Pearson v ING Bank (Australia) Ltd

In this significant case, Cooper J considered an application for security for costs against an impecunious plaintiff. His Honour helpfully set out the key principles and common matters which the Court should consider in such applications before concluding that the interests of justice favoured that security for costs should be ordered.

Cooper J

5 May 2023

The plaintiff commenced proceedings against the defendant (“ING”), seeking damages of more than $5.6 million. [1]. ING applied for security for its costs of the proceedings. [6].

Justice Cooper identified that the Court has a broad discretion under r 670(1) UCPR to order that a plaintiff give security for a defendant's costs. [39]. This discretion must be exercised subject to the provisions of the UCPR, particularly rr 671 and 672, and in the way which best suits the interests of justice and the obligations under r 5 UCPR. [40]. Although rr 671 and 672 UCPR respectively set out the circumstances which enliven the Court’s jurisdiction to order security for costs, and various matters to which the Court may have regard in exercising its discretion, Cooper J considered that they also provide guidance about matters which may be relevant to the ordering of security for costs in the Court's inherent jurisdiction. [41]–[43].

Significantly, though, Cooper J considered that the matters in rr 671 and 672 UCPR were not exhaustive in setting out what the Court should consider in making an order for security for costs. [44]. Rather, his Honour considered that the Court's discretion in these matters is unfettered, with the relevant factors varying from case to case. [44].

Justice Cooper accepted the plaintiff's submission that one relevant factor was that “so far as natural persons are concerned, poverty should not bar their access to justice”. [45]. Rather, his Honour considered that something more was required before the Court would be satisfied that the justice of the case requires the making of the order for the purposes of r 671(h) UCPR. [45]. Nonetheless, his Honour was also of the view that where some other matter warranting the making of an order existed, an impecunious natural person could still be ordered to provide security for a defendant's costs. [46].

Justice Cooper identified the following circumstances as ones which might be relevant in determining whether security for costs should be ordered against an impecunious natural person: [47]:

a)whether the plaintiff's claim is bona fide;

b)whether the plaintiff has reasonably good prospects of obtaining the relief they seek;

c)whether an order for security would bring an end to the proceedings;

d)whether the plaintiff is impecunious and how this was brought about;

e)whether there is anyone standing behind the plaintiff who might benefit from the action but who is unwilling to contribute to the risk involved in the action; and

f)any delay which is present.

Ultimately, his Honour considered that these factors pointed to an underlying principle that security for costs would be ordered against an impecunious plaintiff where not making an order “would allow proceedings to continue which were vexatious, oppressive or an abuse of the court’s process”. [48].

Applying these principles to the instant case, Cooper J reviewed the plaintiff's poor prospects of success and general conduct of the proceedings (including finding that he filed misconceived interlocutory applications), and concluded that, even though the order would stifle the proceedings, the interests of justice required that security for costs be ordered. [141]. Further, his Honour considered that it would be vexatious or oppressive to ING to permit the proceedings to continue without the provision of security for its costs. [142].

Accordingly, Cooper J ordered that the plaintiff provide security for ING's costs. [147].

M Paterson