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Security for costs

Rural & General Insurance Broking Pty Ltd v Barrie Goldsmith t/as Goldsmiths Lawyers [2011] NSWSC 175. Hulme J. 17.03.11

[14] In determining whether there is reason to believe that the plaintiff will be unable to pay an adverse costs order against it, speculation as to insolvency or financial difficulties likely to confront the corporation is insufficient: Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1 at 5....

In [18] There is no merit in Mr Goldsmith's contention that he had an expectation that the plaintiff would have put on evidence as to its financial position.

The plaintiff bore no onus to do so.

[19] As for the other two matters raised by the defendant, they do not, either individually or in combination, satisfy me that the threshold test is met.

With respect to the appointment of a liquidator to ACN 000 007 492 Limited, there is no evidence before the Court of any financial ties between that company and the plaintiff which would affect the plaintiff's capacity to pay an order for costs against it.

Similarly, evidence of criminal charges against a former director of the plaintiff may raise suspicions or concerns regarding the day-to-day management of the plaintiff, however in light of the plaintiff's explanations that matter goes no further.

On Mr Pratten's unchallenged evidence, there appears to be an executive team that can manage the plaintiff's affairs in his absence, and in any event his potential absence significantly post-dates any potential order as to costs in these proceedings.

Moreover, until the proceedings having been finalised, Mr Pratten is entitled to the presumption of innocence.

...

[21]In assessing prospects, I am not required to consider in any great detail the merits of the cases once satisfied that each side appears to have a viable caseKDL Building v Mount [2006] NSWSC 474 at [13].

...

[28] A factor of some significance in favour of not exercising the discretion to order security for costs is the rather small magnitude of the risk to the defendant of the plaintiff not complying with an adverse costs order. I accept the plaintiff's submission that the defendant has overestimated the amount of preparation and hearing time. The matter is not as complex as the defendant appears to suggest. Were I minded to order the giving of security, the quantum would be somewhere in the order of between $15,000 and $20,000 and not the $34,900 sought by the defendant. This is a relatively modest sum, proportionate to the relative simplicity of the matter.

Application dismissed.

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