Prynew Pty Ltd v Nemeth

Prynew Pty Ltd (Prynew) and Mr Nemeth appealed a decision of the Supreme Court of New South Wales. The respondent, Piling Pty Ltd (Piling), sought security for its costs of the appeal. The central issue was whether Piling, an impecunious company, should be required to provide security for Prynew's costs, and conversely, whether Prynew, also impecunious, should be required to provide security for Piling's costs.

The Court of Appeal was required to determine whether Piling, as a respondent to the appeal, should be ordered to provide security for Prynew's costs. It also had to consider whether Prynew, as an appellant, should be ordered to provide security for Piling's costs, particularly in light of the impecuniosity of both parties and the nature of the claims being advanced. The court also considered the effect of an undertaking offered by Mr Nemeth to be responsible for Piling's costs.

Beazley JA applied the principles governing applications for security for costs under section 1335 of the Corporations Act 2001 (Cth). Her Honour noted that impecuniosity alone is not determinative, but it is a significant factor. The court considered the relative strengths of the parties' cases and the potential for recovery of costs. The undertaking by Mr Nemeth was found to be insufficient to meet the threshold for security for costs, given his own impecuniosity. The court also considered that the case of the individual co-plaintiff, Mr Nemeth, was not co-extensive with the case of the corporate plaintiff, Prynew.

The Court of Appeal ordered that Prynew provide security for Piling's costs of the appeal in the sum of $50,000 by 28 May 2010, by way of bank guarantee. Prynew was also ordered to pay Piling's costs of the notice of motion. The matter was stood over for further directions to 1 June 2010.