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In this significant application, the plaintiff agreed with the defendant that it should provide security for costs, and the quantum of those costs, but disagreed with the form of security it should be required to provide. In considering this application, Applegarth J established the principles relevant to determining the form of security for costs where it cannot be agreed by the parties.
2 December 2020
In this application, the defendant applied for security for costs. . While the plaintiff agreed that such an order should be granted, and the amount of the security, the parties disagreed as to the form of the security. . The plaintiff proposed that it pay the security in the form of a deed of indemnity from its insurer, AmTrust Europe Ltd, which is based in England. . The defendant, meanwhile, proposed that the security be provided in the form of an irrevocable bank guarantee or money paid into Court. .
Applegarth J began his consideration of this application by establishing the principles relevant to determining which form of security should be ordered. His Honour noted that the plaintiff is entitled to propose security “in a form least disadvantageous to it”, although it is not entitled to such an order. , –. A plaintiff also bears a “practical onus” of establishing that the security it proposes “is adequate and does not impose an ‘unacceptable disadvantage’ on the defendant”. , –.
Applegarth J further considered that, in exercising its discretion as to the form of the security, the Court must have reference to: :
1) the purpose for ordering security for costs – ensuring that a successful defendant “will have a fund available within the jurisdiction of the Court” against which it can enforce a judgment for costs in its favour; 
2) the purpose of the rules governing civil litigation – namely, “the just and expeditious resolution of the real issues” in dispute at a minimum of expense;  and
3) how justice will be best served in the particular circumstances of the case. .
In his Honour’s view, justice is best served by a means of application which avoids delay and is “simple, accessible and relatively inexpensive”, without there being any uncertainty as to when and whether payment might be made pursuant to that security. –. To this end, the Court will usually prefer the more liquid form of security, although in any event, the form of the security must also be “adequate to protect the party seeking it”. –. The question of whether one form of security does or does not pose an “unacceptable disadvantage” to a defendant – or indeed whether a form should be adopted over another – will turn on a consideration of all of the circumstances of a given case. –. Notably, his Honour considered that these principles applied to all cases, not just class actions. .
As applied to this case, Applegarth J identified that the ultimate question to be determined was: :
“Are the disadvantages of:
- delay in accessing security;
- risk of not being able to recover; and
- requiring satellite litigation in order to do so,
acceptable in all the circumstances?”
His Honour found that the proposed deed from the insurer would involve delay and additional costs from the defendant in order to access the funds to pay its costs. . This delay and cost would arise where the insurer would not readily pay an adverse costs order and separate proceedings to obtain judgment in Queensland and then register and enforce it in England would be required. . While the plaintiff also suggested that it could pay an additional security for enforcement costs, the defendant considered its suggested amount ($30,000) to be inadequate, preferring a range from $30,000 to $120,000. .
Significantly, Applegarth J noted that there was no evidence before the Court as to the cost to the plaintiff of either its, or the defendant’s favoured form of security. . Accordingly, his Honour was unable to ascertain how disadvantageous either form of security would be to the plaintiff. . As to the risk of the defendant not being able to recover its costs, his Honour was satisfied that the risk of non-payment was small, although the risk of delay was “real and uncertain as to its duration”. .
Ultimately, Applegarth J found that the plaintiff was unable to show that the disadvantage it would face by providing security in the form proposed by the defendant would be more disadvantageous to it than its proposed form of security would be to the defendant. –. His Honour was also not satisfied that the form of security proposed by the plaintiff was adequate; nor was his Honour persuaded that it did not impose an unacceptable disadvantage to the defendant. .
In the event, his Honour ordered that security for costs be paid by way of an unconditional bank guarantee from an Australian bank. .