Nordburger P/L v Koronis and Vari

[2025] SADC 26

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil: Interlocutory Application)

NORDBURGER P/L v KORONIS AND VARI (NO. 2)

[2025] SADC 26

Judgment of his Honour Judge Burnett  

21 March 2025

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - PLAINTIFF OR APPLICANT - NOMINAL OR REPRESENTATIVE PLAINTIFF OR APPLICANT

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - PLAINTIFF OR APPLICANT SUBSTANTIALLY IN POSITION OF DEFENDANT

The respondent seeks an order that the applicant provide security for costs in the sum of approximately $97,000. There are two bases for the application. First, it is contended that pursuant to UCR 115.1(d), the applicant is bringing the application for someone else’s benefit. Secondly, pursuant to UCR 115.1(d) and s 1335 of the Corporations Act, it is contended that there is credible testimony to believe that the applicant will be unable to pay the costs of the respondent if the respondent is successful in its defence to the claim.

The applicant is the lessee of shop premises at Norwood from which a business of selling hamburgers is conducted. The applicant claims that it validly renewed the lease of that property for a period of five years commencing on 1 July 2023. The respondent, the lessor of the premises, denies that the lease was validly renewed. At the time of renewal, the respondent claimed that the applicant was in default of its obligation to pay certain management fees. In its defence to the proceedings, the respondent also claims that there was a deemed assignment of the lease by the applicant contrary to the terms of the lease. The deemed assignment is alleged to have occurred in 2019 when the shares in the applicant were transferred from Mrs Victoria Martin to Nordburger Operations Pty Ltd as trustee for the Nordburger Holdings Trust. At the same time, a new entity, Nordburger Norwood Pty Ltd (NNPL), was formed to carry on the business. The applicant provided services to NNPL at cost pursuant to a Services Agreement.

The respondent claims that following the expiration of the term of the lease, the applicant held over on a monthly tenancy. The respondent contends that it terminated the monthly tenancy and validly re-entered the premises on 2 December 2024. The applicant claims that (1) the lease had been validly renewed; (2) any monthly tenancy was not validly terminated and consequently the re-entry was unlawful as the respondent had sent an invoice for rent covering the period after the date of termination and re-entry and had received and accepted that rent. The applicant also claims damages as a result of the unlawful re-entry.

Held:

(1)     The application for security for costs is granted but in the sum of $42,500.

(2)The applicant has a real interest in the claim and is seeking to establish a proprietary right, namely a leasehold interest in the premises. It is not bringing the claim solely for the benefit of others: Orr v Lusute Pty Ltd (1987) 72 ALR 617 and Andrews v Caltex Oil (Australia) Pty Ltd (1982) 60 FLR 261 applied. In these circumstances, the claim is not brought for someone else’s benefit under UCR 115.1(a).

(3)There was credible testimony that the applicant will be unable to meet an adverse costs order. The applicant has not established that those standing behind the applicant or who would benefit from the proceedings were also without means.

(4)In most cases, the merits of the underlying dispute are regarded as a neutral factor except to say the claim is arguable and bona fide: Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564 applied. The respondent has a strong argument that compliance with the terms of the lease was a condition precedent to the exercise of the option to renew: Sperry Australia Ltd v Arrandale Properties Pty Ltd [1979] VR 409 applied. Therefore, there was a strong argument that the applicant was not entitled to renew the lease. The strength of the applicant’s argument that the respondent’s termination of the monthly tenancy was unlawful and therefore so was the re-entry is not able to be assessed at this stage: Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 256, Hemer v Benni & Ors [2011] SASCFC 35 considered.

(5)The claim by the applicant was partly defensive in that the applicant was responding to the self-help procedures taken by the respondent so that the applicant was, in substance, forced to litigate: Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360, Caringbah Business & Sports Club v Carringbah Investments [2015] NSWSC 724 applied. The damages claim made by the applicant was not defensive: Mulwala Hotel Group Pty Ltd v Nyora 1 Pty Ltd [2023] NSWSC 1514.

(6)Where a claim is only partly defensive, as in the present case, the correct approach is to order security but reduce the amount of security to a sum related to the costs of those claims which cannot be characterised a defensive: ADS Advertising Services (Aust) Pty Ltd v Central West Business Park Pty Ltd [2005] VSC 265, Interwest Ltd v Tricontinental Corp Ltd (1991) 5 ACSR 621 applied.

Uniform Civil Rules 2020 rr 115.1(a), 115.1(d); Corporations Act 2001 (Cth) s 1335; Retail and Commercial Leases Act 1995 (SA); Real Property Act s 193; Retail and Commercial Leases Act ss12(5)(d), 68(2); Hire Purchase Act 1959 (WA); Customs Act 1901 (Cth); referred to.
Reschke v Trevor Reschke Nominees Pty Ltd [2020] SASC 60; ASCF Managed Investments Pty Ltd v De Pasquale & Ors [2023] SASC 157; ; In the Matter of Torrens Constructions Pty Ltd; In the Matter of Torrens Constructions Pty Ltd [2024] SASC 136; Cowell v Taylor (1885) 31 Ch D 34; Co-Operative Farmers’ and Graziers’ Direct Meat Supply Pty Ltd v Smart [1977] V.R. 386; Orr v Lusute (1987) 72 ALR 617; Andrews v Caltex Oil (Australia) Pty Ltd (1982) 60 FLR 261; Warren Mitchell Pty Ltd v Australian Maritime Officers’ Union (1993) 12 ACSR 1; Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance Ltd [2003] FCA 803; FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 33 ACSR 739; Olivaylle Pty Ltd v Flottweg [2007] FCA 56; Jones v Dunkel (1959) 101 CLR 298; Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176; PS Chellaram & Co Ltd v China Ocean Shipping Co and Anor (1991) 5 ACSR 633; Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360; KP Cable Investments v Meltglow Pty Ltd (1995) 56 FCR 189; Buckley v Bennell (1974) 1 ACLR 301; Australian Quarry Holdings Pty Ltd (in liq) v Doherty (1989) 8 ACSR 569; GAI Holdings (no 3) Pty Ltd (in liq) v GAI Holdings (No 4) (in liq) (1986) 4 ACLC 90; Sperry Rand Australia Ltd v Arrandale Properties Pty Ltd [1979] VR 409; MacDonald v Robins (1954) 90 CLR 515; West Country Cleaners (Fairmouth) Ltd v Saly [1966] 1 WLR 1485; Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 256; Bell Wholesale v Gates Export Corp (No 2) (1984) 9 ACLR 588; Idoport Pty Ltd v National Australia Bank [2001] NSWSC 744; Yandil Holdings Pty Ltd v The Insurance Company of North America (1985) 3 ACLC 542; Gentry Bros v Wilson Brown (1992) 8 ACSR 405; Jeffcott Holdings Pty Ltd v Paior and others (1997) 15 ACLC 28; Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; Willey v Synan (1935) 54 CLR 175; Heeler Factors Pty Ltd v John Arnold’s Surf Shop (in liq) (1979) 4 ACLR 492; Maatschappij Voor Fondsenbezit v Shell Transport Trading Company Ltd [1923] 2 KB 166; ADS Advertising Services (Aust) Pty Ltd v Central West Business Park Pty Ltd [2005] VSC 265; Interest Ltd v Tricontinental Corp Ltd (1991) 5 ACSCR 621; Australian Quarry Holdings Pty Ltd (in liq) v Doherty (1992) 8 ACSR 569; GAI Holdings (no 3) Pty Ltd (in liq) v GAI Holdings (No 4) (in liq) (1986) 4 ACLC 90; Drumdurno Pty Ltd v Braham (1982) 42 ALR 563; Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564; Clarence Street v ISIS Projects Pty Ltd [2007] NSWSC 380; Jianshe Southern Pty Ltd v Get Motor Cycles Pty Ltd (3) [2007] FCA 1078; Bryan E Fencott Pty td v Eretta Pty Ltd (1987) 16 FCR 497 , applied. , applied.

NORDBURGER P/L v KORONIS AND VARI (NO. 2)
[2025] SADC 26

Introduction

1. The respondent has brought an application for security for costs against the applicant and seeks an order that the sum of $97,873.55 be paid into Court by way of security. The application is brought pursuant to Uniform Civil Rules 2020 (UCR) 115.1(a) and UCR 115.1(d) and s 1335 of the Corporations Act 2001 (Cth), which provide that security may be ordered where:

   (1)The applicant is bringing the claim for someone else’s benefit (UCR 115.1(a));

   (2)The order is authorised by statute (UCR 115.1(d)). Under s 1335 of the Corporations Act 2001 (Cth), the court, may, if it appears by credible testimony, that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

2. In Reschke v Trevor Reschke Nominees Pty Ltd,[1] Blue J held that UCR 115.1(a)-(d) clearly import a two stage test: first, has the respondent established the relevant prerequisite matter and secondly, should the court exercise its discretion to award security. That approach was accepted by Kourakis CJ in ASCF Managed Investments Pty Ltd v De Pasquale & Ors[2] and by Kimber J in In the Matter of Torrens Constructions Pty Ltd.[3] The applicant opposed the application and contended that the respondent had not established the pre-conditions for making the orders and further that the court, in the exercise of its discretion, should not order security.

   [1] [2020] SASC 60, [43].

   [2] [2023] SASC 157, [92].

   [3] [2024] SASC 136, [36].

   The Proceedings

3. The respondent is the owner of premises situated at The Parade, Norwood (the Property) and has leased part of that property to the applicant. Mr Thomas Martin and Mrs Victoria Martin are the directors of the applicant. The Nordburger hamburger business is conducted from the Property although there is a dispute as to which entity currently operates the business.

4. The applicant was assigned the lease (the Lease) from the original lessee by Deed of Assignment of Lease dated 14 October 2016. The Lease is a retail shop lease under the Retail and Commercial Leases Act 1995 (SA). The Lease was for a period of five years commencing on 1 July 2008 with three rights of renewal. The Lease has been renewed on two occasions, the most recent renewal being for the period from 1 July 2018 to 30 June 2023.

5. The applicant, by notice dated 29 March 2023, sought to renew the Lease for a further five years from 1 July 2023. The respondent has refused to renew the Lease and contends that the applicant was in breach of the terms of the Lease at the time of the purported renewal and therefore had no right of renewal. The respondent claimed that the applicant was in breach of the Lease by not paying certain management fees but in its defence, also relies upon further alleged breaches, including that in breach of the Lease, there had been a transfer of the entire share capital of the applicant, such transfer being  deemed to be assignment of the Lease which required the consent of the respondent, which consent had not been obtained. The respondent contends that the applicant was holding over pursuant to a monthly tenancy and that it gave notice on 21 October 2024 terminating the monthly tenancy from 30 November 2024. The respondent re-entered the Property on 2 December 2024.

6. The applicant denies that it was in breach of the Lease and on 6 December 2024 commenced proceedings in this Court in which it sought declarations that it had validly exercised its rights of renewal and that the purported termination and re-entry of the respondent was unlawful and invalid. The applicant sought orders for specific performance including for the renewal of the Lease and damages for breach of the Lease including for the period in which it was not in possession of the Property after the re-entry by the respondent on 2 December 2024.

7. On 19 December 2024, the Court granted an injunction permitting the applicant to re-enter the Property. The matter has been listed for an urgent trial commencing on 29 April 2025 for three days. The respondent issued the application for security for costs on 24 January 2025.

   The Federal Court Proceedings

8. There are also proceedings in the Federal Court concerning the Nordburger business and in which Mrs Martin and Nordburger Operations Pty Ltd (Nordburger Operations) (the sole shareholder of the applicant) are respondents. There are two aspects of those proceedings that are relevant to this application. First, Mrs Martin and Nordburger Operations have given an undertaking (the Federal Court Undertaking) that they shall not, either by themselves or through their agents, including Mr Martin, make payments out of the entities, trusts or business that trade under the Nordburger name except in payment of the expenses of the Nordburger business in the ordinary course of business. Further, an injunction was granted (the Federal Court Injunction) restraining Mrs Martin and Nordburger Operations, either by themselves or through their agents, including Mr Martin, from making any payments out of the funds, assets, entities, trusts or businesses that trade or conduct business under the Nordburger name or business to Mrs Martin or Mr Martin or at their direction.

   Is the applicant bringing the claim on someone else’s behalf?

9. The respondent contended that the applicant is bringing its claim on behalf of other companies in the Nordburger group of companies. Up to 2019, the hamburger business was operated by the applicant from the Property. The share capital in the applicant was held by Mrs  Martin, possibly as trustee for the Hillier PIAH Trust, although that is a matter that is disputed. In 2019, the shareholding in the applicant was transferred from Mrs Martin to Nordburger Operations as trustee of the Nordburger Holdings Trust.

10. On 2 December 2019, the applicant entered into a Services Agreement with a new entity, Nordburger Norwood Pty Ltd (NNPL), which records that NNPL wished to conduct the hamburger business from the Property and the applicant agreed to provide administrative, employment and managerial support to NNPL at cost. The applicant therefore received no income under this agreement. The obligations of the applicant under the agreement included the provision by the applicant of all staff required to conduct NNPL’s business. NNPL therefore received the income from operating the business from the Property. The Service Agreement recorded that the applicant agreed to provide NNPL with exclusive access to the Property. The agreement could be terminated on three months’ notice. If terminated, NNPL was required to vacate the Property. The Services Agreement contemplated that the applicant might enter into a lease or sub-lease of the Property, but there was no evidence of such an arrangement. In its Reply, the applicant has alleged that the Services Agreement has been terminated but there was no evidence of that. In the Reply, the applicant also admitted that the further companies that operated the Nordburger business share common ownership and the same management (Mr and Mrs Martin) with the applicant.

11. The intellectual property of the business is owned by Norburger Capital Pty Ltd (Nordburger Capital), another company in the Nordburger group of companies.

12. The respondent submits that in circumstances where the business is conducted by NNPL and the intellectual property is owned by Nordburger Capital, the proceedings are brought for the benefit of those entities and the Nordburger Holdings Trust.

13. The applicant submitted that notwithstanding the restructure, the companies within the Nordburger Group were under the control of the same directors (Mrs Martin and Mr Martin) and are owned by Nordburger Operations as trustee for the Nordburger Holdings Trust and that the terms of that Trust were similar to the Hillier PIAH Trust.

14. The origins of UCR 115.1(a) come from the common law rule that there was an exception to the rule that poverty was no bar to a litigant. That exception was that there was an obligation to provide security where an insolvent person sues as a nominal plaintiff for the benefit of someone else.[4] In such a case, it was said that the nominal plaintiff is a mere shadow.[5] The decision in Cowell v Taylor was followed in Co-Operative Farmers’ and Graziers’ Direct Meat Supply Pty Ltd v Smart,[6] where Kaye J concluded that it could not be said that the plaintiff in that case was a mere nominal plaintiff without a beneficial interest in the outcome but bringing it solely for the benefit of the secured creditors.[7] In Orr v Lusute Pty Ltd,[8] Sheppard J also followed Cowell v Taylor and held that the fact that the plaintiff was the contracting party and the contract was not a sham meant that the case did not fall within the dictum in Cowell v Clarke.[9] This approach was followed by Lockhart J in Andrews v Caltex Oil (Australia) Pty Ltd[10] where he held:

    Perhaps if it could be established that a franchisee is nothing but a puppet for some third party, a mere shadow, in the sense that he has parted with any right he may have had in the subject matter and become a merely nominal plaintiff (Cowell v Taylor) it would probably follow that he had brought the proceeding not for his own benefit but for the benefit of another.

    [4]    Cowell v Taylor (1885) 31 Ch D 34, 38.

    [5] Ibid.

    [6] [1977] V.R. 386, 390-391.

    [7] Ibid, 391.

    [8] (1987) 72 ALR 617.

    [9] Ibid, 621.

    [10] (1982) 60 FLR 261, 309.

15. In the present case, the applicant has a real interest in the claim. It is seeking to establish a proprietary right, namely a leasehold interest in the Property, through the exercise of the right of renewal. The applicant is seeking to the establish that under the terms of the Lease, it validly exercised the right of renewal. In those circumstances, it cannot be said that the applicant is bringing the claim for someone else’s benefit. The benefit that any other company may derive from the proceedings is dependent on the applicant establishing its claim against the respondent. It is sufficient that the applicant has a proper interest in bringing the proceedings. If it does, it cannot be said that the proceedings are being brought for someone else’s benefit under UCR 115.1(a).

    Credible testimony to believe that the applicant will be unable to meet an adverse costs order

16. In the alternative, the respondent submits, under s 1335 of the Corporations Act, there is credible testimony for the Court to be satisfied that there is reason to believe that the applicant will be unable to pay the costs of the respondent if successful in its defence. If the Court is so satisfied, then pursuant UCR 115.1(d) an order for security is authorised by statute.

17. To satisfy the threshold test required under s 1335, the respondent must show that the material before the Court is sufficiently persuasive to permit a rational belief to be formed that, if ordered to do so, the applicant will be unable to pay the costs of the respondent upon disposal of the proceedings.[11] The Court’s task is to do no more than judge the quality of the evidence to see if it gives rise to a credible belief.[12] It is not sufficient to show that there is merely a risk that the costs will not be able to be paid.

    [11] Warren Mitchell Pty Ltd v Australian Maritime Officers’ Union (1993) 12 ACSR 1 at 5; applied in Gartner v Ernst and Young (no 3) at [2003] FCA 1437. Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance Ltd [2003] FCA 803 at [19].

    [12] FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 33 ACSR 739 at [22].

1. The Court is satisfied on credible testimony that there is reason to believe that the applicant will be unable to pay the costs of the respondent if the respondent is successful in its defence. I have formed this view for the following reasons and based on the following evidence:

   (1)Mr Martin, a director of the applicant, and in support of the application of the applicant for the injunction, deposed to the following facts:

   (a)    The applicant operates a hamburger business (the Nordburger business);[13]

   (b)    “If the application [for the injunction] is not granted, there is a real and immediate risk to the survival of the Nordburger business. Without the cash flow from trade at both locations, the margin of liquidity of the Nordburger business will soon erode”.[14] As the respondent submitted, it follows that if it is successful in the proceedings, the applicant will not be able to trade at the Property and, it can be inferred, the same consequences would occur;

   (c)    “We [Mr and Mrs Martin] are both placed in an extremely precarious position by the current predicament of the business. The litigation in the Federal Court and the Injunctions in particular have made it exceptionally difficult for us operate the business … The extraordinary impact of the Covid state of emergency on the hospitality business in this State, and the compulsory acquisition of the Nordburger restaurant at Frewville in 2022 has placed extreme strain on the finances on the business.”[15] That is an admission of the present difficult financial position of the applicant;

   (d)    “In summary if an interlocutory injunction reinstating the applicant to its occupation of the Norwood Premises is not granted, it is reasonably likely to result in the closure of the Nordburger business in its entirety …”[16]

   (2)The applicant owes a substantial amount of back pay to Mrs Martin as managing director of the business;

   (3)The Deputy Commissioner for Taxation has issued a statutory demand against the applicant and the applicant has brought an application to set aside that demand. The demand permits an inference to be drawn that there is a disputed debt owed by the applicant to the Commissioner of Taxation in relation to unpaid tax. Mr Martin in his February affidavit refers to the demand and the application to set aside but does not say what is the current status of that application. Mr Martin deposes to the fact that he and Mrs Martin have personally paid $285,000 from their own funds to the Commissioner on behalf of the applicant. Mr Martin further deposes that there are good prospects for the applicant to secure a payment arrangement with the Commissioner which will result in the balance of the outstanding tax liability being discharged within 12 months. Mr Martin says he believed that there may be a remittal of the general interest charges but that is just speculation.

   (4)Mr Martin, Mrs Martin and Nordburger Operations have given an undertaking to the Federal Court that they will not make payments out of the entities, trusts or business that trade under the Nordburger name expect in payment of the expenses of the Nordburger business in the ordinary course of business. That undertaking impedes the applicant being able to pay an adverse costs order in these proceedings (unless it can be said to be in the ordinary course of business of the applicant) but also evidences a possible claim by the parties in the Federal Court to the assets of the applicant. I accept the submission of the applicant that, at the very least, it is doubtful, that a payment for security for costs could be said to be a payment in the ordinary course of business;

   (5)The searches conducted by the respondent reveal that the applicant does not possess any land. That evidence, coupled with the evidence that after the restructure, NNPL conducts the business at the Property and the applicant does not receive any profit under the Services Agreement or carried on the business, together with the evidence as to the effect on the business of the applicant if the injunction was not granted, permit an inference to be drawn that the applicant does not have assets available to meet an adverse costs order;

   (6)The applicant said that Mr and Mrs Martin had been funding the legal representation of the applicant.

   [13] Paragraph 2 of the affidavit of Thomas Patick Martin made on 12 December 2024 (Martin 1).

   [14] Ibid, [27].

   [15] Ibid, [32].

   [16] Ibid, [37].

2. The respondent also sought to rely on the fact that the applicant did not respond to requests for information about its financial position as evidence that there was reason to believe that the applicant was unable to meet an adverse costs order. I give no weight to that evidence.

3. The respondent to a security for costs application does not have to respond to a request to provide financial information if the applicant for security has not established the pre-conditions for the making of an order for security. That would impose a requirement to respond where the applicant for security has met some lesser standard (there being a concern as to the financial capacity of the respondent to the security application).

4. I consider that the correct approach is as stated by Finn J in Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA[17] that there is no onus on the respondent to the security application to adduce evidence of its ability to pay its debts (including a future costs order). The rule in Jones v Dunkel[18] is limited to assisting the court to draw an inference from circumstantial evidence itself tending to prove the fact in issue against the silent party. It cannot be directly converted into circumstantial evidence.[19] It cannot fill gaps in the evidence or convert conjecture or suspicion into evidence in the nature of evidence.[20]

   [17][2007] FCA 56 at [12].

   [18] (1959) 101 CLR 298.

   [19]Amcor v Barnes [2015] VSC 90 at [39].

   [20]Ibid.

5. In Christou v Stanton Partners Australasia Pty Ltd,[21] Newnes JA (with whom Murphy JA agreed) held:

   I also do not accept that the filing by the appellants of an application for security to costs gave rise to some obligation on the second respondent to provide a full account of its financial position. That is to put the cart before the horse. In order to enliven the court’s discretion, there must be material before it which is sufficiently persuasive to permit a rational belief to be formed that, if ordered to so, the second respondent would be unable to pay the appellants’ costs if the second respondent were to be unsuccessful in the action; mere speculation as to the second respondent’s insolvency or financial difficulties is not sufficient [citations omitted]. In circumstances where the appellants had not troubled themselves to put any material before the court relating to the second respondent’s financial position, it was not incumbent upon the second respondent to fill the gap. The second respondent took the view (rightly in my opinion) that the discretion has not been enlivened and was content to leave the matter at that. It was entitled to do so.

   [21][2011] WASCA 176 at [34].

6. The applicant did not provide evidence about its financial position other than referring to two assets. First, it referred to Nordburger Operations owning four food trucks in which there was an equity of $280,000. There are a number of difficulties with relying on this evidence to counter a contention that there was credible testimony to believe that the applicant will be unable to meet an adverse costs order. There is no evidence of the financial position of Nordburger Operations and its liabilities. Further, other than Mr Martin deposing that the equity is available from these assets to meet an adverse costs order (subject to the Federal Court Injunction and the Federal Court Undertaking), there is no evidence to that effect. Nordburger Operations is subject to the undertaking given in the Federal Court that it will not deal with its assets other than in payment of the expenses of the Nordburger business in the ordinary course of business. Lastley, there is no evidence of the current value of the food trucks. They were purchased four years ago.

7. Secondly, the applicant referred to franking credits that it holds to the value of $740,000. Again, the existence of the franking credit does not provide evidence that the applicant may be able to meet an adverse costs order. The existence of the franking credit does not provide evidence of the overall financial position of the applicant. Further, the franking credits permit a dividend to be paid to shareholders on which tax has already been paid. The franking credit therefore has value to the shareholders of the applicant. The franking credit does not have direct value to the applicant. The existence of the franking credit demonstrates that at some time in the past (and in fact prior to 1 July 2021), the applicant had generated substantial profits. The franking credits also may be valuable to any person seeking to purchase shares in the applicant from Nordburger Operations if that entity decides to sell its those shares but the value of that asset depends on the applicant being in a position to pay dividends. Again, without understanding the financial position of the applicant, there can be no assessment of the value of that asset.

8. The applicant has chosen to not adduce evidence about its financial position and therefore has not counted the evidence of the respondent that the applicant is unable to meet an adverse cost order.

9. For all of these reasons, I am satisfied that there is credible testimony that the applicant will be unable to meet an adverse costs order. It follows that the pre-condition for ordering security imposed by UCR 115.1(d) has been satisfied.

   Discretionary Matters

10. Given that the pre-condition for awarding security has been satisfied, the Court has an unfettered discretion whether or not to grant an order for security. The discretion is to be exercised having regard to the circumstances of the case. It is not possible to list all the matters relevant to the exercise of the discretion. The factors will vary from case to case. The weight to be given to any circumstance will depend on its own intrinsic persuasiveness and its impact on other circumstances which have to be weighed.[22] Edelman J in Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2)[23] sets out a non-exhaustive list of factors that may be taken into account when considering the exercise of the discretion. Other cases have provided similar lists.

    [22] PS Chellaram & Co Ltd v China Ocean Shipping Co and Anor (1991) 5 ACSR 633.

    [23] [2016] FCA 360.

11. There is no predisposition in favour of the award security.[24] However, the impecuniosity of the applicant is a factor in favour of an award of security.[25] Once the threshold test has been met, the evidentiary onus is on the applicant to establish that there are discretionary matters which are against making an order for security.[26] If no discretionary matters are established that are against ordering security, then the only relevant matter will be the impecuniosity of the applicant which favours the granting of an order for security.

    [24] KP Cable Investments v Meltglow Pty Ltd (1995) 56 FCR 189, 196.

    [25]  Idoport Pty Ltd v National Australia Bank [2001] NSWSC 744, [47] citing Buckley v Bennell (1974) 1 ACLR 301 at 304.

    [26] Reinsurance Australia Corporation Limited v HIH Casualty and General Insurance Ltd (in liquidation) [2003] FCA 803 at [25]; Idoport (above) at [62].

12. I will therefore consider the matters raised by the parties as being relevant to the exercise of the discretion.

    Merits of the Claim and Defence

13. Both the applicant and the respondent submitted that the merits of their respective positions were a factor in favour, respectively, of refusing or granting an order for security. In most cases, it is very difficult for a court to make an assessment of the merits of a claim or defence at the interlocutory stage and the merits of the underlying dispute are regarded as a neutral factor. The Court should not embark on an assessment of the claim except to say that the claim is arguable and bona fide.[27]

    [27] Fiduciary Ltd v Morninstar Research Pty Ltd (2004) 208 ALR 56, [37].

14. Notwithstanding this general principle, the respondent submitted that the Court could make an assessment of one part of the claim. It submitted that on any view, it had a good defence to part of the claim. The respondent referred to clause 1P of the Lease which stated that the lessee shall not assign, transfer, demise, underlet, mortgage or otherwise part with possession of the premises without the prior written consent of the lessor. Clause 1.0.4 goes on to say that in the event of the lessee being a proprietary company or a private company, a transfer of shares (and/or a change in the beneficial entitlement thereto) totalling more than one half of the issued share capital of the lessee during the said term shall be deemed to be an assignment of the Lease requiring the consent of the lessor.

15. The respondent submitted that the change in shareholding in 2019 when Mrs Martin transferred her shares in the applicant to Nordburger Operations constituted a transfer of more than one half of the issued share capital in the applicant which required the consent of the respondent and that the failure to obtain that consent constituted a breach of the terms of the Lease. It therefore followed, the applicant submitted, that this breach provided grounds for the respondent to refuse to renew the lease. The applicant, in its Reply, did not plead any knowledge or consent on the part of the respondent to the change in ownership or waiver or estoppel but pleaded that the alleged change of control did not qualify as a deemed assignment because it did not involve any alteration of the beneficial entitlement to the shares in the applicant or the controlling interest in those shares.

16. There is a good argument that the right to exercise the option to renew contained in the Lease requires, as a matter of construction, strict compliance with the terms of the lease and a breach of a covenant in the Lease disqualifies the applicant from exercising the right to renew. In cases such as Sperry Rand Australia Ltd v Aarondale Properties Pty Ltd,[28] MacDonald v Robins[29] and WestCountry Cleaners (Falmouth) Ltd v Saly,[30] the Court held that it is a condition precedent to the exercise of an option to renew that there is no subsisting breaches at the date of the exercise and a breach disqualified the lessee from the right to exercise the option to renew the Lease.

    [28] [1979] VR 409.

    [29] (1954) 90 CLR 515, 519.

    [30] [1966] 1 WLR 1485, 1489.

17. The contention of the applicant that there was no deemed assignment because it did not involve any alteration of the beneficial entitlement to the shares in the applicant or the controlling interest in those shares appears inconsistent with the wording of clause 1.0.4 of the Lease which refers to two alternatives, first the transfer of more than one half of the issued share capital and secondly, the change in the beneficial ownership.

18. The applicant submitted that as the respondent did not raise this matter at the time of the renewal, its reliance on the matter now could be characterised as opportunistic. The applicant further submitted, as can be accepted, that the Lease, as a matter of construction, will be construed against the respondent. Notwithstanding these matters, the provisional view of the Court is that there is a strong argument that the Lease creates a condition precedent to the exercise of the right of renewal, that being performance and observation of the terms of the Lease. For the sake of completeness, the applicant also referred to having a statutory right of preferential tenure under Part 4A, Division 3 of the Retail and Commercial Leases Act, but that division only applies to leases in shopping centres and has no relevance in the present case.

19. However, even if the contention of the respondent is successful, it would only operate as a defence to part of the claim. It would not constitute a defence to the claim of a breach of the monthly tenancy created by the holding over and that the re-entry by the respondent was unlawful and invalid or the claim for damages.

20. I consider that the respondent’s prospects of success on this issue is a relevant factor and give some weight to it. However, the defence only relates to part of the claim. The Court does not know how the trial will proceed and what matters will take up a significant amount of court time and therefore how costs will be assessed.

21. The same observation applies to that aspect of the claim in respect of which the applicant says that it has strong prospects of success. The applicant submitted that after it received notice of termination of the monthly tenancy, it received an invoice from the respondent for the payment of rent post the termination date and that rent was paid. The respondent submitted that the sending of the invoice and the payment for rent post termination was not an unequivocal act required for an election or affirmation.

22. The respondent referred to the decision of the NSW Court of Appeal in Croc’s Franchising Pty Ltd v Almado Holdings Pty Ltd[31] in support of its position that there was no waiver or estoppel. In that case the Court upheld the lessor’s right to terminate and held that there was no inconsistency between the lessor insisting on its right to receive rent and terminating the lease. However, that case could be distinguished in that in Croc’s Franchising, the lessor had not offered and did not accept part payment of rent post termination.[32] The terms of the invoice and the email did not amount to an unequivocal act sufficient to convey an election to affirm the lease as the invoice and email each contained an express reservation of the lessor’s right to terminate the lease.

    [31] [2023] NSWCA 256.

    [32] Ibid, [154].

23. The applicant referred to the decision of the Full Court in Hemer Pty Ltd v Benni & Ors[33] in support of its contention that the re-entry was unlawful. However, there is no clear ratio from Hemer on the question of election. Doyle CJ held that election did not come into play until the right to re-entry had actually arisen.[34] Gray J took the opposite view and held that there was an inconsistency between demanding payment and the right of re-entry.[35] Sulan J decided the case on other grounds.

    [33] [2011] SASCFC 35.

    [34] Ibid, [52].

    [35] Ibid, [32].

24. The respondent also submitted that the applicant had not pleaded election, waiver or estoppel by the sending of the invoice and the payment of rent for December 2024. The applicant has pleaded that the rendering of the November 2024 invoice and the payment secured the right of the applicant to the Property for the month of December 2024 and therefore the purported termination and re-entry was unlawful and in breach of the Lease. It is not possible for this Court to determine at this stage whether the Court will regard the issue of election, waiver and estoppel as sufficiently raised.

25. It is not possible to determine on the evidence before the Court whether the sending of the invoice for rent and the acceptance of the rent was an unequivocal act on the part of the respondent electing to affirm the monthly tenancy. In any event, this matter does not relate to the claim for renewal. Again, the Court does not know how the trial will proceed and what matters will take up a significant amount of court time and therefore how costs will be assessed.

26. Given my conclusion that I am not able at this stage to determine the strength of this part of the applicant’s claim, I assess the merits of the applicant’s claim as a neutral factor. I accept that the applicant’s claim, in its entirety, is bona fide.

    Frustration of the Proceedings

27. A relevant discretionary factor to consider is whether the applicant’s claim would be stultified if security were ordered. The applicant submitted that if an order for security was made, it would be at risk of not being able to satisfy the order which would have consequences for its ability to conduct the proceedings and for the subject matter of the Federal Court. Apart from the Federal Court Injunction and the Undertaking, there is no evidence of the Federal Court proceedings and the impact that any order for security would have on those proceedings. That would only be a matter for speculation and not a matter which can be properly taken into account in the disposal of this application.

1. The applicant did not concede that it did not have sufficient funds to meet an adverse costs orders, although on the evidence before the Court, I found that there was credible testimony that it will be unable to meet such an order. However, the Federal Court Injunction and Undertaking would, in my view, at the very least, arguably, prohibit the payment for security being made from the assets of the Nordburger. That would be a relevant matter if it had been established that the applicant had assets or recourse to assets to pay an adverse costs order.

2. To claim that the action would be stultified by reason of the security for cost order, the applicant must also establish that those standing behind the company or other parties who will benefit are also without means.[36] The classic statement of this principle was made in Bell Wholesale v Gates Export Corp (No 2)[37] where the Full Federal Court held:

   In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the applicant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust), are also without means.

   [36] Bell Wholesale Co Pty Ltd v Gates Export Corp (No 2) (1984) 8 ACLR 588 at 591; Idoport at [66]; PS Chellaram v China Ocean Shipping (1991) 5 ACSR 633 at 635; Yandil Holdings Pty Ltd v The Insurance Company of North America (1985) 3 ACLC 542 at 545.

   [37] (1984) 9 ACLR 588 at 591.

3. To discharge the onus cast upon it under the decision in Bell, the applicant must establish its impecuniosity and the impecuniosity of those who stand behind it and will gain from the proceedings if successful.[38] The applicant must show that those standing behind it  are unable to provide the funding to meet an adverse order for security (or that it is not commercially practicable for them to do so),[39] not that they are unwilling to provide funds.[40]

   [38] Gentry Bros v Wilson Brown (1992) 8 ACSR 405 at 412-413; Idoport (above), [66].

   [39] Jeffcott Holdings Pty Ltd v Paior and others (1997) 15 ACLC 28, 32.

   [40] Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148, [8].

4. It appears that if the applicant is successful in the proceedings, NNPL (if NNPL continued to operate the business carried on from the Property), the applicant and Nordburger Operations as trustee for the Nordburger Holdings Trust as the shareholder of the applicant would benefit from the proceedings if the applicant were successful (subject to the Federal Court proceedings). NNPL may receive income from continuing to  carry on the business and the applicant would hold a proprietary  interest in the Property.

5. Mr Martin is the sole director of NNPL. Mrs Martin was previously the sole director of NNPL. All of the companies and trusts in the Nordburger Group are controlled by Mr and Mrs Martin. Mrs Martin is a primary beneficiary under the trust and Mr Martin is also a beneficiary. Mrs Martin is a substantial creditor of the applicant and therefore will benefit if the applicant is successful in these proceedings (subject to the Federal Court proceedings). Mr and Mrs Martin’s personal assets are not covered by the Federal Court Injunction or Undertaking.

6. Mr and Mrs Martin are parties to whom distributions may be made under the Trust. They are in a position to control the making of the distributions. The persons to whom distributions may be made under a discretionary trust are persons who stand to benefit if the applicant is successful. Therefore, if the applicant seeks to resist security on the basis that it is unable to provide security, it must establish that Mr and Mrs Martin do not have the means to provide security or that it is commercially impractical for them to do so. Beneficiaries of a discretionary trust come within the principle of Bell Wholesalers: see Rabvila Pty Ltd v Reymor Investments Pty Ltd.[41]

   [41] (1986) ATPR (Digest) 46-009; Unreported, Federal Court of Australia, 16 June 1985 per Pincus K; See Bell Wholesale Co Pty Ltd v Gates Export Corporation (at first instance) 8 ACLR 484, 484.

7. The applicant has not adduced any evidence of the financial position of Mr and Mrs Martin or Nordburger Operations. The applicant submitted that fact that Mr and Mrs Martin had been personally funding the legal representation in these proceedings but no longer do so, permitted the inference that they do not have the means to continue to do so. I do not consider that inference can be drawn when there is a complete lack of evidence about the financial position of Mr and Mrs Martin and Nordburger Operations.

8. The applicant also submitted that whilst the Federal Court Injunction and Undertaking were in place, it could not be said that Mr and Mrs Martin and Nordburger Operations stood to benefit from the current proceedings if the applicant was successful. That is not correct. If successful, the applicant would recover its proprietary interest in the Property and receive an amount in damages. The beneficiaries under the Trust are the ultimate beneficiaries of that success. The use that may be made of those assets may depend on the outcome of the Federal Court proceedings.

9. The applicant has not established that those standing behind the applicant and who are likely to benefit if the applicant is successful in the proceedings, in particular Mr and Mrs Martin and Nordburger Operations, are also without means or that it is commercially impractical for them to provide security.

   Defensive Proceedings

10. A further relevant factor that weighs against an order of security is whether the proceedings are, by their nature, defensive proceedings. The applicant submitted that the claim was defensive in nature because it was brought in response to the respondent’s self-help measures in re-entering the Property.

11. The classic statement of what constitutes defensive proceedings was made by Dixon J in Willey v Synan.[42] In that case, the plaintiff had claimed silver coins that he said that he found on a ship of which he was a crew member. The Collector of Customs issued a notice under the Customs Act 1901 (Cth) requiring the plaintiff to bring an action to recover the coins, or otherwise to forfeit them. In the course of refusing security for costs, Dixon J held that when the plaintiff “does issue a writ he does so to protect his supposed ownership. In substance he is not the attacker, actor or person seeking redress.” The court looks to the substance of the matter, not the form.[43]

    [42] (1935) 54 CLR 175, 186; [1935] HCA 76.

    [43] See Heeler Factors Pty Ltd v John Arnold’s Surf Shop (in liq) (1979) 4 ACLR 492, 498; Maatschappij Voor Fondsenbezit v Shell Transport Trading Company Ltd [1923] 2 KB 166,177.

12. In the present case, the substance of the claim for a renewal of the lease and a declaration that the re-entry was unlawful was defensive. The proceedings were initiated following the respondent sending a notice of termination and re-entering the Property. I accept the submission of the applicant that following the issuing of the notice of termination, the applicant had no practical alternative but to commence proceedings if it wished to retain its interest in the Property.

13. In Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2),[44] the Court held proceedings are in substance defensive if they are directly resisting proceedings already brought or seeking to halt the respondent’s self-help procedures so that the applicant is in substance forced to litigate. Proceedings to prevent the landlord’s self-help measure were found to be defensive in Caringbah Business & Sports Club v Caringbah Investments[45] and in Mulwala Hotel Group Pty Ltd v Nyora 1 Pty Ltd.[46] In Mulwala, the Court held that the claim for damages arising from the breach of the lease was obviously not defensive. The Court held that the defensive nature of the claim should be taken into account in reducing the amount of security to be ordered.

    [44] [2016] FCA 360, [13].

    [45] [2014] NSWSC 548, [28]-[32].

    [46] [2023] NSWSC 1514. [25].

14. The respondent also referred to a decision in Levack International Ltd v AIM Finance Ltd[47] in which it was held that the rights of the plaintiff to resist recovery of possession and asserts its entitlement to pay out the hire purchase agreement and acquire the goods are rights which arise in favour of the hirer by virtue of the terms of the Hire Purchase Act (WA). In those circumstances, it was held that the proceedings could not properly be characterised as defensive. That case is, in my opinion, distinguishable, in that the rights to pay out the hire purchase agreement and acquire the good are rights given by statute. They are separate from merely resisting the claim of the hirer of the goods.

    [47] Unreported, Supreme Court of Western Australia, 29 November 1993 and 17 December 1993) per Murray J.

15. The applicant submitted that the respondent could have taken out proceedings under s 193 of the Real Property Act seeking an order that the applicant give up possession of the Property. The respondent could have elected to proceed by that method but was under no obligation to do so.

16. I accept the submission of the respondent that the claim for damages made by the applicant cannot be said to be defensive in nature. It is not responding to or a defence to any claim made by the respondent. In its amended statement of claim, the applicant seeks damages for breach of contract or orders compensating the applicant in an amount pursuant to s 12(5)(d) and s 68(2) of the Retail and Commercial Leases Act. The applicant is seeking loss of profits and revenue, ongoing costs and expenses and wastage.

17. The proceedings are properly characterised as partly defensive in nature, although not exclusively. That is a factor that has some weight against an order for security. If the proceedings are wholly defensive, that is matter of significant weight in refusing an application for security. Where the claim is only partly defensive, the correct approach is to order security but reduce the amount of security to a sum related to the costs of those claims which cannot be characterised as defensive.[48] That is in accordance with the cases involving counterclaims where it has been held that security will not be ordered if the counterclaim is purely defensive and does not raise matters than just the obverse of the claim.[49] However, if it goes further to raise new matters, then security can be ordered.

    Impecuniosity caused by the conduct of the respondent

    [48]  ADS Advertising Services (Aust) Pty Ltd v Central West Business Park Pty Ltd [2005] VSC 265, [13]; Interwest Ltd v Tricontinental Corp Ltd (1991) 5 ACSR 621, 627.

    [49] Nine Films and Television v Ninox Television Ltd [2005] FCA 735, [72].

18. The applicant raised as further factor that any want of means or impecuniosity of the applicant was caused by the conduct of the respondent. If established, that is a relevant matter.[50] For this factor to be relevant, the applicant must show that the conduct of the respondent has led to the impecuniosity.[51] If the applicant was always insolvent, then this factor will not be relevant.[52] The applicant must prove that prior to the commencement of their association with respondent, that they were in an adequate financial state to be able to meet an adverse costs order.[53]

    [50] Australian Quarry Holdings Pty Ltd (in liq) v Doherty (1989) 8 ACSR 569, 570; GAI Holdings (No 3) Pty Ltd (in liq) v GAI Holdings (No 4) (in liq) (1986) 4 ACLC 90, 93.

    [51] Drumdurno Pty Ltd v Brabham (1982) 42 ALR 563 at 571.

    [52] Ibid.

    [53] Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564 at 585.

19. In the present case, the applicant has not adduced any evidence of its financial position at the time of time of the conduct of the respondent. The first act of the respondent in these proceedings was rejecting the renewal of the lease in 2023. However, it is difficult to see that caused any loss to the applicant as it continued to remain in possession of the Property. The applicant suffered some loss in December 2024 when the respondent re-entered the Property. That loss has not been quantified. The loss was only for a limited period until the injunction was granted permitting the applicant to resume possession of the Property.

20. This factor therefore has no weight in the present case.

    Delay in Bringing the Application

21. Delay can be a relevant factor against awarding security. It is not relevant in the present case for two reasons. First, there has been no operative delay. The respondent brought the application for security on 24 January 2025. That was not long after proceedings had been issued and the granting of the injunction on 19 December 2024. The application for security was taken out prior to the filing of the amended statement of claim by the applicant (which was ordered to be filed by 24 December 2024 but was not in fact filed until 14 February 2024). Secondly, delay is only of significance in application for security for costs if prejudice to the applicant is shown. In Clarence Street v ISIS Projects Pty Ltd,[54] McDougall J held:

    The authorities, I think, on a proper analysis also make it plain that delay is not to be looked at in the abstract.  What is important is whether, assuming that delay has been shown, such delay causes actual prejudice to the party against whom the order is sought.  Even if prejudice is shown, the application need not fail; but unless it is shown the significance of delay as a countervailing factor disappears.  See the decision of Hunter J in Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (7 November 1995, unreported, BC 95079079).

    [54] [2007] NSWSC 380 at [22] cited by Besanko J in Jianshe Southern Pty Ltd v Get Motor Cycles Pty Ltd (No 3) [2007] FCA 1078 at [29] who assumed for the present purposes that delay was only of significance if prejudice to the applicant is shown.

22. There was no evidence of any prejudice suffered by the applicant from any delay (assuming that there had in fact been delay).

    Further Miscellaneous Matters

23. The applicant further submitted that three further factors weighed against the making of an order for security. First, the applicant submitted that the serving of a further notice of termination by the respondent dated 28 February 2025 and which required the applicant to vacate the Property on 4 April 2025 was in contempt of the Court and the order for injunction made on 19 December 2024. That injunction prevented the respondent  by itself, its officers, its employees, its agents from:

    (a)evicting the Applicant from the Premises;

    (b)preventing or in any way hindering the Applicant from:

    a.      conducting a business within the meaning of the “Permitted Use” in Item 5 of the Schedule to the Lease; and 2.2.2;

    b.      accessing and occupying the Premises on the terms of the Lease;

    c.      acting in any way contrary to the Lease being on foot;

    other than in these proceedings.

24. The Notice was accompanied by an email from the respondent’s solicitors which confirmed that in light of the interim injunction that the respondent would not take any steps to re-enter pursuant to the attached notice until the current proceedings are concluded, or the interim relief is revoked.

25. I do not consider that the further notice of termination infringes the injunction. The notice of termination does not evict the application from the Property or prevent or hinder the applicant from conducting the business or accessing or occupying the Property. Further, even if it could be said that the further notice of termination is contrary to the terms of the Lease being on foot (which is not clear), in circumstances where it was accompanied by the email that it was not going to be acted upon, the notice was issued in these proceedings and for the purpose of mounting an alternative case in these proceedings in the event that the first notice of termination was not valid.

26. In any event, any possible contempt does not have anything to do with the application for  security and whether that application should be granted. For both of these reasons, I do not give any weight to the contention of the applicant that the further notice of termination was sent in contempt of the injunction and that this was a reason why security should not be ordered.

27. Secondly, the applicant submitted that security should not be awarded because the respondent had not engaged in settlement negotiations. There was no evidence that the respondent had acted in breach of its obligations under the rules. The proceedings involve a conflict between the applicant’s case that it was entitled to remain in possession, that the Lease had been renewed and the re-entry was unlawful and the respondent’s position that the lease was validly terminated, and it is entitled to possession of the Property. There is no breach of the rules in the respondent maintaining its position.

28. Thirdly, the respondent submitted that the application for security was premature. It contended that the application was premature for two reasons: first, because its application for summary judgment had not yet been heard or determined and secondly, because its application in the Federal Court to vary the Injunction had yet to be heard.

29. I do not consider that either matter provides a justification for refusing to hear and determine the application for security at this stage. The application for summary judgment, even if successful, will only determine part of the claim. A trial would still be required for the claim that the Lease was renewed and the alternative claim that the monthly tenancy was determined by the further notice of termination. These matters would still properly be heard in this Court, especially given the trial date that has been fixed. The summary judgment application is not straightforward, and it cannot be said that the applicant is bound to succeed.

30. It was agreed between the parties that the purpose of the application to vary the Injunction in the Federal Court was to seek a release from the Injunction because of the application for security for costs. However, the applicant has not defended the application for security on the basis that it has funds or access to funds to meet the request for security but is prevented from using them because of the Injunction. The applicant could have chosen to adduce evidence of the assets that are subject to the Injunction but did not do so. If there were available assests to meet an adverse costs order, then the applicant could have argued that it had or had access to assets or funds to meet an adverse costs order but was prevented from accessing such assets or funds by the Injunction. In such a case, it could properly argue that the action in this Court would be stultified if security were granted because it could not access the funds or assets to meet the order for security.

31. The respondent is entitled to pursue the application and would be prejudiced by any delay in its resolution given that the trial is listed for urgent hearing commencing on 29 April 2025. The urgent trial is required because of the injunction that was granted in favour restricting the respondent from gaining possession of the Property.

    Determination

32. On the findings of the Court, the only matters raised by the applicant that militate against an order for security is that the proceedings are partly defensive in nature and that the claim is made bona fide and at least in relation to the termination of the monthly tenancy, can be said to have reasonable prospects of success, although the latter is properly regarded as a neutral matter. The applicant has not established that those standing behind the applicant are without means.

33. Matters weighing in favour of an order for security is that on the evidence before the Court , there is credible testimony that there is reason to believe that the applicant will be unable to pay the costs of the respondent in the event that the respondent is successful in its defence, the applicant has strong prospects of success in relation to the renewal issue and only part of the case can be characterised as defensive.

1. Taking all of these matters into account, I consider that it is appropriate to make an order that security is to be provided although not in respect of that part of the claim of the applicant that can be considered to be defensive in nature.

   Quantum of Security

2. It is clear that security can be awarded in relation to costs already incurred.[55] In this case, where the injunction was called on and argued on an urgent basis following the institution of proceedings and where the application for security was made promptly, there is no reason to exclude past costs from an award of security. Further, the applicant did not provide evidence or make any submission as to why it would suffer prejudice by the inclusion of past costs (other than the fact that it would increase the amount of security to be provided).

   [55] Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, 515.

3. As stated previously, security should not be given in relation to that aspect of the claim that is properly characterised as defensive in nature. That is the claim in relation to the renewal of the lease and the termination of the monthly tenancy. The claim for damages is not defensive.

4. The respondent estimated its party/party costs up to and including the first day of trial to be $97,873.55 which represented a discount of 40% on solicitors fees and 20% on counsel fees. That included past costs and future costs, in roughly equivalent amounts.

5. A broad brush approach and conservative approach should be taken. I consider that $85,000 is a proper estimate of the costs to which the respondent will be entitled if it is successful in these proceedings. The quantum of the security should be reduced by the extent to which the proceedings are properly characterised as defensive. Again, that can only be approached in a broad brushed manner. I estimate that one half of the time spent in preparation for the matter and at trial can be attributed to the damages claim and one half to the claims that can be considered to be defensive in nature.

6. The Court therefore orders that the applicant provide security in the sum of $42,500 which is up to and including the first day of trial.

   Conclusion

7. For the reasons that I have expressed, I order that the applicant provide security in the sum of $42,500. I will hear the parties as to the form of security. Given that I am not the trial Judge or the Judge managing the pre-trial management of the matter, it is not appropriate that I make an order staying the proceedings if security is not granted.