Harrington Services Pty Ltd (In liq) v Harrington

Harrington Services Pty Ltd (in liq) (the Company) and its liquidators appealed against orders made by Palmer J. The Directors sought security for their costs of the appeal.

The primary legal issue before the court was whether there were special circumstances justifying an order for security for costs against the Company and its liquidators, given the Company was in liquidation. A secondary issue concerned the terms of any such security, particularly whether the liquidators should be personally liable.

Hodgson JA considered the principles governing security for costs, noting that while a company in liquidation is generally required to give security for costs, an exception may arise if special circumstances are demonstrated. His Honour found that the liquidators' conduct in pursuing the appeal, coupled with the Company's impecuniosity, did not constitute special circumstances that would disentitle the Directors to security. However, the court also recognised the liquidators' statutory duty to pursue claims and the potential for personal liability if they acted improperly.

The court ordered a stay of certain earlier orders pending the outcome of the security for costs application. It further ordered that if the Directors provided an undertaking not to pursue their cross-appeal if security was not given, then the Company and its liquidators were to give security for the Directors' costs of the appeal. This security was to be provided by the liquidators undertaking to be personally responsible for any costs ordered against the Company. The appeal was to be expedited, subject to the liquidators giving the undertaking. Costs of both applications were reserved for the appeal.