Australian Worldwide Pty Ltd v AW Exports Pty Ltd [2018] NSWSC 1632

Australian Worldwide Pty Ltd v AW Exports Pty Ltd [2018] NSWSC 1632

The plaintiffs, as companies in liquidation with no evidence of sufficient assets, satisfy the threshold for security for costs under s 1335(1). The indemnity from an external litigation funder does not negate this finding; at best, it is a factor in discretion, but without evidence of the funder’s ability to honour the indemnity, it is inadequate. No discretionary factor justifies refusal of security. Security should be ordered in tranches, exclusive of certain prior costs, and quantified on a broad-brush basis with provision for later adjustment.

Parties
Applicant/third Defendant: Mozammil Bhojani; First Respondent/first Plaintiff: Australian Worldwide Pty Ltd; Second Respondent/second Plaintiff: Australian Worldwide Exports Pty Ltd
Jurisdiction
Australia
Judgment Date
30 October 2018
Procedural Posture
Application for Security for Costs / Interlocutory Application
Outcome
Security for costs ordered in favour of the third defendant against the plaintiffs in tranches, with directions for providing and possibly adjusting the security; stay if not complied with.
Legal Topics
Security for Costs, Impecuniosity, Litigation Funding, Discretionary Factors in Security for Costs Applications, Expert Opinion Evidence Admissibility
Practice and Procedure Corporations Law Security for Costs Impecuniosity Litigation Funding Discretionary Factors in Security for Costs Applications Expert Opinion Evidence Admissibility

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 17 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Mozammil Bhojani

Applicant/third Defendant

Australian Worldwide Pty Ltd

First Respondent/first Plaintiff

Australian Worldwide Exports Pty Ltd

Second Respondent/second Plaintiff

Procedural Posture

Application for Security for Costs / Interlocutory Application

Legal Issues

  1. 1 Whether the plaintiffs should provide security for the third defendant's costs under s 1335(1) Corporations Act 2001 (Cth)
  2. 2 Whether a litigation funder's indemnity is relevant to satisfying the threshold impecuniosity requirement or only as a discretionary consideration
  3. 3 Whether discretionary factors justify refusing security (alleged cause of impecuniosity, delay, risk of stultifying proceedings)

Ratio Decidendi

The plaintiffs, as companies in liquidation with no evidence of sufficient assets, satisfy the threshold for security for costs under s 1335(1). The indemnity from an external litigation funder does not negate this finding; at best, it is a factor in discretion, but without evidence of the funder’s ability to honour the indemnity, it is inadequate. No discretionary factor justifies refusal of security. Security should be ordered in tranches, exclusive of certain prior costs, and quantified on a broad-brush basis with provision for later adjustment.

Court Disposition

Security for costs ordered in favour of the third defendant against the plaintiffs in tranches, with directions for providing and possibly adjusting the security; stay if not complied with.

Orders

  • Order that the plaintiffs provide security for the third defendant's costs in two tranches: $50,000 within 28 days of the third defendant filing his list of documents, and a further $120,000 within 42 days of the court setting the proceedings down for trial.
  • Order that security be provided by payment into Court or in such other form as may be approved by the Registrar.