Health and Property Network P/L v Pettingill & Ors No. Scciv-98-1427

In this case, Health and Property Network Pty Ltd sought to recover monies from various defendants, alleging improper disposal by the defendants. The defendants had previously been granted an order for security for costs, which remains in effect because the plaintiff failed to comply with it. The plaintiff, now in liquidation, sought to have the security for costs order set aside. The primary legal issue was whether the order for security for costs should be set aside to allow the liquidator to continue the proceedings. The plaintiff argued that the order should be set aside due to the company's liquidation and adverse findings against one defendant in previous proceedings. The court considered whether the setting aside of the security for costs order was warranted under SCR 84.12 and whether it would undermine the intent of Section 1335 of the Corporations Law, which aims to prevent frivolous litigation by impecunious companies.

The court held that while there are circumstances under which the security for costs order could be set aside, in this case, there was no compelling reason to do so. The liquidator's affidavit did not provide sufficient grounds to warrant setting aside the order, as it lacked specificity regarding the assets and support from creditors. The court emphasized that the discretion to set aside such orders should be exercised sparingly and with great care, especially considering the public interest in preventing frivolous litigation. The court concluded that the application to set aside the security for costs order should be dismissed, as there was no exceptional circumstance that justified overriding the order. The liquidator's responsibility to recover assets for creditors did not, in itself, constitute a sufficient reason to set aside the security for costs order without additional compelling evidence.