Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd (No 4)
[2025] FCA 662
•19 June 2025
FEDERAL COURT OF AUSTRALIA
Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd (No 4) [2025] FCA 662
File number: QUD 578 of 2023 Judgment of: WHEATLEY J Date of judgment: 19 June 2025 Catchwords: PRACTICE AND PROCEDURE — application for further security for costs — where order for security for costs had already been made — where the Applicant does not have the means to pay an order for costs — where the bringing of the application was delayed — reduced amount of security ordered. Legislation: Corporations Act 2001 (Cth) ss 233, 461, 1335
Federal Court of Australia Act 1976 (Cth) ss 37M, 37N, 43 56
Federal Court Rules 2011 (Cth) r 19.01
Cases cited: All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840
Australian Competition and Consumer Commission (ACCC) v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26; [2021] FCA 246
Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1
Big Review TV Ltd (in liq) v FC Securities Pty Ltd [2025] FCA 222
Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49
DSE (Holdings) Pty Limited v InterTAN Inc (2004) 51 ACSR 555; [2004] FCA 1251
East Grace Corporation v Xing (No 1) [2005] FCA 219
Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564; [2004] NSWSC 664
Frigger, in the matter of Computer Accounting & Tax Pty Ltd (In Liq) (No 2) [2018] FCA 612
General Trade Industries Pty Ltd (in liquidation) v AGL Energy Limited (No 2) [2023] FCA 556
Guildford International Group Pty Ltd, in the matter of Aviation 3030 Pty Ltd v Aviation 3030 Pty Ltd [2018] FCA 600
Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2016] AIPC 92-506; [2016] FCA 530
Kayler-Thomson v Colonial First State Investments Limited [2020] FCA 1867
KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189
LFDB v SM (No 2) [2017] FCAFC 207
Madgwick v Kelly (2013) 212 FCR 1; [2013] FCAFC 61
Mensink v Parbery [2017] FCA 1248
Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Mukiza [2022] FCAFC 105
Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd [2024] FCA 845
Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd (No 3) [2025] FCA 661
Tenser v Quigley [2016] FCAFC 178
The Advanced Technology Group Pty Ltd v Foxtel Cable Television Pty Ltd [2025] FCA 408
Tucker v McKee [2022] FCA 315
Virk Pty Ltd v Yum! Restaurants Australia Pty Ltd [2016] FCA 1468
Von Schoeler v Allen Taylor and Co trading as Boral Timber [2019] FCA 941
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 56 Date of hearing: 28 April 2025 Counsel for the Applicant: Mr MA Taylor Solicitor for the Applicant: Tusk Lawyers Counsel for the First, Second, Fourth and Fifth Respondents: Mr TJ Morahan Solicitor for the First, Second, Fourth and Fifth Respondents: Safe Harbour Lawyers Counsel for the Sixth Respondent: Ms P Kinchina Solicitor for the Sixth Respondent: KCL Law ORDERS
QUD 578 of 2023 IN THE MATTER OF AMAZONIA IP HOLDINGS PTY LTD
BETWEEN: NORDEN HOLDINGS PTY LTD ACN 165 389 100 ATF THE NORDEN FAMILY TRUST
Applicant
AND: MARTENS INVESTMENTS PTY LTD ACN 602 144 703 ATF THE DF MARTENS FAMILY TRUST
First Respondent
DWAYNE FREDERICK MARTENS
Second Respondent
AMAZONIA IP HOLDINGS PTY LTD ACN 159 920 877 (and others named in the Schedule)
Fourth Respondent
ORDER MADE BY:
WHEATLEY J
DATE OF ORDER:
19 JUNE 2025
THE COURT ORDERS THAT:
1.The Applicant is to provide security for the costs of the First, Second, Fourth and Fifth Respondents up to and including the second mediation in the amount of $20,000, by paying this sum into the trust account of Tusk Lawyers by 4 July 2025.
2.The Applicant is to provide security for the costs of the Sixth Respondents up to and including the mediation in the amount of $30,000, by paying this sum into the trust account of Tusk Lawyers by 4 July 2025.
3.By 4pm on 4 July 2025, the Applicant’s solicitor is to provide the Court with an appropriate undertaking to hold the funds ordered under Order 1, and not to release those funds except in accordance with a sealed Order of the Court for costs in this proceeding that have been agreed or assessed and are payable to the First, Second, Fourth and Fifth Respondents or pursuant to a further order of this Court.
4.By 4pm on 4 July 2025, the Applicant’s solicitor is to provide the Court with an appropriate undertaking to hold the funds ordered under Order 2, and not to release those funds except in accordance with a sealed Order of the Court for costs in this proceeding that have been agreed or assessed and are payable to the Sixth Respondent or pursuant to a further order of this Court
5.If security for costs is not provided in accordance with Orders 1 and 2, and the undertakings are not provided in accordance with Orders 3 and 4, the proceedings against all of the Respondents be stayed until such security is provided and such undertakings are provided.
6.The costs of these applications for security for costs be costs in the proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
WHEATLEY J:
INTRODUCTION
The Applicant in this proceeding, Norden Holdings Pty Ltd as trustee for the Norden Family Trust, seeks by way of its amended concise statement dated 27 November 2024, in summary, the following relief (including interests and costs):
(a)declarations as to the ownership in certain shares (being the Norden Shares) in the Fourth and Fifth Respondents;
(b)orders pursuant to s 233(1)(d) or (e) of the Corporations Act 2001 (Cth) (the Corporations Act) that the Norden Shares be purchased;
(c)where any Respondents are ordered to purchase the Norden Shares, a receiver be appointed to do certain things pursuant to s 233(1)(h) of the Corporations Act;
(d)further, or alternatively, orders pursuant to s 233(1)(a) or s 461(e) or (k) of the Corporations Act, that the Fourth and Fifth Respondents be wound up.
Each of the First, Second, Fourth and Fifth Respondents (Respondents) and the Sixth Respondent (WMartens) brings an application for security for costs against Norden. Both applications and submissions rely on s 56 of the Federal Court of Australia Act 1976 (Cth) (FCA) and r 19.01(1)(a) of the Federal Court Rules 2011 (Cth) (FCR). WMartens also relies on s 1335 of the Corporations Act.
On 10 May 2024, Downes J ordered security for costs in an amount of $20,000. WMartens was not a party to the proceeding at that time. The Respondents submit that security has been exhausted.
The Respondents anticipate trial costs exceeding $120,000 and seek an order for security in an amount of $100,000 or such other amount as the Court consider appropriate.
WMartens estimates that his costs to the end of a mediation are $68,940 and to the end of trial are $78,560, plus an additional $8,267.50 for an additional interlocutory application. The actual amount of security stated to be sought by WMartens in his application is an amount the Court deems just.
For the reason given below, I am satisfied that it is appropriate to order further security for costs, to each of the Respondents and WMartens, separately in an amount of $30,000.
BACKGROUND
This proceeding commenced by way of an originating application and concise statement filed on 21 December 2023.
Since then, pursuant to orders of Downes J on 28 June 2024, Needham J has heard and determined a separate question as follows (Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd [2024] FCA 845) (Separate Question Judgment) on the following Separate Question:
Were the Applicant’s shares in the Fourth and Fifth Respondents validly transferred to the First respondent on or about 27 June 2023?
Answer: “No”.
The parties have amended their concise statements and the Applicant has brought an application to strike out various parts of the Respondents’ concise statement in response filed on 17 March 2025. I have considered and determined that application: Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd (No 3) [2025] FCA 661 (Strike out Judgment).
These reasons assume a familiarly with the reasons in the Separate Question Judgment and the Strike out Judgment. As such, I will not set out the history of the proceedings.
The matter is currently set down for trial commencing on 15 September 2025. However, the parties appeared at a case management on 10 June 2025 due to a further dispute and issue regarding the appointment (and potentially the availability) of the joint expert.
The parties are to further appear on a case management hearing on 20 June 2025.
RELEVANT PRINCIPLES
Section 56 of the FCA provides the Court with a broad and unfettered power to order an applicant in a proceeding to give security for the payment of costs that may be awarded against them of such amount, at such time and in such manner and form as the Court directs, depending on the particular circumstances of the case: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 4; Madgwick v Kelly (2013) 212 FCR 1; [2013] FCAFC 61 at [6]. Rule 19.01 of the FCR also provides power for the Court to order security for costs.
Various cases have listed relevant factors to be considered in the exercise of this discretion: Madgwick at [7]; Frigger, in the matter of Computer Accounting & Tax Pty Ltd (In Liq) (No 2) [2018] FCA 612 at [9].
In Von Schoeler v Allen Taylor and Co trading as Boral Timber [2019] FCA 941, Rangiah J distilled the relevant factors (in the context of an appeal) which I gratefully adopt, at [5]:
[5]The Court has a broad discretion as to whether to order security for costs. The factors relevant to the exercise of the discretion include:
(1) The appellant’s prospect of success.
(2) The extent of the risk that a costs order will not be satisfied.
(3)Whether the making of a costs order would be oppressive in that it would stifle a reasonably arguable claim.
(4)Whether any impecuniosity of the appellant arises out of conduct alleged against the respondent.
(5)Whether there are aspects of public interest which weigh in the balance against such an order.
(6)Whether there are particular discretionary matters peculiar to the circumstances of the case.
(7) The timing of the application, in that it should be brought promptly.
[See, for example, Equity Access Limited v Westpac Banking Corporation (1989) ATPR 40–972 at 636); Madgwick v Kelly (2013) 212 FCR 1 at [7]; Dye v Commonwealth Securities Ltd [2012] FCA 992 at [26]; Craven v Ready Flowers Pty Ltd [2014] FCA 693 at [15]].
These factors are not meant as a checklist. Whether a particular factor has significance and what weight, if any, is to be attributed to that factor will depend on the particular circumstances of the case.
WMartens also relied on s 1335 of the Corporations Act. It provides:
1335 Costs
(1)Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter 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.
Unlike s 1335 of the Corporations Act, s 56 does not expressly impose any threshold to be met before the Court consider various discretionary matters. However, an applicant’s inability to pay the costs of a respondent remains an important discretionary consideration: All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840 at [41]. WMartens, in his application for security for costs, relied on s 1335 of the Corporations Act in the alternative.
However, both s 56 of the FCA and s 1335 of the Corporations Act are broad, unfettered discretionary powers, which must be exercised judicially. In this respect I gratefully adopt the observations of Derrington J in General Trade Industries Pty Ltd (in liquidation) v AGL Energy Limited (No 2) [2023] FCA 556 at [22]:
In any event, it is unlikely that AGL’s election to rely on one discretionary power over the other would produce any different result in this case. Both s 1335(1) and s 56 have been regarded as conferring a discretion that is broad and essentially unfettered, albeit that it must be exercised judicially: Hopkins v AECOM Australia Pty Ltd (No 5) [2015] FCA 1228 [44], [57] per Nicholas J; Chopsonion Pty Ltd (Controllers Appointed) v Watts Meat Machinery Pty Ltd [2022] FCA 1309 [22] per O’Sullivan J. It has also been acknowledged in several prior decisions of this Court that, where (as here) an application for security for costs is made on the basis that the applicant to the proceeding is impecunious and will be unable to satisfy a potential costs order, there may be no practical difference in the operation of the two provisions: see Soul Pattinson Telecommunications Pty Ltd v Subex Americas Inc [2009] FCA 651 [6] per Perram J; Health Information Pharmacy Franchising Pty Ltd v Khoo [2010] FCA 438 [5] per Yates J; Austcorp Project Number 20 Pty Ltd v LM Investment Management Ltd (in liq) [2014] FCA 1371 [20] – [21] per Gleeson J (Austcorp). An obvious point of divergence is the inclusion of an express threshold requirement in s 1335(1) that “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”, but here General Trade has conceded this point.
That is, whether the applications for security for costs relied on only s 56 of the FCA or s 56 of the FCA and s 1335 of the Corporations Act in the alternative, it is unlikely to produce a different result. This is because the discretionary considerations are the same and the threshold requirement of s 1335 will remain an important discretionary consideration under s 56 of the FCA.
In relation to the Court’s consideration of an application for security for costs, generally, it also worth referring to the following from All Class at [42], where Allsop CJ observed:
The Court’s discretion to require the provision of security for costs is broad and the factors informing the exercise of that discretion cannot be stated exhaustively. The only limitation is that the discretion be exercised judicially: Bell Wholesale Co Ltd v Gates Export Corporation [1984] FCAFC 29; 2 FCR 1 at 3. The matter which lies at the heart of the discretion is one of fairness, both in terms of whether security should be granted, and if so, in what amount: Madgwick v Kelly [2013] FCAFC 61; 212 FCR 1 at 21 [92]. The Court aims to achieve a “balance between ensuring that adequate and fair protection is provided to the defendants, and avoiding injustice to an impecunious plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings”: Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 at 470 (Giles J).
Finally, I would also add and adopt the observations of Murphy J in Tucker v McKee [2022] FCA 315 at [33], as follows:
[33]…It involves a “broad brush” assessment for the purpose of fixing an amount of security that is “sufficient”. It does not involve a full assessment of the respondent’s costs: Pathway Investments Pty Ltd and Ors v National Australia Bank Limited [2012] VSC 97 at [37] (Davies J); Davaria Pty Ltd v 7-Eleven Stores Pty Ltd (No 5) [2020] FCA 953 at [10] (Middleton J). In undertaking a broad brush assessment of future costs, the Court should have regard to the probable costs to which the respondent will be put to insofar as they can be ascertained: Farmitalia Carlo Erba SrL v Delta West Pty Ltd [1994] FCA 88; 28 IPR 336 at 343-4 (Heerey J). It is not the Court’s task to undertake anything in the nature of the taxation of the respondent’s costs (see, e.g. Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 5) [2005] VSC 19 at [5]-[6] (Byrne J); Oswal v Australia and New Zealand Banking Group Ltd [2016] VSC 119 at [8]-[13] (Sifris J)); instead the Court’s task is to identify an amount that is not an “exact assessment” but is “broadly reasonable”: Southern Equity Pty Ltd v Timevale Pty Ltd [2015] FCA 1364 at [49]-[50]; see also Kayler-Thomson v Colonial First State Investments Ltd [2020] FCA 1867 at [114] (Beach J). In Bryan E Fencott & Assocs Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 515 French J (as his Honour then was) said that the process of estimation embodies to a considerable extent, necessary reliance on the “feel” of the case after considering relevant factors.
CONSIDERATION
Norden, at the commencement of argument, accepted that it does not have the means to pay a costs order.
Respondents’ application for security
The Respondents submitted that because security for costs had already been ordered, the real question in this matter was whether further security should be ordered, and if so, in what amount. That is, in so far as the Court must be satisfied that it is appropriate to order security for costs, the Respondents submitted that that state of satisfaction had already been reached by Downes J ordering security on 10 May 2024.
Norden submits that the discretion must be exercised afresh. The circumstances of the proceedings have changed. I accept this submission. It is appropriate to consider the exercise of discretion in all of the current circumstances.
Norden submits that its prospects of success, after the Separate Question Judgment, are strong. This is a matter which Norden submits should weigh in the consideration. On the basis of the Separate Question Judgment, Norden submits that it is entitled to relief and that the only question will be the nature and quantum of that relief.
The Respondents disagree with what are the metes and bounds of the trial and disagree with matters which were the subject of the Separate Question Judgment. In this respect, the Respondents alluded to the arguments on the strike out application. It is important to keep the consideration of these issues separate.
The Respondents submitted that as a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the Court should proceed on the basis that the claim is bona fide with a reasonable prospect of success: KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197. Therefore, so the Respondents submit, once the Court is satisfied that the claim is bona fide with a reasonable prospect of success, the merits underlying the claim will generally be regarded as a neutral factor: Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564; [2004] NSWSC 664 at [37]-[38]. I accept this submission, as far as it goes, however, neutrality should not be regarded as the rule: General Trade at [207]-[211].
There can be circumstances where it may be appropriate to depart from that position where the causes of action have “very serious prospects of success indeed”: Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2016] AIPC 92-506; [2016] FCA 530 at [34]; also see Kayler-Thomson v Colonial First State Investments Limited [2020] FCA 1867 at [82]. In Mensink v Parbery [2017] FCA 1248, Wigney J described the position at [47]:
[47]There is no doubt that in an appropriate case the bona fides and merits of the relevant claim can be taken into account in the exercise of the discretion concerning security for costs where there is material from which some assessment can be made: Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514. That would apply equally, in the case of an appeal, to the merits of an appeal. On the other hand, a line of authority indicates that the prospects of success ought to be regarded as a neutral factor in the exercise of the discretion: see for example Litmus Australia Pty Ltd (in liq) v Canty [2007] NSWSC 670 at [28]; Jazabas Pty Ltd v Haddad [2007] NSWCA 291; (2007) 65 ACSR 276 at [84]; Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at [37] and [38]; Equity Access at 50,636; Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 at 624; Australian Equity Investors, An Arizona Limited Partnership v Colliers International (NSW) Pty Ltd [2012] FCAFC 57 at [15]. Where, however, it is obvious that the action or appeal has strong prospects of success, it may be wrong to treat the merits of the action or appeal as only a neutral factor: Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2016] FCA 530 at [33]-[34].
The matters determined in the Separate Question Judgment may provide a proper basis for the merits of Norden’s claim to be taken into account. However, some doubt has been expressed as to whether this factor can be applied to discount any amount of security sought: Kayler-Thomson at [128].
On that basis of the Strike out Judgment and the Separate Question Judgment, the matters to be determined at the trial, as between the Respondents and Norden, have narrowed. Furthermore, on these bases, this does seem to be a matter where the merits of Norden’s claim as against the Respondents may be considered as somewhat more than neutral. However, I do not intend to embark on any further consideration of the strength of the Applicant’s case against the Respondents. At this stage of the proceedings, the final evidence is yet to be filed, the expert opinion has not yet been obtained and there could still be issues of discovery. Applying Wigney J’s observation that it may be wrong to treat the merits of the action as only neutral, where it is obvious that the action has strong prospects, I will consider the merits of the Applicant’s case as a neutral factor.
Subject to the quantum involved, Norden did not submit that an order for security for costs would stultify these proceedings. There was evidence of Mr Norden, the director of the Applicant, that he has some ability to meet a security for costs order and that he was prepared to do so to the extent that he was able. It can be accepted that the Mr Norden is a person who may benefit from the Applicant’s litigation, if successful. As such, it is appropriate to consider the position of Mr Norden: Bell Wholesale at 4.
After a survey of the relevant authorities, regarding this issue of the extent to which the principles from Bell Wholesale should be qualified by a consideration of whether those who benefit from the litigation could reasonably expect to fund it, Derrington J in General Trade summarised the applicable principles at [74]. However, as was observed by Moore J in The Advanced Technology Group Pty Ltd v Foxtel Cable Television Pty Ltd [2025] FCA 408 at [11], “(t)hese matters have a more limited role in the present case, where [the person], the focus of the relevant enquiry, is the sole shareholder and director of [the applicant impecunious company] and is the guiding mind of [that company] for the purposes of the conduct of the litigation.” Those are the circumstances of this case. Mr Norden is the sole shareholder and director of the Applicant and the sole beneficiary of the discretionary trust. Mr Norden is the controlling mind of the Applicant in this proceeding.
However, as the evidence is that an amount can be paid, but is dependent on any amount ordered, the proceedings might be at risk of stultification if a large amount was ordered by way of security. In this context, the Applicant referred to a costs order it was entitled to after the hearing of the Separate Question. At the hearing the applications for security for costs this issue had not been finalised by the Registrar.
As such, again depending on the quantum, it has not been established that the requirement for the provision of further security would stultify these proceedings.
The Respondents also submit that any impecuniosity of the Applicant has not been caused by the Respondents. This is on the basis, so the Respondents submit, that the value of the shares at the time of any alleged wrongful action was very low.
The expert evidence is not finalised. However, as there is only to be one expert, this will reduce the costs to the Respondents, as the cost of the expert will be shared. However, it is not possible to know at this stage what is the value of the shares or whether that has had an effect of the Applicant’s position. As such, I regard this factor as neutral.
However, there has been some delay in bringing this application for further security by the Respondents. The mediation, to which the previous order for security for costs referred, took place on 17 June 2024. The Separate Question was heard on 24 July 2024 and the Separate Question Judgment was delivered on 1 August 2024.
This current application for security for costs by the Respondents was filed on 27 February 2025. The filing of this application was in accordance with case management orders made on 20 February 2025. The Affidavit of the Respondents’ solicitor relied on in this application does not provide any correspondence showing that the issue of security was raised with the Applicant anytime between 17 June 2024 and the filing of this application (or the case management orders). A period of eight months has elapsed. Delay is a relevant factor when exercising this discretion: Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49 at 175 per Fullagar J: Big Review TV Ltd (in liq) v FC Securities Pty Ltd [2025] FCA 222 at [30]-[39], per Moore J. Delay is a discounting factor, which I will apply in this case.
Finally, in terms of quantum, the Respondents submit that the initial order for security for costs as ordered by Downes J was not for a “nominal” amount. The amount was $20,000. The Respondents submit that the order was made very early on in the proceedings, prior to the first mediation. The amount of $20,000 was ordered on 10 May 2024, in circumstances where security for costs was only ordered up until the mediation which was to take place on 17 June 2024. The amount of security previously sought by the Respondents was approximately $171,450.
The Affidavit of the Respondents’ solicitors relied on in support of the quantum provides the following as the evidence relied on for the quantum of the security sought:
11.Based on my experience and on the work already undertaken and to be undertaken by the Respondents in preparing for the final hearing, I estimate the Respondents’ costs to be incurred from this point forward to exceed $120,000. These costs include, but are not limited to:
1. Preparation of evidence and trial affidavits;
2. Trial preparation, including conferences with witnesses and counsel;
3.Appearance and advocacy at the final hearing (estimated four (4) days);
4. Court filing fees and disbursements; and
5. Post-trial submissions (if required).
12. A breakdown of the anticipated costs is as follows:
1.Solicitor time (including pre-trial preparation and trial attendance): approx. $65,000
2.Counsel’s fees (briefing and daily appearance fees for junior counsel): approx. $45,000
3.Disbursements (court fees, transcript costs, travel if applicable): approx. $10,000
Total estimated costs: $120,000+
[emphasis in original]
It is apparent that this costs estimate is on a solicitor-client basis and not a party and party basis, which would usually be the basis of any recovery for costs. It is also given at a very high-level of generality.
Generally, any order for security for costs is not granted at the level of full indemnity: East Grace Corporation v Xing (No 1) [2005] FCA 219 at [6], per French J; Virk Pty Ltd v Yum! Restaurants Australia Pty Ltd [2016] FCA 1468 at [13], per Nicholas J; Guildford International Group Pty Ltd, in the matter of Aviation 3030 Pty Ltd v Aviation 3030 Pty Ltd [2018] FCA 600 at [24], per O’Callaghan J. That the Respondents provide an estimate of costs of $120,000 but seek an order of $100,000 is implicit acceptance that security is generally not provided as a full indemnity.
Furthermore, it is not the role of the Court on this application to undertake a costs assessment. However, given the very high level that the costs estimate is provided, it is difficult to properly interrogate the estimate provided. Furthermore, it is not possible to ascertain what would be the costs to the second mediation which is currently ordered. Somewhere around half of the costs estimate seems a reasonable basis to consider the costs to be incurred up to the second mediation. In taking a “broad brush” consideration, again observing that it is not an “exact science” and is based on the “feel” of the case, taking into account all of the observations above, the sum of $20,000 is appropriate, up to the date of any second mediation.
WMarten’s application for security
WMartens is in a different position. WMartens was not a party to the proceedings on 10 May 2024. Needham J made orders on 20 November 2024 that he be joined as the Sixth Respondent.
The Applicant, Norden accepts that WMartens has only been relatively recently joined. Therefore in relation to this exercise of the discretion, it clearly has to be exercised a fresh.
In terms of the prospects of success, WMartens was not a party to the proceedings when the Separate Question Judgment was delivered. Therefore, applying the relevant principles set out above at [28]-[29], I will regard this matter as neutral. The Applicant’s claim is bona fide with a reasonable prospect of success as against WMartens.
The Applicant has accepted that it does not have the means to pay a costs order. Therefore, whether this is an application of s 56 of the FCA or s 1335 of the Corporations Act, it is unlikely a different result would be produced (see above at [19]-[20]).
In terms of whether an order for security for costs, in favour of WMartens, would stifle the proceedings, the same considerations as I have considered above at [32]-[35] would apply. It is again dependent on the quantum of any amount ordered.
There has been some delay by WMartens bringing this application. On being joined on 20 November 2024, there is no evidence from the Sixth Respondent’s solicitor that the issue of security for costs was raised in correspondence prior to the case management orders on 20 February 2025. This is a period of 3 months, and although it is not an exercise in comparison, this is less than the delay by the Respondents. Delay is a discounting factor and has some application in these circumstances.
WMartens relies on an affidavit of a costs consultant to provide the estimate of costs to be incurred to trial. The estimate is based on a solicitor-client basis and not a party and party basis. Those costs are estimated as $68,940 to the end of the second mediation (or $77,207.50, including an anticipated additional interlocutory application) and an additional $78,560 to the end of the trial (being $155,767.50 in total).
As already observed, it is not the role of the Court on this Application to undertake a costs assessment. In taking a “broad brush” consideration again observing that it is not an “exact science”, it based on the “feel” of the case, taking into account all of the observations above, the sum of $30,000 is appropriate, up to the date of any second mediation.
COSTS
All parties have had some success. The Respondents and WMartens have obtained an order for security for costs. The Applicant has obtained a significant reduction in the amount sought.
Each of the Respondents and WMartens sought their costs of their applications for security for costs.
Section 43 of the FCA provides the Court with a “broad and ample” discretionary power to award costs: DSE (Holdings) Pty Limited v InterTAN Inc (2004) 51 ACSR 555; [2004] FCA 1251 at [14]; Tenser v Quigley [2016] FCAFC 178 at [26]. The power “must be exercised judicially, not arbitrary or capriciously or on grounds unconnected to the litigation” but having regard to the relevant principles and justice of the particular circumstances of the case involved: Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Mukiza [2022] FCAFC 105 at [4]. The Court must take “into account any failure by a party to comply with the overarching purpose of the civil procedure provisions”, being to “facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible”: s 37N(4) and s 37M(1) of the FCA Act; LFDB v SM (No 2) [2017] FCAFC 207 at [7]; also see Australian Competition and Consumer Commission (ACCC) v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26; [2021] FCA 246 at [6]-[9].
As observed, all parties have had some success. Material, both in terms of affidavits and submissions, was filed late on the applications for security, and not in accordance with the Orders of 20 February 2025. Taking all of these matters into consideration, the appropriate order as to costs is that costs be costs in the proceedings.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheatley. Associate:
Dated: 19 June 2025
SCHEDULE OF PARTIES
QUD 578 of 2023 Respondents
Fifth Respondent:
AMAZONIA GROUP PTY LTD ACN 600 432 997
Sixth Respondent:
WESLEY ALAN MARTENS
Seventh Respondent:
TEASE WINIFRED MARTENS
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