Derma Pen LLC v Biosoft (Australia) Pty Ltd (Security for Costs)

In the matter of Derma Pen LLC v Biosoft (Australia) Pty Ltd, the Federal Court was asked to determine the appropriate amount of security for costs that should be granted to the applicants, Derma Pen LLC and Derma Pen Holdings, against the respondents, Biosoft (Australia) Pty Ltd and Mr. Marshall. Derma Pen LLC and Derma Pen Holdings are corporations incorporated in Delaware, USA, and neither have assets in Australia nor conduct business here. The primary legal issue before the court was whether the applicants were entitled to security for costs, and if so, whether the amount should be limited to the costs of enforcing a judgment in a foreign jurisdiction. The court also had to consider whether there were any countervailing circumstances that would warrant the refusal of the application for security for costs.

The court found that there were no countervailing circumstances to refuse the grant of security in relation to Derma Pen LLC against the first and third respondents. However, it determined that the amount of security should be limited to the costs of enforcing a judgment of this Court in a foreign place (Utah). In relation to Derma Pen Holdings, the court found that there were sufficient countervailing circumstances to support the refusal of a grant of security in relation to the third respondent, but not the first respondent. The court concluded that the amount of security should be limited to the costs of enforcement in Utah for both Derma Pen LLC and Derma Pen Holdings against the third respondent.

The court's decision was based on the fact that Derma Pen LLC had obtained a judgment debt against the third respondent out of jurisdiction, and this debt was considered an asset in a security for costs analysis. The court also took into account that Derma Pen LLC and Derma Pen Holdings did not conduct business in Australia and had no assets here. The court found that the judgment debt against the third respondent was a significant factor in determining the appropriate amount of security for costs, but it did not consider the potential difficulty of enforcing the judgment in Australia as a countervailing circumstance.

The final orders of the court were that Derma Pen LLC and Derma Pen Holdings were to bring in a short minute of order to give effect to these reasons within 7 days. The entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.