The Cultural Intelligence Project Pty Ltd v The Entourage Education Group Pty Ltd (No 2)

In the matter of *The Cultural Intelligence Project Pty Ltd v The Entourage Education Group Pty Ltd (No 2)*, Baird J of the Supreme Court of New South Wales considered an application by the respondent, The Entourage Education Group Pty Ltd (Entourage), for security for costs against the applicant, The Cultural Intelligence Project Pty Ltd (CIP). The dispute concerned CIP's claim and Entourage's defence and cross-claim.

The primary legal issue before the Court was whether to grant Entourage's application for security for costs. This required the Court to consider various factors relevant to the exercise of its discretion, including the likelihood of CIP being unable to pay Entourage's costs, the characteristics of CIP as a proprietary company with minimal share capital, and the absence of evidence from CIP regarding its financial capacity to meet a potential costs order. The Court also had to assess whether ordering security would be oppressive or deny CIP its right to litigate, and the strength and bona fides of CIP's case, though this was to be considered provisionally.

Baird J applied the principles for granting security for costs, which involve a broad consideration of factors. Entourage argued that CIP's lack of evidence regarding its financial circumstances, coupled with its status as a proprietary company with limited assets, provided good reason to believe it could not meet an adverse costs order. While acknowledging that the onus rested on Entourage to establish grounds for security, the Court noted that CIP's failure to adduce evidence of its financial capacity could strongly support an order for security. The Court also considered that the merits of the underlying claim and defence were a secondary factor in this application.