Austcorp Project Number 20 Pty Ltd v LM Investment Management Ltd (in liq)

Austcorp Project Number 20 Pty Ltd and Compromise Creditors Management Pty Ltd, acting as receivers and managers of certain assets of LM Investment Management Ltd, have brought proceedings against LM Investment Management Ltd (in liquidation) and other defendants. The plaintiffs seek various remedies in relation to the defendants' conduct in the management of the Bellambi Property Trust. The defendants have applied for security for costs under section 56 of the Federal Court Act 1976 (Cth). The primary issue before the court was whether the plaintiffs should be required to provide security for the defendants' costs. The court considered several factors, including the undertaking provided by the plaintiffs' financial supporters, the risk of the plaintiffs being unable to satisfy a costs order, and the cause of the plaintiffs' impecuniosity.

The court found that the undertaking provided by the plaintiffs' financial supporters should be given little weight in the exercise of its discretion. The court noted that the undertaking was given by corporate entities and not individuals, and that the available financial information did not permit a reliable assessment of its worth. Additionally, the court found that the plaintiffs' impecuniosity was not caused by the defendants' conduct, as the plaintiffs had not provided sufficient evidence to support this claim. The court also considered the risk of the plaintiffs being unable to satisfy a costs order, and found that this risk was not low enough to warrant denying the defendants' applications for security for costs. The court concluded that the defendants should be granted security for their costs, and ordered the plaintiffs to provide bank guarantees in specified amounts.

The court ordered that the plaintiffs provide a bank guarantee in the sum of $150,000 to each of the first, second, and third defendants, and a bank guarantee in the sum of $100,000 to each of the fifth, sixth, and seventh defendants. The proceedings against the defendants were to be stayed until the plaintiffs complied with these orders. The court also ordered that the plaintiffs pay the defendants' costs of the applications for security for costs.