Gartner v Ernst & Young (No 3)

The case of Gartner v Ernst & Young (No 3) involved the applicants seeking security for costs from the National Australia Bank Limited. The applicants were involved in a legal dispute over alleged misleading conduct and negligence by the bank in relation to financial arrangements. The applicants sought an order for security for costs, arguing that they were impecunious and unable to meet a potential order for costs if they were unsuccessful in their claim against the bank. The bank opposed the application, arguing that the applicants were not genuinely impecunious and that there was a real prospect that they would be able to meet any order for costs.

The court considered various factors in determining whether to make an order for security for costs. The court found that the personal applicants were not shown to be impecunious and that there was no information about their assets and liabilities outside the partnership assets that were the subject of the valuations. The court also considered the position of the personal applicants in relation to whether an order for security for costs should be made against the corporate applicants. Although the threshold for such an order had been met, the court found that there was a real prospect that the applicants generally would be able to meet any order for costs against them if they were unsuccessful in their claim against the bank. The court ultimately decided not to make an order for security for costs against the applicants.

The court also considered whether the applicants' case against the bank was so weak that it would weigh heavily in favour of making an order for security for costs. The court found that while there were obstacles confronting the applicants, their case was not so demonstrably weak as to make this factor weigh heavily in favour of making an award for security for costs. The court also considered whether the applicants were in reality defending their position against the bank and that the bank was, in reality, the aggressor in the proceedings. The court found that the applicants had chosen to impugn the integrity of the security instruments in this proceeding and that their action was not properly described as 'defensive' or where the real aggressor was the bank.

In light of the above considerations, the court refused the application by the National Australia Bank Limited for security for costs against the applicants.