St Mary's Hog's Pty Ltd v HBCA Pty Ltd

St Mary's Hog's Pty Ltd was the applicant in a proceeding brought against it by six respondents. The proceeding involved a dispute over unpaid royalties and advertising fund contributions in relation to the Hog's Breath Café franchise system. The respondents applied for an order that the applicants provide security for the respondents' costs of the proceeding. The applicants opposed the applications for security for costs. The court was required to decide whether the applicants were impecunious, whether the applicants' proceeding was defensive in nature, and whether the applicants' net assets were sufficient to cover the likely costs of the proceeding.

The court found that the applicants' proceeding was defensive in nature as it raised matters beyond the scope of the debt claim. The court also found that the applicants' net assets were insufficient to cover the likely costs of the proceeding. The court noted that the applicants had not provided sufficient evidence of the ability and willingness of group members to contribute to security if ordered, or of the availability of current franchisees' assets to meet any security for costs order. The court held that the applicants were impecunious and granted the applications for security for costs. The court ordered that the applicants provide security in the form of a bank guarantee or payment into Court in tranches at various stages of the proceeding. The court also ordered that the proceeding be stayed until such time as the security was paid and that the applicants pay the respondents' costs of the applications for security for costs.