Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2]

In the case of Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2], the respondent, Diploma Construction (WA) Pty Ltd, sought security for costs from the appellant, Pravenkav Group Pty Ltd, in an appeal. The application was brought pursuant to section 1335 of the Corporations Act 2001 (WA). The dispute centred on whether the appellant would be unable to pay the costs of the respondent if the appeal was unsuccessful, and if so, whether other relevant factors warranted the exercise of the court's discretion to order the appellant to provide security for costs.

The court was required to determine whether the appellant was likely to be unable to pay the respondent's costs if the appeal was unsuccessful. The respondent argued that the appellant's financial position, including its limited financial resources and lack of significant assets, made it likely that the appellant would be unable to pay the costs. The respondent also highlighted other factors, such as the appellant's history of legal proceedings and the potential impact on the respondent if security for costs was not ordered. The court had to weigh these factors against the appellant's ability to pay and consider whether the balance of convenience favoured the respondent.

The court found that the appellant was likely to be unable to pay the respondent's costs if the appeal was unsuccessful. The court considered the appellant's financial position, including its limited financial resources and lack of significant assets, and found that these factors supported the respondent's position. The court also took into account the potential impact on the respondent if security for costs was not ordered, and the appellant's history of legal proceedings, which suggested a pattern of behaviour that might lead to further litigation. The court concluded that the balance of convenience favoured the respondent and that the exercise of its discretion warranted the order for the appellant to provide security for costs.

The court allowed the respondent's application for security for costs. The appellant was ordered to provide security for the respondent's costs of the appeal in the amount of $50,000. The decision underscored the importance of considering the financial position of the parties and the potential impact on the respondent if security for costs was not ordered when exercising discretion under section 1335 of the Corporations Act 2001 (WA).