Cornelius v Global Medical Solutions Australia Pty Ltd

Cornelius and another sought leave to appeal from a decision of the primary judge who had refused to order security for costs against Global Medical Solutions Australia Pty Ltd, the plaintiff in the primary proceedings. The applications for leave to appeal were brought under rule 42.21(1)(d) of the *Uniform Civil Procedure Rules 2005* (NSW) and section 1335(1) of the *Corporations Act 2001* (Cth).

The central legal issues before the Court of Appeal were whether the primary judge erred in finding that there was no reason to believe the plaintiff company would be unable to pay the defendant's costs if ordered to do so, and whether the primary judge correctly applied the principles governing the exercise of the discretion to order security for costs. The Court was also required to consider the principles applicable to appellate review of a determination of the threshold question of whether the power to order security for costs arises.

The Court of Appeal held that the test under section 1335(1) of the *Corporations Act* and rule 42.21(1)(d) of the *Uniform Civil Procedure Rules* is not whether there is a risk that the plaintiff will be unable to pay adverse costs, but rather whether there is reason to believe that such an inability will occur. The Court found that the primary judge had correctly applied this test and that there was no error in the exercise of discretion. The burden of proof in applications for security for costs rests on the applicant seeking the order.

The applications for leave to appeal were dismissed with costs.