商業訴訟When is a Defendant entitled to security for costs?

During the course of litigation in Queensland, a Defendant may bring an application to require the Plaintiff provide security for the Defendant’s costs of the proceeding.

The entitlement to bring such an application is provided for by Rule 670 of the 1999年統一民事訴訟規則 (Qld) (UCPR) and also Section 1335 of the 2001 年公司法 (Cth).

Prior to the Court making any order requiring the Plaintiff to provide security for costs, one of a number of prerequisites must be satisfied. These prerequisites are set out in Rule 671 of the UCPR, and include, but are not limited to, the following:

1. 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
2. the Plaintiff is ordinarily resident outside Australia; or
3. the justice of the case requires the making of the order.

After one of the prerequisites in making an order for security against the Plaintiff is satisfied, the Court may also have regard to a number of discretionary factors as set out in Rule 672 of the UCPR, which include:

1. the means of those standing behind the proceeding;
2. the prospects of success or merits of the proceeding;
3. whether the Plaintiff’s impecuniosity is attributable to the Defendant’s conduct;
4. whether the Plaintiff is effectively in the position of a Defendant;
5. whether an order for security for costs would stifle the proceeding; and
6. the costs of the proceeding.

在 Earthtec Pty Ltd v Livingstone Shire Council [2023] QSC 22, Freeburn J determined that the Plaintiff should provide security for the Defendant’s costs in view of the discretionary matters contained in Rule 672 as:

• the Plaintiff had not produced any evidence of assets which may be used to meet an adverse costs order;
• those standing behind the Plaintiff had not offered to come out from behind the corporate veil;
• the Plaintiff led no evidence to the effect that a security for costs order would be oppressive or stifle the litigation; and
• the proceeding was broad in scope with a commensurate level of costs.[1]

在 Earthtec, Freeburn J ordered that the Plaintiff provide security for the Defendant’s in the amount of $550,000.00.[2]

Pursuant to Rule 673 of the UCPR, the security must be given in the form that the Court directs.

After an order to pay security is made against the Plaintiff, and the Plaintiff does not comply with that order, the proceeding is stayed in respect of any step that is purported to be taken by the Plaintiff.[3] Further, on the Defendant’s application, the Plaintiff’s proceeding may be dismissed by the Court.[4]

The rules relating to security for costs also apply to Counterclaims and Third Party Proceedings, with any necessary changes.[5]

In proceedings in the Queensland and Civil Administrative Tribunal, the Tribunal may make an order that a party give security for the costs of another party who was had a claim made against them. In deciding whether to make such an order, the Tribunal may have regard to:

1. the financial circumstances of the parties to the proceeding;
2. the prospects of success or merits of the proceeding against the party applying for security;
3. the genuineness of the proceeding against the party applying for security; and
4. anything else that the Tribunal considers relevant.[6]

Decisions in the Tribunal have recognised that the effect of section 109(4)(a) of the Queensland Civil and Administrative Tribunal Act 2009 is very different to Rule 671(a) of the UCPR due to the Tribunal’s statutory obligation to deal with matters in a way that is accessible, fair, just, economical, informal and quick, to minimise costs to parties and to encourage the early and economical resolution of disputes.[7]

For these reasons, it is likely that the Tribunal will be more reluctant to exercise its discretion making an order for security for costs.

文章作者 Coen Blue 我們布里斯班辦公室的。

[1] Earthtec Pty Ltd v Livingstone Shire Council [2023] QSC 22 [269].

[2] Earthtec Pty Ltd v Livingstone Shire Council [2023] QSC 22 [300].

[3] 統一民事訴訟規則 Rule 674(b).

[4] 統一民事訴訟規則 Rule 674(c).

[5] 統一民事訴訟規則 Rule 677.

[6] Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 109.

[7] M Plus 2 Projects Pty Ltd v Silvetser [2022] QCAT 218 (21 June 2022) [5].