A W Ellis Engineering Pty Ltd v Malago Pty Ltd

A W Ellis Engineering Pty Ltd, as trustee of the Ellis Family Trust, sought to recover damages for alleged breaches of contract from Malago Pty Ltd. The case was heard in the Federal Circuit Court of Australia. The corporate plaintiff was joined by two individuals, who were beneficiaries of the trust, as plaintiffs. The defendants made an application for security of costs, which the plaintiffs opposed. The individuals, as beneficiaries of the trust, provided an undertaking that if the plaintiffs were unsuccessful in the proceedings, they would not be held liable for any costs orders made against the plaintiffs. The corporate plaintiff was a trustee with a right of indemnity out of trust assets to meet a costs order.

The court was required to decide whether an order for security of costs should be made, considering the undertaking given by the individual plaintiffs and the right of indemnity of the corporate plaintiff. The court considered the principles set out in the case of Legal Aid Commission of South Australia v South Australian Housing Trust, which established that an order for security of costs should be made if there is a real risk that the plaintiff will be unable to meet a costs order if the proceeding is unsuccessful. However, the court also considered the effect of the undertaking given by the individual plaintiffs and the right of indemnity of the corporate plaintiff. The court held that the undertaking and the right of indemnity provided sufficient protection against the risk of the plaintiffs being unable to meet a costs order, and no order for security should be made.

The court held that the undertaking given by the individual plaintiffs, along with the right of indemnity of the corporate plaintiff, provided sufficient protection against the risk of the plaintiffs being unable to meet a costs order. The court found that there was no real risk that the plaintiffs would be unable to meet a costs order if the proceeding was unsuccessful, and therefore, no order for security should be made. The court also noted that the individual plaintiffs had provided an undertaking that they would not be held liable for any costs orders made against the plaintiffs, which further protected the defendants against the risk of the plaintiffs being unable to meet a costs order.

The court dismissed the defendants' application for security of costs. The court held that the undertaking given by the individual plaintiffs and the right of indemnity of the corporate plaintiff provided sufficient protection against the risk of the plaintiffs being unable to meet a costs order, and therefore, no order for security should be made. The court also noted that the individual plaintiffs had provided an undertaking that they would not be held liable for any costs orders made against the plaintiffs, which further protected the defendants against the risk of the plaintiffs being unable to meet a costs order.