Sergienko v AXL Financial Pty Ltd - [2019] NSWSC 1611

Supreme Court

New South Wales

Medium Neutral Citation: Sergienko v AXL Financial Pty Ltd [2019] NSWSC 1611
Hearing dates: 5 November 2019
Date of orders: 20 November 2019
Decision date: 20 November 2019
Jurisdiction: Equity
Before: Ward CJ in Eq
Decision:
1. Pursuant to r 42.21(1) of the Uniform Civil Procedure Rules 2005 (NSW), order the cross-claimants (the fourth and fifth defendants in the proceedings) to provide security for the cross defendants’ costs of the second cross-claim in the sum of $60,000 within 28 days, such security to be provided by way of an unconditional bank guarantee, in a form acceptable to the cross-defendant, or payment into court.
2. In the event that the security ordered in Order 1 is not provided within the time specified, order that the second cross-claim be stayed until further order.
3. Order the cross-claimants to pay the cross-defendants costs of and incidental to this notice of motion.

Catchwords: COSTS — Security for costs — Relevant factors – r 42.21(1A) of the Uniform Civil Procedure Rules 2005 (NSW) – consideration of prospects of success or merits of the proceedings (r 42.21(1A)(a)) and whether the cross-claim is defensive in nature (r 42.21(1A)(e)) – security for costs ordered by way of an unconditional bank guarantee or payment into court.
Legislation Cited: Civil Procedure Act 2005 (NSW), s 3(1)
Corporations Act 2001 (Cth), s 1355
Uniform Civil Procedure Rules 2005 (NSW), r 42.21
Cases Cited: Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited [1995] FCA 1778; (1995) 134 ALR 187
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301
Commissioner of Taxation v Vasiliades [2016] FCAFC 170; (2016) 344 ALR 558
Cornelius v Global Medical Solutions Australia Pty Ltd; Farrag v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65
Estates Property Investment Corporate Ltd v Pooley (1975) 3 ACLR 256
Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC
Green Camel Pty Ltd v Urban Ecological Systems Ltd [2017] NSWSC 362
Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271
In the matter of Colorado Products Pty Limited (in prov liq) [2013] NSWSC 611
In the Matter of Felan’s Fisheries Pty Limited [2016] NSWSC 1351
Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43
John Arnold’s Surf Shop (in liq) v Heller Factors Pty Ltd [1979] 22 SASR 20; (1979) 4 ACLR 492
KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189
Litmus Australia Pty Ltd (in liq) v Canty [2007] NSWSC 670
Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA
Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377; [2008] VSCA 93
LTDC Pty Ltd v Cashlow Finance Australia Pty Ltd [2019] NSWSC 150
Pacific Acceptance Corporation Ltd v Forsyth (No…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NSWSC 1611
Decision Date: 20 November 2019

CaseChat Overview and Summary

The matter before the court involved Sergienko, the plaintiff, and AXL Financial Pty Ltd, the defendant, in a dispute that was heard in the Supreme Court of New South Wales. The primary issue at hand was whether the court should order the plaintiff to provide security for the defendant's costs. This decision was made in the context of the plaintiff's claim against the defendant, which included a cross-claim made by the defendant against the plaintiff. The court was required to consider various factors in determining whether such an order was appropriate, including the prospects of success of the plaintiff's claim and whether the defendant's cross-claim was defensive in nature.

The legal issues the court had to resolve included whether the merits of the plaintiff's proceedings warranted the imposition of security for costs and whether the defendant's cross-claim was defensive, which would impact the consideration of the security for costs. The court had to carefully weigh the relevant factors set out in rule 42.21(1A) of the Uniform Civil Procedure Rules 2005 (NSW), particularly the prospects of success or merits of the proceedings and the nature of the cross-claim. The court also needed to consider the appropriate form of security, whether by way of an unconditional bank guarantee or payment into court.

After considering the evidence and arguments presented by both parties, the court found that the plaintiff's prospects of success were uncertain and that the defendant's cross-claim was defensive in nature. Consequently, the court ordered the plaintiff to provide security for the defendant's costs. The form of security was determined to be an unconditional bank guarantee, reflecting the court's assessment of the circumstances of the case. This decision underscored the importance of the factors outlined in the rules when determining the appropriateness and form of security for costs in complex litigation scenarios.

The final orders of the court mandated that Sergienko provide an unconditional bank guarantee as security for AXL Financial Pty Ltd's costs. This ruling highlighted the court's approach to balancing the rights and obligations of parties in litigation, ensuring that the imposition of security for costs was justified based on a thorough assessment of the relevant factors.

Orders