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[2010] FCA 580
appellant. The review was allowed in substance: Professional Vending was ordered to provide $42,000 security for Christou and AAVC’s costs up to and including the first day of trial, in four instalments; the...
The Court ordered a company pursuing litigation to provide security for some of the opposing parties' costs. The company was not insolvent and its trading performance was improving, but the judge considered its likely cash position when costs would be due, its own litigation expenses and the possibility of other adverse costs orders. Those matters created a sufficient risk of non-payment. Because requiring security also burdened a viable business, the amount was limited to $42,000 and divided into instalments. The judgment also reserved the costs of the security applications.
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Professional Vending Services Pty Ltd and Amina & Asfalia Pty Ltd brought proceedings against Jim Christou and others. The underlying claims alleged that Christou breached his employment contract, failed to comply with fiduciary obligations and misused confidential information ([1]). The judgment does not determine whether those allegations were true. It concerns only the respondents' application for security for costs.
Christou and Australian Automatic Vending Company Pty Ltd (AAVC) first sought security of $103,000 on 17 February 2010. A Registrar dismissed that application on 1 March 2010 and ordered Christou and AAVC to pay its costs ([3]). They then sought review of the Registrar's orders under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) ([4]). By agreement, Bromberg J decided the review on written submissions ([5]).
The financial evidence showed a business with a mixed history. Professional Vending had taken over Amina & Asfalia's vending-machine business in July 2008 ([15]). It incurred a loss of $255,696 in its first 12 months, but later recorded a net profit of $144,464 for the period from 1 July 2009 to 31 March 2010. Its managing director expected a profit of at least $160,000 for the financial year ending 30 June 2010 ([17]). The company had net assets of $693,159 in March 2010, down from $1,087,073 in June 2009 ([19]). Its financial material also showed an overdraft facility, fluctuating available funds, increasing trade debtors and a tripling of current liabilities and trade creditors ([18], [26], [29]).
The judge assessed the likely costs covered by the application at $42,000, rather than the respondents' initial $103,000 estimate. That figure covered relevant defence costs from the first security application through to and including the first day of trial ([21]-[22]). The Court ordered four payments totalling $42,000, due between 24 June and 13 September 2010. It also ordered that a default lasting at least 14 days would stay the first applicant's application unless the Court ordered otherwise. The security-application costs were reserved (orders 1-5; [40]-[43]).
The statutory question was whether there was “reason to believe” that the corporation would be unable to pay the defendants' costs if they successfully defended the case. Section 1335(1) of the Corporations Act 2001 (Cth) was the provision argued and applied ([7]). The Court emphasised that the security applicant bore the onus of satisfying the threshold ([12]).
Bromberg J adopted the approach in Livingspring Pty Ltd v Kliger Partners: the statutory phrase calls for a rational basis for belief, and a practical risk assessment, rather than a requirement that inability to pay be certain ([10]-[12]). The judgment described the threshold as low, consistent with the provision's function of protecting a defendant against the risk of a corporate plaintiff's inability to meet costs ([11]). This does not make security automatic. The Court still had to assess the evidence and then decide whether to exercise its discretion.
The timing of the financial assessment mattered. Following Acohs Pty Ltd v Ucorp Pty Ltd, the Court considered the financial position when the costs order would need to be paid, and the assets capable of being realised in time for that payment ([13]). Bromberg J assumed that judgment would be given around March 2011 and focused on whether $42,000 in liquid funds was likely to be available then ([23]-[24]).
The evidence did not establish that Professional Vending was impecunious. It had net assets of about $700,000 and appeared to be a viable business whose performance was improving ([34]). But net assets did not, by themselves, answer whether the company would have cash or other liquid assets available to pay costs at the relevant time. The judge noted that the material did not include cash-flow projections or financial reports after March 2010, and considered a conservative approach appropriate ([25]).
The Court also looked beyond the $42,000 estimate. A 10-day Federal Court trial would generate substantial legal costs for Professional Vending itself. If unsuccessful, it might also face other substantial adverse costs orders, including costs associated with the trial and the third respondent ([27]-[28]). The company's cash position had fluctuated, and the increase in trade creditors suggested pressure on cash flow ([26], [29]). These factors led the Court to find a risk of inability to pay the relevant sum in the context of its broader liabilities ([30]).
The discretionary stage required a balance between two types of potential injustice. The judge considered the risk that Christou and AAVC might be deprived of their costs if successful. Against that, he considered the burden security would impose on an operating business that might have a good claim ([33], [38]-[40]). Professional Vending's improving profitability and substantial net assets counted in its favour, but the judge gave little weight to the managing director's expectations of increased custom because they were prospective ([34]-[37]). No personal undertaking to provide further funds had been offered ([38]).
The matter was “finally balanced” ([40]). The judge resolved that balance in favour of security, but reduced the immediate burden by ordering staged payments. The order therefore reflected both the respondents' costs risk and the applicant's financial circumstances ([40]-[41]).
The judgment's account of the law is anchored in s 1335(1) and the authorities cited in it. The statutory text permits a court to require security where credible testimony gives reason to believe that a corporate plaintiff will be unable to pay the defendant's costs if successful ([7]). The judgment treats this as a threshold question that must be satisfied before the discretion to order security is enlivened ([8]).
Bromberg J cited Beach Petroleum NL v Johnson for an explanation that considered a real chance of inability to pay in reasonably possible circumstances, and took account of the degree of likelihood and all relevant financial circumstances when exercising discretion ([9]). He then expressly adopted the approach in Livingspring, cautioning against replacing the statute's words with a more elaborate judicial formula. The question remains whether there is reason to believe the corporation will be unable to pay ([10]-[11]).
The judgment thus presents the assessment as having two stages. First, the court asks whether there is a rational basis for the required belief. Second, if that threshold is crossed, the court exercises discretion, taking account of the risk's extent and other relevant circumstances. The threshold is low, but the amount, form and timing of security remain matters for judicial evaluation ([11], [31]-[33], [40]-[41]).
The judgment also gives practical content to “will be unable to pay”. It adopts an assessment at the time the costs order is likely to require payment, considering assets that can be realised in sufficient time. It calls these “liquid assets” for convenience ([13]). On the material provided, it does not set a fixed formula for calculating a corporation's liquidity or prescribe a universal approach to the amount of security.
As to what changed after this decision, the supplied judgment does not establish a later change in law. It does not discuss later decisions or legislative amendments. Any account of later developments would require sources beyond the material provided here.
At [11], the Court adopted the statement that “‘reason to believe’ is the touchstone of jurisdiction” and “requires a rational basis for the belief - and no more.” In plain English, the applicant for security need not prove that the company certainly will fail to pay. It must provide a rational evidential basis for the statutory concern. The judgment also calls for a practical, commonsense review of the company's financial position.
At [13], the Court agreed that the relevant ability to pay should be assessed at the time the costs order would need to be met, and by reference to assets that could be accessed in time. In plain English, a balance sheet figure alone may not answer the question if the company cannot turn assets into funds when payment falls due.
At [24], the Court framed the core questions: what liquid assets would be available for $42,000 around March 2011, and was there reason to believe the company would be unable to pay that amount? This passage shows why the timing and amount of the potential liability mattered to the assessment.
At [30], the judge concluded that there was a risk Professional Vending would not be able to meet the $42,000 order in the context of being unsuccessful in the proceeding. The conclusion rested not only on the company's then-current financial position, but also on the likely cash position when payment fell due and the possibility of other substantial costs liabilities.
At [40], the Court said the matter was “finally balanced”. In plain English, the judge recognised meaningful considerations on both sides: protecting the respondents against non-payment and avoiding undue financial pressure on a viable business. The staged instalments were the chosen way to account for that tension, without changing the finding that security should be ordered.
The decision concerns a corporate plaintiff facing a security-for-costs application under s 1335(1), where the opposing parties provide evidence supporting concern about the corporation's ability to meet an adverse costs order. It is particularly relevant as an illustration of the difference between being presently insolvent or impecunious and facing a risk of insufficient liquid funds when costs become payable. Professional Vending had positive net assets and was trading profitably, but the judge still found the statutory threshold met because of the timing and likely scale of future liabilities ([19], [25]-[30], [34]).
The case also illustrates a situation in which the company's own litigation expenditure and potential liability for other parties' costs affect the risk assessment. The relevant concern was not limited to whether the applicant could pay the respondents' estimate in isolation. The Court considered the likely costs of a 10-day trial and the possibility of other adverse costs orders falling due at roughly the same time ([27]-[29]).
For the discretionary stage, the decision is relevant where security could burden a viable trading business, and where the evidence includes some positive indicators, such as improving profits, but also uncertainty about future cash flow. It demonstrates that the Court may consider the strength of the claimed financial risk alongside the practical burden of security, and may structure payment by instalments ([33]-[41]).
These points describe the fact pattern and reasoning in this judgment. They do not determine how a different application would be resolved. The result in any matter depends on its evidence, statutory setting and relevant authorities.
The supplied judgment does not identify any later court's treatment of Professional Vending Services Pty Ltd v Christou. It contains no discussion of subsequent decisions applying, distinguishing, following or rejecting its reasoning. No conclusion about its later precedential treatment can be drawn from this text alone.
The judgment itself relies on earlier authorities. It cites Beach Petroleum for an explanation of the statutory risk assessment ([9]), adopts the approach in Livingspring that focuses on the statutory words and the need for a rational basis ([10]-[12]), and agrees with the timing and asset-realisation approach discussed in Acohs ([13]). It also refers to Acohs when describing the discretionary nature of the power and relevant guidelines ([31]-[32]). Those are the relationships identifiable from this judgment; they are not evidence of how later courts treated this decision.
The judgment does not decide the underlying contractual, fiduciary-duty or confidential-information claims. It concerns only security for costs, so it says nothing about whether the applicants' allegations would ultimately succeed ([1], [6]).
The financial assessment was expressly constrained by the evidence. The Court had no cash-flow projections and no financial reports after March 2010 ([25]). The decision therefore leaves open how different or more complete forecasts might have affected the assessment, including evidence about expected receipts, payment timing, access to credit and liabilities falling due before trial.
The judge assumed judgment would be provided around March 2011 because the proceeding had not yet been listed ([23]). The judgment does not address how the risk assessment should be adjusted if a trial timetable or the timing of a costs order changes substantially.
The Court noted that directors of Professional Vending's holding company had provided substantial unsecured loans, but no personal undertaking to provide additional funds was offered ([35], [38]). It does not decide what weight should be given to a particular undertaking or funding arrangement in another case.
Finally, the judgment does not explain the later procedural history or whether the staged instalments were paid, varied or followed by further orders. Those matters cannot be determined from the reasons provided.
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Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
BETWEEN: PROFESSIONAL VENDING SERVICES PTY LTD (ACN 131 189 789)
AUSTRALIAN AUTOMATIC VENDING COMPANY PTY LTD (ACN 085 423 490)
introduction 1 Professional Vending Services Pty Ltd ("Professional Vending") and Amina & Asfalia Pty Ltd (together "the applicants") have brought proceedings against the first respondent Jim Christou ("Christou") and others. The applicants allege that Christou breached his employment contract, failed to comply with fiduciary obligations and has misused confidential information. 2 There are other related parties including the second respondent, Australian Automatic Vending Company Pty Ltd ("AAVC"). 3 By notice of motion dated 17 February 2010, Christou and AAVC sought an order that Professional Vending provide security for the costs of Christou and AAVC in the sum of $103,000. On 1 March 2010, a Registrar of this Court dismissed the application for security for costs and ordered that the costs of that application be paid by Christou and AAVC. 4 By notice of motion dated 18 March 2010, Christou and AAVC seek a review, pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act") of the orders made by the Registrar. 5 After some delay (arising from a dispute between the parties as to whether the notice of motion could be dealt with on the papers or required an oral hearing), it has been resolved by agreement that I determine the notice of motion on the papers. For that purpose, written submissions were provided and have been taken into account. 6 For the reasons which follow, I have determined that Professional Vending should provide security for costs in the sum of $42,000 payable by four instalments.
Section 1335 of the corporations act 7 The Court has power to order security under s 56 of the Federal Court Act, but the matter was argued before me and is to be resolved under s 1335(1) of the Corporations Act 2001 (Cth) ("the Corporations Act"). That provision provides as follows: (1) 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. 8 As the authorities demonstrate, before the discretion provided by s 1335 is enlivened, a threshold condition for the exercise of the power needs to be satisfied. That jurisdictional condition is whether: …there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful. 9 Courts have often applied the test formulated by Von Doussa J in Beach Petroleum NL v Johnson (1992) 7 ACSR 203 at 205, as follows: In my opinion the power of the court under s 1335 arises if credible evidence establishes that there is reason to believe there was a real chance that in events which can fairly be described as reasonably possible the plaintiff corporation will be unable to pay the costs of the defendant on the service of the allocatur, if judgment goes against it. This will be so even if in other events which can also be fairly described as reasonably possible the plaintiff corporation would be able to pay the costs. The degree of likelihood of the plaintiff corporation being unable to pay the costs, along with all the circumstances, actual and possible, about its financial position, would be then taken into account in the exercise of discretion, and in framing the orders of the court if the decision is to order security. 10 In Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93 at [12]-[15] Maxwell P and Buchanan JA expressed the view that it would be wrong to substitute a judicial exposition for the words of the statute itself. As their Honours observed, the language of the statutory test is clear and the courts must address the question which the section poses, namely: Is there reason to believe that the corporation will be unable to pay the defendant's costs? 11 I respectfully adopt and will apply the approach of Maxwell P and Buchanan JA set out at [15]-[16] of their judgment, as follows: 15 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. 16 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. (citations omitted) 12 The applicant for security for costs bears the onus of satisfying the Court that the threshold condition is satisfied: Livingspring [18]-[23]. 13 As Jessup J said in Acohs Pty Ltd v Ucorp Pty Ltd [2006] FCA 1279 at [10], whether a corporation "will be unable to pay" involves two considerations of its own. The first is the need to fix the time at which the applicant's inability, or apprehended inability, is notionally to be assessed. That, as von Doussa J said in Beach Petroleum, is an element which requires an opinion to be formed about the financial position of the applicant "at the time of judgment and immediately thereafter": at 205. The second consideration relates to the range of assets to which recourse might be had for the purpose of meeting an adverse costs order. For that purpose, Jessup J took account of those assets which might be immediately realised, together with those which could be realised in sufficient time to enable the applicant to comply with a costs order in the usual terms. I respectfully agree with that approach. For convenience, I will refer to the kind of assets Jessup J has identified as liquid assets.
is the threshold condition satisfied? 14 Christou and AAVC rely upon evidence put before me that Professional Vending has paid up share capital of only $100 and does not own any real property in Victoria. Further they point to a fixed and floating charge registered on 22 September 2008 by the ANZ bank. Reliance is also placed upon the fact that in or about February 2010, Professional Vending conducted a sale of its stock at discount prices which are said to be unprecedented. For these reasons, Christou and AAVC say they are concerned that they will not be able to recover their costs should a costs order in their favour be made at trial. 15 A number of affidavits of Mr Di Donato, the Managing Director of Professional Vending, have been filed which address the financial position of Professional Vending. By reference to that evidence, it is apparent that from July 2008, Professional Vending took over a business owned and operated by the second applicant Amina & Asfalia Pty Ltd. That business involves the purchase and sale of vending machines. 16 According to Mr Di Donato, the financial performance of the business had been poor and it had been trading at a significant loss. Professional Vending has taken steps to reduce the expenses associated with the business and to improve its trading performance. 17 In its first 12 months of operation (1 July 2008 to 31 June 2009) Professional Vending incurred a loss of $255,696. The trading position of Professional Vending has improved and financial statements provided to the Court show that in the period 1 July 2009 to 31 March 2010, net profit was $144,464. Mr Di Donato expects that for the financial year ending 30 June 2010, Professional Vending should return a profit of not less than $160,000 and in all likelihood significantly higher. He has deposed that a number of substantial new orders are expected and that new stock is in transit in order to meet the growth and demand for products from regular and new customers. 18 Further, Mr Di Donato explains that the sale of discounted product ended on 28 February 2010. The reason for the sale was to clean out old and slow moving stock. The sale was very successful and resulted in the acquisition of a number of new customers. He further identifies that the charge to the ANZ bank relates to an overdraft facility with a $100,000 limit. 19 The financial information which accompanied Mr Di Donato's affidavits shows that as at March 2010, Professional Vending had net assets of $693,159; a reduction from its net assets of $1,087,073 as at 30 June 2009. 20 Of central importance to the task before me is an evaluation of the capacity of Professional Vending to meet any adverse cost order at the time such order would need to be complied with. That question involves an identification of the sum likely to be ordered for costs, when judgment will likely be given in this case and what liquid assets are likely to be available at that time. 21 The application seeks security for the costs of Christou and AAVC in defending the action brought against them, up to and including the first day of trial. The solicitor for Christou and AAVC has, in very general terms, calculated $103,000 to be the reasonable costs likely to be incurred. That estimate is challenged in an affidavit by Margaret Goulay, a cost consultant and solicitor with 30 years experience in legal costing. Her evidence is that $29,917 represents a reasonable sum for the costs likely to be incurred. Both parties have made submissions as to the estimates which have been provided to the Court. In particular Christou and AAVC have made submissions challenging a limited number of estimates made by Ms Goulay. 22 I have considered the cost estimates provided. In large part I prefer the evidence of Ms Goulay, but I have accepted some of the challenges made to her estimates in the submissions filed on behalf of Mr Christou and AAVC. In particular, I have allowed an extra $3,000 for the review and consideration of the very large number of affidavits which are expected to be filed by Professional Vending. Further, given preliminary indications that the trial will take 10 days, I consider that an extra 3 days for preparation for counsel should be provided for at $3,000 per day. For those reasons I will proceed on the basis that $42,000 is an appropriate estimate for the likely costs of Christou and AAVC for defending the claims made against them over the period 17 February 2010 (when an application for security for costs was first made) until and including the first day of trial. 23 The next matter to consider is when it is likely that judgment will be given in this case. The proceeding has not yet been listed for hearing but I will proceed on the assumption that judgment will be provided in or about March 2011. 24 The principal questions, then, are: (a) what liquid assets are likely to be available to Professional Vending to pay a sum of $42,000 in or about March 2011? and (b) is there a reason to believe that Professional Vending will be unable to pay that sum at that time? 25 The financial material provided to me is limited. In particular I have not been provided with any cash flow projections and do not have any financial reports for any period beyond the end of March 2010. In those circumstances, a conservative approach is appropriate. 26 In assessing the capacity to pay, I have had particular regard to the cash flow position of Professional Vending as set out in its balance sheet of June 2009 to March 2010 under the item "Bank-main account". I infer, given the substantial negative balance in that account for some of the months in question, that this is the account to which the $100,000 overdraft facility relates. I consider it appropriate to take into account the capacity of Professional Vending to access that overdraft in assessing its capacity to pay. In the period in question, the available funds (including from the overdraft facility) varied from a high of $152,721 (November 2009) to a low of $17,806 (January 2010). Over the nine months in question, the average amount available was $110,399. 27 I need, however, to take into account that the cash flow position (represented by the figures to which I have just referred), is unlikely to reflect the additional extraordinary expenses that Professional Vending will be incurring in the period to March 2011. In that period, Professional Vending will also need to address its own legal costs of this proceeding. 28 Experience suggests that in relation to a 10 day trial in the Federal Court, legal costs will be very substantial and not readily met by a company whose expectation is for an annual profit of something in excess of $160,000. Furthermore, if Professional Vending is the subject of adverse cost orders, it is likely that those orders will also include the costs of the trial and also the entirety of the costs of the third respondent. It is likely that those amounts will dwarf the $42,000 which is here under consideration and all of those costs will fall due at or about the same time, should Professional Vending be unsuccessful. 29 Professional Vending has other current assets which may enhance its cash position. In particular the financial statements show that as at 30 June 2009 it had trade debtors of $300,825. As at 31 March 2010 its trade debtors were $496,342. That increase in trade debtors suggests that sales have been improving and that payment from debtors will increase. On the other hand, current liabilities and in particular trade creditors have tripled. Overall, that analysis suggests a negative impact upon the cash flow position of Professional Vending in the period to March 2010 and at least for some months beyond. 30 As the authorities to which I have referred indicate, I need to make a risk assessment and, of necessity, that assessment is likely to be imprecise. Taking a practical common sense approach, it seems to me that there is a risk that Professional Vending will not be able to meet an adverse costs order of $42,000 in or about March 2011, in the context of it being the unsuccessful litigant. In that respect I have given particular regard to the likely cash flow position of Professional Vending at that time, together with the likelihood that (should it be unsuccessful in the proceeding) it will at or about the same time be required to meet other, very substantial, orders for costs. Bearing in mind that the threshold is low, I am satisfied that there is reason to believe that Professional Vending will be unable to pay the costs of Christou and AAVC which are the subject of the application of those respondents for an order for security for costs. On that basis, the threshold condition is satisfied and I turn to consider the question of the Court's discretion.
discretion 31 The discretion of the Court is unfettered and it is not possible or appropriate to attempt to list all of the matters relevant to its exercise. The factors will vary from case to case: Acohs at [11]. 32 On occasions, single judges of this Court have provided guidelines which in an appropriate case may be of assistance. Some of those guidelines are collected and set out by Jessup J in Acohs at [12]. I have had regard to those guidelines and have identified from them those factors which are of relevance to a case of this kind. I have also had regard to any submissions made by the parties in relation to the exercise of discretion. 33 There are two considerations most relevant to the exercise of my discretion. The first is the extent of the risk that Professional Vending will not be able to meet an order for costs and secondly the extent of any injustice that might be involved in imposing upon Professional Vending an additional financial burden, in circumstances where ultimately the Court may find that Professional Vending has, and has had from the outset, a good claim. 34 On the material before me, it is clear that Professional Vending is not impecunious. It seems to be operating a business which was recently struggling but whose performance is on the improve. Its profits are modest, but it has net assets of about $700,000. 35 In the relevantly short period since 30 June 2008, when Professional Vending took over the business, the directors of its holding company have provided substantial sums by way of unsecured loans. 36 Mr Di Donato has given some detail about his expectation of new custom and significant increases in potential sales. Whilst it may be hoped that that potential will bear fruit, I cannot place much weight upon it. 37 It seems to me that a business which has performed poorly but which is now improving its profitability with an expectation of an annual profit of not less than $160,000 is not well placed to cope with the likely costs of a 10 day proceeding in the Federal Court. 38 In that context, I consider the extent of the risk of an inability to meet an adverse costs order to be significant. It may well be the case that in such circumstances, Professional Vending will have the benefit of the provision of further monies by the directors of its holding company who obviously stand behind it. In the exercise of my discretion I would have taken into account any personal undertaking given by such persons. However no such undertakings have been offered. 39 On the other hand, I do take into account that Professional Vending appears to be a viable trading enterprise with a legitimate business. That business will not be assisted by the imposition upon it of additional financial burdens which it may find difficult to meet. 40 The matter is finally balanced. I am reluctant to impose financial commitments upon Professional Vending but I am also conscious of the risk that Christou and AAVC may be unjustly deprived of their costs should they succeed. On balance I have decided that an order for security for costs should be made in the sum of $42,000. In order to limit the financial burden upon Professional Vending that may be imposed, I consider that security for costs should be provided in a number of stages. 41 I consider that the staged payments should be as follows: (a) $10,000 by 24 June 2010; (b) $10,000 by 19 July 2010; (c) $10,000 by 16 August 2010; and (d) $12,000 by 13 September 2010. 42 The Court has a wide discretion on the question of costs. Whilst I appreciate that the usual order is that costs follow the event, I have determined that circumstances exist that make it appropriate that the costs of the notice of motion should be reserved. The determination of the application for security is finely balanced. No criticism can be made of the opposition to it by Professional Vending. More significantly, I consider that the cost of the application should ultimately fall on the losing party or parties to the litigation as a whole. In a finely balanced security for costs application, it would be harsh that a successful party at trial, who had been ordered to pay security for costs but against whom no cost order is ultimately made, should bear the burden of the costs of the application for security. As there are multiple parties in this proceeding, including both an applicant and a respondent beyond those involved in the application for security for costs, I will reserve costs of the application on the expectation that those costs will ultimately be dealt with by reference to the intent which I have just expressed. 43 It is appropriate that the question of the costs before the Registrar be dealt with consistently with the approach I have taken to the question of the costs of the application before me. For that reason I will make an order vacating the order made by the Registrar in relation to costs and substitute for it an order that costs relating to the application before the Registrar be reserved. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.
Professional Vending Services Pty Ltd
Christou
[2008] VSCA 93
The review was allowed in substance: Professional Vending was ordered to provide $42,000 security for Christou and AAVC’s costs up to and including the first day of trial, in four instalments; the security was to be held as agreed or as directed by a Registrar, and default for 14 days or longer would stay the first applicant’s application unless the Court ordered otherwise. The specified Registrar’s orders were set aside, and the costs of both security motions were reserved.