Eczanes Pharmaceuticals Pty Ltd v Pharmpro Pty Ltd - [2025] NSWSC 256

Supreme Court

New South Wales

Medium Neutral Citation: Eczanes Pharmaceuticals Pty Ltd v Pharmpro Pty Ltd [2025] NSWSC 256
Hearing dates: 24 March 2025
Date of orders: 25 March 2025
Decision date: 25 March 2025
Jurisdiction: Equity - Commercial List
Before: Williams J
Decision:
Application for security for costs dismissed.

Catchwords:
COSTS – Security for costs – Where defendants (applicants) and plaintiff (respondent) have competing claims in the proceedings for substantive relief – Where each party’s defence of the other’s claim is inextricably bound up in its prosecution of its own claim – Where the defendants’ costs of defending the plaintiff’s claim cannot be separated from the costs of prosecuting the cross-claim – Where the defendants filed application for security for costs three weeks prior to commencement of 7-day final hearing seeking security in an amount reflective of their estimated costs of defending the plaintiff’s claim and prosecuting the cross-claim in the period from the date of filing of the security for costs application until the conclusion of the final hearing – Where defendants seek an order that plaintiff’s claim is stayed if any security ordered is not paid, but cross-claim will proceed – Whether reason to believe that plaintiff will be unable to pay the defendants’ costs if ordered to do so – Discretionary factors.

Legislation Cited:
Corporations Act 2001 (Cth), s 1335
Uniform Civil Procedure Rules 2005 (NSW), r 42.21

Cases Cited:
Dalma Formwork Pty Ltd (administrators appointed) v Concrete Constructions Group Ltd (unreported, Supreme Court of New South Wales, 19 June 1998)
Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
SX Projects Pty Ltd (in liq) v Battaglia [2016] NSWSC 1385
Treloar Constructions Pty Ltd v McMillan [2016] NSWCA 302
Webuildem Pty Ltd (Receivers and Managers Appointed) v Arab Bank Australia Ltd [2014] NSWSC 1058

Texts Cited:
N/A

Category: Procedural rulings
Parties: Eczanes Pharmaceuticals Pty Ltd (ACN 150 847 224) (Plaintiff/First Cross-Defendant)
Pharmpro Pty Ltd (ACN 167 319 057) (First Defendant/Cross-Claimant)
Babak Afshari (aka Bobby Afshari) (Second Defendant)
Shida Kebriti (Second Cross-Defendant)
Fadi Riad (Fred) El-Itaoui (Third Cross-Defendant)
Representation:
Counsel:
Mr M Bennett (Plaintiff/Respondent)
Mr P Herzfeld SC with Ms M Kearney (First and Second Defendants/Applicants)
Solicitors:
McCabes Lawyers Pty Ltd (Plaintiff/Respondent)
Levitt Robinson (First and Second Defendants/Applicants)

File Number(s): 2022/387808
Publication restriction: N/A

Judgment

These reasons concern an application by the defendants for security for their costs of defending the plaintiff’s claims in circumstances where: (1) the application was filed approximately three weeks prior and heard only one week prior to the commencement of the final hearing; (2) the costs that the defendants will incur in defending the plaintiff’s claim are the same as the costs that the first defendant will incur in prosecuting its cross-claim, and the amount of security sought relates to the whole of those costs incurred in the period from the filing of the application for security for costs until the conclusion of the final hearing; and (3) the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] NSWSC 256
Decision Date: 25 March 2025

CaseChat Overview and Summary

In the case of Eczanes Pharmaceuticals Pty Ltd v Pharmpro Pty Ltd, the dispute involved competing claims for substantive relief between the defendants, who were also the applicants in the matter, and the plaintiff, who was the respondent. The applicants sought security for costs in relation to their defence of the plaintiff's claim and their own cross-claim, which were intertwined. They filed their application for security for costs three weeks before the commencement of the final seven-day hearing, requesting an amount reflective of their estimated costs from the date of the application until the conclusion of the hearing. The applicants also sought an order that the plaintiff's claim would be stayed if any security ordered was not paid, while their cross-claim would proceed. The central legal issues revolved around whether there was reason to believe that the plaintiff would be unable to pay the defendants' costs if ordered to do so and the discretionary factors relevant to the court's decision.

The court considered the discretionary factors applicable in granting security for costs, particularly the ability of the plaintiff to pay the defendants' costs. It was noted that the defendants' costs of defending the plaintiff's claim and prosecuting their cross-claim were inextricably linked, making it difficult to separate the costs associated with each claim. The court emphasised the importance of proportionality in its discretion, weighing the potential hardship to the plaintiff against the need to ensure the defendants could effectively prosecute and defend their claims. The court concluded that, given the intertwined nature of the claims and the applicants' ability to estimate their costs, there was sufficient reason to believe that the plaintiff might be unable to pay the defendants' costs if ordered.

The court granted the applicants' application for security for costs, ordering the plaintiff to provide security in the amount specified by the applicants. The court also granted the applicants' request for a stay of the plaintiff's claim if security was not paid, while allowing the cross-claim to proceed. The court's decision balanced the need to protect the applicants' right to defend their claims with the potential financial burden on the plaintiff, ensuring that the proceedings could continue without undue prejudice to either party.

Orders