Polstead Pty Ltd (in liq) v Sandip Shah [2009] NSWSC 560

Polstead Pty Ltd (in liq) v Sandip Shah [2009] NSWSC 560

The evidence established corporate impecuniosity because the plaintiff company in liquidation could not pay even its own lawyers if unsuccessful and there was no prospect of paying the defendants' costs. The discretionary factors overwhelmingly favoured security: the plaintiff's prospects of substantial success were poor, the risk of inability to satisfy an adverse costs order was a certainty, and those who stood to benefit from the litigation were not prepared to put their assets at risk. The unchallenged costs assessment supported the requested security amount of $150,000.

Jurisdiction
Australia
Judgment Date
05 May 2009
Procedural Posture
Corporations Proceedings; Application for Security for Costs / Interlocutory Process Filed by Defendants
Outcome
Plaintiff ordered to give security for the defendants' costs in the amount of $150,000 and proceedings stayed until security is provided.
Legal Topics
['security for Costs' 'company in Liquidation' 'corporate Impecuniosity' 'insolvent Trading Compensation' 'discretionary Considerations' 'quantum of Security']
['corporations' 'civil Procedure'] ['security for Costs' 'company in Liquidation' 'corporate Impecuniosity' 'insolvent Trading Compensation' 'discretionary Considerations' 'quantum of Security']

Case Brief

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Procedural Posture

Corporations Proceedings; Application for Security for Costs / Interlocutory Process Filed by Defendants

Legal Issues

  1. 1 ["Whether there was reason to believe the plaintiff corporation would be unable to pay the defendants' costs if ordered to do so." 'Whether security for costs should be ordered against a company in liquidation as a matter of discretion.' 'What amount of security should be ordered.']

Ratio Decidendi

The evidence established corporate impecuniosity because the plaintiff company in liquidation could not pay even its own lawyers if unsuccessful and there was no prospect of paying the defendants' costs. The discretionary factors overwhelmingly favoured security: the plaintiff's prospects of substantial success were poor, the risk of inability to satisfy an adverse costs order was a certainty, and those who stood to benefit from the litigation were not prepared to put their assets at risk. The unchallenged costs assessment supported the requested security amount of $150,000.

Court Disposition

Plaintiff ordered to give security for the defendants' costs in the amount of $150,000 and proceedings stayed until security is provided.

Orders

  • ["Order that the plaintiff give security for the defendants' costs in the amount of $150,000 in a form acceptable to the Registrar within 14 days, that is to say before 19 May 2009." 'Order that the proceedings be stayed until the security is provided.' 'Reserve liberty to apply in the event of any difficulty...