Builtcom Properties 15 Pty Ltd v Maxida International Alexandria Property Australia Pty Ltd

[2025] NSWSC 131

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Builtcom Properties 15 Pty Ltd v Maxida International Alexandria Property Australia Pty Ltd [2025] NSWSC 131

Hearing dates:

28 February 2025

Date of orders:

28 February 2025

Decision date:

28 February 2025

Jurisdiction:

Equity

Before:

Elkaim AJ

Decision:

1. Order that pursuant to Rule 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), that the Plaintiff pay security for the Defendant’s costs of and incidental to the proceedings in the amount of $300,000.00 (Security Amount) on or before Friday, 28 March 2025.

2. Order that the Security Amount be provided by cash either paid into Court or the Trust Account of Sparke Helmore no later than Friday, 28 March 2025.

3. Order that the proceedings are to be stayed pending payment of the Security Amount in accordance with Order 2.

4. Order that in the event the Security Amount is not provided in accordance with Order 2 by 11 April 2025, the proceedings are dismissed.

5. Order that liberty is reserved to the Defendant to apply for further security for costs should the security provided be otherwise insufficient.

6. Order that the Plaintiff pay the costs of the Defendant of and incidental to its Notice of Motion filed on 17 December 2024.

7. Order that the proceedings be listed for further direction on Thursday, 17 April 2025 before the Equity Registrar.

Catchwords:

COSTS — Security for costs — Where plaintiff company is impecunious — Where quantum of security sought might stultify proceedings — Plaintiff to provide security for costs but quantum reduced

Legislation Cited:

Corporations Act 2001 (Cth), s 1335(1)

Uniform Civil Procedure Rules 2005 (NSW), r 42.21

Cases Cited:

KP Cable investments Pty Ltd v Meltglow Pty Ltd & Ors (1995) 56 FCR 189

Category:

Procedural rulings

Parties:

Builtcom Properties 15 Pty Ltd (Plaintiff)
Maxida International Alexandria Property (Defendant)

Representation:

Counsel:
Mr F Salama (Defendant)
Ms C Angus (Defendant)

Solicitors:
Sparke Helmore Lawyers (Defendant)

File Number(s):

2024/338375

Publication restriction:

No

Ex- Tempore JUDGMENT - Revised

1. On 12 September 2024 the plaintiff filed a statement of claim alleging that the defendant had engaged in misleading or deceptive conduct contrary to the Australian Consumer Law and seeking damages arising from the alleged conduct.

2. The origin of the dispute was a transaction entered into on 13 February 2024 relating to the sale of a property in Alexandria by the defendant to the plaintiff. According to the defendant the transaction was no more than a heads of agreement stipulating that the sale was conditional on confirmation by the defendant’s board. The defendant’s board subsequently declined to confirm the agreement.

3. On 17 December 2024 the defendant filed a notice of motion seeking security for costs from the plaintiff. The motion is supported by an affidavit of Mr Attila Oros dated 17 December 2024. Mr Oros is a solicitor acting for the defendant.

4. In addition to the notice of motion which is before me today, I also note that a notice of intention to file a notice of ceasing to act was filed by the plaintiff’s solicitor on 26 February 2025. This notice was dealt with by the Chief Judge in Equity before the matter was referred to me. His Honour excused the solicitors for the plaintiff from further attendance. It is clear from Exhibit A that the plaintiff was aware of today’s security for costs hearing. The plaintiff was called outside the court. There was no appearance.

5. The application for security for costs is made pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and also pursuant to s 1335(1) of the Corporations Act 2001 (Cth).

6. It is apparent from the searches conducted by Mr Oros that the plaintiff company is effectively a shell company with no assets. When this is added to the failure of the plaintiff to respond to correspondence and ultimately a notice to produce in respect of its assets, it becomes obvious that the plaintiff would be unable to pay the defendant’s costs if it was ordered to do so.

7. The defendant’s evidence clearly meets the requirements of both the UCPR and the Corporations Act. There is still a discretion. In KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189, Beazley J (as her Excellency then was) set out the relevant principles to be applied. In summary, the principles relevant to this matter are:

1. an application for security for costs should be brought without undue delay;

2. regard may be given to the apparent strength of the plaintiff’s case;

3. whether the application is oppressive so as to nullify a right to sue; and

4. whether there are persons standing behind the plaintiff who could provide security and who are likely to benefit from the litigation.

8. In this matter there is no suggestion of any delay. The plaintiff’s case seems tenuous. The target of unliquidated damages has never been substantiated despite numerous requests for particulars. The origin of the claim, in the conditional heads of agreement, would seem, at least at this stage, difficult to interpret in the plaintiff’s favour.

9. The amount sought by way of security by the defendant is $488,919.44 which is 80% of $611,149.30, the latter being Mr Oros’s assessment of the likely costs associated with a three-day hearing. Even the discounted amount is a substantial figure which I think might have the effect of stultifying the litigation. I think a lesser figure would be appropriate to recognise the need for a degree of guarantee of the defendant’s costs but without preventing the plaintiff from pursuing the litigation if it so wishes. I think a figure of $300,000 is appropriate.

10. There is no suggestion of any persons standing behind the plaintiff who could provide security.

11. In relation to the discretion generally, I would also add that it is in the defendant’s favour that it has gone to considerable lengths to meet requests by the plaintiff, for example for confidentiality of financial circumstances, all of which have been of no avail. The plaintiff has simply never provided any detail that would indicate financial well-being.

12. The defendant provided me with Short Minutes of Order with appropriate time limits including time to make a payment into court as well as an extended period before the proceedings are dismissed, assuming non-payment of the security.

13. Accordingly, I make orders in terms of the Short Minutes of Order dated today and initialled by me.

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Amendments

28 February 2025 - Correct spelling of Counsel surname

Decision last updated: 28 February 2025