Caselaw update- Security for Costs and the threshold test

Kupang Resources Pty Ltd v Commonwealth of Australia (No 2) [2023] NSWSC 1337 8 November 2023

The Commonwealth filed a subsequent application for security (having initially obtained security of $500,000), submitting the threshold issue had been satisfied due to the following factors:

– Kupang was under administration until 5 May 2021.

– It did not hold any real property in its own name.

– It owed an amount of approximately $2,000,000 to International Litigation Partners Pte Ltd (ILP), a well‑known litigation funder, which has a security interest over all Kupang’s present and after acquired property.

A balance sheet for Kupang, disclosing net assets of $3,043,837 was, while hearsay, accepted as being reliable evidence.

The Commonwealth argued that further security should be provided as Kupang could not “readily” meet a costs order as it would be difficult to realise its assets.

Ball J rejected this notion, stating as follows:

“if Kupang did not have sufficient cash on hand at the time costs were payable, it would be able to raise that cash promptly by borrowing money from a related entity, calling on a loan owed to it or selling cattle.

For those reasons, I do not think any further security should be ordered.”

Key takeaway: the threshold question is not ‘could an order for costs be paid today’ but would a Plaintiff be unable to pay costs if so ordered.

If you require assistance with any costs issue, get in touch with us today.

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