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CITE

Selected for Reporting - See Editor's Note

Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd[2024] QSC 320Wilson J
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Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd[2024] QSC 320

SUPREME COURT OF QUEENSLAND

CITATION:	Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd [2024] QSC 320
PARTIES:	GREAT BARRIER REEF YACHT CLUB VILLAS PTY LTD ACN 137 212 876 (plaintiff) v INSURANCE AUSTRALIA LIMITED ACN 000 016 722 (first defendant) AND PAYNTERS PTY LTD ACN 060 951 162 (second defendant)
FILE NO:	BS 563 of 2024
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	20 December 2024
DELIVERED AT:	Brisbane
HEARING DATE:	25 and 29 October 2024
JUDGE:	Wilson J
ORDER:	Within 28 days, the plaintiff provide security for the costs of the first defendant up to mediation, in the sum of $437,549 by payment of that sum into court, or by the provision of security in such other form as is acceptable to the registrar, and in default, the claim be stayed until such time as security is provided. Within 28 days, the plaintiff provide security for the costs of the second defendant up to mediation, in the sum of $863,898 by payment of that sum into court, or by the provision of security in such other form as is acceptable to the registrar, and in default, the claim be stayed until such time as security is provided. Liberty to the first and second defendants to apply for further security on the giving of five business days’ notice in writing. The question of costs is adjourned to a date to be fixed.
CATCHWORDS:	PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – PLAINTIFF’S OR APPLICANT’S IMPECUNIOSITY – GENERALLY – where the first and second defendants applied for security for costs – where the plaintiff acts similarly to a body corporate of a strata scheme – where the plaintiff has no assets or real property but has undertaken to exercise its powers to determine that its members pay a special levy in the event of an adverse costs order – where the plaintiff submits it has demonstrated an ability to raise levies from its members in the past to cover legal costs – whether there is reason to believe the plaintiff will be unable to pay the first and second defendants’ costs – whether the court should exercise discretion to order security PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – AMOUNT AND NATURE OF SECURITY – where the parties disagree as to what costs are recoverable – whether security for costs should be ordered to the date of mediation or to the first day of trial Corporations Act 2001 (Cth), s 1335 (1) Uniform Civil Procedure Rules 1999 (Qld), r 670, r 671, r 672 Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd [2010] QSC 176 Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114 Beach Petroleum NL v Johnson (1992) 7 ACSR 203 Fitzpatrick v Isaacs [2024] FCA 1187 General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd (No 2) [2023] FCA 556 Its Eco Pty Ltd v BPS Financial Limited [2022] FCA 842 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Lanai Unit Holdings P/L v Mallesons Stephen Jacques [2016] QSC 2 Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40-584 Mathew (SA) Nominees Pty Ltd v Belconnen Automotive Pty Ltd (2019) 133 SASR 408 Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 Owners Corporation Strata Plan 64970 v Austruc Constructions Ltd [2007] NSWSC 778 Owners-Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820 Re Eastmark Holdings Pty ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 Strata Plan 94417 trading as The Owners-Strata Plan 94417 v TC Build [2021] NSWSC 1284 Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464 Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317 The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 The Owners – Units Plan No 1917 v Koundouris & Anor [2014] ACTSC 269
COUNSEL:	B O'Donnell KC with C George for the plaintiff G D Beacham KC with P O'Brien for the first defendant D O'Sullivan KC with A P McKinnon for the second defendant
SOLICITORS:	MinterEllison for the plaintiff Carter Newell for the first defendant Thomson Geer for the second defendant

[1]
Insurance Australia Limited (the first defendant) and Paynters Pty Ltd (the second defendant) seek an order pursuant to rule 670 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) that Great Barrier Reef Yacht Club Villas Pty Ltd (the plaintiff) provide security for their costs to the first day of trial. The first defendant seeks $1,000,000 and the second defendant seeks $1,200,000.
[2]
The plaintiff opposes these applications.

The claim against the first and second defendants

[3]
The plaintiff commenced proceedings against the first and second defendants by way of a claim filed in the Supreme Court on 16 January 2024.
[4]
The proceedings concern a large luxury villa complex (the development) on Hamilton Island called Great Barrier Reef Yacht Club Villas.
[5]
The development comprises 36 lots, forming a portion of land leased by the State of Queensland to Hamilton Island Enterprises Pty Ltd under a statutory perpetual lease.
[6]
One of the lots, lot NM, is sub-leased by Hamilton Island Enterprises to the plaintiff by way of a sub-lease executed on 11 November 2009.
[7]
On lot NM are the plaintiff’s common areas for the villa members, which include a swimming pool area, a private access road, car parks, security gates, fencing and an open space area.
[8]
A luxury villa is constructed on each of the remaining 35 lots which were constructed in around 2009.
[9]
Those villa lots are sub-leased by Hamilton Island Enterprises to various persons or entities, to be used for residential purposes and/or letting as holiday accommodation.
[10]
As explained by the plaintiff’s solicitor in her affidavit, the development is conducted in a similar way to a strata scheme:

“(a)
the [plaintiff’s] share capital is partially comprised of 350 “Villa Shares”. The Villa Shares are divided equally (at 10 shares apiece) between each of the sub-lessees of the Villa Lots (Villa Members);

Villa Members are required to observe the By-Laws at all times;

the [plaintiff] carries on the activities and business of holding the common property (Lot NM) and, so far as possible, acts as if it were a strata body corporate for the Development including administering the common property, raising levies, and administering an administrative fund and a sinking fund;

the [plaintiff] engages an administration manager to carry out administration duties and convene meetings and has done so at all material times;

the [plaintiff’s] directors use the administrative fund for the purposes of meeting the [plaintiff’s] actual and expected expenditure;

Villa Members are required to, and do, pay amounts levied on them as a contribution to the administrative fund and sinking fund;

where possible, the [plaintiff], Villa Members and directors have regard to the provisions of applicable strata titles legislation and administer consistently with the powers, rights and obligations applying to a strata body corporate;

if it becomes possible to convert the Development into a strata title leasehold system, the [plaintiff] has the power to take steps necessary to prepare for, and if seen fit, recommend to Villa Members the implementation of the conversion.”^[1]

[11]
The plaintiff held a “residential strata insurance policy” with CGU Insurance Limited (CGU) (later transferred to the first defendant) for the relevant period^[2] and all buildings comprising the development were extensively damaged by Cyclone Debbie on 28 March 2017.
[12]
The plaintiff made an indemnity claim under the policy to CGU on or about 30 March 2017 for damage caused by the cyclone. The claim was accepted.
[13]
The first defendant (by then the insurer) approved the second defendant to perform reinstatement works in relation to the damage caused by the cyclone to the villas. The second defendant performed building works, in excess of $20 million, pursuant to a building contract from January to June 2018. The plaintiff alleges a number of defects in the work performed by the second plaintiff.
[14]
The plaintiff summarises its claim against the defendants in this way:

“12.
In its claim against [the first defendant], the [plaintiff] contends that the Policy entitled it to a standard of repair for the Villas in keeping with the above plain wording of the Policy to restore to the same condition as when they were new and that the existence of defects that are not disputed by the parties means that the standard has clearly not been met. Further, the Building Contract included a special condition that reflected [the first defendant’s] obligation to reinstate the facility back to a position as per the Policy. The [plaintiff] contends that [the first defendant] paid [the second defendant’s] charges for the reinstatement works, and that the insurer also paid amounts for lost rent and temporary accommodation suffered by individual Villa Members. The [plaintiff] seeks specific performance of the insurer’s promise under the Policy, or damages for the cost of the rectification works. This relief is based on a breach of the Policy, or a breach of [the first defendant’s] duty of utmost good faith pursuant to s 13(1) of the Insurance Contracts Act 1984 (Cth) (ICA).

As against [the second defendant], the [plaintiff] seeks specific performance of the Building Contract or damages for the cost of the rectification works amongst other relief. The [plaintiff] claims that [the second defendant] breached the Building Contract, and was negligent, and failed to comply with statutory warranties under the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) and a statutory guarantee under the Australian Consumer Law (ACL). The [plaintiff] also seeks relief for misleading and deceptive conduct by [the second defendant] in contravention of s 18 of the ACL.”^[3]

[15]
I note that the plaintiff’s third amended statement of claim filed on 12 July 2024 does not allege an amount for the damages sought. However, the plaintiff’s quantum expert report dated 20 September 2024 (to which the defendants were yet to respond at the date of the hearing) estimates the cost of rectification work at $15,167,114.75. On any view, the claim is very substantial.
[16]
A vast majority of the villa members^[4] have assigned to the plaintiff their causes of action against the first and second defendants in relation to the reinstatement works. The terms of assignment are set out in the material and include those from:
1. 12 villa members who were villa members at the time of the damage caused by the cyclone and remained villa members at the date of the assignment;
2. 18 villa members who were not villa members at the time of the damage caused by the cyclone but were villa members at the date of the assignment; and
3. two villa members who were villa members at the time of the damage caused by the cyclone but were no longer villa members at the date of the assignment.
[17]
The second defendant states that the claim brought by the plaintiff is complex as:
1. there are substantial issues to be tried involving experts from various building disciplines including structural, waterproofing and tiling, and metallurgy;
2. although general allegations of defective works are made, the precise alleged defects vary across the 35 villas, and the nature of the remedial works said to be required is bound to be disputed; and
3. the second defendant has raised a number of points of law in its defence of the claims.
[18]
The second defendant is yet to file and serve its expert reports and has indicated to the plaintiff that it will need to amend its defence once that occurs.
[19]
At this stage, pleadings have not been finalised and the proceedings are being managed on the Building, Engineering and Construction List along with two related third-party proceedings commenced by the second defendant.
[20]
The trial can be expected to be reasonably lengthy and complicated.
[21]
The solicitor for the plaintiff states that, based on her experience and knowledge of the matter, she estimates that the trial (consolidated with the two third party proceedings) is unlikely to be heard before the second half of 2026 and is likely to take more than four weeks.
[22]
Clearly, the trial will be expensive for all parties. To date, the parties have incurred the following costs:
1. the plaintiff’s costs are in the order of $1.2 million;
2. the first defendant’s costs are in the order $139,750 (plus GST)^[5] in defending the claim to the end of August 2024; and
3. the second defendant’s costs has incurred $849,479 (plus GST)^[6] in defending the claim to 5 September 2024.

The plaintiff has provided two undertakings

[23]
In relation to this matter, the plaintiff has provided two undertakings.
[24]
The first through their solicitor, where the solicitor states in her affidavit that she has been informed (and believes) by the chair of the plaintiff’s board of directors that:

“(a)
if any order is made against the [plaintiff] that it provide security for [the first defendant’s] and/or [the second defendant’s] costs of and incidental to this proceeding, the [plaintiff’s] directors will exercise their power under clause 22.3 of the Constitution (as defined in paragraph 15 below) to determine that a levy in the amount sufficient to satisfy the order be recommended to be levied on Villa Members (as defined in paragraph 17(a) below) as a contribution the administrative fund; and

the [plaintiff’s] directors undertake to the Court that they will do so.”^[7]

[25]
The second undertaking was provided on the morning of the first day of hearing and states:

“The Plaintiff UNDERTAKES TO THE COURT as follows:

‘If any adverse costs order is made against the Plaintiff in this proceeding:

the Plaintiff’s directors will exercise their power under clause 22.3 of the Plaintiff’s Constitution dated 18 June 2007 (Constitution) to determine that a levy in the amount sufficient to satisfy the order be recommended to be levied on Villa Members (as defined in the Constitution) as a contribution to the administrative fund;

the Plaintiff will take steps under clause 22.8 of the Constitution to recover from a Villa Member as a debt any unpaid levy for any such adverse costs order at the end of one month after such debt becomes due and payable.’”

How does the plaintiff raise levies?

[26]
The plaintiff’s powers to raise a levy to pay for any adverse costs order comes from its constitution.
[27]
Pursuant to clause 1.9 of the constitution, the plaintiff is expressly not for profit and the plaintiff meets its actual and expected expenditure by raising levies from its villa members using an administrative fund and a sinking fund.
[28]
Part 22 of the constitution prescribes how this is done:^[8]

“22
Levies

22.1
Administrative Fund

The Directors may establish an Administrative Fund for the purposes of meeting its actual and expected expenditure to:

maintain in good condition on a day to day basis the Common Property and any personal property vested in the Company;

provide for insurance premiums;

pay rent payable under the Lease; and

meet other regular expenses.

22.2
Sinking Fund

The Directors may also establish a Sinking Fund for the purposes of meeting its actual and expected expenditure:

for painting or repainting any part of the Common Property that is a building or other structure;

to renew or replace fixtures and fittings that are part of the Common Property;

to replace or repair the Common Property;

to meet other expenses of a capital nature relating to Common Property; and

to acquire personal property for the Company.

22.3
Directors to determine amounts

The Directors must determine the amounts recommended to be levied on Villa Members as a contribution to the Administrative Fund and the Sinking Fund to raise the amounts estimated as needing to be credited to those funds each year.

The Directors must determine the non-discretionary expenses of the Company (such as lease payments in respect of the Property, rates and taxes and other amounts which the Company cannot avoid liability for by alteration of the operation of the Common Property) and discretionary expenditure.

The Directors may determine how regularly the contributions are levied (for example, quarterly).

22.4
Villa Members to approve

The determination of levies under article 22.3 is subject to approval of the Villa Members by a Villa Member Resolution.

Villa Members may, in the meeting for the determination of levies under article 22.3, proposed and determine by Villa Member Resolution a different levy from that recommended by the Directors, but they may not determine an amount that is insufficient to provide the Company with funds to pay non-discretionary expenditure determined by the Directors under article 22.3.

22.5
Notification of levy

Subject to approval under article 22.4, the Directors must levy the contributions to be paid by each Villa Member by serving a written Notice on the Villa Member of the amount payable by that Villa Member.

22.6
Payable by proportion

Villa Members must pay the contributions approved under article 22.4. Contributions must be levied in respect of each group of shares set out in Schedule 1 and are payable by the Villa Members in shares proportional to the number of shares held by each Villa Member.

22.7
Chargee liable

A charge of shares in the Company that is in possession of a Villa (whether in person or not) is jointly and severally liability with the Villa Member for any regular period contributions to the Administrative Fund and Sinking Fund together with any interest on those contributions. This does not affect the liability of the Villa Member to pay any contribution levied on it.

22.8
Arrears and interest

Any contribution levied must be paid by the Villa Member and becomes due and payable to the Company in accordance with the resolution under article 22.4 as notified to Villa Members. A contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest at an annual rate of 10 per cent.”

[29]
On 15 August 2023, at a general meeting of the plaintiff’s members, the villa members and the plaintiff’s ordinary shareholders voted to authorise the plaintiff to commence, conduct and progress the proceedings.
[30]
The plaintiff is a corporation with paid up share capital of $182.
[31]
The plaintiff is not, and has never been, charged any annual rent pursuant to its sub-lease in respect of lot NM, and the plaintiff does not recognise any book value in its accounts for the sub-lease.
[32]
The plaintiff’s solicitor set out in her affidavit how levies are managed by the plaintiff:

“(c)
consistently with the Constitution, the [plaintiff’s] directors meet regularly as a board to determine the non-discretionary expenses of the [plaintiff], and how regularly and in what amounts there will be levies upon Villa Members to meet the [plaintiff’s] expenditure;

Villa Members cannot propose different levies that are insufficient to provide the [plaintiff] with funds to pay non-discretionary expenditure that has been determined by the [plaintiff’s] directors;

on each occasion that the directors have determined the amounts recommended to be levied on Villa Members as a contribution to the administrative or sinking fund, the Villa Members have approved those levies;

once a levy has been approved by resolution, the levy is treated by the [plaintiff] as due and payable by the Villa Members. Any overdue levies may attract interest and be recovered by the [plaintiff] as a debt;

since commencing its role as if a body corporate in about 2009, the [plaintiff] has met its debts as they became due;

the [plaintiff] has never been required to take legal action against any Villa Member to recover an overdue levy;

consistently with the Constitution, the levies (including GST) raised by the [plaintiff] are the same per Villa, per annum, and are or have been as follows for the current and last three financial years:

Year	Administrative fund	Sinking fund	Special Levy
2020/2021	$39,189.70	$5,904.40
2021/2022	$47,027.00	$6,302.20
2023/2024	$64,156.00	$7,542.90	$27,264.35

a review of the [plaintiff’s] records in respect of the levies issued by the [plaintiff] since 1 March 2022 and paid by Villa Members shows an established practice of the Villa Members paying those levies promptly, and in almost all cases within three months. Exhibit RP 12 is a copy of two spreadsheets prepared by Gail Absolon of Team Whitsundays, the [plaintiff’s] administration manager, summarising the outcome of that review, and in which the code 4-1000 is for administration fund levies (other than special levies for the [plaintiff’s] own costs of this proceeding), the code 4-1001 is for special levies for the [plaintiff’s] own costs of this proceeding, and the code 8-8001 is for sinking fund levies. One spreadsheet is for levies issued from 1 March 2022 to 29 May 2024. The other spreadsheet is for levies issued in the first quarter of the current financial year;

if a Villa Member did fail to pay a levy within three months, then the [plaintiff] would, in the absence of any satisfactory arrangements for payment of the outstanding levy within a reasonable period thereafter being agreed by the [plaintiff] and the Villa Members, exercise its rights to suspend rights that the Villa Member has to use the common property and vote at meetings of Villa Members. The review at Exhibit RP 12 shows that there are six Villa Members presently in arrears in respect of special levies for the [plaintiff’s] own costs of this proceeding, namely:

Villa 2 (which was a Villa Member at the time of the damage caused by the Cyclone and has given an assignment as referred to in paragraph 33(n) below in the same form as that at Exhibit RP 13), Villa 32 (which was not a Villa Member at the time of the damage caused by the Cyclone and has given an assignment as referred to in paragraph 33(n) below in the same form as that at Exhibit RP 14) and Villa 34 (who has not given an assignment as referred to in paragraph 33(n) below). In that regard, I am further instructed by Mr Evans and believe that these three villas are in the rental pool referred to in paragraph 33(l)(i) below, and the [plaintiff] has made a commercial decision not to take any enforcement action in respect of those outstanding levies at this time;

Villa 1 (which was a Villa Member at the time of the damage caused by the Cyclone and has given an assignment as referred to in paragraph 33(n) below). This is in respect of one special levy that was only issued on 1 August 2024, and Villa 1 is otherwise up to date in the payment of special levies;

Villas 15 and 17 (who have not given an assignment to the [plaintiff]). This is in respect of one special levy that was only issued on 1 August 2024, and Villas 15 and 17 are otherwise up to date in the payment of the special levies;”^[9]

[33]
The plaintiff’s evidence is that there are six villa members presently in arrears in respect of special levies for the plaintiff’s own costs of this proceeding with three involving:
1. a villa member at the time of the damage caused by the cyclone who has given an assignment to the plaintiff;
2. a villa member who was not a villa member at the time of the damage caused by the cyclone and has given an assignment to the plaintiff; and
3. a villa member who has not given an assignment to the plaintiff.
[34]
As to why these three villa members have not paid the special levy to pay for the plaintiff’s legal costs, counsel for the plaintiff frames it in this way:

“MR O'DONNELL:	…The three villa members who didn’t pay, they paid their sinking fund levy and they paid the administrative fund levy, other than the special levy for the legal costs.
HER HONOUR:	So they’re just not wanting to be involved in the legal costs at all?
MR O'DONNELL:	There’s no evidence from – as to their state of mind. They just didn’t pay it.”

[35]
These three villas are in the rental pool and the plaintiff has made a commercial decision not to take any enforcement action in respect of those outstanding levies at this time.
[36]
There is no evidence as to the basis of why this commercial decision was made.
[37]
In relation to the other three villas, their failure to pay the special levy is only in relation to the most recent levy and otherwise they are up to date in the payment of the special levies.

Assets of the plaintiff and the villa members

[38]
The only asset that the plaintiff has is the common area for the villas, comprising the car park area and other common property. This cannot be sold to meet an adverse costs order because the common area is necessary for the villa owners to enjoy their villas. This common property does not appear in the plaintiff’s balance sheets.
[39]
The plaintiff does not hold any real property, lines of credit or debit facilities.
[40]
There is no evidence about the financial means of the villa owners which the plaintiff relies on for its funding. Most of the owners of the villas are corporations or trustees.
[41]
However, the plaintiff’s solicitor states that she has been informed by the plaintiff’s chair of the board of directors that “the villa members are persons or entities of substantial financial means, evidenced by the nature and location of the villas owned by them”.
[42]
To that end, I note that 31 of the 35 villas are rented out as holiday accommodation with a nightly charge of between $1,355 and $2,646 per night. The total consideration paid by the current villa members to acquire their interests in the villas exceeds $98.5 million. Recently, one villa sold for $4 million.
[43]
However, there is no evidence that establishes how the villa purchases may have been financed, or the equity that each villa member holds in their villa.
[44]
Since the cyclone, many of the villas have changed ownership:
1. there have been 29 transfers of sub-leases relating to the 35 villas;
2. 22 of the 35 sub-leases have been transferred to a new sub-lessee;
3. five of the sub-leases have been transferred twice and 1 villa’s sub-lease has been transferred three times; and
4. there were four transfers in 2018, none in 2019, one in 2020, 12 in 2021, four in 2022, four in 2023 and one in 2024.
[45]
Accordingly, the evidence establishes an average of about four sub-leases of villas being transferred per year.

Legal principles

[46]
This application is brought pursuant to Chapter 17 of the UCPR, section 1335 of the Corporations Act 2001 (Cth) (the Corporations Act) and/or the inherent jurisdiction of the court. Rules 670 to 672 of the UCPR state:

“670
Security for costs

On application by a defendant, the court may order the plaintiff to give the security the court considers appropriate for the defendant’s costs of and incidental to the proceeding.

This rule applies subject to the provisions of these rules, particularly, rules 671 and 672.

671
Prerequisite for security for costs

The court may order a plaintiff to give security for costs only if the court is satisfied—

the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or

the plaintiff is suing for the benefit of another person, rather than for the plaintiff’s own benefit, and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or

the address of the plaintiff is not stated or is misstated in the originating process, unless there is reason to believe this was done without intention to deceive; or

the plaintiff has changed address since the start of the proceeding and there is reason to believe this was done to avoid the consequences of the proceeding; or

the plaintiff is ordinarily resident outside Australia; or

the plaintiff is, or is about to depart Australia to become, ordinarily resident outside Australia and there is reason to believe the plaintiff has insufficient property of a fixed and permanent nature available for enforcement to pay the defendant’s costs if ordered to pay them; or

an Act authorises the making of the order; or

the justice of the case requires the making of the order.

672
Discretionary factors for security for costs

In deciding whether to make an order, the court may have regard to any of the following matters—

the means of those standing behind the proceeding;

the prospects of success or merits of the proceeding;

the genuineness of the proceeding;

for rule 671(a)—the impecuniosity of a corporation;

whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;

whether the plaintiff is effectively in the position of a defendant;

whether an order for security for costs would be oppressive;

whether an order for security for costs would stifle the proceeding;

whether the proceeding involves a matter of public importance;

whether there has been an admission or payment into court;

whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;

whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;

the costs of the proceeding.”

[47]
Section 1335 (1) of the Corporations Act is similar to UCPR r 671 (a):

“1335
Costs

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.”

[48]
An application for security for costs requires a three-step inquiry:
1. first, is the jurisdiction enlivened? That is, the plaintiff being a corporation, is there is reason to believe that it will not be able to pay the first and second defendants’ costs if ordered to pay them?^[10] (the threshold question);
2. second, having regard to, inter alia, the matters in UCPR r 672, should the court exercise its discretion to order security? (the discretionary issues); and
3. third, if the first two questions are answered in favour of the first and second defendants, what quantum of security should be ordered? (quantum).
[49]
The defendants bear the onus of establishing that a prerequisite for making an order for security for costs exists, i.e. that there is reason to believe that the plaintiff will not be able to pay the defendant’s costs if ordered to do so.^[11]
[50]
If that onus is discharged, the onus shifts to the plaintiff to establish reason why security should not be granted.^[12]

Reason to believe that the plaintiff will be unable to pay the defendants’ costs

[51]
Rule 671 (a) of the UCPR poses a threshold question as to whether there is reason to believe that the plaintiff will be unable to pay the first and second defendants’ costs and requires:
1. a consideration of whether there is a rational basis for the requisite belief that the plaintiff will be unable to pay in the future the costs of the first and second defendants; and
2. a formation of an opinion as to the financial position of the plaintiff at the time of judgment and immediately thereafter.^[13]
[52]
The defendants bear the persuasive onus of establishing that there is reason to believe that the plaintiff will be unable to pay the costs of the litigation if unsuccessful, i.e. to adduce evidence from which the requisite reason to believe may be deduced and also to persuade the court that such a deduction ought to be made.^[14]
[53]
The meaning of “reason to believe” requires a rational basis for the requisite belief to be held, the requisite belief being that the plaintiff will be unable in the future to pay the defendants’ costs, assuming the defendants were to succeed.^[15]
[54]
A conclusion that there is a risk that that will, or may, be the case is insufficient.^[16] So, in relation to this matter, merely showing a risk that the plaintiff will be unable to pay the costs is not enough to satisfy the threshold question.
[55]
Gotterson JA in Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (Monto Coal)^[17] considered the meaning of “unable to pay”:

“[50]
I turn next to the meaning of the expression “will be unable to pay”. It is found in r 671(a) and is therefore a necessary component of the threshold question. The expression itself does not stipulate when, or by what means, the plaintiff company is to be able to pay the costs order. It does not require, for example, that in order to be able to pay a costs order, a company must have available liquid funds sufficient to meet the costs order on the date that the order is made. To put it another way, it does not state or imply that a company will be unable to pay unless it has on hand such liquid funds at that date.

[51]
In Beach Petroleum NL v Johnson, von Doussa J observed:

“A corporation ‘will be unable to pay’ the costs within the meaning of the section if it can only do so if given extended time to realise assets which might be difficult to realise, at least at a price sufficient to provide a surplus over the liabilities, sufficient to pay the costs... The company will also be unable to pay the costs within the meaning of the section if the payment would be one that will amount to a preference of the defendant over other creditors such that the payment would be liable to be set aside either as a preference or as a fraudulent disposition (that is a payment made by the plaintiff corporation with the intention to defeat or delay one or more other creditors) in the event of the plaintiff corporation later going into liquidation …

In my opinion the power of the court under s 1335 arises if credible evidence establishes that there is reason to believe there is 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 service of the allocator, if judgment goes against it.”

[52]
These observations imply, correctly in my view, that the period of time likely to be required for determination, by assessment or otherwise, and allowing for resolution of any disputes that arise in the determination process, is to be taken into account. So also is the opportunity that the plaintiff corporation will have within that period to realise non-liquid assets in order to pay the quantum of the ordered costs as and when they are ultimately determined.”^[18]

[56]
Accordingly, the time it takes for a corporation to pay an adverse costs order is relevant. A corporation is to be taken to be unable to pay an adverse costs order if it can only do so if allowed extended time to realise assets, even if, upon realisation, the assets may produce a surplus over liabilities sufficient to pay the costs.
[57]
However, as Gotterson JA explained in Monto Coal, the time taken in assessing the quantum of costs needs to be factored in when considering the time allowed for the corporation to obtain the funds to meet an adverse costs order:

“[59]
With respect, that proposition assumes that the requisite conclusion is to be reached without regard for either the time required for realisation or, for that matter, the time required for determination of the quantum of costs payable. As I have explained, such an assumption is, in my view, incorrect.”^[19]

[58]
The threshold ground has been described, somewhat compendiously and imprecisely, as corporate impecuniosity.^[20]
[59]
In Beach Petroleum NL v Johnson,^[21] Von Doussa J, when considering the equivalent provision under the Corporations Act, stated:

“In my opinion the power of the court under s 1335 arises if credible evidence establishes that there is reason to believe there is 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 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.”^[22]

[60]
The test has been described as involving an “undemanding test”.^[23]
[61]
The assessment as to whether a corporation is unable to pay requires a practical and common-sense approach to the examination of the corporation’s financial affairs.^[24] The court’s assessment will, almost inevitably, be a preliminary one based on limited materials.^[25]
[62]
It must be steadily born in mind that the resolution of the threshold question depends upon a determination as to whether the defendants have established the existence of a relevant inability to the requisite degree upon the facts and circumstances of a particular matter.^[26]

Security for costs when a levy is required to pay an adverse costs order – a summary of the relevant cases

[63]
In this case, the plaintiff has no assets (except for some cash) and no line of credit.
[64]
It is common ground that, to pay any adverse costs order, the plaintiff will need to levy its members.
[65]
In Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd (Laundry Coin-Wash),^[27] speaking of a trustee’s right of indemnity, Smithers J said:

“With respect to the indemnity, unless the applicant itself co-operated, or the applicant company were wound up, benefit could not be obtained by the respondents thereunder. No direct process of execution would be available for the purpose of obtaining that benefit. Further, the extent to which the indemnity would in any event be productive would depend upon the state of the finances of the trust. And the possibility of some defences cannot be ignored.”^[28]

[66]
Street v Luna Park Pty Ltd^[29] involved a plaintiff who was a trustee for a joint venture with its only asset being its right of indemnity as a trustee against the trust assets. Brereton J concluded that, in such circumstances, the applicant for security will be taken to have satisfied the onus of establishing that there is reason to believe that the plaintiff will be unable to pay a costs order if so ordered, unless the plaintiff can establish that it will have recourse to property or assets held by it on trust:

“As Smithers J explained in Laundry Coin Wash, this is because, where the only tangible assets of the plaintiff are held on trust for another entity, so that the plaintiff’s solvency depends on its right of indemnity, the Court must bear in mind the difficulty which a successful defendant may encounter in attempting to execute in respect of an order for costs. These observations of Smithers J were approved by Tadgell J in Lagarna (at 154).”^[30]

[67]
Accordingly, where a plaintiff depends on a right of indemnity, or a similar right to be put into funds as in the case of a corporate trustee, it is not sufficient for the plaintiff to point to that right in answer to an application for security for costs.
[68]
The rationale was explained by Doyle J in Mathew (SA) Nominees Pty Ltd v Belconnen Automotive Pty Ltd:^[31]

“[64]
…the reason ordinarily given for this approach to trustee plaintiffs is that a successful defendant should not be subjected to the potential complexity, and hence expense and uncertainty, associated with having to resort to derivative rights in order to recover any costs to which it might be entitled. This has been held to be so even in situations where there is evidence of significant trust assets against which the right of indemnity might be exercised; the reason being that there is a risk those assets may become unavailable, for example, by reason of them being distributed to beneficiaries prior to the conclusion of the proceedings.

[65]
While it is thus significant, in the context of an application for security, that a plaintiff is suing as trustee, it does not follow automatically that it will be appropriate that there be an order for security. The onus remains on the defendant to establish both that the threshold requirement has been made out (in the case of an application under s 1335), and that the interests of justice will be best served by making an order for security.”^[32]

[69]
This principle, familiar in the case of plaintiff trustees, has also been applied when considering security for costs applications in relation to body corporates (which are similar to the plaintiff).^[33]
[70]
In this present case, there is no strata title scheme. As the second defendant points out, there is a private arrangement with some similarities to a strata title scheme.
[71]
A significant amount of time in this application was spent by the parties analysing security cases which considered ordering security where levies were required to pay costs orders.
[72]
However, as can be seen by trawling through these security cases, the outcomes are not consistent; facts and circumstances being the decisive factor.

Walter Construction

[73]
In 2001, Bergin J in Owners-Strata Plan No 50530 v Walter Construction Group Ltd (Walter Construction)^[34] determined that the defendants had not met the threshold in circumstances where the plaintiff, a body corporate, could meet any adverse costs order by striking a levy:

“[36]
I am of the view that for the defendant to have discharged its burden, it needed to call evidence upon which, viewed objectively, I could be satisfied that the plaintiff was not entitled to raise a special levy to pay the costs or, if able to raise levies in respect of costs, that such levies would not be paid. There is no evidence of any recalcitrance on the part of the unit holders to pay the special levies nor is there any evidence of an inability in any of the unit holders to pay a levied amount of approximately $5,700 or $11,500 depending on whether the costs are $1 million or $2 million.

[37]
Mr Hunt, for the defendant, argued that the structure of the Management Act prevented the plaintiff from raising a levy to meet the costs of the proceedings should the plaintiff be unsuccessful. In support of this submission he referred to the restrictions in s 230 on the owners corporation levying contributions. I am of the view that this section is adverse to the defendant’s submission. The restriction that is expressly stated in s 230 is only a restriction on the owners corporation raising levies in respect of proceedings brought under Chapter 5. There is no other express restriction on the owners corporation levying contributions to pay costs. I am of the view, that there is an entitlement to raise a levy for the payment of costs of these proceedings and that the terms of s 230 reinforces that view.

[38]
In all of the circumstances I am not satisfied that the defendant has discharged its evidentiary burden. I am not satisfied that the evidence before me viewed objectively gives rise to the requisite satisfaction that there is reason to believe that the plaintiff will be unable to pay the defendant’s costs if ordered to do so.”^[35]

[74]
I note that in Walter Construction, the only evidence in relation to the question of an inability to pay was an exchange of correspondence between solicitors for the parties which considered the costs of the proceedings and the capacity of levies to deal with any costs order. There was also a discussion (unresolved in the evidence) as to accumulated reserves and funds raised by a special levy.
[75]
Notably, in Walter Construction, there was no evidence of any recalcitrance, or inability, on the part of the unit holders to pay the levies contemplated. The defendant in Walter Construction did not discharge its evidentiary burden.

Austruc Constructions

[76]
Six years later in 2007, Einstein J considered an adverse costs order being paid by a special levy in Owners Corporation Strata Plan 64970 v Austruc Constructions Ltd (Austruc Constructions).^[36]
[77]
In Austruc Constructions, Einstein J described the distillation of principles by Bergin J in Walter Construction as unexceptional:

“[8]
Considerable assistance has been given in unravelling the principles which inform applications of the present type by the judgment given by Bergin J in Owners – Strata Plan 50530 v Walter Construction Group Ltd [2001] NSWSC 820 (24 September 2001).

[9]
In particular the plaintiff in resisting the present claim for security for costs has relied upon the following distillation of those principles which seems to me to be unexceptionable:

‘a)
the defendant has the evidentiary burden of proving it is entitled to the order it seeks…;

b)
if the Owners Corporation is able to pay any adverse costs order by way of a special levy and there is no evidence of any recalcitrance on the part of any unit holder to pay the special levy, or inability for such payment to be made (and no evidence to the contrary) the defendant would not have discharged its evidentiary burden.’”^[37]

[78]
In Austruc Constructions, regard was had to the fact that the owners’ corporation had raised special levies specifically to fund the litigation. The strata manager had received no express unwillingness to pay the levies and “all the lot owners have always paid levies within a matter of weeks of those levies being due and payable”.^[38]
[79]
In considering whether the applicants had discharged their onus upon the threshold test, Einstein J looked at the financial statements of the body corporate and noted that the administrative fund totalled $58,031 and the sinking fund totalled $17,360. In Austruc Constructions, each unit owner would be required to pay a levy of approximately $6,000 to meet the amount of security sought by the defendant.
[80]
In the circumstances, Einstein J held that the defendant had failed to discharge its onus of persuading the court on the evidence that the plaintiff, if unsuccessful, would not be able to pay the defendant’s costs.

Koundouris

[81]
Then, in 2014, The Owners – Units Plan No 1917 v Koundouris & Anor (Koundouris)^[39] was decided.
[82]
In Koundouris, it was alleged that unit owners had assigned to the body corporate their rights to take legal action against the builder, and the body corporate had done so.
[83]
The builder’s application for security for costs was refused because the evidence did not prove that the threshold requirement had been made out.
[84]
The circumstances of Koundouris were that:
1. the body corporate submitted that the evidence showed that it had powers to raise funds by way of special levies and had done so;
2. any suggestion that a further special levy might not be paid was speculation; and
3. the body corporate’s financial records demonstrated that it had never had any issue with raising or recovering levies and had predominately maintained a positive net asset position.
[85]
The court found that the financial records showed that the body corporate had managed, where necessary, to raise substantial funds to meet its obligations.
[86]
The court referred to Walter Construction with approval at paragraph 130 and then concluded that:

“[131]
In the present case where the records of the body corporate were available they show that the entity has, in the relatively recent past, had the capacity to raise substantial amounts by way of a special levy from the owners. There is no evidence that indicates that the owners would be unable or unwilling to pay a levy that was necessary to fund a costs order against the plaintiff. While the plaintiff may not have that money immediately available there is no evidence to indicate that it could not be raised with in a reasonably short period of time and hence to be available to meet a costs order by the time that order became crystallised in an enforceable judgment for a particular amount.”^[40]

Eastmark Holdings

[87]
In 2015, Brereton J in Re Eastmark Holdings Pty ltd (Recs and Mgrs Apptd) (Eastmark Holdings),^[41] considered that, when levies are required to pay an adverse costs order, the reasoning as set out Laundry Coin-Wash applies:

“[6]
The same applies in this case: it seems to me that, unless the plaintiff itself cooperates or unless it were wound up, the defendants could not enforce any right and duty of the plaintiff to raise an additional levy from the unit holders. The defendants would have no direct process of execution against the unit holders for the purposes of doing so. The extent to which the levy would be productive in any event would depend upon the terms of the resolution determined at a general meeting of the Owners Corporation by the people liable to pay and it cannot be excluded that they, or some of them, might have some defence to a levy being struck.

[7]
It is true that, in the case of Owners-Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820, Bergin J (as her Honour the Chief Judge in Equity then was) said (at [36]) that for the defendant to have discharged its burden, it needed to call evidence upon which, viewed objectively, the Court could be satisfied that the plaintiff was not entitled to raise a special levy to pay the costs or, if able to do so, that such levies would not be paid, and in the absence of evidence of recalcitrance on the part of the unit holders to pay the special levies, was not so satisfied. However, that was a rather different case from the present. In particular, as I understand it, there does not appear to have been evidence of the impecuniosity of the plaintiff itself in the way in which there is in this case. Her Honour does not appear to have been referred to the line of authority descending from Laundry Coin-Wash and Pitcairn Investments.

[8]
I am satisfied that an order for security should be made.”^[42]

[88]
Brereton J referred to Walter Construction where Bergin J stated that:

“…for the defendant to have discharged its burden, it needed to call evidence upon which, viewed objectively, the Court could be satisfied that the plaintiff was not entitled to raise a special levy to pay the costs or, if able to do so, that such levies would not be paid.”^[43]

[89]
In the absence of evidence of recalcitrance on the part of the unit holders to pay the special levies, Bergin J was not so satisfied.^[44]
[90]
Ultimately, Brereton J distinguished the facts of Eastmark Holdings from Walter Construction as in Eastmark Holdings there was evidence of the plaintiff’s impecuniosity, whilst there was no such evidence in Walter Construction.

Serman

[91]
Then, in 2017, in a comprehensive analysis, the tension between the outcomes in Eastmark Holdings and Walter Construction was considered by Walton J in The Owners – Strata Plan 64415 v Serman (Serman):^[45]

“[134]
It follows that primarily Brereton J distinguished Walter Construction upon the basis of the factual circumstances applying in each matter, namely the impecuniosity of the plaintiff. It is reasonably clear that his Honour did not demur from the approach adopted by Bergin J in circumstances where there was an absence of evidence of impecuniosity. However, his Honour considered that, in a case where the plaintiff’s liabilities exceeded its assets by a very substantial margin with modest liquid assets, the application of the principles in Laundry Coin-Wash should be applied to the determination of the application for security for costs.”^[46]

[92]
As to how Walter Construction and Eastmark Holdings impacted the decision in Serman, Walton J explained:

“[144]
I do not consider that the circumstances of this matter may be distinguished from those in Eastmark Holdings. It follows that, as Brereton J did in that matter, the circumstances in this matter may be distinguished from Walter Constructions, although, as will be observed below, I consider that some of the principles stated by Bergin J in Walter Constructions may also be applied to in the present circumstances.”^[47]

[93]
Again, the facts and circumstances of Serman were relevant when distinguishing Walter Construction and deciding the matter.
[94]
Walton J found that plaintiff in Serman was impecunious, as:
1. the liabilities of the plaintiff were $542,621 which far exceeded the plaintiff’s assets;
2. the plaintiff held no real property and had limited cash reserves;
3. creditors had not been paid by the date on which the plaintiff’s invoices were due or payable;
4. the plaintiff had nearly $30,000 worth of outstanding invoices to multiple creditors as at 16 November 2016. Although that amount had been reduced to $10,000, under the (then) current accounts there remained outstanding a substantial amount of legal costs over a lengthy period of time; and
5. there was evidence of a failure to pay levies when due and payable in the years 2012 to 2015. Whilst that period excluded the most recent year (2016), it did coincide with the existence of an outstanding legal cost burden (the counterpart of which was any adverse costs order made in those proceedings).
[95]
The evidence in Serman demonstrated that the historical pattern of meeting liabilities including costs orders was by means of special levies paid by instalment. An analysis of the owners’ ledger revealed the following pattern:

“[110]
The Owners’ Ledger also illustrated another relevant pattern with respect to levies, namely, special levies were paid by instalment. Special levies fixed from time to time were paid in instalments which represented an amount less than the full instalment due in relation to particular items such as legal costs. There is no explanation in the evidence for this situation but it does accord with other evidence showing that significant liabilities remain unpaid. For example, the fees owed to the defendants from the Vero proceedings were still not fully paid as at February 2017. These fees relate to orders made by Stephenson J on 30 October 2014.

[111]
This puts into context one of the submissions by the plaintiff that it had demonstrated a capacity to pay by the means of special levies. The plaintiff pointed to the amounts paid to the first and second defendant in the Vero proceedings, in this respect, which amounted to the total sum of $983,191 (rounded). However, whilst that sum represents substantial repayment, it also represents a liability which has not been fully paid over an extended period of time (the amounts owing as set out earlier).

[112]
Similarly, when the plaintiff submitted in defence of the contention of its inability to pay, that it had paid by levy $1.8 million over 5 years, that contention needs to be understood in light of how the systems of levy and payment operate in practice. The counterpart is that the owners corporation has accumulated over a period of time a negative net asset position of $422,985.

[113]
This analysis provides the basis for two conclusions.

[114]
First, the evidence is supportive of the concern expressed by the defendants that mechanisms within the Act requiring levies to meet liabilities as a costs order do not warrant a conclusion that the payments will be made within a reasonable time. The opposite is the case.

[115]
Secondly, these assessments may also illustrate an unwillingness to pay, not merely because levies charged are unduly delayed in payment but because the levies charged are set, for financial or other reasons, in the form of instalments over a period of time.”^[48]

[96]
In such circumstances, the only way that the plaintiff could raise funds to pay funds for any adverse legal costs was to levy the lot holders. Walton J set out the difficulties that this would cause the defendant in recovering monies from the plaintiff:

“[150]
Whilst it is true that the plaintiff has a legal obligation to levy the lot holders in the strata scheme to meet an order for costs (or other liabilities) that legal impost does not diminish the difficulties that would be encountered by the defendants in recovering monies owed under a costs order as discussed by Brereton J, because:

the obligation to raise levies does not diminish the difficulties faced by a defendant in acting upon derivative rights;

some lot owners may have a defence to a levy being struck;

the mechanisms for the recovery against the relevant lot owners contributions are limited and ultimately dependent upon recourse by the plaintiff to recovery actions including legal actions (see s 83 of the Act). These processes are exclusive of the defendants, involve substantial sum of money in this case, and may involve a significant time period; and

there is no statutory requirement that a general meeting convened to establish levies in accordance with the obligations must resolve to pay the defendants a full instalment on one occasion as opposed to staged or periodic instalments (s 81(5) of the Act).

[151]
The last two observations squarely raise the question of whether costs ordered would be paid within a reasonable time.”^[49]

[97]
Further, in Serman, not only would a levy be required to pay any costs order, but there was also the additional burden for each unit holder of discharging the negative net asset position which would double the required levy from around $30,000 per unit holder to around $60,000.
[98]
Due to the pattern as disclosed in the owners’ ledger, Walton J found that any costs order in the proceedings would not be met within a reasonable time because of the likelihood of the continuance of this pattern given the plaintiff’s financial position; this being a relevant factor in determining the threshold question.
[99]
Ultimately, in Serman, Walton J found that the defendants established that there was reason to believe that the plaintiff would be unable to pay the costs of the defendant if so ordered and set out a number of factors in coming to that conclusion:

“[156]
Without limiting the aforementioned discussion, the following factors, by summary, principally feature in that conclusion:

The substantial negative net asset position of the plaintiff;

The cash reserves of the plaintiff are meagre when compared with the estimate of the quantum of an adverse costs order in this matter and insufficient to meet that obligation;

As a corollary of (1) and (2) each lot owner would face a substantial levy to meet the estimated cost order alone, in addition to the levies designed to deal with the current negative net asset position;

The plaintiff has no real property;

There has been no undertaking given by the lot owners to pay any levies when it was imposed upon them and to do so within a reasonable time frame;

The executive committee has not determined to raise a special levy to meet any expected costs order (of the kind mentioned by Einstein J in Austruc Constructions);

The aforementioned discussion of the applicability of Brereton J’s judgment in Eastmark Holdings (see [150] of this judgment); and

The conclusions reached (in the light of the preceding analysis) in [114] and [115] of this judgement.”^[50]

[100]
Walton J found the plaintiff to be impecunious and adopted the approach by Brereton J in Eastmark Holdings:

“[160]
…

In those circumstances, I consider the approach adopted by Brereton J in Eastmark Holdings and Smithers J with respect to a corporate trustee in Laundry Coin-Wash may be adopted in this case, namely, notwithstanding that the plaintiff may raise levies in accordance with the Act, in the absence of some step taken by the plaintiff to alleviate the difficulties facing the defendants to recover costs, the plaintiff should be found to be or taken as if it were without sufficient assets to meet the liability occasioned by the cost order. In any event, the state of present and projected indebtedness of the plaintiff and the plaintiff’s inability to make payments when due and payable (or the corollary that they will not pay a costs order within a reasonable time) is a plain indication of impecuniosity.”^[51]

SPS Building

[101]
Since the decisions in Eastmark Holdings and Serman, there have been a number of decisions in New South Wales, each involving body corporates, where the court has refused to order security for costs primarily based upon the plaintiff’s historical ability to raise funds from members to meet its expenses.
[102]
In Strata Plan 99960 v SPS Building Contractors Pty Ltd (SPS Building)^[52], a body corporate sued a builder due to defective works, and the builder applied for security for costs. The builder’s application was refused for want of proof of the threshold requirement. The circumstances of SPS Building were:
1. the body corporate had raised two substantial special levies to fund the litigation;
2. there were some levies in arrears, but the majority of lot owners supported the litigation; and
3. the body corporate’s financial statements recorded a positive net asset position and showed that its financial affairs were well run, and it was not impecunious.
[103]
Rees J in SPS Building noted that there was a consensus amongst the lot owners to progress the proceedings:

“[12]
It appears from the financial records before the Court that the financial affairs of this strata scheme are well run. The fact that the owners corporation has been able to strike two special levies suggests that there is general consensus amongst lot owners to progress these proceedings. Obviously, not all lot owners agree, and it will, of course, remain the burden of those running the owners corporation to seek to ensure that all lot owners are as happy as they can make them, notwithstanding that these lot owners no longer support the bringing of these proceedings.”^[53]

[104]
In SPS Building, if an adverse costs order was to be made, then it would be paid by using cash at hand, by raising a special levy, or by obtaining a loan. It was reasonable to think that the cash at hand was unlikely to be sufficient to meet an adverse costs order:

“[19]
It is reasonable to think that the cash at hand is unlikely to be sufficient to meet such an adverse costs order. However, the evidence before the Court indicates that the owners corporation is cohesive and well-organised, such that two special levies have been able to be raised and collected in relation to these proceedings without any great difficulty. There is also evidence that the owners corporation may soon obtain a loan, although there is no evidence to indicate whether the proposed resolution to enter into a loan agreement will succeed or fail at the upcoming meeting.”^[54]

[105]
Rees J in SPS Building referred to Walter Construction, where it was said that, for the defendant to have discharged its burden, it needed to call evidence upon which, viewed objectively:
1. would satisfy that the plaintiff was not entitled to raise a special levy to pay the costs; or
2. if the plaintiff was able to raise levies in respect of costs, that such levies would not be paid.^[55]
[106]
In all of the circumstances, Rees J concluded that the threshold question had not been engaged:

“[21]
Her Honour was not there satisfied that the defendant had discharged its evidentiary burden; the evidence viewed objectively did not give rise to the requisite satisfaction that there was reason to believe that the plaintiff would be unable to pay the defendant's costs if ordered to do so.
[22]
I am in the same position here. I am not presently satisfied that the Court’s power to order security for costs has been enlivened in this case. For that reason, the builder’s application is dismissed with costs.”^[56]

TC Build

[107]
In Strata Plan 94417 trading as The Owners-Strata Plan 94417 v TC Build (TC Build),^[57] a body corporate sued a builder and a developer due to defective works.
[108]
The defendants applied for security for costs and this was refused.
[109]
The circumstances of TC Build were:
1. the financial statements of the body corporate showed a positive net asset position and its own costs of the litigation had been funded by a special levy;
2. some levies were in arrears as at the date of the application;
3. any order for security would be funded through further a special levy; and
4. there was a mechanism (under New South Wales strata schemes legislation) by which the body corporate could raise funds from lot owners to meet financial obligations and to recover unpaid contributions.
[110]
In TC Build, the court was not satisfied that the builder had proved the threshold requirement and said:

“[7]
…Consequently, in substance, these proceedings are brought for the benefit of lot owners who ultimately must bear the costs of the proceedings, including any costs orders made against the Owners Corporation. There is no evidence before the Court that the individual lot owners would not ultimately pay any special levy raised to meet any costs order against the Owners Corporation. Indeed, it is the applicants’ case that the Court should not conclude that the lot owners would be unable to pay any special levy raised to meet the defendants’ costs.
[8]
The true position, therefore, is that, not unsurprisingly, the Owners Corporation does not have cash on hand to meet any costs ordered against it. However, it has not only the ability but the obligation to raise that cash from unitholders if an adverse costs order is made against it. At most, all that can be said on the evidence is that it may take some time for the Owners Corporation to raise funds to meet any costs order against it. The question is whether that provides a sufficient basis for an order for security for costs. In my opinion, it does not.”^[58]

Submissions by the first and second defendant in relation to the threshold question

[111]
Clearly, there will be significant costs incurred in this matter.
[112]
Thus, by about late 2025 or early 2026, the plaintiff could be ordered to pay at least $2.6 million if unsuccessful in its claim.
[113]
The figure of $2.6 million excludes the costs of the trial itself, and if these are added, it is apparent that an adverse costs order, after a trial is run and lost, is likely to be in the region of $3 million (and probably more).
[114]
The defendants submit that the plaintiff does not have the resources to pay such a substantial sum, or indeed anything close to it.
[115]
By its constitution, the plaintiff is expressly not for profit. Accordingly, amounts recorded in the plaintiff’s accounts can only reflect levies which have been charged for “actual and expected expenditure”.^[59]
[116]
The plaintiff’s only asset (apart from some cash) is an asserted contractual right to seek payment of costs by way of levies issued to villa owners (who are shareholders of the plaintiff company). In that sense, the defendants say, the plaintiff is in a worse position to a corporate trustee entity, which enjoys a right of indemnity and exoneration against trust assets, for costs properly incurred.
[117]
In relation to the mechanics of the plaintiff raising and recovering levies to pay for any adverse costs order, the following steps are relevant:
1. the directors must determine the amounts recommended to be levied on villa members;^[60]
2. this is subject to approval of villa members by a villa member resolution;
3. villa members may propose and determine a different levy but may not determine an amount that is insufficient to provide the company with funds to pay “non-discretionary expenditure”, as determined by the directors;^[61]
4. the plaintiff may (not must) recover, as a debt, a contribution not paid by a villa member at the end of one month after it becomes due and payable;^[62] and
5. if a villa member does not pay and is more than three months in arrears, the villa rights attached to villa shares (primarily, the entitlement to occupy the common property) are suspended and the villa member may not vote at general meetings.^[63]
[118]
Accordingly, the defendants state that the process of raising and recovering levies does not guarantee that funds will be obtained to meet an adverse costs order as:
1. whether or not there is a levy raised for existing or anticipated costs, debt will be determined by a combination of directors’ resolutions and villa members’ resolutions; and
2. whether or not such a levy is recovered depends on a decision by the plaintiff to take action against the villa member.
[119]
Even if such action is taken, many of the members are not individuals but rather corporate trustees and/or $2 companies.
[120]
Accordingly, the defendants’ position is that there is no real assurance that levies would be raised to meet an adverse costs order, or that they would be recovered.
[121]
As to the undertaking, the defendants state that it does not alleviate their concerns as there is no undertaking from the villa members that states that they will:
1. vote to approve a levy; and/or
2. pay any levies imposed upon them and do so within a reasonable time frame of any adverse costs order.
[122]
Further, there are no undertakings from the villa members to pay an adverse costs order.
[123]
Counsel for the second defendant frames the issue in this way:

“And so, in our submission, the two animating principles is (1), the benefit and burden principle, and secondly, the difficulties of enforcement together should persuade you, in our submission. This is plainly a case where the balance in terms of the – in exercise of your Honour’s discretion favours the granting of security in such amount as you see fit.

What about the undertaking, your Honour? The undertaking counts in favour of Mr O'Donnell’s client because it is a factor in his favour. The question for you is is it sufficient to displace the principles that I’ve just addressed? That is, those who take the benefit of litigation should bear its burden, and secondly, problems of execution in the case of derivative – claimants who are funded by derivative rights of action, difficulties of execution is a reason for ordering security.

In our submission, the undertaking doesn’t address either of those two, as it were, animating principles. Those who bear the benefit – those who stand to benefit from the litigation are the 35 villa owners. They haven’t provided an undertaking, but they will pay the levies.

They haven’t provided an undertaking to you, but they’ll even vote in favour of levies.

Secondly, your Honour, the second animating principle, namely, the problems of execution are to be laid at the door of the plaintiff, not at the door of the defendant. That problem isn’t addressed at all by the undertaking. All the undertaking does is highlight the problem because it indicates that if this undertaking is met, what will, in fact, happen is a recommendation would be made by the directors. There’s then a process whereby the members undergo the process your Honour saw in the articles. They can vote one way or another.

And then there’s the question about whether and when, your Honour, these levies will ever be paid, and in our submission, as we’ve already said, you have those who stand behind the villa owners, as your Honour saw, and I’ll give you a list, some of them are individuals – here’s the list that I said I’d give to your Honour – some are corporations, and some are corporate trustees. The details don’t matter.

What matters is that, in terms of the second principle that’s in play, which is difficulties of execution, the undertaking doesn’t answer that at all. My client still can’t levy execution against the villa members. It still has no practical right to compel any villa member to pay any of the levies, and in our submission, for that reason, your Honour would regard the undertaking as not meeting one of the two animating principles which attract the exercise of your Honour’s discretion in favour of security.”

[124]
The defendants submit that that they should not be subjected to the potential complexity, and hence expense and uncertainty, associated with having to resort to derivative rights in order to recover any costs to which it might be entitled. There is no obvious way for them to pursue villa members directly, nor to compel the plaintiff to do so, absent liquidation.
[125]
In short, the plaintiff will not be able to realise assets for a price sufficient to provide a surplus over other liabilities sufficient to pay the costs anticipated.^[64]
[126]
An asserted right against third parties (i.e. to raise levies) does not provide a sufficient answer to this deficiency. Further, the risk that an adverse costs order will not be met promptly, in full, is also a relevant factor.
[127]
Accordingly, the defendants state that the threshold jurisdictional question is satisfied.

The plaintiff’s submissions as to the threshold question

[128]
The plaintiff states that the evidence does not support a finding that there is reason to believe the plaintiff will not be able to pay the defendants’ costs if ordered to pay them.
[129]
The plaintiff has powers to determine amounts recommended to be levied on villa members to meet the plaintiff’s expenditure and has undertaken to the court to exercise its powers.
[130]
The nature of the powers according to the plaintiff’s constitution supports a conclusion that any levies recommended by the plaintiff to meet a costs order will, in fact, be paid as:
1. while levies must be approved by resolution, villa members cannot propose different levies that are insufficient to meet non-discretionary expenditure determined by the plaintiff’s directors;
2. once a levy is approved, it becomes a debt due and payable by villa members that may attract interest and is recoverable as a debt;
3. non-payment of levies may lead to suspension of villa members’ rights to use common property and vote at meetings; and
4. the plaintiff would exercise its rights if a villa member failed to pay a levy within three months in the absence of satisfactory arrangements for payment by agreement.
[131]
Further the plaintiff’s directors have provided an undertaking to take steps to raise and recover levies from the villa members, pursuant to the constitution, to recover funds to pay an adverse costs order.
[132]
The plaintiff states that it is commercially impractical to order each of the villa members to provide an undertaking to meet any adverse costs order.
[133]
The plaintiff submits the villa members that will benefit from the plaintiff’s success will be those who are villa members at the time the claim is determined and not the present villa members, and accordingly:

“Someone who’s a member today but is no longer a member when the proceedings are finally determined gets no benefit from the success – the plaintiff’s success, and in our submission, it falls into the category of being commercially impractical to expect that the current members should give an undertaking to the court to meet a future levy for costs following an adverse court order.”

[134]
If an undertaking is framed in a way that it is conditional upon the villa member continuing to be a villa member at the time of the finalisation of the proceeding, then, due to changing membership, the plaintiff states that the burden will unfairly fall upon the remaining villa members.
[135]
The plaintiff states that the constitution does not provide^[65] that any new villa member must provide an undertaking:

“So the directors have no power to impose a condition that an incoming villa member must first give an undertaking to the court to bear a share of any adverse costs order. In other words, there’s no mechanism to impose that obligation to give an undertaking to the court upon villa members who come in between now and any final assessment of the costs. And that would mean that the burden of any costs order would fall upon those who gave the undertaking back in 2024, and a subset of those being only those who continue to be villa members at the time of the adverse determination, and it would mean that the burden of the costs order fall unfairly upon those villa members, that is, they don’t just pay one-thirty-fifth. If there’s only 15 of them left, they each pay one-fifteenth.

It also has the problem that it would provide a ready means for a villa member to evade the obligation under the undertaking. If the company lost the case and an order for costs were made, the villa member could simply transfer the sub-lease to someone else. They could transfer it from company A to company B. So in our submission, it falls – it’s not a commercially practicable proposal, and that was one of the things Justice Derrington remarked upon in General Trade Industries.”

[136]
The plaintiff made reference to General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd (No 2) (General Trade Industries),^[66] where Derrington J analysed the authorities which considered whether those who stand behind the plaintiff company, and who stand to benefit from its success in the litigation, should put their hands in their own pockets in order to put the company in funds in order to pay security for costs.
[137]
The plaintiff emphasises that those who stand to benefit from this litigation are not the current villa members, but the villa members at the time of the finalisation of the proceeding.
[138]
In General Trade Industries, Derrington J referred to the “commercial impracticability” in considering whether it was unreasonable to expect those standing to benefit from the litigation to provide security:

“[51]
Notwithstanding the trace of some inconsistency in the authorities so far surveyed, the decisions can collectively be reconciled to a significant extent by the observation that “mere” unwillingness, in the sense of straightforward disinclination, without further reasons, will not in and of itself make it unreasonable to expect those standing to benefit from the litigation to provide security. In attempting to demonstrate the unreasonableness of such an expectation, a decisive factor will be an absence of means on the part of the persons concerned, but it may also be relevant to show “commercial impracticability” of the type considered in Ariss.”^[67]

[139]
Accordingly, the plaintiff submits that the notion of imposing or extracting an undertaking to the court by each current villa member in order to pay any eventual adverse costs order is commercially impractical because:
1. of the fluctuating membership;
2. the obligation cannot be imposed on a new incoming villa member;
3. accordingly, the burden would therefore fall unequally upon those who are current members and who remain current members in years ahead until an adverse determination; and
4. if the undertaking was qualified in terms such as “if I remain as a member” then it provides a mechanism for an escape route by villa members to avoid the obligation.
[140]
The plaintiff noted that in none of the authorities following Serman, where the courts declined to order a security for costs order in circumstances where the body corporate had a good history of raising money through levies, was an undertaking given by the individual members.
[141]
Further, the plaintiff submitted that the evidence demonstrates that its financial operations over several years supports a conclusion that future levies issued to meet any costs order will be paid as:
1. the plaintiff’s financial statements over the four previous financial years record an average annual income of about $1.6 million;
2. the plaintiff’s income in the most recent financial year ending 30 June 2024 was about $2.5 million;
3. the income in the two most recent financial years includes special levies paid by villa members for the plaintiff’s own legal costs of this proceeding;
4. the plaintiff is not impecunious;
5. the plaintiff has had a positive net asset position over the four previous financial years. It is not charged any rent in respect of its sub-lease of the common property. It has met its debts as they become due in the 15 years since it commenced operating in 2009;
6. villa members pay levies within three months in most cases;
7. the plaintiff has never had to take legal action against a villa member to recover an unpaid levy; and
8. while six villa members are now in arrears in respect of special levies for the plaintiff’s costs of this proceeding, three of these are in arrears in relation to a special levy that was only issued on 1 August 2024 and are otherwise up to date in the payment of special levies.
[142]
The plaintiff states that, critically, the plaintiff has the ability to raise costs as and when needed and has demonstrated that ability over its 15 years of operations.
[143]
The plaintiff emphasises its demonstrated track record of raising funds from its members to meet its expenses as and when they have occurred, as and when they have fallen due, over the past 15 years.
[144]
The plaintiff states that this track record is the best guide to what will occur in the future if an order for costs is made against the plaintiff. The plaintiff’s track record in raising levies is a pillar of the plaintiff’s submissions as to why the defendants have not met the threshold:

“What’s critical in this case, we say, is that the plaintiff Club has the ability to raise costs as and when needed, and has demonstrated that ability over its 15 years of operations. In other words, we point to a demonstrated track record within the plaintiff of raising funds from the members to meet the [plaintiff’s] expenses as and when they have occurred, as and when they’ve fallen due, over the past 15 years. And we say that track record is the best guide to what will occur in the future if an order for costs is made against the [plaintiff].”

[145]
The villa members’ support for the proceeding is shown by their voting in favour of the plaintiff commencing, conducting and progressing it at a general meeting. 31 villa members have assigned to the plaintiff their causes of action against the first and second defendants in respect of the defective building works.
[146]
Further, the plaintiff submits that the likelihood of it being ordered to pay the defendants’ costs of the proceeding is low, having regard to the prospects or merits of the plaintiff’s claim; in particular, the evidence about the existence of the defective works already available, and the admissions or acknowledgments of them made by the defendants in their pleadings.

The threshold test has been satisfied

[147]
The costs in this matter are going to be significant. Already, the parties have spent considerable money on their legal fees, and pleadings are yet to be finalised.
[148]
By the end of the trial, the defendants state that, cumulatively, their costs will be in the order of $3 million (and probably more). Such an estimate does not seem to be excessive in the circumstances.
[149]
The plaintiff has no assets (except for cash which would not meet an adverse costs order) and the only way it can pay for its own legal costs and any adverse costs order is through the administrative fund. Levies are required to be raised and recovered to pay expenditure through this fund.
[150]
Clause 22.1 of the plaintiff’s constitution relevantly states that:

“22.1
Administrative Fund

The Directors may establish an Administrative Fund for the purposes of meeting its actual and expected expenditure to:

….

meet other regular expenses.”

[151]
There was some debate between the parties about whether the administrative fund could be used to pay legal costs, i.e. whether “regular expenses” were recurrent expenses or not irregular expenses.
[152]
I am prepared to proceed on the basis that “regular expenses” means not irregular expenses and the administration fund can pay for legal costs incurred in these proceedings.
[153]
However, it is clear that the sinking fund cannot pay for legal costs incurred in these proceedings. Clause 22.2 sets out the scope of the sinking fund:

“22.2
Sinking Fund

The Directors may also establish a Sinking Fund for the purposes of meeting its actual and expected expenditure:

for painting or repainting any part of the Common Property that is a building or other structure;

to renew or replace fixtures and fittings that are part of the Common Property;

to replace or repair the Common Property;

to meet other expenses of a capital nature relating to Common Property; and

to acquire personal property for the Company.”

[154]
Legal expenses are not covered by the sinking fund.
[155]
The administrative fund pays the plaintiff’s legal expenses by raising and recovering special levies. Accordingly, the plaintiff has given an undertaking that, if an adverse costs order is imposed, then:
1. the plaintiff’s directors will exercise their power under clause 22.3 of the constitution to determine that a levy in the amount sufficient to satisfy the order be recommended to be levied on villa members as a contribution to the administrative fund; and
2. the plaintiff will take steps under clause 22.8 of the constitution to recover from a villa member, as a debt, any unpaid levy for any such adverse costs order at the end of one month after such debt becomes due and payable.
[156]
This undertaking sets up a process to raise and recover levies to pay any adverse costs order. It is not an undertaking by the villa members that they will pay any adverse costs order.
[157]
The plaintiff refers to the commercial impracticability of the individual members offering undertakings to pay any adverse costs order. In response, the second defendant submits:

“Now, the constantly changing membership has been urged upon your Honour as a big problem for the court and for the defendants on Friday and today. And the gist of what’s said by Mr O'Donnell is, “That’s a reason why my client’s villa members shouldn’t – it shouldn’t be held against them that they have come forward – haven’t come forward and given an undertaking to meet a costs order or to pay a levy”.

In our submission, the following matters arise. Firstly, there is no evidence of that. If that was a case they wanted to bring forward, Ms Pisano could have put it on, and she hasn’t. Secondly, if one has a moment to think about it, the obvious undertaking would, of course, be one for so long as you’re a villa member, if that was going to be the position. It wouldn’t be one forever. And one can well imagine, if efforts were made to investigate this, the arrangement would be, well, “I give you an undertaking to the court for as long as I’m a villa member” and the arrangements will be, when someone becomes a new villa member, they will have to give a like undertaking.

One can imagine by, commercially, that might – thought not to be a very good idea. It might affect the value of the villas. But that’s got no traction with your Honour’s assessment of whether the first threshold test is met because an undertaking of that kind could have been given and it would have gone some significant way to allaying the concerns that otherwise exist: is there reason to believe – is there a reason to believe that, at the end of the day, the costs won’t be paid? So in our submission, your Honour would give no credence to the notion that the changing villa members is some problem either in grating security or in relation to the question of whether the members of the club – it ought to be held against them that they haven’t given an undertaking.”

[158]
In my view, this submission has merit.
[159]
The undertaking provided by the plaintiff guarantees a process to be undertaken, but not the outcome.
[160]
There is no evidence as to the financial worth of the villa members to pay any adverse costs order, whether they be the villa members now, or in the future. The highest it gets is the plaintiff’s solicitor stating that she has been told by the plaintiff’s chair of directors that the villa members are persons or entities of substantial financial means, evidenced by the nature and location of the villas, which are used as either residences or for letting for commercial reward.
[161]
Whilst, in August 2023, the villa members voted to commence these proceedings, the evidence is that villa members are not static, but fluctuate. It is probable that the villa members of today will not be the same villa members as when these proceedings are finalised.
[162]
The plaintiff states that the nature of the powers according to the plaintiff’s constitution supports a conclusion that any levies recommended by the plaintiff to meet a costs order will, in fact, be paid.
[163]
However, it is unknown who the villa members will be at the time when these proceedings are concluded and what their attitude will be to paying levies in the order of $100,000. This amount will be on top of the special levies the villa members have already paid to fund the plaintiff’s legal representation and also the usual levies required to be paid to the administration and sinking funds.
[164]
What is known is that, out of the present 35 villa members, three of them have not paid the special levy.
[165]
Although the plaintiff states that it would exercise its rights if a villa member failed to pay a levy within three months, in the absence of satisfactory arrangements for payment by agreement, in relation to these three members, it has not. The plaintiff states that this was due to a commercial decision, although, the basis for such a decision is unknown.
[166]
I cannot speculate the reason for the failure of these villa members to pay the special levies, or the basis of the plaintiff’s commercial decision to not pursue them. What is clear is that some members have not paid their special levy to fund this litigation and have done so without recourse from the plaintiff. The plaintiff’s undertaking needs to be considered in this context.
[167]
These circumstances demonstrate that the process for raising and recovering levies pursuant to the constitution does not always guarantee the outcome.
[168]
If the plaintiff does have to pursue any recalcitrant villa members, who chose not to pay the levy to pay for any adverse costs order, then the defendants bear the burden of the time required to do so. This is so, even when considering the time required to assess the quantum of costs.
[169]
The parties spent considerable time analysing the cases in relation to security for costs applications where the plaintiff relied upon levies to pay any adverse costs order.
[170]
The defendants state that the relevant principles are as set out in Laundry Coin-Wash referred to by Brereton J in Eastmark Holdings and adopted by Walton J in Serman:

“[160]
…

In those circumstances, I consider the approach adopted by Brereton J in Eastmark Holdings and Smithers J with respect to a corporate trustee in Laundry Coin-Wash may be adopted in this case, namely, notwithstanding that the plaintiff may raise levies in accordance with the Act, in the absence of some step taken by the plaintiff to alleviate the difficulties facing the defendants to recover costs, the plaintiff should be found to be or taken as if it were without sufficient assets to meet the liability occasioned by the cost order. In any event, the state of present and projected indebtedness of the plaintiff and the plaintiff’s inability to make payments when due and payable (or the corollary that they will not pay a costs order within a reasonable time) is a plain indication of impecuniosity.”^[68]

[171]
The plaintiff, in turn, refers to the number of cases determined since Serman where no security for costs was ordered against a plaintiff who had to rely upon levies to pay for any adverse costs order. The plaintiff rightfully noted that each case rested on its own facts and circumstances.
[172]
The plaintiff states that a key feature of Eastmark Holdings was that the body corporate had a substantial deficit of assets. The impecuniosity of the body corporate in Eastmark Holdings was demonstrative that it was not able to raise funds from the members as needed to meet its costs and expenses as they fell due. The plaintiff states that, unlike the facts of this present case, the body corporate in Eastmark Holdings did not have a good track record of raising funds sufficient to enable it to pay its costs and expenses as they fell due.
[173]
The same reasoning, the plaintiff submits, was applied in Serman:

“MR O'DONNELL: So Justice Walton ordered security for costs, primarily on the basis that the body corporate in that case was already in a net liability situation. He analysed it this way at 146. “To meet the estimated costs order if the defendants won the case, there would need to be a levy on each owner of about 30,000.” But he said, “There would also need to be an additional levy just to get the body corporate out of its current negative net asset position. So the total levy would need to be about 62,000.” And that was the evidence he relied upon to say that the threshold test was satisfied.

But that’s not the case of this plaintiff, because this plaintiff, as your Honour will see from the accounts of 30 June 2004, it has currently net assets.”

[174]
In an effort to make good this claim, and demonstrate the healthy state of their financial affairs, the plaintiff has produced this summary of its balance sheets:

	FY21	FY22	FY23	FY24	1^st quarter FY25
Administrative fund levies	$1,248,000	$1,353,297	$1,496,784	$2,336,102	$1,131,801
Sinking fund levies	$187,867	$361,934	$200,530	$240,001	$119,999
Total levies	$1,435,867	$1,715,231	$1,697,314	$2,576,103	$1,251,800
Total levy per member	$41,025	$49,007	$48,495	$73,603	$35,766
Cash at bank	$709,954	$608,506	$546,174	$462,881	$599,995
Net assets	$701,778	$673,275	$442,715	$332,227	$771,304

[175]
The plaintiff makes the point that the levy required to pay the security for costs of $2.2 million is $62,857 which they say is not dissimilar to the levies that the villa members have paid in the past.
[176]
However, several points need to be made in relation to this submission:
1. the levy of $62,857 is based on security for costs in the amount of $2.2 million;
2. the levy of $62,857 is based on 35 members paying their special levy;
3. to date, three villa members have not paid their special levy and the plaintiff has not taken action to recover these unpaid levies;
4. if three villa members continue to not pay their special levy, then the $62,857 will not be shared by 35 villa members, but rather, by 32 villa members. Accordingly, these 32 villa members will either pay more, or the plaintiff will not be able to pay the entirety of the security for costs;
5. an adverse costs order is likely to be significantly higher than $2.2 million;
6. the defendants’ legal fees, after a trial, could be around $3 million (or more);
7. accordingly, in the event of an adverse costs order, the levy for each villa member could be $100,000 and higher if the three villa members continue not to pay the special levy;
8. any levy to pay an adverse costs order will be in addition to the “usual” levies that the villa members pay to the administrative fund and the sinking fund;
9. a special levy for legal costs was only raised in FY 2023-24; and
10. previous legal costs were paid by the sinking fund.
[177]
Closer scrutiny of the balance sheets shows that the healthy state of the plaintiff’s balance sheet is due to the sinking fund. The administration fund has run a deficit for at least the past three years.
[178]
In FY 2020-21, the administration fund had an opening balance of $54,764, however had a FY deficit of $91,314, thus making a total deficit of $36,550. The sinking fund had an opening balance of $500,537 and a FY surplus of $237,791, thus making a total surplus of $738,328:

Administration fund – FY 2020-21

Opening balance – $54,764.15

Deficit for year – ($91,314.78)

Total deficit – ($36,550.63)

Sinking fund – FY 2020-21

Opening balance – $500,537.14

Surplus for year – $237,791.19

Total surplus – $738,328.33

Total members funds – $701,777.70

[179]
In FY 2020-21, there were no legal fees paid by either the administration fund or the sinking fund.
[180]
In FY 2021-22, the administration fund had an opening deficit of $36,550, a FY deficit of $76,593 and a total deficit of $113,144. On the other hand, the sinking fund had a FY surplus of $48,091 and a closing balance of $786,419:

Administration fund – FY 2021-22

Opening balance – ($36,550.63) (in deficit)

Deficit for year – ($76,593.43)

Total deficit – ($113,144.06)

Sinking fund – FY 2021-22

Opening balance – $738,328.33

Surplus for year – $48,091.01

Total surplus – $786,419.34

Total members funds – $673,275.28

[181]
In FY 2021-22, in relation to legal fees:
1. the administration fund raised no special levies;
2. the administration fund paid $2,485 in legal fees; and
3. the sinking fund paid $86,938 in legal fees.
[182]
In FY 2022-23, the administration fund had a deficit of $118,043 and the sinking fund had a deficit of $225,661. Because of the healthy state of its coffers carried over from FY 2021-22, the sinking fund had a positive balance of $560,757:

Administration fund – FY 2022-23

Opening balance – ($113,144.06) (in deficit)

Deficit for year – ($4,899.03)

Total deficit – ($118,043.09)

Sinking fund – FY 2022-23

Opening balance – $786,419.34

Deficit for year – ($225,661.37)

Total surplus – $560,757.97

Total members funds – $442,714.88

[183]
In FY 2022-23, in relation to legal fees:
1. the administration fund did not raise any special levy;
2. the administration fund did not pay any legal fees; and
3. the sinking fund carried this burden by paying $363,948 in legal fees.
[184]
In FY 2023-24, the administration fund had a deficit of $346,329 which, when added to previous years’ deficit, had a cumulative deficit of $464,372. The sinking fund had a surplus of $235,841 with a positive closing balance of $796,599:

Administration fund – FY 2023-24

Opening balance – ($118,043.09) (in deficit)

Deficit for year – ($346,329.77)

Total deficit – ($464,372.86)

Sinking fund – FY 2023-24

Opening balance – $560,757.97

Surplus for year – $235,841.54

Total surplus – $796,599.51

Total members funds – $332,226.65

[185]
In FY 2023-24, in relation to legal fees:
1. the administration fund raised $867,501 in a special levy for legal fees;
2. the administration fund paid $1,186,827 in legal fees; and
3. the sinking fund paid no legal fees.
[186]
The plaintiff states that, since commencing in about 2009, it has always met its costs as they become due and has never been required to take legal action against any villa member to recover an overdue levy.
[187]
However, this may be because the plaintiff has chosen not to. Three of the villa members have not paid the special levy and the plaintiff states that they have made a commercial decision not to pursue payment.
[188]
The plaintiff’s balance sheets record levy debtors as an asset:
1. $0 in FY 2020-21;
2. $255,247 in FY 2021-22;
3. $226,648 in FY 2022-23; and
4. $262,400 in FY 2023-24.
[189]
In this case, taking into account all of the circumstances, I consider that the threshold question must be answered in favour of the defendants.
[190]
The defendants have established, on the evidence before the court, there is reason to believe that the plaintiff will be unable to pay the costs of the defendants if so ordered.
[191]
The plaintiff states that it has a track record of paying its expenses when they are due, and that the plaintiff’s balance sheet shows a healthy financial state. However, under closer scrutiny, the plaintiff’s balance sheet shows a declining state of affairs over recent years:
1. the legal fees can only be paid from the administrative fund;
2. the administrative fund has been running in a deficit since FY 2021-22:
  1. a net deficit of $36,550 in FY 2020-21;
  2. a net deficit of $113,144 in FY 2021-22;
  3. a net deficit of $118,043 in FY 2022-23; and
  4. a net deficit of $464,372 in FY 2023-24;
3. on the financial records before the court, FY 2019-20 was the last year that the administration fund had surplus funds. In that financial year, there was a surplus of $54,764. Since then, the administration fund has run at a deficit;
4. the sinking fund has carried over a surplus balance sheet every year:
  1. $500,537 in FY 2019-20;
  2. $738,328 in FY 2020-21;
  3. $786,419 in FY 2021-22;
  4. $560,757 in FY 2022-23; and
  5. $796,599 in FY 2023-24;
5. in relation to the sinking fund, in:
  1. FY 2022-23 it ran a substantial deficit of $225,661. This was largely due to paying $363,948 in legal costs; and
  2. FY 2023-24 it had a surplus of $235,841. This was due to the only expense incurred being $4,159 for gates;
6. the sinking fund has built up a significant buffer of funds over time which defrays the deficit incurred each year by the administration fund. This ensures that each year the plaintiff has cash in the bank that it can draw upon;
7. however, the total available members funds have been slowly declining since FY 2020-21:
  1. $701,777 in FY 2020-21;
  2. $673,275 in FY 2021-22;
  3. $442,714 in FY 2022-23; and
  4. $332,226 in FY 2023-24.
[192]
Prior to FY 2023-24, the pattern for meeting legal costs was not to raise a special levy, but to dig into the sinking fund. During the financial years FY 2021-22 and FY 2022-23, the sinking fund paid about $450,000 in legal fees in contrast to the administration fund paying about $2,500 in legal fees.
[193]
There is no power under the constitution for the sinking fund to pay for the plaintiff’s legal fees.
[194]
The undertaking provided by the plaintiff’s directors only guarantees that the plaintiff’s directors will embark upon a process to raise and recover levies to pay for an adverse costs order. It does not ensure the outcome.
[195]
The villa members have not sought to provide any evidence as to their independent financial means nor a commitment or undertaking (or similar) to the effect that they will vote in favour of any resolution to levy amounts for the defendants’ costs and that they undertake to pay such amounts.
[196]
It is likely that the villas will change hands between now and judgment and the extent to which new owners may be willing to contribute or support any levy for an adverse costs order can only be speculation.
[197]
The plaintiff states that, since commencing its role as if a body corporation in about 2009, the plaintiff has met its debts as they became due and it has never been required to take legal action against any villa member to recover an overdue levy.
[198]
However, this is because the plaintiff has chosen not to recover overdue levies.
[199]
As at the end of FY 2023-34, the plaintiff’s levy debtors amount to $262,400.
[200]
Three villa members have not paid the special levy, and the plaintiff has made a commercial decision not to take any enforcement action in respect of these outstanding levies. No evidence or explanation has been provided as to the basis of such a decision.
[201]
In short, the plaintiff will not be able to realise assets for a price sufficient to provide a surplus over other liabilities sufficient to pay the costs anticipated. An asserted right against third parties (i.e. to raise levies) does not provide a sufficient answer to this deficiency.
[202]
The defendants should not be subjected to the potential complexity, and hence expense and uncertainty, associated with having to resort to derivative rights to recover any costs to which it might be entitled. There is no obvious way for the defendants to pursue villa members directly, nor to compel the plaintiff to do so, absent liquidation.
[203]
In all of the circumstances, I adopt the approach adopted by Smithers J in Laundry Coin-Wash, Brereton J in Eastmark Holdings and Walton J in Serman, namely notwithstanding that the plaintiff may raise levies, in the absence of some step taken by the plaintiff to alleviate the difficulties facing the defendants to recover costs beyond the undertaking (which guarantees a process not an outcome), the plaintiff should be found to be, or taken as if it were, without sufficient assets to meet the liability occasioned by the costs order.
[204]
I am satisfied, in the circumstances, there is reason to believe that the plaintiff will not be able to pay the defendants’ costs if ordered to pay them.

The discretionary factors

[205]
The next question is whether the court should exercise its discretion to order security.
[206]
The discretionary factors set out in UCPR r 672 are not exhaustive.
[207]
In Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd,^[69] at paragraph 23, Margaret Wilson AJA (with whom McMurdo P and Applegarth J agreed) said that:

“The determination of an application for security for costs calls for the exercise of a judicial discretion in all the circumstances of the particular case. The exercise of that discretion requires the assessment and weighing of relevant factors, some of which may be inter-related.”^[70]

[208]
In this case, I have assessed and weighed the relevant factors and concluded that the balance favours the exercise of discretion to award security for costs.

The means of those standing behind the proceeding and the villa owners prosecuting the action without risk as to costs^[71]

[209]
In this case, the plaintiff is suing for the benefit of its members, the villa owners. However, the villa owners have not come out from behind the corporate coattails to provide any security.
[210]
This matter is a weighty factor in the court’s exercise of its discretion to award security for costs against a company.
[211]
The special position of a corporate plaintiff was explained by Derrington J in General Trade Industries as follows:

“The general practice with regard to companies has been said to be “just the opposite” of that prevailing in respect of individuals, and the company’s impecuniosity may be a “most significant factor” in the exercise of the discretion… The policy objective served by s 1335(1) and its antecedents has been explained on a number of occasions as being, essentially, to ensure that the privilege of limited liability is not misused in such a way as to make the company a “stalking horse”, enabling those who stand behind it, and those who are liable to benefit from the proceedings that it has brought, to pursue their own interests in the action without facing any risk as to costs…”^[72]

[212]
The substance of the plaintiff’s claim is to effect rectification of alleged defects or receive damages representing the value of such works in relation to the villas to which the members themselves (and not the plaintiff) own. Thus, the plaintiff states that the economic interest in this litigation is held by the villa owners. The plaintiff states that the villa owners who will benefit from this litigation are the villa members at the time of the determination of the proceedings.
[213]
Of course, the financial means of future villa members are unknown.
[214]
The plaintiff states that, from the evidence of the villa’s nature, location and historical sales prices, as well as the evidence of the rental income that may be earned from them and the demonstrated history of villa members’ payment of substantial levies, there is a good and proper basis to infer that the villa members are persons or entities of substantial financial means.
[215]
Accordingly, it is submitted by the plaintiff that the evidence firmly establishes that villa members have adequate financial means to contribute to levies to meet any future costs order.
[216]
In General Trade Industries, Derrington J referred to the form of evidence required on this issue:

“[74]
As to the form of the evidence required on this issue, it has consistently been recognised that the discharge of the onus borne by the impecunious applicant will usually necessitate that it puts on a full and frank statement of the assets and liabilities of the persons or entities who stand to benefit from its success in the litigation, including shareholders and creditors… Obviously, this will exclude arm’s length trade creditors, since they cannot reasonably be required to provide a detailed summary of their financial position to the applicant, nor can the applicant reasonably be required to go to the lengths of obtaining such details from them. Instead, where the party against whom security is sought is attempting to demonstrate that it would be commercial impracticable for its creditors to contribute to the costs of the litigation, that state of affairs will generally need to be established through evidence as to the approaches made to those creditors (particularly the larger ones) with requests for support…”^[73]

[217]
No such evidence is before the court on this application.
[218]
The hearsay evidence contained in the plaintiff’s solicitor’s affidavit does not meet this test.

The impecuniosity of a corporation^[74]

[219]
I have analysed the plaintiff’s balance sheets and have raised concerns as to the capacity of the levies to cover any costs order.
[220]
The plaintiff’s total available funds have been dwindling over time. The plaintiff’s funds that it has held in the past, and now presently holds, is meagre in comparison to the costs estimates of the defendants’ solicitors. The plaintiff has no real or other property of any realisable value.
[221]
This is a substantial factor in the decision whether to exercise the discretion.
[222]
The matters that I have set out in the first stage analysis are also relevant to the consideration of this discretionary factor.
[223]
Importantly, the defendants have no direct claim against members of the plaintiff to require them to satisfy a costs order against the plaintiff.
[224]
The defendants have no rights of execution in respect of what the plaintiff says is its asset of value, being its alleged entitlement to require members to put in it funds by means of levies.
[225]
These considerations are especially germane in the context of corporate trustees. In Laundry Coin-Wash, Smithers J said at 46,729:

“With respect to the indemnity, unless the applicant itself cooperated or the applicant company were wound up, benefit could not be obtained by the respondents thereunder. No direct process of execution would be available for the purpose of obtaining that benefit. Further, the extent to which the indemnity would, in any event, be productive would depend upon the state of the finances of the trust and the possibility of some defence cannot be ignored.”^[75]

[226]
The considerations apply with equal force to the position of the plaintiff.
[227]
In Eastmark Holdings, Brereton J applied this principle in the context of a similar plaintiff company which had to “strike a further levy on each owner to contribute to the administrative fund” to cover any liability for costs.^[76] His Honour reasoned at paragraph 6 that:

“The same applies in this case: it seems to me that, unless the plaintiff itself cooperates or unless it were wound up, the defendants could not enforce any right and duty of the plaintiff to raise an additional levy from the unit holders. The defendants would have no direct process of execution against the unit holders for the purposes of doing so. The extent to which the levy would be productive in any event would depend upon the terms of the resolution determined at a general meeting of the Owners Corporation by the people liable to pay and it cannot be excluded that they, or some of them, might have some defence to a levy being struck.”^[77]

[228]
A similar conclusion was reached in Serman.

The prospects of success or merits and genuineness of the proceeding^[78]

[229]
In KP Cable Investments Pty Ltd v Meltglow Pty Ltd,^[79] Beazley J said that:

“As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.”^[80]

[230]
The plaintiff states that it has a good case against the defendants and that the court is in a position to consider the prospects or merits of the plaintiff’s claim without descending into undue detail.
[231]
The plaintiff states that its claim against the first defendant is strong as:
1. the plaintiff’s claim for indemnity under the policy in respect of damage to all buildings on the 36 lots was accepted. The policy provided for the repair of the cyclone damage to an “as new” condition;
2. there can be no serious dispute that the villas were buildings covered by the policy. Significant repairs to the villas were carried out at the direction of the first defendant and paid for by the first defendant;
3. there are multiple sources of evidence about the existence of defects in the building works carried out by the second defendant; and
4. the effect of that evidence is that the villas have not been repaired to the standard required by the policy.
[232]
The plaintiff states that its claim against the second defendant is also strong:
1. there can be no serious dispute that the second defendant owed obligations to perform the work without defects both under the building contract and under the Queensland Building and Construction Commission Act 1991 (Qld);
2. the evidence establishes defects that fall short of the second defendant complying with its obligations, including that the works are contrary to the requirements of the National Construction Code and applicable Australian Standards; and
3. the plaintiff seeks to enforce its rights for the second defendant’s non-compliance with its contractual and statutory obligations, amongst other actions.
[233]
The plaintiff submits that the existence of the defects is established by the available evidence.
[234]
The plaintiff states that its disclosure in this proceeding will include contemporaneous statements made by the parties and expert reports exchanged between them before the plaintiff commenced this proceeding concerning the existence and nature of the defects. The plaintiff states that these reports variously establish the alleged defects and that they are due to workmanship and other issues. By those reports, the plaintiff contends that the first and second defendants have acknowledged or admitted the existence of defects.
[235]
Since the plaintiff commenced this proceeding, it has disclosed independent expert reports of a civil engineer and a building certifier, pursuant to which detailed pleadings about the defective works have been provided.
[236]
The plaintiff contends that the existence of certain defective works has not been disputed by the second defendant in its pleadings in this proceeding.
[237]
The plaintiff also contends that the second defendant’s defence largely disputes causation, and that it has attempted to shift blame for the defects onto its subcontractors by third party proceedings (that it seeks to consolidate with this proceeding) in which it has acknowledged or admitted certain defective works by positive pleas that are inconsistent with non-admissions or denials made by the second defendant in this proceeding. These relate to the defects concerning roofing, tiling, installation of sliding door tracks, ponding of water, corrosion of door tracks, and water leaks that are said to be due to workmanship and other issues.
[238]
This, the plaintiff states, is underscored by the second defendant attempting to raise a defence based on proportionate liability pursuant to the Civil Liability Act 2003 (Qld) in this proceeding, whereby the second defendant contends that its subcontractors are liable to the plaintiff for the defective works.
[239]
The plaintiff has asserted to the second defendant that its current pleadings fail to establish a proper basis for proportionate liability and the second defendant has accepted that its defence must be amended.
[240]
The plaintiff contends that it entered into the building contract as the agent of the villa members and provided particulars of the facts supporting the agency.
[241]
The villa members have assigned to the plaintiff their causes of action against the second defendant but, in any event, the plaintiff’s case is that it may recover damages to rectify the defective works where the building contract was made for the benefit of the plaintiff and the villa members.
[242]
While the second defendant has made a bare denial of the plaintiff’s allegation that the building contract was to benefit villa members, it pleads that the object and intention of that contract was to repair the damage to the villas.
[243]
The plaintiff contends that it entered into the policy as agent for the villa members or that the villa members are “third party beneficiaries” of the policy within the meaning of s 48 of the Insurance Contracts Act 1984 (Cth).
[244]
While the first defendant denies this, its pleadings do not dispute the essential terms of the building contract. These include an express term of the building contract that establishes a relationship between the policy and the building contract in the form of a special condition stating:

“…All costs associated to reinstate the facility back to a position as per the insurance policy are to be invoiced to the below entity for payment.”

[245]
In its first defence, the first defendant did not dispute that it paid the second defendant for the work it performed, or that it paid amounts for loss of rent and temporary accommodation pursuant to the policy.
[246]
In its second defence, the first defendant says that its underwriting agent, Strata Unit Underwriting Agency Pty Ltd, paid.
[247]
Otherwise, the first defendant’s pleadings largely consist of non-admissions and fail to plead any positive defence.
[248]
The plaintiff says that the first defendant’s defence pleads non-admissions where, in some instances, reasonable inquiries enable it to know the truth or otherwise of allegations and, in other instances, are inconsistent with other pleas it makes.
[249]
Critically, the plaintiff states that this includes non-admissions of the existence of the entirety of the defective works alleged by the plaintiff, and whether the works failed to comply with the National Construction Code or applicable Australian Standards.
[250]
The first defendant does not admit that, within the meaning of the policy, the villas were “Buildings”, or that “Rent” meant rental income receivable by letting the villas but, in its first defence, the first defendant did not dispute that it paid the second defendant for building works under the building contract, which terms provided for work on the villas, and paid an amount for lost rent pursuant to the policy.
[251]
Further, the plaintiff states that it is extraordinary that the first defendant has issued no cross-claim against the second defendant in light of the evidence of the contractual arrangements between them and statements made in relation to the release of the second defendant’s bank guarantees.
[252]
It is submitted that the first defendant has given an assurance to the plaintiff that the defects in the works would be attended to by the second defendant such that it was appropriate for the plaintiff to release the bank guarantees. The evidence, the plaintiff states, encapsulates a position taken on behalf of the first defendant that defects did, in fact, exist.
[253]
In the circumstances, the plaintiff submits that the prospects or merits of their claims against the first and second defendants are good, and the claim is genuine.
[254]
However, in this matter, I accept that it is inappropriate to reach a particular view as to the merits of the plaintiff’s claim for a number of reasons, including:
1. the claim brought by the plaintiff involves a deal of complexity;
2. there are substantial issues to be tried involving experts from various building disciplines including structural, waterproofing and tiling, and metallurgy;
3. although general allegations of defective works are made, it appears that the precise alleged defects vary across the 35 villas, and the nature of the remedial works said to be required is bound to be disputed;
4. the trial of the matter can be expected to be reasonably lengthy and complicated;
5. the plaintiff is now up to its third amended statement of claim;
6. the second defendant pressed the plaintiff for better particularisation and a revised pleading because of the “unconventional approach” adopted by the plaintiff in using annexures to plead defects and the opaqueness of allegations including, for example, “accretion of mould on walls” and “damage” to various parts of villas;
7. the second defendant is yet to file and serve its expert reports and has indicated to the plaintiff that it will need to amend its defence once that occurs;^[81]
8. the plaintiff has sought to make much out of allegations the second defendant has raised in its proceedings against third party subcontractors;
9. the second defendant has accepted in its r 445 letter^[82] that, due to an oversight, it did not expressly condition its pleaded case against four of five defendants upon the second defendant being found liable to the plaintiff in the primary proceedings;
10. the second defendant states that it intends to correct that oversight, which, it says, ought to have been an obvious one given that the remaining claims against third parties are pleaded in such a manner; and
11. accordingly, the second defendant states that it is wrong for the plaintiff to seek to treat such third party claims as “admissions” when they are conditioned on disputed facts being established by the plaintiff in the primary proceeding.
[255]
Further, the second defendant states that a high-level overview of its defence to the action underscores why it is not possible to reach any reliable view of the merits of the claims made, especially by reason of the points of law raised in defence of the claims.
[256]
The second defendant states that a fundamental problem with the plaintiff’s claim is that it has suffered no loss with respect to the alleged defective works to the villas; it is seeking to sue for the loss of third parties contrary to the privity doctrine. Whilst an exception has developed in certain situations in English law, the principles within the United Kingdom decisions have not yet been adopted in Australia. As the plaintiff acknowledges, this will need to be determined by the High Court.
[257]
Such an acknowledgment by the plaintiff underscores the complexity of the proceedings.
[258]
As the second defendant states, the claim raises difficult questions of law and requires nuanced fact-finding such that to achieve any level of confidence about the merits, the court would be forced to undertake a mini-trial.
[259]
Such a course is inappropriate on an interlocutory application as Derrington J emphasised in Its Eco Pty Ltd v BPS Financial Limited:^[83]

“[23]
The consideration of the strength of the applicants’ claim on the question of whether security for costs should be awarded is necessarily a factor of variable weight. It will carry greater weight one way or the other where the claims made are less complex and their veracity or lack thereof is capable of being demonstrated with some relative ease. Conversely, where the claims are more intricate and turn on matters of disputed evidence, nuanced fact-finding or difficult questions of law, less weight can be accorded. In order to achieve any level of confidence about the merits of such a case, a mini-trial would need to be undertaken. That is, necessarily, inappropriate on interlocutory applications.”

[260]
In cases such as this, it will often not be appropriate for the court to attempt a more detailed assessment of its prospects of success.
[261]
Indeed, as Derrington J noted in Fitzpatrick v Isaacs,^[84] the cases where the court can make a reasonable preliminary assessment of the respective merits are “likely to be few in number”.^[85]
[262]
In my view, this is not one of them.
[263]
Ultimately, this factor is neutral.

The application was brought promptly

[264]
There is no suggestion that the first and second defendants have delayed in bringing this application.
[265]
The plaintiff does not suggest in its evidence that it or villa owners have been prejudiced by any delay.
[266]
I am satisfied that this application has, in the circumstances, been brought promptly.

There is no suggestion of stifling^[86]

[267]
There is no suggestion that the proceedings would be stultified by an order for security for costs. Indeed, if security for costs were ordered, the plaintiff’s directors will determine a levy in that amount and recommend to villa members that such amount be levied as a contribution to the administrative fund.
[268]
Nor does the evidence suggest that an order for security for costs would be oppressive or raise any matter of public importance.

Security for costs should be ordered

[269]
In my view, weighing the full mix of considerations relevant to the exercise of the discretion, there should be an order for security for costs.

Quantum of security

[270]
In working out the quantum for security for costs, the court should adopt a “broad brush” rather than a strictly mathematical approach.^[87] In Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques,^[88] Jackson J said:

“[52]
…A broad brush approach does not require that. Parties should not be encouraged to devote extensive resources (including court resources) to questions of security for costs. It should not be forgotten that an order for security is not a final assessment of anything about the amount of the costs that may be payable but a provision against a contingent amount that depends on a number of things that are not amenable to precise predictions.”

[271]
The security may extend to costs already incurred.^[89]
[272]
In ordering security, the court does not set out to give a complete and certain indemnity to a defendant.^[90] What is required is security against the risk of non-payment; it is intended to provide protection against the risk that an order for party and party costs in the defendant’s favour might not be satisfied.
[273]
The ordinary approach is, therefore, to forecast the recoverable costs, to which the plaintiff is exposed by reason of an adverse costs order, and to then discount below that amount, to a sum that represents a fair and proper security against the risk of non-payment, in all of the circumstances.
[274]
It is for the defendants to put on cogent evidence to support the quantum for security for costs claimed.
[275]
As Daubney J explained in Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd,^[91] this does not require engagement in some sort of anticipatory assessment of costs:

“[41]
That should not, however, be construed as requiring the judge hearing such an application to engage, in effect, in some sort of anticipatory assessment of costs. In the present case, I am satisfied that the evidence led by the defendants is cogent evidence, and am also satisfied on that evidence that each of the defendants will incur significant costs up to and including the first day of trial in defending this matter. However, I am also satisfied that the quantum of those costs claimed by the plaintiff needs to be discounted to take account of the matters advanced by the plaintiff. The approach to fixing the quantum to be provided by way of further security is not a finely tuned mathematical exercise. The principles appropriate to the approach to be adopted were collected by French J (as he then was) in Bryan E Fencott and Assocs Pty Ltd v Eretta Pty Ltd(1987) 16 FCR 497 at 515:

In fixing the amount of the security the court must look first at the whole case and take into account, inter alia, the chance of it collapsing without coming to trial. It is not bound to give the amount of security which a defendant says will be the amount of his costs.

The court may in such a case, order somewhat less than if there seems to be every prospect that the action will be fought to a finish.

The court does not set out to give a complete and certain indemnity to a defendant.

The process of estimation embodies to a considerable extent, necessary reliance on the “feel” of the case after considering relevant factors.”^[92]

[276]
The defendants seek security for costs up to and including the first day of trial. It is appropriate to guard against the risk of over-estimation of costs which reflects the idea that the proceeding may end before a trial.
[277]
The plaintiff states that if security is to be ordered then it should be up to mediation. I agree. By mediation, the scope and shape of the dispute between the parties, and any trial, will be in sharper focus.
[278]
In my view, it is appropriate to order security for costs up to, and including, mediation.
[279]
To cater for the possibility that a mediation does not occur or is unsuccessful and the matter is to advance to trial, my orders will give the defendants liberty to apply for further security.
[280]
The question is how much the security for costs should be?

The approach taken

[281]
As noted, the security may also extend to costs already incurred.
[282]
In Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques,^[93] Jackson J noted that any delay in seeking security may result in an order being made only in respect of future costs but his Honour added it was ultimately all a matter of discretion.^[94]
[283]
This is not a case where there has been delay by the defendants in bringing this application, and certainly not unjustifiable delay.
[284]
In this case, both defendants seek the security to cover costs already incurred and also future costs.
[285]
However, the plainitff has only addressed the issue of future costs. No submissions by the plainitff have been provided, nor any evidence adduced, in relation to the defendants’ claim for the security to cover costs already incurred. The plaintiff is effectively silent on this issue.
[286]
However, the plaintiff has drilled down in quite some detail as to what costs should be allowed, or not, in relation to future recoverable costs. Ultimately, the parties’ positions as to future recoverable costs are not too far apart.
[287]
I will proceed on the basis of the plaintiff’s estimate as to future recoverable costs in relation to both defendants. It is a conservative approach and ultimately not too disparate from the amounts proffered by the defendants.
[288]
For each defendant, I have undertaken the following approach in arriving at the amount to be ordered for the security:
1. using the plaintiff’s estimate as to each of the defendant’s future recoverable costs;
2. then, adding the past recoverable costs as set out in each defendant’s instructing solicitor’s affidavit; and
3. then, applying a 25% discount.
[289]
I note that the cases recognise that it is appropriate to guard against the risk of over-estimation of costs. This reflects the idea that the proceeding may end before a trial. Accordingly, the court may account for the risk by applying a discount if security is ordered for costs up to trial.
[290]
In this case, the security is ordered up mediation and not up to the first day of trial. However, in my view, it is appropriate to still apply a 25% discount to take into account the uncertainties of litigation that may arise before mediation.
[291]
I note that the second defendant has applied a 26.5% discount on their amount sought for security up to mediation.
[292]
I have applied a 25% discount to both the first and second defendants’ security.

The first defendant’s security

[293]
The plaintiff’s estimate as to the first defendant’s future costs are as follows:

Step	Total (actual)	Carter Newell Fees (60%)	Counsel and disbursements	Total (recoverable)
To mediation	$558,000	$124,200	$342,900	$467,100

[294]
However, as already noted, the plaintiff’s estimate does not include the costs already incurred by the first defendant. In my view, the security should cover the past incurred costs.
[295]
An affidavit has been prepared by the first defendant’s solicitor (who is the partner with conduct of the proceedings) setting out the past costs in relation to this proceeding.
[296]
In relation to the total recoverable costs from the date of service of the proceedings to the end of August 2024, the first defendant’s solicitor states that $116,299 in recoverable costs have been incurred. There is no evidence, nor submissions, by the plaintiff contesting such an amount.
[297]
Accordingly, adding the plaintiff’s estimate of future recoverable costs ($467,100) to the recoverable costs already incurred ($116,299) arrives at $583,399.
[298]
Applying a 25% discount to $583,299 arrives at $437,549.^[95]
[299]
In my view, this amount should be ordered as security for costs in relation to the first defendant.

The second defendant’s security

[300]
In relation to the second defendant, the plaintiff’s estimate as to future costs is as follows:

Step	Total (actual)	Carter Newell Fees (60%)	Counsel and disbursements	Total (recoverable)
To mediation	$789,280	$284,850	$283,077	$567,927

[301]
However, once again, the plaintiff’s estimate does not include the costs already incurred by the second defendant. In my view, the security should cover the past incurred costs.
[302]
An affidavit has been prepared by the second defendant’s solicitor (who is the partner with conduct of the proceedings) setting out the costs in relation to this proceeding.
[303]
In relation to the total recoverable costs from the date of service of the proceedings to 4 September 2024, the first defendant’s solicitor states that $583,938 in recoverable costs has been incurred. There is no evidence, nor submissions, by the plainitff contesting such an amount.
[304]
Accordingly, adding the plaintiff’s estimate of future recoverable costs ($567,927) to the recoverable costs already incurred ($583,938) arrives at $1,151,865.
[305]
Applying a 25% discount to this amount to arrive at $863,898.^[96]
[306]
In my view, this amount should be ordered as security for costs in relation to the second defendant.

The time to provide the security

[307]
The defendants seek that, within 14 days, the plaintiff provide security for the costs.
[308]
However, I note that the plainitff will have to raise a levy in accordance with their undertaking that they have provided to the court through their solicitor which states that the directors will exercise their power under clause 22.3 of the constitution (to determine that a levy in the amount sufficient to satisfy the order be recommended to be levied on villa members as a contribution the administrative fund).
[309]
This may take longer than 14 days; especially, considering the number of public holidays upcoming in the next month.
[310]
Accordingly, I will allow 28 days.

Costs

[311]
I will give the parties an opportunity to consider these reasons before they are required to file and serve short written submissions on the question of costs. I encourage the parties to agree on an order for costs.
[312]
However, if this cannot occur, the parties should, within 28 days, file and serve written submissions as to costs.
[313]
If it is appropriate, I will then deal with the question of costs on the papers, unless either party requests a hearing. In order to facilitate that process, I will adjourn the question of costs to a date to be fixed.

Order

[314]
The order of the court is:

Within 28 days, the plaintiff provide security for the costs of the first defendant up to mediation, in the sum of $437,549 by payment of that sum into court, or by the provision of security in such other form as is acceptable to the registrar, and in default, the claim be stayed until such time as security is provided.
Within 28 days, the plaintiff provide security for the costs of the second defendant up to mediation, in the sum of $863,898 by payment of that sum into court, or by the provision of security in such other form as is acceptable to the registrar, and in default, the claim be stayed until such time as security is provided.
Liberty to the first and second defendants to apply for further security on the giving of five business days’ notice in writing.
The question of costs is adjourned to a date to be fixed.

Footnotes

[1]Affidavit of Raffaela Pisano sworn 11 October 2024 at [17].

[2]30 November 2016 to 30 November 2017.

[3]Footnotes omitted.

[4]As listed in Annexure 11 of the plaintiff’s third amended statement of claim filed 12 July 2024.

[5]This is the total costs incurred by the first defendant to August 2024 plus $41,554.15 (plus GST) in work in progress as set out in the affidavit of Patrick Mead sworn 4 September 2024, at [23]. The first defendant has estimated a total of recoverable costs incurred of $116,299.59 (plus GST) as set out in the affidavit of Patrick Mead sworn 4 September 2024, at [25].

[6]Affidavit of Andrew Kelly affirmed 5 September 2024, at [29]. The second defendant has estimated a total of recoverable costs incurred of $583,938 (affidavit of Andrew Kelly affirmed 5 September, at [39]).

[7]Affidavit of Raffaela Pisano sworn 11 October 2024 at [7].

[8]The plaintiff also considers that the sub-leases provide the plaintiff with the power to raise levies and require villa members to contribute to the expenses of the plaintiff in addition to its powers under the constitution.

[9]Affidavit of Raffaela Pisano sworn 11 October 2024 at [33].

[10]Uniform Civil Procedure Rules 1999 (Qld) r 671 (a); Corporations Act 2001 (Cth) s 1335 (1).

[11]Robson v Robson [2008] QCA 36.

[12]Wollongong City Council v Legal Business Centre Pty Ltd [2012] NSWCA 245 at [29]-[30] (Beazley JA, Meagher and Barrett JJA agreeing).

[13]Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [32](3).

[14]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 at [48]-[49] (Gotterson JA, McMurdo JA and Boddice J agreeing).

[15]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 at [41] (Gotterson JA, McMurdo JA and Boddice J agreeing) citing Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301, 311-312 at [56], [59] (Ward JA).

[16]Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301 at [16] (McFarlan JA).

[17](2019) 3 Qd R 143.

[18]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 at [50]-[52] (Gotterson JA, McMurdo JA and Boddice J agreeing). Citations omitted.

[19]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 at [59] (Gotterson JA, McMurdo JA and Boddice J agreeing).

[20]Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317 at [2], [6].

[21](1992) 7 ACSR 203.

[22]Beach Petroleum NL v Johnson (1992) 7 ACSR 203, 205.

[23]Re Skytraders Pty Ltd [2024] NSWSC 984 at [20] referring to Re Felan’s Fisheries Pty Ltd [2016] NSWSC 1351 at [10].

[24]Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [32(6)].

[25]Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2019) 3 Qd R 143 at [41] citing Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301 at [16]-[17] (Macfarlan JA, Tobias AJA agreeing).

[26]Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [143].

[27](1985) ATPR 40-584.

[28]Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40-584, 46,729.

[29][2006] NSWSC 1317.

[30]Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317 at [9].

[31](2019) 133 SASR 408.

[32]Mathew (SA) Nominees Pty Ltd v Belconnen Automotive Pty Ltd (2019) 133 SASR 408 at [64]-[65]. Citation omitted.

[33]Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071; Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [130]-[135].

[34][2001] NSWSC 820.

[35]Owners-Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820 at [36]-[38].

[36][2007] NSWSC 778.

[37]Owners Corporation Strata Plan 64970 v Austruc Constructions Ltd [2007] NSWSC 778 at [8]-[9]. Citation omitted.

[38]Owners Corporation Strata Plan 64970 v Austruc Constructions Ltd [2007] NSWSC 778 at [17].

[39][2014] ACTSC 269.

[40]The Owners – Units Plan No 1917 v Koundouris & Anor [2014] ACTSC 269 referring to Owners – Strata Plan 50530 v Walter Construction Group Pty Ltd [2001] NSWSC 820 with approval at [130] and stating at [131].

[41][2015] NSWSC 2071.

[42]Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [6]-[8].

[43]Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [7] referring to Owners-Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820 at [36].

[44]Re Eastmark Holdings Pty ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [7].

[45][2017] NSWSC 806.

[46]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [134].

[47]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [144].

[48]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [110]-[115].

[49]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [150]-[151].

[50]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [156].

[51]The Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [160](6).

[52][2022] NSWSC 1464.

[53]Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464 at [12].

[54]Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464 at [19].

[55]Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464 at [20] citing Owners – Strata Plan 50530 v Walter Construction Group Pty Ltd [2001] NSWSC 820 at [36].

[56]Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464 at [20]-[21].

[57][2021] NSWSC 1284.

[58]Strata Plan 94417 trading as The Owners-Strata Plan 94417 v TC Build [2021] NWSC 1284 at [7]-[8].

[59]Constitution, clauses 22.1, 22.2.

[60]Constitution, clause 22.3.

[61]Constitution, clause 22.4.

[62]Constitution, clause 22.8.

[63]Constitution, clause 22.9.

[64]Beach Petroleum NL v Johnson (1992) 7 ACSR 203, 204-5.

[65]Pursuant to ‘Part 7 – Transfer of Shares’.

[66][2023] FCA 556.

[67]General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd (No 2) [2023] FCA 556 at [51].

[68]Owners – Strata Plan 64415 v Serman [2017] NSWSC 806 at [160](6).

[69][2012] QCA 114.

[70]Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2012] QCA 114 at [23] (Wilson AJA, McMurdo P and Applegarth J agreeing).

[71]Uniform Civil Procedure Rules 1999 (Qld) r 672 (a).

[72]General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd (No 2) [2023] FCA 556 at [33]. Citations omitted.

[73]General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd (No 2) [2023] FCA 556 at [74]. Citations omitted.

[74]Uniform Civil Procedure Rules 1999 (Qld) r 672 (d).

[75]Laundry-Coin Wash Nominees Pty Ltd v Dunlop Olympic Ltd & Ors (1985) ATPR 40-584, 46,729; noted by Brereton J in Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [3].

[76]Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [2].

[77]Re Eastmark Holdings Pty Ltd (Recs and Mgrs Apptd) [2015] NSWSC 2071 at [6].

[78]Uniform Civil Procedure Rules 1999 (Qld) r 672 (b)-(c).

[79](1995) 56 FCR 189.

[80]KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189, 197.

[81]In a letter of 2 August 2024, the solicitors for the plaintiff noted at para 6(j) that “the only expert opinion evidence that has been prepared for the purposes of this proceeding and that is probative of the existence of defects is the evidence that has been delivered by the [plaintiff]”.

[82]Dated 10 October 2024.

[83][2022] FCA 842.

[84][2024] FCA 1187.

[85]Fitzpatrick v Isaacs [2024] FCA 1187 at [70] citing Gumm v Commissioner of Taxation [2024] FCA 71 at [99].

[86]Uniform Civil Procedures Rules 1999 (Qld) r 672 (h).

[87]Mio Art Pty Ltd v Mango Boulevard Pty Ltd [2018] QSC 31 at [89]; Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques [2016] QSC 2 at [52].

[88][2016] QSC 2.

[89]Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, 515; Re Colorado Products Pty Ltd (in prov liq) [2013] NSWSC 611 at [69].

[90]Brundza v Robbie & Co (1952) 88 CLR 171, 175 (Fullagar J).

[91][2010] QSC 176.

[92]Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd [2010] QSC 176 at [41]. Citations omitted.

[93][2016] QSC 2.

[94]This point was followed by Davis J in Get Tonic v Pocket Health [2020] QSC 235 at [52].

[95]Rounded down.

[96]Rounded down.

Editorial Notes

Published Case Name:
Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd
Shortened Case Name:
Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd
MNC:
[2024] QSC 320
Court:
QSC
Judge(s):
Wilson J
Date:
20 Dec 2024
Selected for Reporting:
Editor's Note

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Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd	[2010] QSC 176	3 citations Jump To Cite 1 - [2010] QSC 176 Cite 2 - [2010] QSC 176 Cite 3 - [2010] QSC 176
Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd	[2012] QCA 114	3 citations Jump To Cite 1 - [2012] QCA 114 Cite 2 - [2012] QCA 114 Cite 3 - [2012] QCA 114
Beach Petroleum NL v Johnson	(1992) 7 ACSR 203	4 citations Jump To Cite 1 - (1992) 7 ACSR 203 Cite 2 - (1992) 7 ACSR 203 Cite 3 - (1992) 7 ACSR 203 Cite 4 - (1992) 7 ACSR 203
Brundza v Robbie & Co.	View on:JADE(1952) 88 CLR 171	1 citation Jump To Cite 1 - (1952) 88 CLR 171
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd	(1987) 16 FCR 497	2 citations Jump To Cite 1 - (1987) 16 FCR 497 Cite 2 - (1987) 16 FCR 497
Cable Investments Pty Ltd v Meltglow Pty Ltd	(1995) 56 FCR 189	3 citations Jump To Cite 1 - (1995) 56 FCR 189 Cite 2 - (1995) 56 FCR 189 Cite 3 - (1995) 56 FCR 189
Cornelius v Global Medical Solutions Australia Pty Ltd	(2014) 98 ACSR 301	3 citations Jump To Cite 1 - (2014) 98 ACSR 301 Cite 2 - (2014) 98 ACSR 301 Cite 3 - (2014) 98 ACSR 301
Get Tonic Pty Ltd v Pocket Health Pty Ltd	[2020] QSC 235	1 citation Jump To Cite 1 - [2020] QSC 235
Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques	[2016] QSC 2	4 citations Jump To Cite 1 - [2016] QSC 2 Cite 2 - [2016] QSC 2 Cite 3 - [2016] QSC 2 Cite 4 - [2016] QSC 2
Laundry Coin-wash Nominees Pty Ltd v Dunlop Olympic Ltd	(1985) ATPR 40	4 citations Jump To Cite 1 - (1985) ATPR 40 Cite 2 - (1985) ATPR 40 Cite 3 - (1985) ATPR 40 Cite 4 - (1985) ATPR 40
Mathew (SA) Nominees Pty Ltd v Belconnen Automotive Pty Ltd	(2019) 133 SASR 408	3 citations Jump To Cite 1 - (2019) 133 SASR 408 Cite 2 - (2019) 133 SASR 408 Cite 3 - (2019) 133 SASR 408
Mio Art Pty Ltd v Mango Boulevard Pty Ltd	[2018] QSC 31	1 citation Jump To Cite 1 - [2018] QSC 31
Monto Coal 2 Pty Ltd v Sanrus Pty Ltd	[2019] 3 Qd R 143; [2018] QCA 309	7 citations Jump To Cite 1 - [2019] 3 Qd R 143 Cite 2 - [2019] 3 Qd R 143 Cite 3 - [2019] 3 Qd R 143 Cite 4 - [2019] 3 Qd R 143 Cite 5 - [2019] 3 Qd R 143 Cite 6 - [2019] 3 Qd R 143 Cite 7 - [2019] 3 Qd R 143
Robson v Robson	[2008] QCA 36	1 citation Jump To Cite 1 - [2008] QCA 36
Street v Luna Park Sydney Pty Ltd	View on:JADE[2006] NSWSC 1317	4 citations Jump To Cite 1 - [2006] NSWSC 1317 Cite 2 - [2006] NSWSC 1317 Cite 3 - [2006] NSWSC 1317 Cite 4 - [2006] NSWSC 1317
The Owners - Strata Plan 64415 v Serman	View on:JADE[2017] NSWSC 806	13 citations Jump To Cite 1 - [2017] NSWSC 806 Cite 2 - [2017] NSWSC 806 Cite 3 - [2017] NSWSC 806 Cite 4 - [2017] NSWSC 806 Cite 5 - [2017] NSWSC 806 Cite 6 - [2017] NSWSC 806 Cite 7 - [2017] NSWSC 806 Cite 8 - [2017] NSWSC 806 Cite 9 - [2017] NSWSC 806 Cite 10 - [2017] NSWSC 806 Cite 11 - [2017] NSWSC 806 Cite 12 - [2017] NSWSC 806 Cite 13 - [2017] NSWSC 806
Wollongong City Council v Legal Business Centre	View on:JADE[2012] NSWCA 245	1 citation Jump To Cite 1 - [2012] NSWCA 245

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Great Barrier Reef Yacht Club Villas Pty Ltd v Insurance Australia Ltd[2024] QSC 320