Livingspring Pty Ltd v Kliger Partners

Livingspring Pty Ltd, a trustee of a unit trust, sued Kliger Partners in the Supreme Court of Victoria. The dispute centred on whether Livingspring would be unable to pay the costs of the proceedings, prompting Kliger Partners to seek security for costs. Kliger Partners argued that the plaintiff's financial information was outdated and that the company had expended significant legal costs, which could affect its ability to pay. Livingspring contended that the presumption of accuracy of company accounts under the Corporations Act 2001 (Cth) should apply, and that the existence of professional indemnity insurance was a mitigating factor.

The court had to determine whether the onus shifts to the defendant to satisfy the threshold question of the plaintiff's ability to pay costs once the defendant establishes a reason to believe the plaintiff will be unable to pay. The court also had to consider the factors relevant to the exercise of the discretion to require security for costs, including the nature of the proceedings, the existence of professional indemnity insurance, and the failure to supply up-to-date financial information. Additionally, the court needed to assess whether expenditure on legal costs could be properly considered an asset.

The court held that the onus does not shift to the defendant to satisfy the threshold question. However, once this question is satisfied, the court must exercise its discretion to require security for costs. The nature of the proceedings and the failure to supply up-to-date financial information were relevant factors, but the existence of professional indemnity insurance was not. The court also found that expenditure on legal costs could not be considered an asset in assessing the plaintiff's ability to pay costs. The appeal was allowed, and the matter was remitted to the trial judge for reconsideration in light of these findings.

The court ordered that Livingspring provide up-to-date financial information and that the trial judge reconsider the application for security for costs in light of the appeal's findings. The court also noted that the legislative policy against interlocutory appeals was relevant but did not prevent the appeal from proceeding in this case due to the sufficient doubt attending the decision below.