Monto Coal 2 Pty Ltd v Sanrus Pty Ltd

In Monto Coal 2 Pty Ltd v Sanrus Pty Ltd, the defendants sought security for costs under r 671(a) of the Uniform Civil Procedure Rules 1999 (Qld). This was a complex case involving over 30,000 documents and potentially 60 witnesses, including experts on various topics such as mine planning and financial modelling. The plaintiffs, Monto Coal 2 and Macarthur Coal, were small proprietary companies with limited paid-up capital, which they accepted would be insufficient to cover the potential costs of the trial. However, each plaintiff was also a trustee of a trading trust with the primary asset being their interest in the MCJV, and they argued that they could access these trust assets to meet any adverse costs order.

The primary issue before the court was whether the learned primary judge applied the correct test in deciding whether there was reason to believe that the plaintiffs would be unable to pay the defendants' costs if ordered to do so. The court had to consider whether the plaintiffs' interests in the MCJV were sufficient to meet any likely costs order if their actions were dismissed. The learned primary judge dismissed the application for security for costs, finding that while the plaintiffs could not meet the costs from their own resources, their interests in the MCJV were sufficient to cover any potential costs order.

The court found that the learned primary judge correctly applied the relevant test and did not err in his approach. The judge first considered whether there was reason to believe the plaintiffs would be unable to pay the defendants' costs, and then assessed whether security for costs should be granted considering the discretionary factors. The judge's assessment was that the plaintiffs' interests in the MCJV were sufficient to meet any likely costs order, and therefore, there was no basis for granting security for costs.

The appeal was dismissed, and the appellants were ordered to pay the respondents' costs of the appeal on the standard basis.