the well-known and accepted authorities. The second attempt was made on the morning of the day assigned for the hearing of this application, some three months following the filing of the First Welling Affidavit and over a year since after the issue of security for costs was first raised.[52] Again, I do not accept that the matters raised in the second affidavit as to quantum, being the affidavit affirmed 5 March 2026, dealt with matters strictly in reply.
2. Mr Welling's evidence suffered from a number of shortfalls including:

(a) the First Welling Affidavit did little to explain how his estimates were calculated. The estimate of $363,500.00 in legal expenses was accompanied by a description 'work associated with preparation for trial, including: conferences with counsel and client; finalisation and filing of the revised Statement of Agreed Facts and Court Book; preparation for and attendance at directions on 4 March 2026; attendance at further incidental directions hearings; witness conferences; and miscellaneous attendances, including correspondence, expert conferences, settlement discussions and interlocutory attendances.' This amount of $363,500.00 appears to relate solely to solicitor costs and does not include disbursements for Counsel fees. Broad generalised claims of '$363,500 for trial' without any breakdown of who was to do the work and at what charge out rate are meaningless and they do not accord with the well-known and accepted standards of the evidence of quantum that must be put before the Court to enable the Court to engage in the type of broad brush assessment which is required;

(b) the proceeding was commenced in August 2022. The pleadings have been settled since October 2023. Witness outlines and expert evidence were exchanged between the parties throughout 2024 and 2025. The parties have therefore had a significant period of time to familiarise themselves with the issues and the relevant evidence. The only interlocutory steps left to complete at the time the application for security was filed were the filing of a revised court book index and a statement of agreed facts, each of which I was informed were substantially advanced.[53] In those circumstances, I consider the broad and generalised claim of '$363,500 for trial' wholly unsatisfactory and unpersuasive. In my view, it materially overstates the work reasonably required to prepare the matter for trial; and

(c) similarly, the estimate provided by Mr Welling included a provision of $209,190.00 for Counsel to prepare for, and attend, trial at a daily rate of $5,700.00. That equates to approximately 36.7 days of counsel's time or 14 days for trial and 22.5 days for preparation. Again, I find this estimate to be grossly overstated, particularly where trial counsel has been engaged in the matter since the preparation and filing of a defence in October 2022.

1. It follows from the matters above that the defendants' application for security is refused.
2. The parties are directed to confer as to an appropriate form of order to give effect to these reasons, including in respect of the costs of the application.

1. In the event the parties are unable to reach agreement about those matters, the matter will be listed for a brief further hearing and the parties will be required to address the Court orally as to their respective positions.

[1] Affidavit of Paul Benjamin Welling filed 22 December 2025, [55].

[2] Despite both affidavits being relied upon, neither affidavit was formerly filed with the Court.

[3] Stuart v Said (2021) 65 VR 50, [5]-[6].

[5] [2008] VSCA 93; (2008) 20 VR 377, [15]-[17] (citations omitted) ('Livingspring').

[6] Trility Pty Ltd v Ancon Drilling Pty Ltd [2013] VSC 577, [11] ('Trility').

[7] US Realty Investments LLC #1 v Need [2013] VSC 590, [22] citing Tradestock Pty Ltd v TNT (Management) Pty Ltd [1977] FCA 1; (1977) 14 ALR 52, 56.

[8] [2013] VSC 311, [20] (citations omitted). See also Trility (n 6), [15]-[16].

[9] See G E Dal Pont, Law of Costs (LexisNexis Butterworths, 4th ed, 2018), [29.5].

[11] [2022] VSCA 22, [14].

[12] Transcript of Proceedings (5 March 2026) 15.21-15.31; 16.1-16.5.

[19] Defendants' written outline of submissions filed 13 February 2026, [3] ('Defendants' Outline').

[20] Transcript of Proceedings (5 March 2026) 35.30-35.31; 36.1-36.3.

[21] By order of Matthews J made 5 March 2026, the proceeding was fixed for trial for an estimate of 15 days.

[23] Transcript of Proceedings (5 March 2026) 37.15-37.31.

[24] Affidavit of Colin Charles Orchard filed 6 February 2026, [12(g)].

[25] Affidavit of Paul Benjamin Welling filed 22 December 2025, [37].

[27] Livingspring (n 5), [21].

[30] [2000] WASCA 69; (2000) 33 ACSR 739.

[33] Transcript of Proceedings (5 March 2026) 15.21-15.31; 16.1-16.5.

[34] (n 11), [14] with my emphasis added.

[36] Transcript of Proceedings (5 March 2026) 54.12-54.20.

[38] [2018] VSC 288, [105].

[39] Transcript of Proceedings (5 March 2026) 9.7-9.18.

[41] Affidavit of Raed Elmasri filed 3 February 2026, [48]-[49].

[42] [1998] VSC 8.

[43] [2016] VSC 52, [34].

[45] [2011] WASCA 176, [20] ('Christou').

[48] (Supreme Court of New South Wales, Young J, 12 February 1987), [6].

[49] [2008] NSWCA 148, [57].

[50] [2025] VSC 293.

[52] See Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293; Bogan v The Estate of Peter John Smedley (Deceased) [2023] VSC 105.

[53] Transcript of proceedings (5 March 2026) 2.25-3.23.