Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd (No 2)

The appeal concerned an application for security for costs brought by the first and second respondents against the appellant, Comlin Holdings Pty Ltd. The dispute arose in the context of an appeal where the respondents sought security for their costs, proposing that this security be provided by way of a caveatable interest over property owned by a third party, which was held under a testamentary trust. The primary question before the court was whether this property was acceptable as security, and if not, whether the appellant should be granted a further opportunity to provide acceptable security.

The court was required to determine two principal legal issues. Firstly, whether the property held under a testamentary trust, proposed as security for costs, was acceptable for that purpose. Secondly, the court considered whether an interlocutory order for security for costs could be varied, and if so, whether the respondents had sufficient knowledge of the owner's interest in the property at the time the original order was made, and whether such variation was warranted.

In its reasoning, the court addressed the nature of the proposed security, noting that property held under a testamentary trust presented complexities regarding its suitability as security for costs. The court considered the principles governing the exercise of a liberty to apply to vary an interlocutory order, including the requirement for notice and the circumstances under which such variations are permissible. The court ultimately determined that the proposed security was not acceptable and that the appellant should be afforded a further opportunity to provide adequate security.

The court ordered that, subject to compliance with a further condition, the appeal against the first and second respondents would be dismissed on 29 January 2019. This dismissal would not take effect if, by that date, the appellant lodged $85,000 in cash or a bank guarantee of that amount with the registrar as security for the respondents' costs. The appellant was also ordered to pay the costs of the proceedings concerning security for costs forthwith.