FERNGROVE PHARMACEUTICALS PTY LTD v BETTERWAY HEALTH CARE INTERNATIONAL GROUP PTY LTD [2025] SASC 153

On Appeal from DISTRICT COURT OF SOUTH AUSTRALIA (HER HONOUR JUDGE THOMAS) DCCIV-19-1307 First Appellant: FERNGROVE PHARMACEUTICALS PTY LTD Counsel: MR S OWER KC - Solicitor: ADELTA LEGAL (AS AGENTS FOR JURIS COR LEGAL) Second Appellant: WEI TANG Counsel: MR S OWER KC - Solicitor: ADELTA LEGAL (AS AGENTS FOR JURIS COR LEGAL) Respondent: BETTERWAY HEALTH CARE INTERNATIONAL GROUP PTY LTD Counsel: MR E GUTHRIE - Solicitor: JOHNSTON WITHERS Hearing Date/s: 22/08/2025 File No/s: CIV-25-007302 B SUPREME COURT OF SOUTH AUSTRALIA (Appeal to a Single Judge) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. FERNGROVE PHARMACEUTICALS PTY LTD & ANOR v BETTERWAY HEALTH CARE INTERNATIONAL GROUP PTY LTD [2025] SASC 153 Judgment of the Honourable Justice B Doyle 12 September 2025 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - APPEAL OR REVIEW PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - FACTORS RELEVANT TO EXERCISE OF DISCRETION The respondent to the appeal (‘Betterway’) commenced proceedings in the District Court in 2019 against the first applicant for leave to appeal (‘Ferngrove’). A number of questions were formulated and determined by way of a separate trial of preliminary issues. Betterway substantially prevailed on those issues. Ferngrove’s appeal against the judgment was dismissed and its application for special leave to appeal was refused. In respect of those and other matters, costs have been awarded in Betterway’s favour against Ferngrove. In 2024, Betterway joined the second applicant (‘Mr Tang’) as a second respondent to the District Court proceedings. In late 2024, Ferngrove and Mr Tang applied for security for costs pursuant to s 1335(1) of the Corporations Act 2001 (Cth). The judge found that there was reason to believe that Betterway will be unable to pay the costs of Ferngrove and Mr Tang if they are successful in their defence of the action. In exercising the discretion whether to order security for costs, the judge had regard to the significant delay in bringing the application for security for costs and an undertaking proffered by Betterway not to enforce the costs order in its favour relating to the refusal of special leave to appeal. Conditional upon Betterway’s compliance with that undertaking, the judge declined to award security for costs. -- 1 of 21 -- Ferngrove and Mr Tang filed a notice of appeal on 23 June 2025 and the appeal, together with the application for leave to appeal, was listed for hearing on 22 August 2025. Ferngrove and Mr Tang failed to file an appeal book until two days prior to the appeal hearing and did not file written submissions. After an oral application for an adjournment was refused, they advanced oral submissions focusing upon contentions that: 1. the judge failed to treat Betterway’s impecuniosity as a factor in favour of the exercise of discretion; 2. the judge erred by giving weight, or considerable weight, to delay, when there was no sufficient evidence of prejudice; 3. in respect of Mr Tang, the judge erred in her assessment of the extent of the potential adverse costs order and/or by treating delay as a factor militating against an award of security for costs in his favour. The balance of the grounds of appeal, which were not the subject of detailed oral submissions, concerned the judge’s treatment of the evidence of Ferngrove and Mr Tang’s solicitor regarding costs, and the judge’s assessment of the potential net liability for costs of Betterway. Held, refusing permission to appeal: 1. where the decision sought to be challenged is interlocutory in nature and does not involve or materially bear on the determination of substantive rights, the interests of justice require that a tight rein be kept upon appeals and a grant of leave will only be appropriate where an issue of principle is raised which is of general public importance or where, although the decision does not directly concern substantive rights, a significant injustice may be suffered by the applicant if leave is not granted; 2. to deny leave to appeal where the refusal of an application for security for costs does not impede the progress of a proceeding towards a determination on the merits would not ordinarily cause significant or substantial injustice; 3. a refusal of security for costs which involves a graphically, and not merely arguably, wrong exercise of discretion may assist in demonstrating relevant injustice, but it is also important to consider whether a re-exercise of the relevant discretion is likely to lead to a substantially different result; 4. the better view of the judge’s reasons is that regard was had to Betterway’s impecuniosity in the exercise of discretion; 5. the judge did not err in her reliance upon the delay in bringing the application as a factor strongly militating against its success; 6. even if it is arguable that the judge erred in her consideration of Mr Tang’s application for security for costs, it is not inevitable that, re-exercising the discretion, an order for the provision of cash or equivalent security would be appropriate. If an award were to be made it would be modest. Refusing leave to appeal does not risk a substantial injustice to him; 7. the judge gave relatively detailed reasons for the exercise of discretion and there was no obvious error of principle made. The outcome reached does not appear surprising or unfair. The application for leave to appeal does not raise any questions of general or public importance, and a refusal of leave would not cause substantial injustice. Corporations Act 2001 (Cth) ss 127(3), 1335(1); District Court Act 1991 (SA) s 43(1); Law of Property Act 1936 (SA) s 41(4); Uniform Civil Rules 2020 (SA) rr 151.1(2), 213.1(1), 217.6(1), referred to. -- 2 of 21 -- House v The King (1936) 55 CLR 499; Mannix Electrical Pty Ltd v Belport Pty Ltd [2019] SASC 159; PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48; Programmed Solutions Pty Ltd v Dectar Pty Ltd [2007] QCA 385, applied. Adelaide (SA Pools & Spa) Manufacturing and Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60; Attorney-General (Botswana) v Aussie Diamond Products Pty Ltd [2009] WASC 299; Betterway Health Care International Group Pty Ltd v Ferngrove Pty Ltd [2021] SADC 63; Betterway Health Care International Group Pty Ltd v Ferngrove Pharmaceuticals Pty Ltd [2023] SADC 107; Betterway Health Care International Group Pty Ltd v Ferngrove Pharmaceuticals Pty Ltd (No 2) [2024] SADC 47; Betterway Health Care International Group Pty Ltd v Ferngrove Pharmaceuticals Pty Ltd & Wei Tang (No 4) [2025] SADC 54; Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176; Commonwealth of Australia v Cable Water Skiing (Australia) Ltd (1994) 116 FLR 153; Ecos College Inc v J & P Pope Pty Ltd [2002] SASC 33; Ferngrove Pharmaceuticals Pty Ltd v Betterway Health Care International Group Pty Ltd [2022] HCASL 156; Ferngrove Pharmaceuticals Pty Ltd v Betterway Healthcare International Group Pty Ltd [2022] SASCA 31; Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29; Islander Enterprises Pty Ltd v Commonwealth of Australia [2024] SASCA 141; McDonald v Attorney-General for South Australia [2022] SASCA 43; Success 618 Pty Ltd v New Zealand Natural Pty Ltd [2015] SASC 182; Viscariello v Livesey [2014] SASCFC 40, discussed. -- 3 of 21 -- -- 4 of 21 -- FERNGROVE PHARMACEUTICALS PTY LTD & ANOR v BETTERWAY HEALTH CARE INTERNATIONAL GROUP PTY LTD [2025] SASC 153 Single Judge Appeal – Civil 1 B DOYLE J: Using the language of s 1335(1) of the Corporations Act 2001 (Cth), the applicants for leave to appeal (‘Ferngrove’ and ‘Mr Tang’) are the defendants in District Court proceedings commenced by the plaintiff (‘Betterway’), the respondent in this Court. 2 A judge of the District Court refused an application for security for costs by Ferngrove and Mr Tang.1 They require leave to pursue an appeal against that decision.2 3 For the reasons that follow, leave to appeal should be refused. Leave to appeal against a refusal to order security for costs 4 Whenever leave to appeal is required, the Court acts in the interests of justice with reference to three-interrelated questions, namely: whether the decision is attended with sufficient doubt to warrant its reconsideration on appeal; whether the decision raises an issue of principle or general importance; and whether allowing the decision to stand would work a substantial injustice to the applicant.3 5 In a case where the decision sought to be challenged is interlocutory in nature and does not involve or materially bear on the determination of substantive rights, the interests of justice require that a tight rein be kept upon appeals. The fragmentation, delay and additional cost of appeals in respect of interlocutory decisions has the potential to undermine the efficient administration of justice. A grant of leave will only be appropriate in such cases where an issue of principle is raised which is of general public importance or where, although the decision does not directly concern substantive rights, a significant injustice may be suffered by the applicant if leave is not granted. 6 As de Jersey CJ said in Programmed Solutions Pty Ltd v Dectar Pty Ltd,4 in contrast to a case where security for costs is ordered and the plaintiff’s inability to provide the security may result in the proceeding being terminated or forever stayed, it is difficult to see how substantial injustice would be caused to an applicant by denying leave to appeal where the refusal of an order for security for costs does not impede the progress of the proceeding to a determination on the merits.5 The Chief Justice acknowledged, however, that if a refusal of security 1 Betterway Health Care International Group Pty Ltd v Ferngrove Pharmaceuticals Pty Ltd & Wei Tang (No 4) [2025] SADC 54 (‘Reasons’). 2 District Court Act 1991 (SA), s 43(1), Uniform Civil Rules 2020 (SA) (‘UCRs’), r 213.1(1). 3 McDonald v Attorney-General for South Australia [2022] SASCA 43 at [21] (Livesey P and Bleby JA). 4 [2007] QCA 385. 5 [2007] QCA 385 at [3], [6] (Jerrard JA and Dutney J substantially agreeing). -- 5 of 21 -- [2025] SASC 153 B Doyle J 2 involved a graphically, rather than merely arguably, wrong exercise of discretion, the case for a grant of leave may gain some arguable strength.6 7 But he cautioned that:7 As a matter of judicial policy, it is important to ensure that the passage of a proceeding to trial is not burdened by interlocutory skirmishes at an appellate level which consume time, money another resources, and which will not necessarily contribute in a productive way to what really matters to the parties – that is, the determination of their substantive rights. The determination should be available expeditiously. Hence, where leave is necessary, the Court is reluctant to grant leave. 8 In assessing whether there is a risk of significant injustice, and, relatedly, whether there is sufficient reason to doubt the correctness of the decision under appeal, it is relevant to consider whether the proposed appeal is one which attracts the ‘correctness standard’ or the ‘deference standard’. If what is challenged is a discretionary decision (or a discretionary aspect of a decision), or an evaluative decision which does not demand a uniquely correct outcome, it will likely attract the deference standard.8 In such a case, unless the grounds of appeal disclose a viable basis, consistent with the principles associated with House v The King,9 upon which to challenge such a decision, the proposed appeal will lack sufficient prospects of success. 9 So far as an application for security for costs pursuant to s 1335 of the Corporations Act 2001 (Cth) (‘Corporations Act’) is concerned, it has been held that the deference standard applies both to the threshold question (whether there is ‘reason to believe that the [plaintiff corporation] will be unable to pay the costs of the defendant if successful’) and, if that threshold is crossed, to the discretion whether to order security for costs.10 10 In the present case, the judge found the threshold question in favour of the applicants, and the grounds of appeal are necessarily focused upon the factual findings and weighing of relevant considerations in respect of the discretion. 11 Where the proposed appeal attracts the deference standard, even if relevant error is arguably able to be demonstrated, it may be that a re-exercise of the relevant discretion or evaluation cannot be said to be likely to lead to a substantially different result. In that case, it may be doubtful that refusing leave would occasion a substantial injustice. 6 [2007] QCA 385 at [8]. 7 [2007] QCA 385 at [12]. 8 See, eg, Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 at [76] (Edelman J). 9 (1936) 55 CLR 499. 10 See, eg, Mannix Electrical Pty Ltd v Belport Pty Ltd [2019] SASC 159 at [34]-[37] (Doyle J), Islander Enterprises Pty Ltd v Commonwealth of Australia [2024] SASCA 141 at [68]-[74] (Livesey P, Lovell and David JJA). See also Commonwealth of Australia v Cable Water Skiing (Australia) Ltd (1994) 116 FLR 153 at 157 (Bollen J, Mohr and Duggan JJ agreeing). -- 6 of 21 -- [2025] SASC 153 B Doyle J 3 12 The applicants contended that, so long as error is demonstrated and it can be said that some order for security for costs which is not truly de minimis would appropriately be made in the re-exercise of discretion, the denial of leave would result in a substantial injustice. I disagree. Whilst the likely quantum of any order that might be made in the re-exercise of discretion has to be viewed relative to the size and complexity of the claim, it is, in my view, a matter that bears on whether a substantial injustice would result from refusing an application for leave to appeal. 13 In light of the foregoing principles, it is unsurprising that this Court has not infrequently declined to grant leave to appeal against security for costs decisions.11 Background 14 The District Court proceedings were commenced by Betterway in 2019. Betterway’s claim against Ferngrove is that it breached its obligations to satisfy certain regulatory requirements of the People’s Republic of China in respect of its manufacturing premises and the infant milk powder product of Betterway so that the product could be manufactured by Ferngrove under a supply agreement for the export and sale by Betterway to the Chinese market. More recently, in late 2024, Betterway joined Mr Tang, Ferngrove’s sole director and shareholder, alleging tortious interference in contractual relations by him. 15 Betterway’s claim in breach of contract is founded upon a document styled as a Deed. Ferngrove pleaded, amongst other things, and as a complete answer to the whole of the claim made, that the parties were not bound by that document because it had not been validly executed. Initially over Betterway’s opposition, but later with its acquiescence, Ferngrove requested that the Court determine preliminary issues at a separate trial pursuant to r 151.1(2) of the Uniform Civil Rules 2020 (SA) (‘UCRs’). Five questions for determination were formulated, four of which were answered by a judge of the District Court in reasons published on 1 June 2021, following a trial of those issues late in 2020.12 16 The judge found in Betterway’s favour that the Deed had been validly executed pursuant to s 127(3) of the Corporations Act and was binding on the parties; that, alternatively, if it had been defectively executed under the Law of Property Act 1936 (SA) it must be taken to be valid pursuant to s 41(4) of that Act; and that, in the further alternative, the Deed bound the parties as a simple contract supported by valid consideration. An award of costs was made in Betterway’s favour. Betterway’s solicitor has estimated the costs associated with the hearing of the preliminary determination to be $19,451.90. 17 Ferngrove appealed against the judgment. Following a hearing in December 2021, the Court of Appeal published reasons on 14 April 2022, dismissing the 11 See, eg, Ecos College Inc v J & P Pope Pty Ltd [2002] SASC 33, Viscariello v Livesey [2014] SASCFC 40 and Success 618 Pty Ltd v New Zealand Natural Pty Ltd [2015] SASC 182. 12 Betterway Health Care International Group Pty Ltd v Ferngrove Pty Ltd [2021] SADC 63. -- 7 of 21 -- [2025] SASC 153 B Doyle J 4 appeal and confirming the correctness of the answers given by the judge.13 A costs order in Betterway’s favour was later the subject of quantification in the amount of $27,036.65. Those costs have been paid. 18 Ferngrove sought special leave to appeal to the High Court. That application was dismissed, with costs.14 Those costs were quantified by Betterway’s costs expert in the sum of $18,552.39. Subject to their final assessment, those costs are recoverable forthwith. 19 Returning to the conduct of the proceedings in the District Court, as is explained in Betterway’s solicitor’s affidavit on the application, Betterway made an application for specific disclosure, and, subsequently, a further application for further and better discovery and seeking verification of a further list of documents on oath. The Court published reasons and made orders including in respect of costs in favour of Betterway on both applications.15 Betterway’s solicitor estimated the costs of those applications as being $18,233.50 and $18,089.50 respectively. 20 The more recent history of the proceedings has, according to the affidavit evidence of Betterway’s solicitor, been characterised by a want of diligence on Ferngrove’s part in complying with orders, including a delay in filing responsive expert evidence and its Amended Defence. As will be seen, the judge essentially agreed with that characterisation of the recent history. 21 On 8 October 2024, an order was made joining Mr Tang as a second respondent. A revised pleading setting out the proposed claim against Mr Tang had been provided, along with an explanation for the timing of the revised pleading, in an affidavit sworn on 20 September 2024. The application 22 The application for security for costs was made on 11 November 2024. It was first foreshadowed in a letter sent by Ferngrove on 22 October 2024. The application was based upon s 1335(1) of the Corporations Act and r 115.1(d) of the UCRs. 23 The interlocutory application sought an order for security for costs of the action ‘to be incurred by the Respondents (including for trial) in an amount and form determined’ by the Court. As expressed, and perhaps in recognition of the usual reluctance to make an award of security for past costs,16 the application appeared to be in respect of costs to be incurred from the date of the application. 13 Ferngrove Pharmaceuticals Pty Ltd v Betterway Healthcare International Group Pty Ltd [2022] SASCA 31. 14 Ferngrove Pharmaceuticals Pty Ltd v Betterway Health Care International Group Pty Ltd [2022] HCASL 156. 15 Betterway Healthcare International Group Pty Ltd v Ferngrove Pharmaceuticals [2023] SADC 107, Betterway Healthcare International Group Pty Ltd v Ferngrove Pharmaceuticals (No 2) [2024] SADC 47. 16 See, eg, the authorities catalogued in Dal Pont, Law of Costs (2021, 5th ed) at [28.37]. -- 8 of 21 -- [2025] SASC 153 B Doyle J 5 24 The application was supported by an affidavit sworn by Ferngrove’s solicitor, Mr Chen. Mr Chen’s affidavit disclosed the rates being charged by his firm and by counsel and referred to a trial estimate of 15 days. The affidavit listed a number of steps said to be required to progress the matter to a final hearing, including the hearing of the security for costs application and a mediation. After describing his litigation experience, the deponent then affirmed: Based on my experience and having regard to the above listed scope of work, I estimate that the total costs of defending the proceedings to completion to the end of trial will be in the vicinity of $450,000 (incl GST). This would comprise approximately $225,000 costs up to the trial, and then $225,000 in costs for the trial. 25 That estimate was made on a solicitor-client basis. Although ambiguously expressed, the better reading of the evidence is that the estimate of $225,000 related to the entirety of the costs of preparing the matter to the first day of trial. That is to say, it included past costs. That was the position adopted by Ferngrove’s counsel during argument before the judge. 26 It is also important to note that in a letter sent by Ferngrove’s solicitors foreshadowing the application, they asserted that their client had already incurred costs and disbursements in the proceedings amounting to approximately $200,000. 27 The respondent’s solicitor Mr Graney swore an affidavit dated 24 January 2025 in opposition to the application for security for costs in which a number of matters were addressed, including what was characterised as extensive delay on Ferngrove’s part in making the application. The costs estimate made by Mr Chen was critiqued. 28 As to the former, it was pointed out that the financial statements of Betterway relied upon by Ferngrove had been available since May 2020. In respect of the impact of the delay upon Betterway, Mr Graney deposed that: [Betterway] is not in a position to say with any certainty what (if any) forensic decisions it would have made differently in respect of the conduct of the proceedings if an application for security was made at the outset of or at an earlier stage in the proceedings. Notwithstanding this, I am informed by the Applicant and verily belief that there is a real prospect the Applicant would have endeavored to fast track the matter to trial by, at least, maintaining its opposition to the Separate Issues Application such that the Appeal and the Special Leave Application could have been avoided (it may have also made different forensic decisions in the conduct of the Specific Disclosure Application and about the joinder of the Second Respondent). 29 Mr Graney went on to describe the costs orders made in Betterway’s favour and to estimate the quantum of those costs (as summarised earlier in these reasons). As for the future costs of the proceedings, Mr Graney said that the trial length would be between five and ten days and more likely seven, and he considered that the defendants’ future costs to commencement of the trial (excluding the security application) should be no more than $57,500 (including GST). His estimate of the defendants’ trial costs based on a seven day trial excluding transcript and -- 9 of 21 -- [2025] SASC 153 B Doyle J 6 interpreter costs was $149,000 (including GST). He deposed to an estimated maximum by way of recoverable costs for preparation and conduct of the trial in the amount of $167,265 (including GST), of which he estimated that costs solely attributable to the claim against Mr Tang might amount to 25%. 30 A reasoned basis for the trial length estimate was provided. A reasoned basis for the costs estimate was also set out. The assumptions involved, including as to the form of evidence in chief, were exposed. 31 Finally, Mr Graney deposed that if the application for security for costs were to be dismissed, Betterway was willing to undertake not to enforce the special leave costs order in its favour, which, when considered together with the other costs entitlements in Betterway’s favour which were not yet enforceable and would be available to be set-off, amounted to effectively providing security of approximately $74,327.29. Additionally, Betterway’s director Mr Balfour was prepared to undertake to personally meet any net costs order against it up to the sum of $25,000. In a later affidavit dated 20 February 2025, Mr Graney gave evidence of unencumbered property owned by Mr Balfour which he purchased some time ago for $800,000. The judge’s reasons 32 On 15 May 2025, the judge delivered detailed reasons in which she concluded that although the threshold requirement under s 1335(1) of the Corporations Act was satisfied, on condition that Betterway undertake not to enforce the special leave costs order in its favour until further order, it was not appropriate to exercise the discretion to award security for costs in favour of Ferngrove or Mr Tang.17 33 In her introductory observations on the evidence, the judge noted that whereas Mr Graney’s account of the procedural history was comprehensive and corroborated by the court record and various judgments given in the matter to date, Mr Chen’s account was incomplete and inaccurate both by omission and in emphasis (Reasons [11]). 34 In terms that were not criticised by either party on appeal, the judge summarised the relevant legal principles, drawing upon observations made in Mannix Electrical Pty Ltd v Belport Pty Ltd18 and a number of other relevant authorities (Reasons [18]-[27]). 35 In considering whether the threshold requirement was satisfied, the judge considered the quantum of any ultimate award of costs that might be made against Betterway. The judge observed that where the costs estimate of the party seeking security for costs was substantially overinflated, not only might that mean that the 17 Betterway Health Care International Group Pty Ltd v Ferngrove Pharmaceuticals Pty Ltd & Wei Tang (No 4) [2025] SADC 54. 18 [2019] SASC 159. -- 10 of 21 -- [2025] SASC 153 B Doyle J 7 threshold might not be met, but the evidentiary deficiencies could also inform the exercise of the discretion whether security should be ordered (Reasons [35]). 36 The judge considered the history of the proceeding. She noted that between July 2020 and August 2024, almost all the interlocutory steps taken, and costs incurred in relation to the proceeding, concerned interlocutory applications determined in Betterway’s favour that are the subject of existing costs orders against Ferngrove. The judge noted that not only would Ferngrove not be entitled to its costs associated with those applications but, in the ordinary course, Ferngrove would not be entitled to have its costs for certain other steps taken (amendments, extensions of time, adjournments, costs arguments) even if it succeeded at trial (Reasons [39]). As the judge noted, these important considerations were not addressed by Mr Chen in his affidavit (Reasons [40]). 37 The judge also noted that notwithstanding what had been said in Mr Chen’s letter foreshadowing the application (in respect of past costs), his affidavit made no reference at all to the actual level of costs incurred to date, so that there was no way of understanding what proportion of his first estimate of $225,000 was for future, as distinct from past, costs (Reasons [48]). In the judge’s view, it was not for the Court to conduct its own investigation into past recoverable costs when the parties’ solicitor had made no attempt to prove them (Reasons [50]). 38 The judge identified a number of further difficulties with Mr Chen’s estimates, namely: • the figures used were solicitor-client costs (Reasons [45]), and the proposed discount of 20% to reflect ‘recoverable’ costs was inadequate in all the circumstances (Reasons [56]); • to the extent that the first $225,000 figure included a substantial amount of past costs (which the earlier letter suggests it must have), no allowance had been made for significant irrecoverable past costs incurred by Ferngrove unsuccessfully prosecuting or defending applications where costs orders had been made against it (Reasons [49]); • there was no satisfactory evidentiary foundation upon which recoverable future costs up to the date of trial could be assessed (Reasons [52]); • the trial cost estimate was excessive on account of the length and the assumption that both senior and junior counsel fees would be recoverable (Reasons [55]); • the estimate did not attempt to distinguish between the position of Ferngrove and Mr Tang (Reasons [57]). 39 The judge concluded that the deficiencies in Mr Chen’s costs estimate were so serious that it should be disregarded in assessing Betterway’s potential liability -- 11 of 21 -- [2025] SASC 153 B Doyle J 8 for an adverse costs order should Ferngrove and Mr Tang succeed in their defences (Reasons [58]). 40 By contrast, the judge found Mr Graney’s estimate of future costs up to the commencement of trial to be reasonable. Ferngrove’s counsel had not disagreed in the course of oral submissions (Reasons [61]). The judge treated Mr Graney’s estimate as a sufficient starting point to make a broad-brush assessment of the future costs of action of Ferngrove and Mr Tang. On a solicitor-client basis, the judge’s assessment was $64,000 (excluding GST) to the first day of trial, and $48,000 (excluding GST) for the trial. The total solicitor-client costs of $112,000, when reduced by a discount of 30%, yielded an estimate of future recoverable costs of $78,400 (excluding GST) (Reasons [60]-[65]). 41 In respect of the existing adverse costs orders, as earlier indicated, the judge accepted estimates which resulted in a total estimated liability to Betterway in the order of $74,000 (excluding GST) (Reasons [66]-[71]). 42 On this basis the judge identified a net liability for costs in the order of $4,400 (excluding GST) (Reasons [72]). 43 Despite the relatively low estimate of any (net) adverse costs exposure on Betterway’s part, the judge was prepared to find, in part due to Betterway not adducing evidence on the matter, that the threshold was satisfied, and that Betterway was relevantly impecunious (Reasons [73]-[90]). The judge therefore accepted that the discretion to order security for costs was enlivened and turned to a consideration of that discretion (Reasons [90]). 44 The judge first considered the delay in bringing the application and its timing. In that respect, her Honour said (Reasons [94]-[97]). In oral argument, the respondents’ counsel accepted that there is some element of prejudice to Betterway because of the time elapsed and costs spent but submitted there is no evidence of substantial prejudice. Whilst Mr Graney’s evidence on this topic was not directly challenged, it was criticised as carrying little weight and should have been addressed by Betterway’s director, Mr Balfour.19 The respondents’ submissions are not persuasive. The more than five-year delay between the commencement of the proceeding and when the application was foreshadowed is a significant and compelling reason for refusing the application alone. The proximity of a trial increases the significant unfairness to Betterway arising from the delay in bringing the application and its timing. Forensic decisions have been made about the conduct of the case in circumstances where there has been sufficient opportunity for an application for security for costs to be made. As Mr Graney identifies, if the application had been brought earlier, Betterway may have made different forensic decisions. Any such opportunity had been lost by the time the application was foreshadowed. Substantial prejudice flows from Betterway conducting its 19 First Graney Affidavit [30]. -- 12 of 21 -- [2025] SASC 153 B Doyle J 9 case for five years and joining Mr Tang on the basis that there would be no application and order for security for costs made. Self-evidently, substantial work has been undertaken and substantial costs incurred by Betterway in progressing the proceeding to trial on the assumption there would be no order for security as to costs. Having regard to the existing costs orders in its favour, Betterway has undoubtedly incurred substantial irrecoverable costs on this same assumption that an earlier application would have avoided and which would be wasted if an order for security had the effect of ending the proceeding. It was not necessary for Mr Graney to identify any specific costs as wasted or avoidable. The respondents have also not given any adequate explanation for their delay in bringing the application. They were on notice of Betterway’s alleged impecuniosity since discovery of the 2017 and 2018 financial statements in May 2020. An expert report based on these financial statements that analysed Betterway’s trading history was filed in May 2023. Mr Chen does not address why there was no concern about potential costs liabilities at either of these times. Moreover, the explanation proffered by Mr Chen in his affidavit is not credible. There has been no “period of inaction by the Applicant”20 and the requests concerning taxation and costs can hardly be described as unexpected when the procedural history is properly appreciated. Whether security is granted or not does not have any bearing on the orderly progression of the litigation. 45 Next, the judge referred to the undertakings proffered by Betterway and Mr Balfour. Whilst she was ultimately unpersuaded that Mr Balfour should be required to give the proposed undertaking, the judge considered that it was appropriate to make the proffering of the undertaking not to enforce the special leave costs order a condition of any exercise of discretion to refuse the application for security for costs (Reason [98]-[103]). 46 The judge observed that Ferngrove’s existing liability on account of costs was a consideration weighing against an order being made, because it reduced Betterway’s potential net liability to Ferngrove and Mr Tang should their defences succeed. However, that was on the basis that the undertaking just mentioned would be made a condition of any order dismissing the application (Reasons [104]-[105]). 47 In respect of Mr Tang, the judge recognised that the relevant discretionary factors required separate consideration. She noted the submission that Mr Tang could not be said to have delayed in bringing an application (Reasons [107]). Equally, however, only about 25% of the relevant costs could be said to be referable to matters relevant only to Mr Tang’s defence (Reasons [108]). 48 In that respect, the judge said that (Reasons [109]): Accordingly, when Mr Graney’s estimated 25% is applied to the Court’s assessment of Betterway’s potential liability for the respondents’ costs of action after set-off of 20 Chen Affidavit [9]. -- 13 of 21 -- [2025] SASC 153 B Doyle J 10 Ferngrove’s existing liability for existing costs orders, the potential liability to Mr Tang as distinct from Ferngrove is a very modest amount: $1,100.21 49 The judge considered, in any event, that there were compelling reasons for not exercising the Court’s discretion on security in Mr Tang’s favour (Reasons [110]). In that respect, she reasoned:22 First, the respondents’ submissions overlook the full circumstances of Mr Tang’s joinder as second respondent and that Mr Tang as Ferngrove’s director, majority shareholder and controller of the wider corporate group was aware of all relevant matters in dispute since the proceeding was commenced. As Betterway submitted, Mr Tang is not an independent third party and cannot disentangle himself from Ferngrove’s delay in bringing the application for security for costs and its timing. Delay is fatal to both respondents’ application for security for costs. Secondly, Mr Tang was joined in circumstances where it was not reasonable to plead a claim against him until Ferngrove had fully complied with its discovery obligations, plainly acting on Mr Tang’s instructions,23 bearing in mind that Court orders were required to compel compliance and the latest Court order for compliance was made on 26 August 2024.24 When the respondents’ consent to Betterway’s application to join Mr Tang was communicated to Mr Graney by Mr Chen on 25 September 2024, no application for security for costs was foreshadowed. By the time it was foreshadowed, consent orders had already been made for Mr Tang’s joinder and the filing of his defence and an amended reply. It follows that the opportunity for Betterway to alter the forensic decisions that led to the joinder of Mr Tang as a second respondent and avoid the costs of doing so had already been lost before the respondents’ joint application was foreshadowed. These decisions included pursuit of the discovery applications against Ferngrove in the first place that are in part the foundation of the claim made against Mr Tang. Thirdly, Mr Chen did not address Mr Tang’s defence costs separately from Ferngrove’s. His evidence only addressed their joint costs because that was not the basis of the filed application. For these reasons, the Court’s discretion on security for costs should not be exercised in Mr Tang’s favour 50 The judge concluded that, together, the relevant considerations pointed strongly against the Court exercising its discretion in favour of ordering security for costs, either jointly or in respect of Mr Tang, on condition that Betterway undertook not to enforce the special leave costs order by demanding payment of any assessed sum until such further order of the Court (Reasons [116]). The application was therefore dismissed. 21 First Graney Affidavit [37(f)]. That is, 25% of $4,400. 22 Reasons [111] – [115]. 23 See FDN 88 [4] comprising as Exhibit YC-1 to the Chen Affidavit. 24 FDN 84. -- 14 of 21 -- [2025] SASC 153 B Doyle J 11 The proposed appeal 51 By notice of appeal filed on 23 June 2025, the applicants proposed six grounds of appeal. Their track record of dilatoriness continued before this Court. The applicants’ solicitors failed, without proper explanation, to file an appeal book until two days prior to the appeal. Even then, it was not compliant. No written submissions or list of authorities were filed. 52 Rule 217.6(1) of the UCRs provides that each party who intends to make submissions on the appeal must file written submissions in accordance with the rule applicable thereto. 53 Relying on this rule, Betterway submitted at the hearing that the application for leave to appeal should be dismissed. 54 Counsel for the applicants, whose retainer was only confirmed on the eve of the hearing, and who therefore cannot be criticised for his clients’ non-compliance, sought an adjournment of the appeal. 55 I acceded to neither application. Whilst I was not satisfied the appeal should be adjourned to a later date (both because of the inadequate explanation for the applicants’ non-compliance, and because of the proximity of the trial), I was also unpersuaded that the matter should be determined without any consideration of the merits. Following a brief adjournment of about 45 minutes, I required the applicants’ counsel to present oral submissions in support of the application for leave on the basis that if anything said caught Betterway’s counsel by surprise (because written submissions had not been filed), I would make directions to remedy that prejudice. 56 In support of the proposed appeal, the applicants’ counsel, whilst not formally abandoning the other grounds of appeal, made oral submissions in support of three main contentions. They were that: (1) whereas the authorities support the proposition that demonstrating impecuniosity in the relevant sense is not only relevant to demonstration of the threshold requirement, and is also a factor in favour of the exercise of discretion, the judge failed to have regard to Betterway’s impecuniosity;25 (2) the judge erred by giving weight, or considerable weight, to delay, when there was no sufficient evidence of prejudice;26 (3) in respect of Mr Tang, the judge erred in her assessment of the extent of the potential adverse costs order and/or by treating delay as a factor militating against an award of security for costs in his favour.27 25 This contention substantially corresponded with ground 3. 26 This contention comprised part of ground 5(b). 27 This contention substantially corresponded with ground 6. -- 15 of 21 -- [2025] SASC 153 B Doyle J 12 57 The grounds of appeal not the subject of oral submissions, but not abandoned, involved arguments that: (1) the judge’s conclusion that the costs estimate in Mr Chen’s affidavit was superficial and grossly excessive, such that it was of no real use on the application, was erroneous given Mr Chen’s experience as a litigation solicitor. It could still have been used as part of a broad brush assessment of costs;28 (2) the judge’s assessment of the recoverable future costs was unreasonably low;29 (3) the judge erred by finding that the potential net liability for costs of the applicants was $4,400.30 58 In my view, these proposed grounds have low prospects of prevailing on appeal because they do not identify errors of principle with respect to the essential questions arising on the application. They advance contestable and, in my view, relatively unpersuasive, contentions about integers in the judge’s overall exercise of discretion. 59 The fact is that Mr Chen’s affidavit was superficial and whilst, in a very general sense, it might be argued to have had some capacity to found a broad brush assessment of costs, it is unclear why anything that might be derived from the affidavit would result in a different assessment to that which was made. The judge’s assessment of recoverable future costs was perhaps conservative, but does not seem to me to be outside the range of reasonable estimates. Nor is there any obvious reason to doubt the net assessment made by the judge. 60 In considering whether leave to appeal should be granted, the focus must be on the three matters emphasised in oral submissions. Failure to consider impecuniosity as a discretionary factor? 61 There is no doubt that the impecuniosity of a plaintiff is not only a threshold consideration but also a discretionary factor in favour of a grant of an order for security for costs pursuant to s 1335(1) of the Corporations Act. 62 The real question is whether the judge misdirected herself by failing to appreciate or failing to have regard to that circumstance. 63 I would be hesitant to conclude that the judge erred in that way, because the risk of a plaintiff’s impecuniosity – and the consequent risk that a successful defendant may ultimately be awarded costs which the plaintiff may be unable to 28 These are the main contention advanced in ground 1. 29 Ground 2 advanced a number of arguments in relation to this proposition. 30 This contention substantially corresponds with ground 4. -- 16 of 21 -- [2025] SASC 153 B Doyle J 13 pay – is so obviously the animating purpose of an award pursuant to s 1335(1) that it would be surprising if it were to be overlooked. It will often go without saying. 64 Whilst there is no presumption in favour or against an order for security for costs once the threshold requirement is met, in the ordinary course, where the threshold requirement is met, it is natural for argument to focus upon factors that may militate against an order for security, for the very reason that it is well understood that in the absence of such factors it will often if not usually be appropriate to make an award. 65 Further, the proposition that impecuniosity is a reason why security might be ordered was expressly recognised in several of the authorities cited by the judge.31 66 The extent to which impecuniosity militates in favour of the exercise of discretion to award security for costs is naturally affected by the likely extent of the quantum of recoverable costs which may go uncompensated if security is not granted. Insofar as the judge grappled with the likely extent of any such net liability, the judge was therefore having regard to the weight that Betterway’s impecuniosity should carry in the exercise of discretion. 67 The applicants’ counsel submitted that the judge’s consideration of that issue, and her estimation of a net liability of $4,400, ought not be taken as a recognition of the relevance of impecuniosity to the exercise of discretion, because the judge’s analysis in that respect was incomplete: it excluded past costs which, even if not to be included in the award of security, were relevant to the overall impact that impecuniosity might have if the defences succeed at trial. 68 By way of response, Betterway’s counsel submitted that because of the paucity of the evidence in respect of past costs, and the limited extent to which Ferngrove was likely to be entitled to any costs prior to the date of the application (even if the claim were ultimately to be dismissed), the judge should be understood as having found that there was no such potential exposure. Or, at least, the judge was not satisfied that such a potential exposure was positively established on the evidence before her. 69 I am inclined to accept Betterway’s submission. I accept that, for the purposes of considering the weight to be attached to Betterway’s impecuniosity, the extent of the injustice that might be caused as a consequence of the plaintiff’s impecuniosity if security is not ordered may be affected by any exposure Betterway may have for past costs, even where security is only being contemplated in respect of future costs. But that did not require the judge to make a positive finding as to the quantum of any past recoverable costs and, in any event, for the purposes of exercising the discretion, the judge was entitled to take the view that the extent of any such past recoverable costs was not satisfactorily proved. 31 Adelaide (SA Pools & Spa) Manufacturing and Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60 at [13]-[14] (Doyle J), Mannix Electrical Pty Ltd v Belport Pty Ltd [2019] SASC 159 at [70] (Doyle J). -- 17 of 21 -- [2025] SASC 153 B Doyle J 14 Because it was within the power of the applicants to provide an evidentiary foundation for any past potentially recoverable costs, their failure to do so justified placing no weight on the extent of any past recoverable costs. 70 In any event, even if that is not how the judge’s reasons are to be read, and the judge did not give distinct consideration, as part of the discretionary exercise, to the quantum of any past costs that might prove recoverable if the defences succeed, any past recoverable costs must have been modest in this case. As the judge observed, the interlocutory applications had gone against Ferngrove. It failed to comply with a number of procedural orders. Some of the general costs of action might have been attributable to the preliminary issues upon which Betterway prevailed. Accordingly, even if the judge failed distinctly to consider the additional exposure that might result from Betterway’s impecuniosity in respect of past costs, the weight to be attached to that circumstance was necessarily very limited. If, as Ferngrove’s solicitors had stated, their past costs on a solicitor client basis totalled around $200,000, the vast proportion of that is likely to have related to interlocutory steps for which Ferngrove will never be entitled to its costs. In my view, given the paucity of the evidence, the extent of any adverse costs orders, on a standard basis, for the previous conduct of the proceedings, is unlikely to have exceeded $25,000. 71 For that reason, even if it is accepted that there are arguable prospects of demonstrating a failure to have regard to a relevant consideration, standing alone, the point to be agitated is not one which would self-evidently (or even probably) result in a different result on the re-exercise of discretion. Unless the judge’s reliance on Ferngrove’s delay as a reason pointing strongly against an order for security for costs was erroneous, the result of the application was and is unlikely to turn on a recognition that Ferngrove may have incurred past costs in the order just described that might ultimately be irrecoverable if Ferngrove is successful at trial. Erroneous reliance upon delay? 72 In respect of Ferngrove’s application for security for costs, there is no dispute that there was substantial and unsatisfactorily explained delay, and no challenge to the judge’s observations in that regard (Reasons [96]). The applicants’ criticism of the judge’s approach was instead that in the passages earlier extracted she erred by inferring that there was some prejudice occasioned by the delay. I would reject the submission that the judge’s approach involved any error of principle of a kind that would justify interfering with her exercise of discretion. 73 First, in my view, Mr Graney’s deposition on the topic, whilst expressed cautiously and conservatively, was not weightless for that reason. It is not difficult to see that had security for costs been flagged at an earlier time, Betterway may have persisted in its opposition to a splitting of issues on the basis that it had the potential – a potential which was realised in this case – to result in delay in the event that the ruling was the subject of an appeal. In my view there was no error, -- 18 of 21 -- [2025] SASC 153 B Doyle J 15 much less an error of principle, in attributing weight to the possibility that had security been raised earlier, Betterway may have acted differently. A past counter- factual of that kind does not need to be a certainty in order for it to carry some weight in the exercise of a broad discretion. 74 Secondly, if the matter were to be reconsidered afresh, in my view, Ferngrove’s delay would remain significant even if no, or not much, weight were to be given to the possibility that Betterway would have acted differently at an earlier stage in the proceedings. That is because having to deal with a security for costs application close to a trial is itself a distraction that involves a form of prejudice.32 Whilst perhaps of lesser weight, it is also to be remembered that if security for costs is sought and obtained many years into a proceeding, and a proceeding is stayed for that reason, judicial resources will have been wasted.33 75 As Bell P and Simpson AJA said in PPK Willoughby Pty Ltd v Baird,34 delay will invariably be a relevant discretionary factor in any application for security for costs, but the degree or extent of its relevance will vary according to the circumstances of any given case along a spectrum from the slight to the extreme.35 76 In these circumstances, Ferngrove can only be complaining that the judge gave the delay too much weight in the overall exercise of discretion. Even if that is so, and again I am unpersuaded about that, it is not enough for present purposes. Error in relation to Mr Tang’s position? 77 The applicants submit that whilst the judge was right to deal with Mr Tang’s position distinctly, she erred in two respects. 78 First, the judge erred by considering that Betterway’s likely adverse costs exposure to Mr Tang if his defence succeeds is 25% of the $4,400 figure reached by deducting Ferngrove’s estimated existing liability from the estimate of the applicants’ future recoverable costs. The applicants pointed out that, amongst other things, that assumed that Mr Tang would not be jointly and severally liable to his solicitors for all the defence costs. There is logic to the applicants’ submissions, but also an air of unreality. In circumstances where the applicants adduced no evidence about the terms of their retainer(s), it was not unreasonable for the judge to adopt a rough and ready approach to this question. 79 However, even if one assumes that Mr Tang would only likely be called on personally to meet 25% of the future costs of the action, and that Betterway could not, to that extent, enjoy the benefit of any set-off, the extent of any recoverable costs exposure to Mr Tang was in the order of $20,000. 32 See, eg, Attorney-General (Botswana) v Aussie Diamond Products Pty Ltd [2009] WASC 299 at [15], [16], [21]-[22] (Kenneth Martin J). 33 See, eg, Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176 at [21] (Newnes JA). 34 [2019] NSWCA 48. 35 [2019] NSWCA 48 at [11]. -- 19 of 21 -- [2025] SASC 153 B Doyle J 16 80 It would still fall to be determined whether, given the lateness of the application, it was appropriate to require security for costs to be given in respect of that amount or a proportion of it. 81 That invites consideration of the second challenge to the judge’s reasoning on this issue, and the fact that she treated delay as militating against an order in Mr Tang’s favour notwithstanding the application was made shortly after he was formally joined as a party. 82 The judge’s reasons on this topic were set out earlier. That reasoning involved three propositions: (1) that there was no culpable delay by Betterway in joining Mr Tang – its decision to do so was affected by Ferngrove’s delay in complying with its discovery obligations; (2) when joinder was foreshadowed, no application for security for costs was foreshadowed; and (3) as the majority shareholder and controller of Ferngrove, Mr Tang could not disentangle himself from Ferngrove’s delay. 83 There is no challenge to the first and second propositions as a matter of fact, although the applicants disputed that there was an obligation to foreshadow that security for costs would be sought by Mr Tang. As to that, I agree, but it was open to Mr Tang to submit that he should only be joined on condition that security for costs be proffered. The fact that he did not is not decisive, but nor is it totally irrelevant. The real question in my view is whether the third proposition involved an error that might vitiate the exercise of discretion. In the end, I do not think that it does. First, whilst I do not consider it necessary finally to decide the question, it seems to me that a practical approach involving substance over form may be appropriate in relation to an interlocutory question such as this. Secondly, even if separate legal personality should be observed, so that Mr Tang is not responsible in any way for Ferngrove’s delay, that does not entail that the fact of Ferngrove’s delay, and any consequences for Betterway, are irrelevant in the exercise of the discretion. 84 In any event, even if I proceed on the basis that it is arguable that the judge may have relevantly erred in respect of Mr Tang’s application for security for costs, it is not inevitable that, re-exercising the discretion, an order for the provision of cash or equivalent security would be appropriate. There remained a real question whether, in all the circumstances of the case, and even accepting that Mr Tang might not be responsible, at least to the same extent, for any culpable delay on Ferngrove’s part, security should be ordered. I also think that if any award were to be appropriate, it would be modest. 85 In the circumstances, I do not consider that refusing leave to appeal risks a substantial injustice to Mr Tang. -- 20 of 21 -- [2025] SASC 153 B Doyle J 17 Disposition 86 The judge gave relatively detailed reasons for the exercise of discretion. There was no obvious error of principle made. Standing back, and considering all the circumstances, the outcome reached does not appear to be surprising or unfair. 87 Even if leave were to be granted, and a vitiating error demonstrated, it is not obvious that the outcome of a re-exercise of the discretion would be different and, if it were, any order for security for costs would inevitably be modest. 88 The application for leave to appeal does not raise any questions of general or public importance, and a refusal of leave would not cause substantial injustice to the applicants. I therefore refuse leave to appeal. I will hear the parties as to costs. -- 21 of 21 --