Hydrocool Pty Limited v Hepburn (No 2)

Hydrocool Pty Limited was involved in a legal dispute with Hepburn, with the matter coming before the court for a determination on the security for costs. Hydrocool, a corporation, was the plaintiff, and the court had to consider whether Hydrocool could afford to pay the costs of the defendant if it were to be successful in its defence. The court had to assess whether the corporation met the threshold requirement under section 1335(1) of the Corporations Act, which mandates that security for costs be provided if there is a credible belief that the plaintiff corporation would be unable to pay the defendant's costs if they were to be awarded against the plaintiff. This decision was influenced by Hydrocool's financial position and its ability to provide such security.

The court identified three key issues: whether Hydrocool met the statutory threshold for security for costs, whether the delay in applying for security justified withholding an order, and if so, what amount of security should be required. The court evaluated Hydrocool's financial statements and affidavits, which indicated a history of trading losses and a recent profit, but found that Hydrocool had not sufficiently demonstrated a change in its financial circumstances since the last application for increased security. The court also considered the delay in Hydrocool's application for additional security, which was made just two and a half months before the trial, and whether this delay justified declining the application for security.

The court concluded that Hydrocool had not met the threshold requirement for security for costs as it had not demonstrated a change in its financial circumstances since the last application. Additionally, while the delay in the application did not prevent the court from ordering security, it did affect the quantum of security to be required. The court ordered Hydrocool to provide an additional $150,000 in security by way of a bank guarantee or an alternative acceptable form. If Hydrocool failed to provide the security by specified dates, the proceedings would be stayed. The court also mandated that Hydrocool pay the respondents' costs associated with the security application and set a timeline for mediation and further directions.