Chan v Kai Design & Construction Pty Ltd

The plaintiffs, Chan, filed an originating application in the Supreme Court of New South Wales seeking security for costs as the defendants in arbitration proceedings under the Commercial Arbitration Act 1986. The defendants, Kai Design & Construction Pty Ltd, opposed the application. The plaintiffs applied for security for costs as the defendants in the arbitration, which was opposed by the defendants who argued they were an impecunious corporation. The court was required to determine whether the defendants were an impecunious corporation and if so, whether the plaintiffs were entitled to security for costs.

The court considered the statutory provisions of the Commercial Arbitration Act 1986, which provides for the grant of security for costs in arbitrations. The court found that the defendants were not an impecunious corporation, and therefore, the plaintiffs were entitled to security for costs. The court considered the financial position of the defendants and found that they had sufficient assets to meet the security for costs. The court also considered the public interest in the enforcement of security for costs provisions in arbitration proceedings.

The court granted the plaintiffs' application for security for costs in the sum of $80,000. The security was to be provided by payment into a joint account in the name of the plaintiffs' and defendants' solicitors or by unconditional bank guarantee payable on demand made by the plaintiffs' solicitors or in a form agreed to by the plaintiffs within seven days of the date of the order. The application in proceedings dated 31 March 2014 was dismissed. The defendants were ordered to pay the plaintiffs' costs of the originating application dated 13 March 2014 except that there be no order as to costs of the application in proceedings dated 31 March 2014. If the security required by order 1 was not provided, the arbitration proceedings IAMA 5073 and 5074 were to be stayed until that security was provided.