Precious 1 Pty Ltd v Chamberlain Early Learning Centre Pty Ltd

Precious 1 Pty Ltd (appellant) appealed a decision of the primary judge. Chamberlain Early Learning Centre Pty Ltd (respondent) sought security for costs of the appeal pursuant to s 1335(1) of the *Corporations Act 2001* (Cth). The appellant was the trustee of a trust and argued that its right of indemnity over the trust assets meant it would be able to pay costs if unsuccessful.

The central legal issue before the Court of Appeal was whether the respondent had established that the appellant would be unable to pay the respondent's costs if the appeal were unsuccessful, thereby justifying an order for security for costs under s 1335(1) of the *Corporations Act 2001* (Cth).

Macfarlan JA considered the evidence presented and noted that while the appellant was a corporate trustee, there was no evidence to suggest that the appellant would be unable to meet any costs order made against it. The Court applied the principle that an applicant for security for costs must demonstrate a real risk that the respondent would be unable to pay costs. In this instance, the appellant's right of indemnity over trust assets, coupled with the absence of evidence to the contrary, meant this threshold was not met.

Consequently, the respondent's notice of motion for security for costs was dismissed with costs.