John Irving As Liquidator of Mawson KLM Holdings P/L (in Liq) & Anor v Starmaker (No 51) P/L (No 2)

In the matter of John Irving as liquidator of Mawson KLM Holdings P/L (in Liq) and Anor v Starmaker (No 51) P/L (No 2), the parties were engaged in a dispute concerning security for costs in relation to a complex set of transactions from 1995 and 1996, including a loan, an option agreement, and a joint venture agreement. The court was required to determine whether the claims and remedies sought by the parties were separate, whether the Master had erred in characterising the relief sought, and whether the absence of material regarding the assets and liabilities of the parties constituted a barrier to ordering security for costs.

The court found that the Master had erred in characterising the relief sought by Irving, as the claim was not seeking to avoid the joint venture agreement but rather damages or compensation based on the equity lost by Mawson. The court also found that the claims of the parties involved overlapping evidence, which the Master had not adequately considered. The court held that the discretion to order security for costs should be exercised in a manner that is fair and just, taking into account the nature of the claims and the likelihood of success. The court found that it was appropriate to order security for costs against the liquidator and insolvent company, where there is a litigation funding agreement, and where the absence of material as to assets and liabilities before the Court did not constitute a barrier to ordering security for costs.

The appeal was allowed, and the order of the Master dismissing the application for security for costs was set aside. The court ordered that security for costs be provided by the liquidator and insolvent company, and that the litigation funding agreement be taken into account in determining the appropriate amount of security. The court also found that the delay in applying for security for costs did not constitute a barrier to ordering security, as the circumstances of the case warranted the exercise of the court's discretion in favour of the applicant.