The Corporate Co-Appellant in Liquidation - should it be required to provide Security for Costs?
Winnote Pty Limited (In Liquidation) v Page & Ors [2005] NSWCA
The Courts have an inherent jurisdiction to order a plaintiff to provide a defendant with security for its costs. The purpose of such an order is to protect the defendant by ensuring that any costs order made at the conclusion of a trial in its favour can be met by the plaintiff. This is especially relevant and important where a plaintiff is resident outside Australia and has no assets in Australia as is often the case with shipping litigation involving foreign corporations.
The general rule is that the impecuniosity of a plaintiff is not a decisive factor. This rule applies where the litigant is a natural person. In cases where the litigant is a corporation, the operation of section 1335(1) of the Corporations Act (2001) modifies the position. Under section 1335(1) it is ordinarily appropriate for a court to exercise its jurisdiction and order an impecunious corporate plaintiff to provide security.
However, in the recent decision of the New South Wales Court of Appeal of Winnote Pty Limited (In Liquidation) v Page & Ors [2005] NSWCA 362, Mason, P dismissed a defendant’s application to order an impecunious corporate appellant to provide security for costs of an appeal largely on the basis that the co-appellant was solvent.
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