Quarter Turn Pty Ltd v Reinteractive Pty Ltd

Link copied
Case Copied 16 min read

FEDERAL COURT OF AUSTRALIA

Quarter Turn Pty Ltd v Reinteractive Pty Ltd [2025] FCA 1110   

File number(s): NSD 51 of 2024
Judgment of: GOODMAN J
Date of judgment: 10 September 2025
Catchwords: PRACTICE AND PROCEDURE – application for the provision of security for costs – impecunious applicant – significant delay in bringing the application – provision of security ordered for future costs only
Legislation cited:

Corporations Act 2001 (Cth), s 1335

Federal Court of Australia Act 1976 (Cth), s 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

Big Review TV Ltd (in liq) v FC Securities Pty Ltd [2025] FCA 222

Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd [2022] FCA 148

Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176

Devenish v Jewel Food Stores Pty Ltd [1990] HCA 35; (1990) 64 ALJR 533

KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189

Li v State of New South Wales [2013] NSWCA 165

Moubarak by his tutor Coorey v Holt (No 2) [2019] NSWCA 188

PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48

Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 40
Date of hearing: 4 September 2025
Counsel for the Applicant: Mr B May
Solicitor for the Applicant: AMK Law
Counsel for the Respondent: Mr B Dziubinski
Solicitor for the Respondent: Wotton Kearney

ORDERS

NSD 51 of 2024
BETWEEN:

QUARTER TURN PTY LTD (ACN 649 691 065)

Applicant
AND:

REINTERACTIVE PTY LTD (ACN 160 446 453)

Respondent

ORDER MADE BY:

GOODMAN J

DATE OF ORDER:

10 SEPTEMBER 2025

THE COURT ORDERS THAT:

1.The applicant provide security for the respondent’s costs of this proceeding in the amount of $175,000.00, by payment of that amount into Court within 28 days of the date of these orders.

2.In the event of non-compliance with Order 1, the proceeding be stayed.

3.The respondent’s interlocutory application filed on 14 July 2025 otherwise be dismissed.

4.Costs be reserved.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

GOODMAN J:

A.       INTRODUCTION

  1. These reasons for judgment address an application for the provision of security for past and estimated future costs in circumstances where it is plain that the applicant is unable to meet an adverse costs order; and where there has been substantial delay in the making of the application.

  2. For the reasons set out below, it is appropriate to make an order for the provision of security of costs, referable only to estimated future costs.

    B.       BACKGROUND

  3. The background relevant to the application is as follows.

  4. The applicant is a…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Quarter Turn Pty Ltd v Reinteractive Pty Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2025] FCA 1110
Decision Date

CaseChat Overview and Summary

Quarter Turn Pty Ltd brought an application against Reinteractive Pty Ltd, seeking a declaration for breach of contract and misleading or deceptive conduct. The dispute revolves around the failure of Reinteractive to deliver a website and mobile application as agreed, and allegations of misleading conduct. The court considered the application for security for costs under section 56 of the Federal Court of Australia Act 1976 and rule 19.01(1) of the Federal Court Rules 2011. The primary issue was whether the applicant, Quarter Turn, should be required to provide security for the respondent's estimated future costs, given the significant delay in filing the application and the applicant's impecuniosity.

The court assessed the delay in filing the application and the impecuniosity of the applicant as significant factors. The delay in filing the application was considerable, which the court viewed as a strong indicator of the applicant's financial situation. Moreover, the applicant had limited financial resources in Australia and most of their assets were overseas, which further complicated their ability to provide security. The court balanced the need to ensure fair protection for the respondent against the potential injustice to the applicant, ultimately deciding that the applicant should provide security for the respondent's estimated future costs only. This decision was based on the need to avoid unnecessary prejudice to the applicant and the principle of fairness in litigation.

The court ordered Quarter Turn to provide security for the respondent’s costs amounting to $175,000, to be paid into court within 28 days. If this order is not complied with, the proceeding will be stayed. The interlocutory application filed by the respondent on 14 July 2025 was otherwise dismissed, and costs were reserved.

Orders

Orders of the court

1. The applicant provide security for the respondent’s costs of this proceeding in the amount of $175,000.00, by payment of that amount into Court within 28 days of the date of these orders.

2. In the event of non-compliance with Order 1, the proceeding be stayed.

3. The respondent’s interlocutory application filed on 14 July 2025 otherwise be dismissed.

4. Costs be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the reasons set out below, it is appropriate to make an order for the provision of security of costs, referable only to estimated future costs.B. BACKGROUND The background relevant to the application is as follows. The applicant is a company in which Mr Brett Earl and Mr Kok An Andric Liew are the directors. The members of the applicant are Mr Earl and a company associated with Mr Liew. On 22 January 2024, the present proceeding was commenced by the filing of an originating application and concise statement. In broad terms, the applicant contends that it engaged the respondent to develop a website and mobile application, but the respondent: (1) failed to deliver that product in breach of contract; and (2) engaged in misleading and deceptive conduct. On 15 March 2024, the respondent filed a concise statement in response. On 21 March 2024, an order was made for the filing of evidence by the applicant. The time for compliance with that order was subsequently extended and on 27 June 2024, the applicant completed the filing of its evidence in chief when it filed an expert report of Dr Brent Coker. On 12 July 2024, the respondent issued a notice to produce to the applicant and on 25 July 2024, the applicant produced documents in response to the notice to produce including various financial documents. On 8 August 2024, in response to a request for further and better particulars of quantum (the date of which request is not apparent), the solicitors for the applicant wrote to the solicitors for the respondent setting out a series of figures based upon Dr Coker’s report which suggested an amount claimed for loss in excess of $20,000,000.00. On 8 October 2024, the solicitors for the respondent wrote to the solicitors for the applicant in the following terms :Introduction 1.We refer to the above matter. As you know, we act on behalf of Reinteractive Pty Ltd (Reinteractive) in the above proceedings. 2.The purpose of this letter is to request details of the financial position and assets of Quarter Turn Pty Ltd (Quarter Turn) and its ability to meet any order for costs that is made against it in the proceedings.Reinteractive’s costs and estimated future costs3.Reinteractive has incurred very significant costs in the proceedings to date, and there remains significant risk that the parties will not resolve this matter prior to trial.4.We set out below a summary of the estimated costs that Reinteractive expects to incur in defending Quarter Turn’s claim up to the end of trial (estimate of 5-7 hearing days). The estimated costs are on a standard basis under the Federal Court Scale. On 21 October 2024, the Court made various orders including an order that the parties attend a mediation by 20 December 2024. On 22 October 2024, the solicitors for the applicant responded to the 8 October 2024 letter, contending that the respondent was not entitled to security for costs by dint of delay. Further correspondence was exchanged on 18, 27 and 29 November 2024.. From about 29 November 2024, the respondent determined to put the issue of security for costs on hold in view of the mediation scheduled for 13 December 2024, so as to avoid the unnecessary incurrence of costs. The mediation commenced on 13 December 2024 and was terminated on 26 March 2025..

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Liew has also provided evidence that: 5.I have been funding these proceedings on behalf of Quarter Turn to date. The other director and shareholder of Quarter Turn, Brett Earl, has not funded the proceedings. I understand that he does not have the financial capacity to do so.6.Reinteractive’s late application for security has prejudiced my ability to make choices in this litigation, including in mediation, with the benefit of knowing early in the proceedings whether or not security for costs would be ordered and before Quarter Turn had incurred significant fees.7.I also do not have assets in Australia that would allow me to pay the amount of security sought by Reinteractive. I was born in Singapore and moved to Australia in January 2017. I am a permanent resident. My assets are primarily located overseas, including in Singapore where I am a citizen. I do not have $544,126 in cash in Australia available to pay into Court for security for costs.8.If security for costs was ordered in the amount sought by Reinteractive, I would have to try and source this from my assets overseas.C. CONSIDERATION The application is brought pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) and r 19.01(1) of the Federal Court Rules 2011 (Cth). The amount of $544,126.00 sought by the respondent by way of security for costs is calculated as follows:Costs to date $458,942.00Estimated future costs $318,380.00Total $777,322.00(x 0.7) $544,125.40 The multiplier of 0.7 represents an estimated return of 70 per cent of costs incurred after taxation of those costs. The applicable principles were conveniently summarised by Allsop CJ in All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840 at [40] to [43] (albeit in that case reliance was also placed upon s 1335 of the Corporations Act 2001 (Cth)):40Where the applicant is a corporation, the Court is empowered to order security for costs pursuant to s 1335 of the Corporations Act 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”. Once this threshold is met, the Court will turn to the matters relevant to the exercise of its discretion to order security for costs: Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65; 98 ACSR 301.41Section 56 of the Federal Court of Australia Act does not expressly impose any threshold to be met before the Court considers the various discretionary matters. However, the applicant’s inability to pay the costs of the respondent remains an important consideration in the exercise of the Court’s discretion.42The 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).43The Court’s discretion should be exercised having regard to all of the circumstances of the case (see Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 at 513 [26] (Kirby J)). There are a number of well-established factors relevant to the Court’s exercise. These include (see KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; 56 FCR 189 at 197–198 per Beazley J): whether the application for security for costs has been brought promptly; the strength and bona fides of the applicant’s case; whether the applicant’s impecuniosity was caused by the respondent’s conduct subject of the claim; whether the respondent’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate; and whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security.