Gensco Laboratories, LLC v Care A2 Plus Pty Ltd (receiver appointed) (No 2)

In the matter of Gensco Laboratories, LLC and Gensco Nutrition LLC v Care A2 Plus Pty Ltd (receiver appointed) (No 2), the Federal Court was required to determine whether Care A2 Plus Pty Ltd, a company in receivership, could provide security for costs in relation to a cross claim brought by Gensco Laboratories, LLC and Gensco Nutrition LLC. The applicants alleged breaches of contract and misleading or deceptive conduct against Care A2, while Care A2 had filed a cross claim against Gensco and its officers. The court was tasked with deciding if there was reason to believe Care A2 could not meet an adverse costs order and whether the cross claim was purely defensive in nature.

The court found that there was reason to believe Care A2 could not meet an adverse costs order, primarily due to the unexplained appointment of a receiver since December 2022 and the registration of security interests over Care A2's assets without clear explanations. These factors, coupled with Care A2's refusal to address Gensco's concerns about its financial position, led the court to conclude that Care A2 was likely unable to meet a costs order. Additionally, the court determined that the cross claim was not purely defensive, as it involved substantive allegations against Gensco and its officers.

The court ordered that Care A2 must provide security for Gensco's costs in relation to the cross claim in the amount of $675,859.05. This security is to be paid in an initial tranche of $50,000 by 19 February 2024, with subsequent tranches to be agreed upon by the parties or determined by the court. The cross claim will be stayed until the initial security is provided and will be dismissed if not met by 7 March 2024, with Care A2 liable for Gensco's costs.