Hapisun Pty Ltd v Rikys & Moylan Pty Ltd

Hapisun Pty Ltd brought an application for judicial review against Rikys & Moylan Pty Ltd, challenging a decision of the Victorian Civil and Administrative Tribunal (VCAT) to refuse an application for security for costs. The application was made under section 79 of the Victorian Civil and Administrative Tribunal Act 2008 (Vic). The primary issue before the court was whether the principles developed under section 1335 of the Corporations Act 2001 (Cth) could be applied to VCAT’s decision-making process in relation to security for costs. The court also needed to consider the threshold test to be applied in determining the appropriate standard of proof, specifically whether it was a “real risk” or “reason to believe” that the party might be unable to meet an order for costs. Additionally, the court examined whether other policy considerations should be taken into account in making an order for security for costs and whether an order 56 proceeding was the appropriate method to review VCAT’s decisions or if section 148 of the VCAT Act should have been utilised.

The court examined the applicable principles and found that the principles developed under the Corporations Act could be applied to VCAT proceedings. It held that the threshold for establishing a real risk of inability to pay costs was lower than a reason to believe, which required a higher standard of proof. The court also found that policy considerations, such as the need to protect against frivolous claims and the potential impact on the administration of justice, were relevant in the context of security for costs. Finally, the court concluded that the order 56 proceeding was the appropriate mechanism to review VCAT's decisions, as it provided a more flexible and expeditious process compared to section 148 of the VCAT Act.

The court found in favour of Hapisun Pty Ltd and quashed the decision of VCAT to refuse the application for security for costs. It held that VCAT had applied the wrong threshold test and had not adequately considered the policy considerations relevant to the application for security for costs. The court ordered that the matter be remitted back to VCAT for reconsideration in light of the court's findings.