Elip Pty Ltd v Arch Finance Pty Ltd [2020] NSWSC 752

Elip Pty Ltd v Arch Finance Pty Ltd [2020] NSWSC 752

Security for costs ordered where plaintiff is impecunious and personal guarantee offered by director does not provide adequate security due to imminent bankruptcy; contractual entitlement to indemnity for costs does not preclude discretionary reduction; quantum determined after deduction for surplus funds and reasonable adjustments based on expert evidence.

Parties
First Plaintiff/first Respondent: Elip Pty Ltd ACN 137 960 046 in its own right and as Trustee for the Pile Street Discretionary Trust; First Defendant/first Applicant: Arch Finance Pty Ltd ACN 137 960 046; Second Defendant/second Applicant: Perpetual Trustee Company Ltd ACN 000 001 007; Third Defendant/third Applicant: Louise Meng Li Sijabat and Nick Combis in their capacities as joint and several receivers of Elip Pty Ltd
Jurisdiction
Australia
Judgment Date
16 June 2020
Procedural Posture
Equity Applications List / Security for Costs Application
Outcome
Security for costs ordered; proceedings stayed until security provided
Legal Topics
Security for Costs, Costs, Contractual Entitlement to Indemnity for Costs, Delay in Application, Quantum of Security
Civil Procedure Security for Costs Costs Contractual Entitlement to Indemnity for Costs Delay in Application Quantum of Security

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Parties

Elip Pty Ltd ACN 137 960 046 in its own right and as Trustee for the Pile Street Discretionary Trust

First Plaintiff/first Respondent

Arch Finance Pty Ltd ACN 137 960 046

First Defendant/first Applicant

Perpetual Trustee Company Ltd ACN 000 001 007

Second Defendant/second Applicant

Louise Meng Li Sijabat and Nick Combis in their capacities as joint and several receivers of Elip Pty Ltd

Third Defendant/third Applicant

Procedural Posture

Equity Applications List / Security for Costs Application

Legal Issues

  1. 1 Should security for costs be ordered against an impecunious corporate plaintiff where the defendant mortgagee has a contractual entitlement to indemnity for costs?
  2. 2 Are defendants adequately secured by the surplus from receivership proceedings?
  3. 3 Is a personal guarantee by the director sufficient to resist a security for costs order?

Ratio Decidendi

Security for costs ordered where plaintiff is impecunious and personal guarantee offered by director does not provide adequate security due to imminent bankruptcy; contractual entitlement to indemnity for costs does not preclude discretionary reduction; quantum determined after deduction for surplus funds and reasonable adjustments based on expert evidence.

Court Disposition

Security for costs ordered; proceedings stayed until security provided

Orders

  • On or before 7 August 2020 the first plaintiff is to provide security for the defendants' costs of the proceedings in the sum of $112,000 by payment into Court, provision of a bank guarantee or such other means as the parties may agree or in default of agreement as may be determined by the Registrar in Equity
  • Order that the proceedings be stayed until such time as the security referred to in order 2 is provided.