DGR Global Ltd v P.T. Limited [2025] QCA 122

SUPREME COURT OF QUEENSLAND CITATION: DGR Global Ltd v P.T. Limited [2025] QCA 122 PARTIES: DGR GLOBAL LTD ACN 052 354 837 (appellant) v P.T. LIMITED ACN 004 454 666 AS TRUSTEE OF THE ARMOUR ENERGY SECURITY TRUST (first respondent) PERPETUAL CORPORATE TRUST LIMITED ACN 000 341 533 AS TRUSTEE FOR THE ARMOUR ENERGY NOTE TRUST (second respondent) RICHARD SCOTT TUCKER AND ROBERT WILLIAM HUTSON IN THEIR CAPACITY AS THE FORMER RECEIVERS AND MANAGERS OF ARMOUR ENERGY LIMITED ACN 141 198 414 (IN LIQUIDATION), MCARTHUR OIL AND GAS LIMITED ACN 648 622 404 (IN LIQUIDATION), MCARTHUR NT PTY LTD ACN 649 856 315 (IN LIQUIDATION), ARMOUR ENERGY (SURAT BASIN) PTY LIMITED ACN 607 504 905, ARMOUR ENERGY (VICTORIA) PTY LTD ACN 167 298 240, COERA PTY LTD ACN 636 658 574, HOLLOMAN PETROLEUM PTY LTD ACN 126 728 498 AND CORDILLO ENERGY PTY LTD ACN 636 904 204 (ALL SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (third respondents) ADZ ENERGY PTY LTD ACN 672 466 198 (fourth respondent) SHUNKANG HOLDING GROUP CO. LIMITED (A COMPANY INCORPORATED IN THE PEOPLES REPUBLIC OF CHINA) (fifth respondent) BAKER & MCKENZIE (A FIRM) (sixth respondent) FILE NO/S: Appeal No 566 of 2025 SC No 15575 of 2023 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane – [2025] QSC 5 (Hindman J) DELIVERED ON: 1 July 2025 -- 1 of 33 -- 2 DELIVERED AT: Brisbane HEARING DATE: 16 May 2025 JUDGES: Mullins P and Bond JA and Kelly J ORDERS: 1. The appeal is allowed. 2. The orders made on 15 January 2025 are set aside. 3. Each of the following applications are dismissed: a. Amended application filed by the first and second respondents on 10 January 2025; b. Application filed by the third and fourth respondents on 18 December 2024; c. Application filed by the fifth respondent on 13 December 2024; d. Application filed by the sixth respondent on 13 December 2024. 4. The respondents pay the appellant’s costs of the applications referred to in paragraph 3. 5. The respondents pay the appellant’s costs of the appeal. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – PLAINTIFF’S OR APPLICANT’S IMPECUNIOSITY – GENERALLY – where the respondents applied under r 671(a) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) and s 1335 of the Corporations Act 2001 (Cth) (“Corporations Act”) for security for costs – where the primary judge ordered that the appellant, a public company, provide security for costs – where r 671(a) of the UCPR and s 1335 of the Corporations Act impose a precondition for an order of security of costs that there is “reason to believe” that the plaintiff will not be able to pay the defendants’ costs if ordered to pay them – where the objective circumstances must be sufficient to incline the mind toward accepting that the plaintiff will not be able to satisfy a costs order – whether, in applying the threshold test, the primary judge erred in principle by failing to undertake the kind of assessment upon which reason to believe could be based – whether there is reason to believe the appellant would be unable to pay an adverse costs order when it likely fell due PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – PLAINTIFF’S OR APPLICANT’S IMPECUNIOSITY – GENERALLY – where an applicant for security for costs bears the evidentiary burden of persuading the court to exercise its discretion to order security for costs – where the primary judge, -- 2 of 33 -- 3 in concluding the threshold question was satisfied, imposed a persuasive burden on the appellant to demonstrate that the power to order security for costs should not be exercised – where this Court, if satisfied the primary judge’s conclusion was affected by error, must express its own views on the threshold question – whether the primary judge erred at the stage of exercising the discretion by reversing the onus, placing it on the appellant – whether the respondents discharged their evidentiary burdens PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – DELAY – where the primary judge ordered on 22 July 2024 that the respondents file and serve any application for security for costs by 29 July 2024 – where no security for costs application was filed in compliance with the 22 July 2024 orders – where the respondents did not bring their applications for security for costs until December 2024 – where an application for security for costs should ordinarily be brought promptly – whether the primary judge incorrectly concluded that the delay in making the applications for security for costs was “adequately explained” – whether delay warranted the refusal of the respondents’ applications for security for cost APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – GENERAL PRINCIPLES – FUNCTIONS OF APPELLATE COURT – GENERALLY – where the decision below to order security for costs was a matter of practice and procedure – where the appellant contends that the primary judge erred in the exercise of the discretion to order security for costs by taking into account extraneous or irrelevant matters, mistaking the facts, failing to take into account material considerations and reaching unjust and unreasonable conclusions – whether the order for security for costs worked a substantial injustice to the appellant Corporations Act 2001 (Cth), s 1335 Uniform Civil Procedure Rules 1999 (Qld), r 671 Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; [2014] NSWCA 65, applied George v Rockett (1990) 170 CLR 104; [1990] HCA 26, applied House v The King (1936) 55 CLR 499; [1936] HCA 40, applied Monto Coal 2 Pty Ltd v Sanrus Pty Ltd [2019] 3 Qd R 143; [2018] QCA 309, applied Robson v Robson [2008] QCA 36, considered -- 3 of 33 -- 4 COUNSEL: A C Stumer KC, with R W Tooth, for the appellant A I O’Brien and A M Campbell, for the first and second respondents D de Jersey KC, with M W P Ziebell, for the third and fourth respondents P K O’Higgins KC, with L E Gamble, for the fifth respondent D B O’Sullivan KC, with S McCarthy, for the sixth respondent SOLICITORS: DLA Piper Australia for the appellant Corrs Chambers Westgarth for the first and second respondents Johnson Winter & Slattery for the third and fourth respondents Thomson Geer for the fifth respondent Hall & Wilcox for the sixth respondent An appeal from an order for security for costs [1] THE COURT: On 15 January 2025, the learned primary judge ordered the appellant, a public company, to provide by 14 March 2025, security for costs in an amount of $3.46 million. At that time, a four-week trial of the proceeding was to commence on 22 April 2025. The applications for security were made under r 671(a) of the Uniform Civil Procedure Rules 1999 (Qld) (“the UCPR”) and s 1335 of the Corporations Act 2001 (Cth) (“the Corporations Act”). Rule 671(a) imposes a precondition of making an order for security that the court be satisfied that “there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them”. Section 1335 imposes a precondition in terms that “it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in … its defence”. The appellant contends that the judge made errors in finding that the statutory preconditions were met and in the exercise of the discretion to award security. [2] Parts of the written and oral arguments before this Court were directed to the standard of review applicable on this appeal. The appellant styled each statutory precondition as posing a threshold or jurisdictional question which admitted of one legally permissible answer. Relying upon that classification, the appellant submitted that the standard of review to be applied to the threshold question was the “correctness” standard as explained in Warren v Coombes.1 To the extent that the judge was said to have made separate errors at the discretionary stage, the appellant submitted that the relevant standard of review was the “discretionary” standard as explained in House v The King.2 The appellant ultimately adopted a position that the outcome of the appeal did not turn on which standard applied because the asserted errors were said to have met the description of House v The King errors. The respondents argued that the entirety of the appeal was governed by House v The King and involved the “added restraint” or “particular caution” which an appellate court should exercise in relation to a matter of practice and procedure.3 1 (1979) 142 CLR 531 at 551–2. 2 (1936) 55 CLR 499 at 505. 3 Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 176–7. -- 4 of 33 -- 5 [3] In a particular case, the question whether the correctness standard applies to the threshold question on an appeal from an order for security for costs may assume importance. The answer to that question is not without difficulty. It would involve consideration of two recent decisions of the High Court in GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore4 and Moore (a pseudonym) v The King5 and the impact of those decisions on previous appellate court authority which applied House v The King principles to an appeal from an order for security for costs. The answer might also require some consideration of the separate language and contexts of r 671(a) and s 1335. The parties’ submissions on this appeal did not differentiate between the approach to the exercise of the power to order security for costs under the UCPR and under the Corporations Act. It would be inappropriate to decide the answer to the question without the benefit of submissions as to whether there is any relevant difference in the approach under each section. In Robson v Robson,6 in the following passage with which Muir JA disagreed and in respect of which McMeekin J made no comment, Keane JA alluded to a possible difference between the approach under each provision: “It seems to me that the text and structure of r 671 and r 672 require the court to treat the preconditions of making an order for security, which are stated in r 671, separately from the discretionary factors, which are stated in r 672. … Rule 671 and r 672 thus require the court to deal separately with issues which, under the statutory provisions in relation to the giving of security for costs by a corporate plaintiff, have been dealt with in a global fashion – ‘in all the circumstances of the case’ – where the principal concern of the court tends to be focused upon whether the litigation of the individual’s claim will be stifled by reason of the plaintiff’s lack of financial means if an order for costs is made.” (Footnotes omitted) [4] In this case, it is not necessary to resolve the question because, for the reasons which follow, the decision, at the threshold and discretionary levels of reasoning, was affected by House v The King errors. Being conscious of the need to regard the constraints confirmed in House v The King as “real constraints, to be respected [and] not perfunctorily discarded”7 and accepting that there is a need for particular caution and circumspection before an appellate court should interfere in a decision involving practice and procedure, the appeal should be allowed. The order for security for costs should not have been made as the threshold requirement was not satisfied and the inordinate delay in making the applications warranted their refusal. In appeals of this nature, generally an appellate court will not interfere unless in addition to error of principle, the appellant demonstrates that the order will work a substantial injustice to one of the parties.8 In this case, the order for security for costs has caused substantial injustice to the appellant. The order placed upon the appellant an urgent imperative to raise a significant sum of money to preserve existing trial dates and avoid its claims from being stayed, in circumstances where it was known to be uncertain whether the appellant could raise the required funding prior to the trial. Accordingly, the appeal must be allowed and the orders made below set aside. The 4 (2023) 97 ALJR 857, particularly at [16]. 5 (2024) 98 ALJR 1119, particularly at [15]. 6 [2008] QCA 36 at [19]. 7 Rigato Farms Pty Ltd v Ridolfi [2001] 2 Qd R 455 at 459 [23]. 8 Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd (2021) 9 QR 141 at [13]. -- 5 of 33 -- 6 same result would have been obtained if the correctness standard of appellate review was applied. Procedural and financial events prior to the applications for security [5] Prior to its liquidation, Armour Energy Limited (“Armour”), a company within a group of companies referred to as the Armour Group, issued fixed rate secured amortising notes to FIIG Securities Limited on conditions contained in an information memorandum. The issue of the amortising notes raised $55 million. The appellant claims that it acquired a material investment in Armour through the issue of the notes and its position as Armour’s largest shareholder.9 As part of the process of issuing the amortising notes, securities were provided over assets of the Armour Group. The first respondent became the security trustee under a security trust deed dated 25 March 2019. The second respondent became the note trustee under a note trust deed dated 25 March 2019. The securities were enforced and the third respondents were appointed as receivers and managers to companies in the Armour Group. The fourth respondent acquired a significant portion of the amortising notes and was involved in the appointment of the third respondents. The fourth respondent is alleged to be a subsidiary of the fifth respondent. The sixth respondent (“Baker & McKenzie”) acted as the lawyers for the fourth respondent in relation to its acquisition of the notes and the appointment of the third respondents. The appellant proposed various deeds of company arrangement to creditors and shareholders of Armour and its subsidiaries.10 The proposals failed, and Armour was placed into liquidation. [6] In December 2023, the appellant commenced separate proceedings, each against the first to fourth respondents. On 8 December 2023, the appellant commenced a proceeding by originating application in which it sought a declaration that, upon its payment of the secured debt owed by Armour under the amortising notes, the appellant was entitled to be subrogated to the rights of the first and second respondents under the security documents (“the subrogation proceeding”). On 21 December 2023, the appellant commenced a proceeding by originating application in which it sought an order that the appointment of the receivers was not valid (“the validity proceeding”). [7] On 22 December 2023, the originating applications were returnable before the judge. On that date, the judge made orders in each proceeding that any application by the first to fourth respondents for security for costs be filed and served by 5 February 2024 and made returnable for hearing on 14 February 2024. No applications for security for costs were filed and served in accordance with those orders. [8] The appellant publishes annual, half yearly and quarterly financial reports and provides other market disclosures. On 17 January 2024, the appellant announced to the ASX that it had entered into a facility agreement with Choice Investments (Dubbo) Pty Ltd (“the Choice Loan”). The announcement noted that Choice had agreed to provide funding to the appellant in tranches up to $15 million. [9] On 5 February 2024, the date by which any security for costs application had been ordered to be filed, Baker & McKenzie, then acting for the first to fourth respondents, wrote to the appellant’s then lawyers, HopgoodGanim, proposing “an amendment” 9 RB 1702. 10 RB 1702. -- 6 of 33 -- 7 to the 22 December 2023 orders to the effect that any application for security for costs might be filed and served by 15 February 2024. On 8 February 2024, HopgoodGanim responded in terms that the proposed extension might “be practicable” if the evidence in support of any security for costs application was filed by 15 February 2024. At the time, the parties did not advise the judge that, despite the terms of the 22 December 2023 orders, the first to fourth respondents were still contemplating making an application for security for costs. [10] By a letter dated 13 February 2024 to HopgoodGanim, Baker & McKenzie requested security for costs in both the subrogation proceeding and the validity proceeding. The letter stated that the first to fourth respondents were concerned that the appellant was impecunious and, in support of that statement, referenced the appellant’s published financial reports. Relevantly, the letter noted that the appellant’s annual report for 30 June 2023 revealed a deficiency in working capital and that its current liabilities exceeded its current assets. The letter stated that having regard to the annual report for 30 June 2023 and the latest quarterly report published on 31 January 2024, the appellant did “not appear objectively likely to be in a position to raise further funding by way of new borrowings” and there were “significant constraints on [the appellant’s] ability to realise the assets on which it might seek to rely to meet an adverse costs order”. The letter stated that “[t]o the knowledge of the respondents, no other person is standing behind the litigation sought to be progressed by [the appellant]”. The letter demanded that the appellant provide security for costs in the amount of $675,000. [11] By a responsive letter dated 5 March 2024, HopgoodGanim denied any entitlement on the part of the first to fourth respondents to an order for security for costs and noted that the appellant’s audited financial statements revealed that the appellant, as at 30 June 2023, had net total assets of $108 million. The letter relevantly made the following statements. It was unnecessary for the appellant to respond to the first to fourth respondents’ “speculative observations as to what commercial funding arrangements” were or might be available and the appellant could and would “obtain funding by way of new borrowings should it become necessary for it to do so”. As to whether any person was then standing behind the litigation, there was no need as the appellant was “a substantial company who is of sufficient means to litigate without that”. The letter concluded as follows: “… our client anticipates that it will shortly be seeking leave to file an amended originating process and pleadings which will contemplate both the consolidation of [the subrogation proceeding] and [the validity proceeding] and the inclusion of new relief which our client intends to seek in connection with the loss and damage which has now crystallised. Draft documents reflecting these amendments will be circulated to you as soon as possible for your clients’ consideration. Whilst our client expects that any security for costs application would be unsuccessful in any event for the reasons explained above, any request or application seeking that our client provide security as to costs should obviously take these amendments into account… For the reasons above, our client anticipates that a security for costs application would be unsuccessful and is in any event premature. -- 7 of 33 -- 8 We anticipate that we will be in a position to circulate draft documents reflecting the amended relief and pleadings which our client intends to seek by the end of the week. Once those documents have been received, we invite your clients to consider whether they still intend to pursue their application for security for costs and, if so, provide an updated quantum for our client’s consideration. Our client will of course consent to your clients being afforded an extension of time to file and serve their application for security for costs in the circumstances if your client still wishes to pursue that course notwithstanding the matters above.” [12] By a letter dated 12 March 2024, Baker & McKenzie responded to the 5 March 2024 letter. The response materially stated that the first to fourth respondents’ position “remain[ed] unchanged by your letter”, they would “proceed with their foreshadowed [a]pplication” and the application “ought to be heard before any [a]pplication to consolidate the proceedings”. [13] On 15 March 2024, the appellant published its half yearly report for the period ending 31 December 2023. The half yearly report identified total net assets of $49.37 million and a loss after income tax expense for the half-year amounting to $32.74 million. The report identified the net impairment and fair value movements in the Armour assets owned by the appellant as being $25.52 million. As to the Choice Loan, the report stated that the lender had agreed to provide funding in tranches up to $15 million and that, since 17 January 2024, the appellant had drawn down $5 million. The report noted that the Choice Loan was secured over the appellant’s assets, repayable on 30 November 2024 and subject to an interest rate of 20 per cent per annum, which was capitalised and payable on maturity. [14] On 18 March 2024, the judge made orders which required the appellant and the first to fourth respondents to take certain procedural steps. Relevantly, by 22 March 2024, the appellant was ordered to file and serve any application to amend its originating process and pleadings and for the consolidation of the proceedings and the first to fourth respondents were ordered to file and serve any application for security for costs. The orders provided for a timetable for affidavits and outlines of argument. The contemplated applications were listed for a one-day hearing before the judge on 12 April 2024. [15] On 22 March 2024, the date by which the 18 March 2024 orders required the first to fourth respondents to have filed any security for costs application, Baker & McKenzie wrote to HopgoodGanim in these terms: “We refer to the orders made … on 18 March 2024. [The appellant’s] interim report for the period ended 31 December 2023 published on 15 March 2024, which we have now had an opportunity to consider, reiterates our clients’ concerns regarding [the appellant’s] financial position. The report reflects that: (a) there have been reported losses of $99.3 million over an 18 month period; (b) … -- 8 of 33 -- 9 (c) [the appellant’s] market capitalisation does not accord with [the appellant’s] net asset position; (d) the terms of the facility with Choice … are not reflective of a company with a strong credit position but rather of a high risk company where the lender requires a substantial fee to compensate it for the risk of loss. Notwithstanding those concerns, our clients will not be pursuing security for costs on 12 April 2024. Rather, our clients take the view that the more appropriate course of action is to consider the forthcoming amendments to [the appellant’s] case, confirm which new parties [the appellant] proposes to add and allow for [the appellant’s] case to crystalise. All of our clients’ rights are reserved, including the right to seek security for costs in the future.” [16] No application for security for costs was filed and served in accordance with the 18 March 2024 orders. The time for compliance with the orders came and went without the parties advising the judge that, despite the terms of the 18 March 2024 orders, the first to fourth respondents were reserving to themselves the right to apply for security for costs in the future. [17] On 22 March 2024, in accordance with the 18 March 2024 orders, the appellant filed its application to amend the originating application and pleadings and to consolidate the proceedings. The amendments sought the joinder of the fifth respondent and Baker & Mackenzie. On the same day, the first to fourth respondents filed an application seeking summary judgment or alternatively striking out the appellant’s subrogation claim as made in the subrogation proceedings. [18] On 3 April 2024, the validity proceeding and the subrogation proceeding were listed for a ten day trial to commence on 2 December 2024. [19] On 30 April 2024, the appellant released its quarterly activities report for the period January to March 2024. That report identified the Choice Loan and again noted its interest rate, date for repayment, that it was secured by the appellant’s assets and the amount then advanced as being $5 million. Two other loans were identified by the report as follows. On 16 December 2021, the appellant had entered into a loan with EFH by which the appellant had been advanced the equivalent of $3,116,862.12 (“the first EFH Loan”). Relevantly, the first EFH Loan was described as secured by 12 million ordinary shares held by the appellant in Atlantic Lithium Limited (“Atlantic Lithium”), bearing interest at 3.5 per cent per annum and repayable on 16 December 2024. On 21 September 2023, the appellant had entered into another loan with Equities First Holdings LLC (“EFH”) by which the appellant had been advanced £911,121 (“the second EFH Loan”). Relevantly, the first EFH Loan was described as secured by 15 million ordinary shares held by the appellant in SolGold PLC (“SolGold”), bearing interest at 3.75 per cent per annum and repayable on 21 September 2025. The report also indicated that the appellant had positive cash and cash equivalents for the quarter of $4.080 million, but only after taking account of $4.75 million of the proceeds of borrowings from the Choice Loan. For the quarter, the appellant had a negative cash flow from its operating activities of $1.18 million. -- 9 of 33 -- 10 [20] On 9 May 2024, Cooper J heard the interlocutory applications filed on 22 March 2024. On 17 May 2024, Cooper J made orders which dismissed the third and fourth respondents’ application, consolidated the proceedings, joined the fifth respondent and Baker & McKenzie to the consolidated proceedings and granted leave to amend the statement of claim. The consolidated proceedings were listed for management on the Commercial List by the judge. [21] On 19 July 2024, the new lawyers for the first and second respondents, Corrs Chambers Westgarth, wrote to the appellant’s new lawyers, DLA Piper, and again raised the issue of security for costs. The letter stated that its purpose was to put the appellant on notice that the first and second respondents then held “serious concerns” that the appellant would not be able to satisfy any adverse costs order made against it in the proceedings. The letter stated that the first and second respondents intended to file an application for security for costs failing agreement about the provision of security. The letter referenced the appellant’s half yearly report which had been released on 15 March 2024 and noted the loss suffered by the appellant, its working capital deficiency of $5.6 million and a $1.457 million decline to its cash balance. The letter observed that the appellant’s net asset figure of $49.37 million had been calculated by reference to non-current assets totalling $65.69 million and the appellant had transferred title to at least some of its assets comprising shares to financiers as security for loans. The letter concluded that there were “plainly genuine concerns as to [the appellant’s] solvency”. [22] On 22 July 2024, the judge reviewed the consolidated proceedings and made an order that the respondents file and serve any application for security for costs by 29 July 2024. [23] By a letter dated 25 July 2024, DLA Piper responded to the 19 July 2024 letter. The response stated that the appellant would not provide any security and would oppose any application for security. By a letter dated 25 July 2024, Baker & McKenzie’s lawyers, Hall & Wilcox, wrote to DLA Piper, referenced the 19 July 2024 letter and noted that Hall & Wilcox had undertaken a similar analysis of the appellant’s financial position and arrived at the same conclusions as those expressed in the 19 July 2024 letter. The Hall & Wilcox letter concluded by stating that the sixth respondent intended to apply for an order that the appellant provide security for costs and would, in the absence of a satisfactory proposal, proceed with any such application without further notice. By a letter dated 30 July 2024, DLA Piper responded to Hall & Wilcox noting that the appellant would oppose any application for security for costs. [24] On 31 July 2024, the appellant released its quarterly activities report for the period April to June 2024. That report provided the following commentary upon the consolidated proceedings: “In December 2023, [the appellant] commenced legal proceedings in the Supreme Court of Queensland in relation to the administration and receivership of the Armour Group (Proceedings). [The appellant] continues to prosecute the Proceeding (as defined in our previous Jan – Mar 2024 Quarterly Report). In May 2024, [the appellant] successfully defended an application by the Defendants to strike out or summarily dismiss its claim, and the Court awarded [the appellant] its costs for defending that application. -- 10 of 33 -- 11 [The appellant] also succeeded in its own application to amend its claim and join [the fifth respondent] and Baker & McKenzie as parties to the Proceeding. … The Court recently ordered further timetabling directions for the Proceeding. Under that timetable, the pleadings will close in the coming weeks, to be followed by disclosure and the filing of evidence. The matter remains listed for a 10-day trial in early December 2024.” [25] The report also noted that the appellant’s consolidated cash flow for the quarter was negative $424,000, its net cash flow from operating activities was negative $1.74 million and the cash amount or cash equivalents at the quarter end was $1.92 million. The report noted the existence of the Choice Loan and the first and second EFH Loans. [26] On 30 August 2024, during another review hearing, the issue of security for costs was raised by the judge.11 On that occasion, the judge said “… I assume no one’s pressing security for costs now. No one complied with those orders. Is that the position?”. In reply to this question, senior counsel for Baker & McKenzie and counsel for the third and fourth respondents separately said, “that’s the position”.12 [27] On or about 30 September 2024, the appellant released its annual report for the year ending 30 June 2024. The annual report included an independent auditor’s report. The appellant’s balance sheet as at 30 June 2024 revealed total assets of $47.32 million, total liabilities of $17.22 million and net assets of $30.1 million. In terms of the appellant’s non-current assets which totalled $45.1 million, approximately $39 million comprised shares in listed companies, including Atlantic Lithium and SolGold, and $2.78 million comprised exploration and evaluation assets. Over the 12 months to 30 June 2024, the appellant’s net assets had decreased by $78.7 million. That decrease was said to have resulted from the net impairment of the Armour assets, some exploration and evaluation assets having been written off, a decline in the fair value of listed securities, the sale of shares in Atlantic Lithium and an increase in borrowings. It was noted that the appellant was in breach of loan covenants and there was a working capital deficiency of $9.78 million, which was said to be primarily attributable to the borrowings from Choice and EFH and a tax liability of $1.5 million. The report contained a statement that the appellant’s directors considered that the appellant had sufficient resources to meet its obligations as and when they fell due. The report also stated that the directors were confident that the deficiency in working capital would be addressed by “new financing facilities that are currently under negotiation and are expected to settle before the end of October”. The report went on to note that the appellant had financing options and the option to sell listed investments. The market value of the appellant’s listed investments as at 30 June 2024 was stated as $39.45 million. [28] The 30 June 2024 annual report contained a note regarding “Future Exploration”. The note stated that the appellant had “certain obligations to expend minimum amounts on exploration in tenement areas, or obligations to complete defined exploration programs (with budgets submitted)”. The note went on to state that these obligations might be varied from time to time and were expected to be fulfilled in the normal course of operations. The note then stated: 11 RB 493 [63]. 12 Ibid. -- 11 of 33 -- 12 “Committed at the reporting date but not recognised as liabilities, payable: Within one year: $19,869,595 One to five years: $11,751,248 … To keep the exploration permits in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, [the appellant] has the option to negotiate new terms or relinquish the tenements. [The appellant] also has the ability to meet expenditure requirements by joint venture or farm-in agreements.” [29] In terms of the accounting policy for the exploration and evaluation assets, the annual report contained the following statement: “Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing. A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.” [30] On 8 October 2024, DLA Piper, on behalf of the lawyers acting for all parties in the consolidated proceedings, sent an agreed email to the judge’s associate. The material parts of the 8 October 2024 email were to the following effect. The parties’ legal advisers (represented by counsel and solicitors) had conferred and agreed that, primarily by reason of difficulties with expert evidence, it was not possible to prepare the consolidated proceedings for trial by 2 December 2024. The parties wished to vacate the trial dates. The parties were optimistic that the trial of the consolidated proceedings would take three to four weeks. The parties had been in discussions about further directions including a possible direction allocating two days in December 2024 for the resolution of any interlocutory disputes and a review hearing. [31] Notably, the possibility of any future application for security for costs was not raised in the 8 October 2024 email to the judge’s associate. Further, the discussions referenced in that email between the parties’ lawyers about further directions had not involved any suggestion that a security for costs application would be made by any respondent at a future time.13 13 RB 494 [67]. -- 12 of 33 -- 13 [32] By an email sent to the parties’ lawyers on 9 October 2024, the judge’s associate materially advised that the judge was prepared to vacate the existing trial dates and would relist the proceedings for trial in the four weeks commencing Tuesday 22 April 2025. The email advised the parties that the new trial dates were “immovable”. The email concluded by noting that any further interlocutory applications could be accommodated in the week commencing 18 November 2024. [33] On 10 October 2024, the trial dates listed for December 2024 were vacated and a trial of four weeks was listed to commence on 22 April 2025. [34] On 23 October 2024, the appellant was granted leave to file and serve a second further amended statement of claim which included a tortious conspiracy claim against the third to fifth respondents. That grant of leave had no impact upon the trial dates and notably did not result in an increase in the length of the trial. [35] On 31 October 2024, the appellant released its quarterly activities report for the period July to September 2024. The report provided the following update on the consolidated proceedings: “Since the last Quarterly Report, the following has occurred: [The appellant] has applied for and obtained leave of the Court to amend its claims and pleadings to include additional claims for tortious conspiracy by unlawful means against all of the Defendants other than the [first and second respondents]. Leave for [the appellant] to amend to make similar tortious claims against the [first and second respondents] is to be heard in mid- November 2024. Related to [the appellant’s] tortious conspiracy claims, in September 2024 [the appellant] applied for disclosure of certain privileged documents from the Defendants. Shortly after the filing of the application, … [the fourth and fifth respondents], waived privilege over various documents which were produced to [the appellant]. So too were privilege documents produced by … Baker & McKenzie. The application with respect to the [the first and second respondents] is to be heard in mid- November 2024. In October 2024, the Court moved the 10 day trial listed in December 2024 and listed it as an 18 day trial commencing on 22 April 2025. Disclosure by the parties is ongoing and there are various interlocutory disputes concerning disclosure that also remain to be heard in mid-November 2024. As a result of [the appellant] amending its claims, the pleadings have not yet closed and the Defendants are to file amended Defences. The Court recently ordered further timetabling directions for the Proceeding. Under that timetable, the filing of lay and expert evidence is to be finalised by February 2025.” -- 13 of 33 -- 14 [36] On 25 November 2024, the appellant issued an ASX announcement advising that it had signed a term sheet in relation to a proposed facility agreement with Samuel Holdings Pty Ltd as trustee for the Manumbar Pastoral Trust (“Samuel”). The announcement described the proposed facility agreement (“the Samuel facility”) as being subject to shareholder approval. The Samuel facility was to fund the refinancing of existing debt facilities, provide working capital and funding for payment of ongoing legal fees for the litigation. The funding was to be in two tranches, an initial tranche up to $9 million with the potential for a further tranche of $14.5 million. The announcement noted that Samuel was a related party to the appellant and controlled by Mr Nicholas Mather, the appellant’s Managing Director and CEO, who held a 17.01 per cent interest in the appellant. The announcement noted that the Choice Loan was due to be repaid and to facilitate the refinancing of the Choice Loan, it was proposed to enter a deed of assignment and novation with Samuel. [37] The announcement contained a statement that the Samuel facility “substantially provides the necessary funding runway for [the appellant] to see, over the next 2 years, the outcomes of the feasibility study on SolGold’s Cascabel project and development of financing strategies for the SolGold exploration portfolio”. The announcement went on to note that the appellant expected “substantial improvement in [SolGold’s] financial metrics” and regarded SolGold’s current share price as “unjustifiably discounted”. The appellant’s shareholding in SolGold was stated to be “an important asset … with considerable potential given the compelling long term supply demand imbalances of the copper market”. [38] At around this time, a circulating resolution was distributed to the appellant’s board in respect of the Samuel facility which materially noted: “[The appellant] requires significant additional funding in order to repay existing loans when they fall due and to provide sufficient working capital to fund the current legal proceedings and the current operations of the company. … the Directors have pursued a number of funding options but these have proven to be extremely difficult and expensive to put in place due to [the appellant’s] lack of revenue and the lack of any assets that the lenders will accept to hold as security.” [39] Samuel then paid out Choice and took over the Choice Loan on its existing terms. [40] On 27 November 2024, Hall & Wilcox wrote to DLA Piper foreshadowing a security for costs application. The letter asserted that “recent financial information” had revealed that the appellant’s financial circumstances had become “more parlous”. The letter contended that the appellant’s claims had “substantially expanded, by the addition of an extensive new conspiracy case” since 25 July 2024. The letter observed that the terms of the proposed facility agreement with Samuel were onerous and implied that the appellant was financially distressed because it was able to meet maturing financial obligations only by borrowing money from a major shareholder on very disadvantageous terms. On 29 November 2024, the lawyers for the third and fourth respondents wrote to the appellant’s lawyers foreshadowing a security for costs application. On 3 December 2024, at a hearing before the judge, orders were made requiring the respondents to file any security for costs application by 14 December 2024. The respondents thereafter filed applications for security for costs. -- 14 of 33 -- 15 The judge orders security for costs [41] On 10 January 2025, the applications for security for costs were heard by the judge. [42] The respondents’ affidavits filed in support of their applications did not explain the reasons why the respondents had not complied with the 22 July 2024 orders and then not sought, or even raised the issue of, security for costs between July and late November 2024.14 The respondents adduced no valuation evidence in relation to the appellant’s assets. The substantive focus of the respondents’ evidence was on the costs they had incurred and were likely to incur in the future conduct of the consolidated proceedings. [43] The appellant relied upon an affidavit of Mr Prescott, the partner of DLA Piper responsible for the day to day conduct of the consolidated proceedings on behalf of the appellant. Mr Prescott provided his opinion, based on his experience, that if the trial were to finish in May 2025 and judgment was delivered in August 2025, a costs assessment resulting in costs becoming due and payable would not occur before March 2026. Before the judge and on this appeal, that contemplated timeframe was accepted by the respondents. [44] Mr Prescott deposed to some matters on information and belief from Mr Hassell, a non-executive director of the appellant, Mr Walker, the appellant’s company secretary and chief financial officer, and Mr Mather. The appellant’s evidence in response to the applications essentially collected the appellant’s published financial information, focused on the effect of the delay in bringing the applications and disputed the various estimates of costs. Perhaps conscious of the onus of proof on the application, the appellant’s evidence did not provide working estimates of its likely future expenses or explain how, and to what extent, it intended to utilise the working capital provided by the Samuel facility in the period to in or about April 2026. [45] Mr Prescott deposed to the following matters on information and belief from Messrs Mather and Walker: (a) There were no reasons of which they were aware, that the Samuel facility would not be approved by the appellant’s shareholders. (b) The earliest realistic date from which the Samuel facility might be approved was the end of February 2025. (c) Under the Samuel facility, the net amount of working capital that would be available to the appellant would be approximately $8 million with interest on the Samuel facility being paid by the appellant drawing down on the Samuel facility without the appellant being required to fund the interest payments from some other source. (d) Since 29 July 2024, when the respondents had not filed any security for costs application pursuant to the 22 July 2024 orders, the appellant had conducted its affairs and proceeded on the basis that no security for costs applications would be made by the respondents. 14 Such evidence as touched upon the issue – see RB 1432 [8], 1469 [6] to [8], 1507 [16] and [19] to [20] – shed no meaningful light on what the explanation might have been. -- 15 of 33 -- 16 (e) The appellant would not have the funds available to meet an order for security for costs in the near future and would need to raise additional funds for that purpose if it were ordered to provide security. [46] Mr Prescott deposed to the following matters on information from Mr Hassell: (a) Since 29 July 2024, when the respondents had not filed any security for costs application pursuant to the 22 July 2024 orders, the appellant had sought funding to refinance its existing facilities and provide working capital including to fund its legal costs of the litigation. (b) The proposed funding negotiated with Samuel did not include funding for any security for costs because no application for security for costs had been made in compliance with the 22 July 2024 orders and no application for security had been threatened after 29 July 2024. (c) It was not anticipated that the appellant would need to provide for security for costs when it negotiated with Samuel. (d) If the appellant was ordered to pay security for costs, it could not pay any significant amount within 42 days and would need to take steps to obtain further funding to provide security for costs in circumstances where the availability and or terms of any such funding was uncertain. [47] Mr Prescott had been informed by Mr Walker that if the appellant lost at trial and was ordered to pay the respondents’ costs on the standard basis, the appellant would need to obtain Samuel’s consent before selling the appellant’s securities to meet those liabilities. Mr Prescott had been informed by Mr Mather that if it became necessary and, in the absence of alternative options, Samuel would agree to give the consents and releases to allow the sale of the appellant’s securities or assets as required to meet the appellant’s liabilities, including the amounts then owing to Samuel and in respect of any future costs order made against the appellant in the consolidated proceedings. [48] On the day of the hearing of the applications, Baker & McKenzie sought leave to file an affidavit which exhibited two documents pertaining to Samuel’s financing arrangements with its lender Global Credit Investments Pty Ltd (“Global Credit”), being a document headed “Samuel Holdings Facility Agreement dated 22 November 2024” (“the GC Agreement”) and “Samuel Holdings General Security Deed dated 22 November 2024” (“the GC Deed”). The definitions contained in the GC Agreement applied to the GC Deed. By clause 3.1 of the GC Deed, Samuel granted a security interest in the Collateral to the lender. The term “Collateral” was defined to mean all of Samuel’s rights, property and undertaking of whatever kind, whether present or after acquired, and in respect of which Samuel had a sufficient right, interest or power to grant a security interest. The GC Deed then contained a Schedule 1 headed “Collateral” which identified assets to be included as Collateral by reference to headings Motor Vehicles, Aircraft, Watercraft, Designs, Patents, Plant Breeder’s rights and Trade Marks. Some of these items were marked “N/A”. By clause 4.1 of the GC Deed, Samuel could not dispose of any Collateral unless permitted to do so. Before the judge there was a contested question of construction as to whether Samuel’s charge over the appellant’s assets was “Collateral” for the purpose of clause 4.1. Assuming that question was decided adversely to its interests, the appellant relied upon the definition of “Permitted Disposal” as contained in the GC Agreement which contemplated that the lender might consent to the disposal of -- 16 of 33 -- 17 any asset, with such consent not to be unreasonably withheld if the proceeds of the disposal were to be fully applied towards prepayment of the facility provided by GC. The GC Agreement identified two parcels of land over which the security extended. Valuations of the two parcels had been provided by Samuel at its cost as a condition precedent to the facility. There was no evidence about the amount of the indebtedness owed by Samuel to Global Credit. Nor was there any evidence as to the value of the two parcels of land. [49] On 15 January 2025, the judge ordered that the appellant provide security for costs by 14 March 2025 in the total amount of $3.46 million. The judge’s reasons included a statement that they were “necessarily presented in a summary type way to ensure the proceeding continues to progress and the parties have the best prospects of maintaining the scheduled trial dates”. The reasons were structured by reference to the “Threshold test” and “Discretionary matters”. [50] In the context of considering the threshold test, the reasons state: “[4] There does not appear to me to be any significant dispute between the parties as to the relevant threshold test to be applied: is there reason to believe that the corporate plaintiff will not be able to pay the defendants’ costs if ordered to pay them – see Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2018) 3 Qd R 143 at [42]-[43]. The plaintiff has asked me to take care not to convert that test, as some cases have suggested, into one that considers simply the risk of the plaintiff being unable to pay costs. A risk assessment approach is not the applicable test. Instead, I must be positively persuaded to a belief (which need not be to the balance of probabilities standard) that the plaintiff will in fact be unable to pay relevant costs at some generally identified future point in time at which those costs would become payable. It is not enough that I consider there just be some risk of that occurring. [5] I am persuaded that the threshold test is met in this case. I am positively inclined to accept, and do accept, that the plaintiff will be unable to pay a relevant adverse costs order made against it at the conclusion of an unsuccessful claim at the time such costs would likely became payable (say in the first half of 2026 – allowing for a judgment to have been delivered early in the second half of 2025). I note that a corporation will be unable to pay for the purpose of the test if it can only do so given an extended period of time to realise assets – see Beach Petroleum NL v Johnson (1992) 7 ACSR 203, 205. That does not mean a corporation is relevantly unable to pay unless it has liquid funds on hand – see Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2018) 3 Qd R 143 at [50] per Gotterson JA.” [51] Later in the reasons, the judge referred to being “persuaded to the belief that the [appellant] will be in a significantly worse financial position come the first half of 2026 in terms of its ability to pay an adverse costs order”. Six matters were identified as informing that belief. The reasons dealt with those matters as follows: -- 17 of 33 -- 18 “[11] First, as mentioned above, I take into account that liquifying the amount required to meet an adverse costs order would require a significant portion of the plaintiff’s assets to be sold and that would not ordinarily be a quick process. Any type of ‘fire sale’ is likely to adversely affect the value of the assets to be sold. Some of the types of assets held by the plaintiff, such as mining tenements, may not be readily saleable. [12] Insofar as the plaintiff’s assets that could be sold include large amounts of shares (for example in SolGold) I do think that regard has to be had to the likelihood that the price the shares could be sold at would be adversely affected by a ‘flooding of the market’ which I do not consider could be wholly avoided even with staged sale given the amount of shares involved. [13] Second, I am not prepared to positively conclude that the price of the shares to be sold in both SolGold plc and Atlantic Lithium Limited will be significantly less than the current share price by the time those shares came to be sold simply by reason of an apparent recent downward trend in the value of those shares. But I am not prepared to infer that they would go up: some small allowance for the downward trend continuing is allowed. [14] Third, without finally determining the various construction arguments propounded by the parties about the Facility Agreement and GSA underlying the financing to be obtained by Samuel, which it is then extending to the plaintiff, I do take into account that there does appear to be real hurdles in the way of liquidation of the assets of the plaintiff over which Samuel will hold security, because of obligations Samuel will owe to its own lenders. [15] Fourth, I take into account that the expenditure that has been allowed for to be covered by the Samuel refinance does not, in a significant way, account for anticipated spending of the plaintiff that was referred to in the annual report for the purpose of maintaining tenements. The annual report (page 80) refers to the Group having certain obligations to expend minimum amounts on exploration in tenement areas or obligations to complete defined exploration budgets. A spend of $19.8m over the next year is identified, and a further $11.7m over the next 1 to 5 years. It describes the amounts as ‘Committed at the reporting date but not recognised as liabilities’. Whilst it is for the management of the plaintiff to work out what it will actually spend on such maintenance costs, and it seems to suggest it is planning to spend far less than those amounts referred to in the annual report, I would infer that in fact the expenditure will inevitably be more, or, the value of the assets would be adversely affected by the failure to expend the appropriate maintenance costs. Either way, the plaintiff’s overall financial position will be worse than anticipated. -- 18 of 33 -- 19 [16] Fifth, I am not prepared to conclude that the terms of the refinance with Samuel are per se a bad deal for the plaintiff. What I take from the Samuel refinance and its terms is that the plaintiff’s financial position is such that it can not secure tier one or tier two type lending, or lending without some contingency fee type arrangement linked to the outcome of the litigation, and that is suggestive of a corporation facing financial difficulties now and forward looking. [17] Sixth, there are several matters that point to the plaintiff’s financial deterioration including reduced cash at the bank, the Samuel refinancing, the deficit in current assets over current liabilities, etc, but I also take into account that there are upcoming liabilities to be dealt with where there is no apparent plan of how those liabilities are to be paid – note in particular the substantial entries of about $1.5m and $9.4m in the table at page 75 of the annual report. There also appears to be a loan that was repayable on 16 December 2024 to EFH in the amount of about now $3.5m which little information regarding repayment has been provided (page 4 of Appendix 5B of the quarterly activity report ending September 2024).” [52] At paragraph 18 of the reasons, the judge expressed the conclusion that the six matters had persuaded her Honour to “a belief to the requisite level that the plaintiff will not be in a position to meet an adverse costs order against it at the time that such an adverse costs order would become payable”. Paragraph 19 of the reasons then reads “The defendants’ onus to satisfy the threshold test having been satisfied, the onus shifts to the plaintiff to demonstrate a reason why security should not be ordered.” [53] In terms of the discretionary considerations, the reasons dealt with the delay as follows. Reference was made to the series of orders which had directed applications for security to be made by identified dates. As to the 22 December 2023 and 18 March 2024 orders, “little weight” was given to the non-compliance with those orders because the appellant’s “express position … was that any application for security for costs at those times would be premature in circumstances where [the appellant] intended to consolidate its two proceedings, otherwise amend its proceeding, and add additional defendants to the proceeding”. The judge concluded that “[t]he position of the [respondents] at the time appears to have been accession to the [appellant’s] position … such that no applications for security were then filed.” The reasons note that the first to fourth respondents had expressly reserved their rights to apply for security for costs at a later point in time. The reasons described the non-compliance with the 22 July 2024 orders as being “of more concern”. The 22 July 2024 orders were described as having provided for “a logical time for applications for security for costs to be determined as any later applications might imperil the then assigned trial dates”. Reference was made to the lawyers’ correspondence which passed between 19 July and 30 July 2024. As to the appellant’s lawyers’ final letter dated 30 July 2024, the reasons described the appellant’s response as having “advanced the proposition that if the [respondents] were to proceed with an application for security for costs on the basis of the material the [respondents] were then able to put before the court, the application would fail”. The reasons observe that there was “much to be said for that proposition” and conclude that the respondents “must have thought so too, as consequently no -- 19 of 33 -- 20 applications for security for costs were brought at the time.” Notably, the reasons then state “[t]he issue of security of costs did not arise again until 27 November 2024.” [54] The reasons dealt with the submissions on delay as follows: “[30] The defendants point to two material changes of circumstances that justify the court entertaining the applications now. [31] The first concerns what is alleged to be further information about the plaintiff’s alleged deteriorating financial position. That is submitted to be evidenced through documents not available at the time that the defendants were previously directed to file applications for security for costs. In particular, reliance is placed on: (a) the … annual report for the year ending 30 June 2024 that is dated 30 September 2024; (b) the … quarterly activity report for the quarter ending September 2024; (c) the … public announcement on 25 November 2024 in respect of the Samuel refinancing facility – terms of that facility were disclosed to the defendants in late December 2024 as part of the plaintiff’s evidence in the substantive proceeding. [32] The second concerns the plaintiff’s recent indication that it would be seeking leave to further amend its case. On 29 November 2024 the appellant served an interlocutory application seeking to file and serve a third further amended statement of claim. That has been the subject of a different hearing. [33] Together the defendants say having regard to those two matters, that the complexity of the plaintiff’s case has grown whilst its financial position has deteriorated. [34] Even considering that: (a) the proceeding (albeit in a different form and with different substance) has been on foot since late 2023; (b) there have been three directions made by the court in respect of the time limited for the filing of security for costs applications; (c) the applications for security for costs have been made significantly after those times; (d) the scheduled trial is only some 3.5 months away (but noting the time between when the applications last should have been filed and heard and the then trial dates was about 3.5 months also), -- 20 of 33 -- 21 I do not consider those matters in this case result in the position that either security for costs should not be awarded at all, or not at all in respect of past costs. [35] The delay in making the applications is in my opinion, adequately explained and not of a nature to deprive the defendants of security for costs of itself.” (footnotes omitted) [55] The reasons dealt with the appellant’s evidence as to how it had conducted its financial affairs in the absence of an application for security for costs having been made as follows: “[38] I do not find that evidence particularly persuasive. A plaintiff is always at risk of having to provide security for costs, even if it has defeated an earlier application for security for costs. Security for costs, even late security for costs, can be appropriate where there has been a material change of circumstances, particularly with respect to the financial position of the plaintiff. [39] The plaintiff is the person in the very best position, having the most evidence to know what is its financial position at any point in time and what might be inferred from that into the future. [40] The plaintiff has always maintained and continues to maintain in this application that the threshold test for a security for costs order is not met. I disagree considering the evidence before me at the present time. [41] The plaintiff should have always been prepared for the possibility of being ordered to put up security for costs. The issue never fully went away. [42] I accept that the plaintiff in fact has not prepared itself for the possibility of being ordered to put up security for costs and that is a separate matter considered below. [43] In my view, the circumstances of this case are not where the fact that the plaintiff has acted on an assumption that no security for costs would be required to be provided, disentitles the defendants to an award of security for costs in their favour.” [56] The reasons addressed several other discretionary matters. In respect of what were described as practical issues concerned with the provision of security, the reasons referred to the evidence that the appellant could not pay any significant amount of security within 42 days and would need to take steps to obtain further funding to provide security in circumstances where the availability and terms of any such funding was uncertain. The judge inferred that a significant amount of security would be an amount exceeding the appellant’s available cash at bank being $235,000. The reasons then state: “[52] I am left in a position where what I know is that some arrangements are going to have to be made for the [appellant] to provide security if it is ordered to do so, but how long that may take and what are the risks of security not being able to be -- 21 of 33 -- 22 provided at all, are somewhat speculative. It is a factor though to be taken into account.” [57] Finally, in respect of the discretionary matters, under a sub-heading “Balancing of the relevant factors”, the reasons express this ultimate conclusion: “[63] Having regard to all of the factors set out above, I am not persuaded that I should not order security for costs and I intend to do so.” House v The King errors made out [58] Rule 671(a) of the UCPR provides: “The court may order a plaintiff to give security for costs only if the court is satisfied— (a) the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them”. Rule 672 then provides: “In deciding whether to make an order, the court may have regard to any of the following matters— (a) the means of those standing behind the proceeding; (b) the prospects of success or merits of the proceeding; (c) the genuineness of the proceeding; (d) for rule 671(a)—the impecuniosity of a corporation; (e) whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct; (f) whether the plaintiff is effectively in the position of a defendant; (g) whether an order for security for costs would be oppressive; (h) whether an order for security for costs would stifle the proceeding; (i) whether the proceeding involves a matter of public importance; (j) whether there has been an admission or payment into court; (k) whether delay by the plaintiff in starting the proceeding has prejudiced the defendant; (l) whether an order for costs made against the plaintiff would be enforceable within the jurisdiction; (m) the costs of the proceeding.” [59] Section 1335(1) of the Corporations Act relevantly provides: -- 22 of 33 -- 23 “Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.” [60] It can be accepted that, in terms of the threshold questions posed by these statutory provisions, the phrase “reason to believe” is “the touchstone of jurisdiction”.15 The phrase “reason to believe” has been contrasted with other expressions such as “if the court is satisfied that” or “if in view of the court it is likely that”.16 The phrase may also be contrasted with the expression “reasons to suspect”. The objective circumstances which constitute a reason to suspect may be quite different to those which constitute a reason to believe.17 [61] In Cornelius v Global Medical Solutions Australia Pty Ltd,18 Macfarlan JA (with whom Tobias AJA agreed) emphasised that the statutory language, “reason to believe”, does not “refer to risk”. Macfarlan JA then said:19 “The words ‘reason to believe’ acknowledge that on an application for security for costs, as a matter of practicality, a court will not be able to undertake as thorough an examination of the financial position of a plaintiff as it would if an issue as to that arose at a final hearing. Almost inevitably, the court’s assessment will be a preliminary one based on limited materials. Nevertheless, for the power to order security to arise, the outcome of the assessment must be that the court considers that there is ‘reason to believe’ that the plaintiff ‘will be’ unable to meet an adverse costs order. A conclusion that there is a risk that that will, or may, be the case is insufficient. The words of the statute and rule are clear and should be applied according to their terms without a gloss being placed upon them.” [62] In Monto Coal 2 Pty Ltd v Sanrus Pty Ltd,20 Gotterson JA, with whom McMurdo JA and Boddice J agreed, adopted the reasoning of Macfarlan JA and made the following observations about that reasoning: “In my view, it accords with the earlier observations of a full bench of the High Court in George v Rockett as to the meaning of the expression ‘reason to believe’. In a joint judgment, their Honours said: ‘The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief 15 Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 at 382 [15]. 16 Ibid. 17 George v Rockett (1990) 170 CLR 104 at 115–6. 18 (2014) 98 ACSR 301 at [15]. 19 Ibid at [16] and [17]. 20 [2019] 3 Qd R 143 at 154 [42] and [43]. -- 23 of 33 -- 24 is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture’. I draw from these observations that for a reason to believe that a fact will exist, the objective circumstances must be sufficient to incline the mind towards accepting, rather than rejecting that the fact will exist. By way of contrast, the requisite belief is not merely that the circumstance may come into existence, or that there is some risk that it may. It is a belief that the fact will come into existence.” (emphasis as per original) [63] The latter part of the passage of the joint judgment in George v Rockett, which refers to “the grounds which can reasonably induce the inclination of mind” is properly understood as specifically directed to the statutory provision considered by the High Court, which spoke in terms of “reasonable grounds for suspecting” and “reasonable grounds for believing”. The statutory provisions in respect of security for costs merely speak in terms of “reason to believe”. Gotterson JA’s conclusion drawn from George v Rockett was apparently informed by the earlier part of the quoted passage from the joint judgment of the High Court which was directed in terms to “the objective circumstances sufficient to show a reason to believe”. It is also notable that, in an earlier part of the joint judgment in George v Rockett, a distinction was drawn between a suspicion and a belief, with a suspicion being referenced as a state of conjecture or surmise where proof is lacking. [64] Monto Coal is authority for the proposition that for there to exist “reason to believe” within the meaning of r 671(a), the objective circumstances must be sufficient to incline the mind toward accepting that the plaintiff will not be able to pay the costs. The inclination of mind is established by reference to objective circumstances and can exist even though the likelihood is not proved on the balance of probabilities21 and despite some matters being left to, as distinct from being informed by, conjecture or surmise. Nothing in Monto Coal or Cornelius is inconsistent with the statement in Livingspring to the effect that the phrase “reason to believe” requires “a rational basis for the belief – and no more”. Indeed, subsequent single judge decisions in New South Wales have cited Livingspring and Cornelius together as reflecting settled principle.22 [65] Cornelius is also a leading authority in relation to the onus of proof on an application for security for costs. In Cornelius, the New South Wales Court of Appeal considered a submission that a judge had erred by stating that the burden of proof rested upon an applicant for security “from first to last”. It was submitted that a statement to that effect was inconsistent with a previous statement by Beazley JA in Wollongong City 21 Ibid at 155 [46]. 22 Treloar Constructions Pty Limited v McMillan [2016] NSWCA 302 at [11]; Classic Bet (NSW) Pty Ltd v KRM (Vic) Pty Ltd [2020] NSWCA 43 at [9]; Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd [2021] NSWCA 90 at [9]; and Litigation Fund WCX Pty Ltd v Darren Mitchell [2025] NSWCA 27 at [31]. -- 24 of 33 -- 25 Council v Legal Business Centre Pty Ltd.23 In dealing with that submission, Macfarlan JA reasoned as follows:24 “The defendants contended on appeal that the judge erred in stating that the burden of proof rests upon applicants for security ‘from first to last’ … They submitted that this was contrary to the following statement of Beazley JA in Wollongong City Council at [30]: ‘… Once the defendant has discharged the onus of establishing that there is reason to believe that the other party to the litigation will be unable to pay the costs of the litigation if unsuccessful, the onus shifts to the party against whom the order is sought (who I will refer as the plaintiff) to establish a reason why security should not be granted …’. I do not consider that there is an inconsistency, as alleged, as Beazley JA was in my view referring to the evidentiary (or evidential) burden shifting in the circumstances described to the party against whom security is sought. In fact, her Honour made that explicit in her earlier decision in Prynew Pty Ltd v Nemeth (2010) 28 ACLC 10-026; [2010] NSWCA 94 at [16] where in the same context she referred expressly to the evidentiary burden shifting. The expression “evidential burden” can be used in at least three senses: Strong v Woolworths Ltd (2012) 246 CLR 182; 285 ALR 420; [2012] HCA 5 at [46]–[64]. For present purposes, it is sufficient to say that it includes reference to the principle that in certain circumstances a party who does not bear the ultimate burden of proof may have to raise for consideration matters that favour it if it wishes them to be taken into account in the determination of the case. The evidential burden of raising a matter is thus distinct from the legal onus of proving entitlement to an order for security for costs which it is correct to describe as resting throughout on an applicant for such an order.” [66] These paragraphs of the reasons of Macfarlan JA were approved of in Monto Coal.25 [67] In relation to the threshold test, no complaint is made about the way in which the reasons framed the question. At first blush, the reasons contain language which might be thought to have conveyed a more demanding test than that which was required by the statutory language. However, the ultimate finding by the judge was expressed in terms of her Honour being “positively inclined to accept … that the plaintiff will be unable to pay a relevant adverse costs order made against it at the conclusion of an unsuccessful claim at the time such costs would likely become payable (say in the first half of 2026 – allowing for a judgment to have been delivered early in the second half of 2025).” That language indicates that the judge was correctly concerned with a level of satisfaction based on reason to believe rather than the balance of probabilities. [68] In her Honour’s application of the threshold test, the judge erred in principle by failing to undertake the kind of assessment upon which reason to believe could be based. 23 [2012] NSWCA 245. 24 Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301 at 305–6 [18]–[20]. 25 (2019) 3 QR 143 at 155 [49]. -- 25 of 33 -- 26 The power to order security requires an assessment to be undertaken, the outcome of which is reason to believe that the plaintiff will be unable to pay an adverse costs order. The assessment required may differ from case to case and be dependent upon the objective circumstances of a particular case. In this case, the objective circumstances included that the appellant was not alleged to have been insolvent, had a significant finance facility and a pool of assets and was a public company with audited accounts and current financial information. In those circumstances, the required assessment, albeit a preliminary one based on limited materials, necessarily involved considering the interrelationship between the appellant’s likely expenditure, working capital and available assets to the point when the adverse costs order was likely to fall due for payment. The threshold test fell to be satisfied only if the outcome of that kind of assessment inclined the mind towards reason to believe that the appellant would be unable to pay an adverse costs order when it likely fell due. The judge did not undertake that kind of assessment. Rather, the reasons identified risks associated with various aspects of the appellant’s financial affairs. Properly construed, the reasons deferred to the identification of risk rather than undertaking the requisite assessment to identify reason to believe. [69] Beyond the threshold question, upon a fair reading of the reasons, particularly paragraphs 19 and 63, it is tolerably clear that the judge erred at the stage of exercising the discretion by reversing the onus, placing it upon the appellant. The reasons reveal that the judge effectively imposed a persuasive burden on the appellant by approaching the applications on the basis that once the threshold condition had been satisfied, the power to order security for costs fell to be exercised in the respondents’ favour unless the appellant persuaded the court by reference to discretionary matters, that the power should not be so exercised. That error was of the same kind as the error made by the judge in Livingspring.26 In this case, the error would seem to have been promoted by unqualified reference to the statement in Wollongong in written submissions made to the judge.27 [70] In consequence of having been persuaded that the decision below was attended by House v The King errors, it becomes necessary for this Court to express its own views on the salient issues. No reason to believe the appellant would not be able to pay costs [71] It was accepted that the earliest time at which any adverse costs order would become due and payable was in or around March 2026. The respondents’ estimates, taken at face value, suggested the amount of the adverse costs order could be approximately $8.4 million. The appellant emphasised that it had net assets of some $30 million but conceded that the various matters identified in the reasons, taken at their highest, could demonstrate there was a risk, rather than reason to believe, that the appellant would be unable to pay the adverse costs order. That concession involved an acceptance that despite the value of its net assets, at some level, the appellant was facing financial difficulties. The respondents did not submit that the appellant was insolvent. Rather, the respondents sought to project forwards to in or about March 2026, when, it was submitted, an assessment of the evidence inclined the mind towards there being reason to believe that the appellant would not be able to pay the 26 (2008) 20 VR 377 at 383 [21]. 27 RB 395 [14(a)]. -- 26 of 33 -- 27 costs. The assessment of the evidence requires consideration of the appellant’s available funding, likely expenses and available assets. [72] The starting point is the Samuel facility. The earliest realistic date from which the Samuel facility might be approved was the end of February 2025. The term of the Samuel facility was 21 months and three weeks from the first drawdown. The total facility limit was $23.5 million. As at the time of the applications, the payout figure for the Choice Loan assigned to Samuel was approximately $10 million and the net amount of working capital to be made available to the appellant under the Samuel facility was approximately $8 million. The balance of the facility, approximately $5.5 million, was to be allocated to an interest reserve account and paid out progressively through the term of the facility to cover interest payable over the term. [73] The appellant submitted that because the $8 million for working capital was the working capital for the term of the facility, “one would infer that that’s not all going to be both drawn down and spent and repayable by the time you get to March 2026”. The basis for drawing that inference was not articulated. The inference is not consistent with the market announcement of the Samuel facility which notably said that the working capital was intended to fund the litigation and “substantially” provide necessary funding. The announcement had not, in terms, suggested that the facility was intended to or would cover the entirety of the appellant’s required working capital for the duration of the facility. [74] In oral argument, the appellant’s counsel made a concession that the appellant “had always been funding its activities through loans”.28 That concession was explained in terms that “when one looks at the accounts … all of the operating expenses … were being paid from the loans that it was taking”.29 The accounts did not reveal any discernible income from which operating expenses might be paid. The appellant’s evidence did not seek to estimate how much of the working capital provided by the Samuel facility was expected to have been used by April 2026. The appellant’s evidence did not include any working estimate of its expected expenditure for the period to April 2026, including its legal costs of preparing for and conducting the four-week trial. [75] The appellant’s financial information published to the market provides some objective historical evidence suggestive of the appellant’s expenditure in the usual course of its business. The appellant’s quarterly activity reports for the 12 month period to September 2024 indicated that the appellant had incurred staffing costs of $1.373 million (comprised of quarterly spends ranging between $312,000 and $375,000), administration and corporate costs of $4.824 million (comprised of quarterly spends ranging between $969,000 and $1,450,000), exploration and evaluation expenses of $1.734 million (comprised of quarterly spends ranging between $370,000 and $517,000) and an income tax payment of $410,000. [76] An estimate of the appellant’s likely future legal costs of preparing for and conducting the trial can be discerned from the respondents’ evidence as to costs. A reasonable figure for those costs would appear to be in the vicinity of $1 million. That figure is based upon the trial judge’s estimate that the trial would cost $20,000 per day per party (a figure of $400,000 for the appellant) plus a figure of around $600,000 for 28 T 1-80.39–40. 29 T 1-81.04–6. -- 27 of 33 -- 28 future costs to the first day of the trial, a figure within the range of the actual costs which the judge found might be incurred by the respondents. [77] The objective circumstances comprised of the appellant’s recent historical operating expenses and likely future legal costs, support the conclusion that by April 2026 the appellant would have spent the working capital notionally allocated by the Samuel facility. It is reasonable to conclude that, as at April 2026, approximately $21 million of the Samuel facility would have been spent reflecting the payout of the Choice Loan, the utilisation of the working capital and the payment out of the interest owing to that point in time, being more than half of the term of the facility. [78] At the time of the applications, the appellant owned $32.45 million worth of listed shares which comprised: (a) 204,200,000 SolGold shares, then trading at $0.1404, with a value of $28,688,874; (b) 12,200,000 Atlantic Lithium shares, then trading at $0.29, with a value of $3,538,000; (c) 23,850,000 Clara Resources Australia Ltd (“Clara”) shares, then trading at $0.0055 with a value of $131,175; (d) 8,030,000 New Peak Metals Ltd (“New Peak”) shares trading at $0.011 with a value of $88,330. [79] The appellant’s evidence did not explain how it proposed to repay either the first or second EFH Loans. It was not suggested that those loans could or would be repaid out of income. The appellant submitted that it should be inferred that the first and second EFH Loans would be repaid by selling the Atlantic Lithium shares and 15 million SolGold shares.30 The evidence revealed that the value of those securities would be sufficient to discharge the total indebtedness to EFH. Hence, by selling these shares and using the first $10 million of the Samuel facility, the appellant would have discharged its existing loans. [80] Following the repayment of the first and second EFH Loans in that manner, the appellant would be left with a bundle of listed shares with an approximate value of $27 million, calculated according to the stated values of the shares at the time of the applications. That is, according to those calculations, as of April 2026, the appellant would be left with approximately $6 million worth of shares which were not required to be sold to repay the then expected indebtedness to Samuel. The appellant also had non-current assets comprising the exploration and evaluation assets valued at approximately $2.8 million. On this preliminary and necessarily limited assessment, the appellant would have approximately $8.8 million worth of assets available to pay an adverse costs order of approximately $8.4 million. None of the matters identified in the reasons undermines the efficacy of this limited assessment. [81] The judge appears to have been concerned that the appellant’s assets were not readily saleable and would be sold at a discount. In that regard, the judge stated that “liquifying the amount required to meet an adverse costs order would require a significant portion of the plaintiff’s assets to be sold and that would not ordinarily be a quick process”. The reasons reference a “fire sale” and state “[i]nsofar as the 30 T 1-77.30–5. -- 28 of 33 -- 29 [appellant’s] assets that could be sold include large amounts of shares (for example in SolGold) … regard has to be had to the likelihood that the price the shares could be sold at would be adversely affected by a ‘flooding of the market’ which I do not consider could be wholly avoided even with a staged sale given the amount of shares involved.” The judge also made “some small allowance for the downward trend continuing” in respect of the value of the shares. Separately, the reasons observe that “[s]ome of the types of assets held by the [appellant], such as mining tenements, may not be readily saleable”. [82] The respondents adduced no valuation or expert evidence on these applications. There was, however, evidence from Mr Hutson, one of the third respondents, which was premised on an assumption that that the appellant would “look to sell [its] shares gradually so as to maintain the equity value”.31 That assumption informed Mr Hutson’s uncontroversial assessment that it would take 278 trading days or approximately one year for the appellant to realise “all of its investment in SolGold”. There was no evidence to suggest that a staggered or staged sale of SolGold shares within that time frame would not maintain the equity value of the shares. There was no expert evidence as to the likely future value of any of the shares. There was evidence that the appellant regarded the SolGold shares as undervalued. There was evidence as to the book value of the mining tenements, but no evidence as to the market for, and the market value of, the mining tenements. To the extent that the judge found that share sale prices would be adversely affected by a flooding of the market, allowed for a slight decrease in future value of the shares and speculated that mining tenements might not be readily saleable, her Honour’s reasoning was informed by matters of conjecture, not evidence, and impermissibly detracted from the respondents’ burden of proof. [83] The judge found that there were “real hurdles” in the way of liquidation of the appellant’s assets over which Samuel held security because of “obligations Samuel will owe to its own lenders”. That finding was made despite the judge expressly not deciding the “various construction arguments propounded by the parties” about the GC Deed. The “real hurdles” consideration was apparently premised on Samuel being obliged to obtain Global Credit’s consent under clause 4.1 of the GC Deed because Samuel’s security over the appellant’s shares constituted “Collateral”. That construction seems unlikely given that Schedule 1 appears to have had the objective purpose of listing the various types of property intended to be covered by the term “Collateral”. In any event, there was no evidence that Samuel had ever sought and been refused Global Credit’s consent. There was no evidence about the amount of the finance provided by Global Credit or the value of its other securities, including the two parcels of land. Assuming the answer to the question of construction in favour of the respondents, the relevant objective circumstances simply revealed that Global Credit’s consent was required, it being left to conjecture whether obtaining that consent would constitute or involve a real hurdle to the realisation of the appellant’s assets. [84] The judge reasoned that the Samuel facility had not allowed for “anticipated spending” for maintaining tenements. The reasons refer to the 30 June 2024 annual report as having identified a “spend of $19.8m over the next year … and a further $11.7m over the next 1 to 5 years.” The reasons interpreted the 30 June 2024 annual report as suggesting that the appellant was planning to spend far less than those 31 RB 1493. -- 29 of 33 -- 30 amounts. The judge then inferred that “the expenditure will inevitably be more, or, the value of the assets would be adversely affected by the failure to expend the appropriate maintenance costs”. There was no proper basis for drawing this inference. The amounts of $19.8 million and $11.7 million were not properly described as anticipated spending. The 30 June 2024 annual report expressly identified these amounts as “not recognised as liabilities payable”. A note in the report stated that the appellant had obligations to spend minimum amounts on tenements or to complete defined exploration programs, with budgets having been submitted. Those obligations were expected to be fulfilled in the normal course of operations. The report also noted that incurred exploration and evaluation expenditure was accumulated in respect of each area and the costs were being carried forward to the extent they were expected to be recouped from the successful development of the area. Against that objective background, the tenements had been valued in the annual reports at $2.78 million. Separately, the published quarterly activities reports for a period embracing part of the period of the 30 June 2024 annual report demonstrated that the appellant had in fact been expending in the order of $400,000 per quarter on its tenements. [85] Having regard to all of evidence, the respondents did not discharge their burdens on these applications. There was some apparent risk apparent that the appellant might not be able to pay the costs, but the objective circumstances, viewed as a whole, were insufficient to incline the mind toward accepting that the appellant would not be able to pay the costs. This conclusion would be sufficient to justify allowing the appeal, setting aside the orders below and substituting orders dismissing the applications. However, in the circumstances of this case it is appropriate also to turn to explain why discretionary considerations also warranted dismissing the applications. Discretionary considerations militated against any order for security for costs [86] The discretionary power to award security for costs, once engaged, is broad and unfettered. However, in the context of the exercise of that discretionary power, there is a well-established guiding principle that an application for security for costs should ordinarily be brought promptly. That principle has been described as “long standing”.32 A particular reason why delay is an important consideration is because it is ordinarily unjust to permit a defendant who has stood by and allowed work to be performed by a plaintiff to come to court and ask for security after such expense has been incurred.33 As Mason CJ once observed, one of the vices in a late application for security is that the application “comes at the heel of the hunt”.34 In James v ANZ Banking Group Ltd,35 Toohey J found there to be a compelling reason to refuse security by reference to the proximity of the proceeding to trial and the fact that “so much time and costs have been expended, that it would work a grave injustice to the applicants if they were ordered to provide security for costs when it is apparent that they could not comply with such an order”. [87] The other particular reason why delay is a relevant consideration is that a delayed application for security for costs can disrupt the efficient case management of a proceeding and jeopardise allocated trial dates leading to a waste of public 32 KP Cable Investments v Meltglow Pty Ltd (1995) 56 FCR 189 at 197. 33 Smail v Burton [1975] VR 776 at 777. 34 Devenish v Jewel Food Stores Pty Ltd (1990) 64 ALJR 533 at 534. 35 (1985) 9 FCR 442 at 446. -- 30 of 33 -- 31 resources. This consideration has been recognised by the courts for decades, even before the conduct of civil litigation was subject to the overriding obligation of parties to proceed expeditiously as now reflected in r 5 of the UCPR. [88] In Crypta Fuels Pty Ltd v Svelte Corp Pty Ltd (1995) 19 ACSR 68 at 71, Lehane J concluded that there was “first and foremost a proposition accepted in every one of the cases which is that if an application for security for costs is to be made it must be made promptly”.36 His Honour went on to observe that there “are degrees of promptness and obviously, equally, security for costs being a discretionary matter, there are cases where delay will weigh more heavily with the court than it does in other cases”. His Honour then said:37 “It is notable, however, that in the cases where, despite delay, an order has been made for the provision of security, there have been present at least one and usually two other factors. One is that the hearing or resumed hearing was not immediately imminent, certainly not as immediately imminent as it is in these proceedings. The other is that there has been some forewarning: usually correspondence concerning the financial standing of those who might benefit from the success of an applicant or plaintiff, and often detailed correspondence foreshadowing an application for security for costs.” [89] As at in or about July 2024, the first and second respondents and Baker & MacKenzie were adopting a position in their lawyers’ correspondence to the effect that they each held “serious concerns” that the appellant would not be able to satisfy any adverse costs order made against it in the proceedings and that there were “plainly genuine concerns as to the [the appellant’s] solvency”. By the 22 July 2024 orders, the respondents were ordered to file and serve any application for security for costs by 29 July 2024. That order was made when all respondents had been joined to the consolidated proceedings and trial dates had been allocated, the trial being listed to commence in December 2024. [90] The reasons acknowledge that the 22 July 2024 orders provided for “a logical time for applications for security for costs to be determined”. There was no evidence from any solicitor with the conduct of the proceedings on behalf of any respondent which explained why no security for costs application was filed in compliance with the 22 July 2024 orders. Such an explanation was called for given that at the time of those orders, according to their contemporary correspondence, the respondents were in no doubt that the appellant could not pay an adverse costs order. Notably, the reasons refer to the appellant’s position at the time as being that an application for security for costs would fail on the material then available, state that there was “much to be said for that proposition” and add the respondents “must have thought so too as consequently no applications for security for costs were brought at the time”. This latter language reflects the lack of evidence on the point. [91] The reasons incorrectly state that following the non-compliance with the 22 July 2024 orders “the issue as to security did not arise again until 27 November 2024”. On 30 August 2024, during a review hearing, the issue of security for costs was squarely raised by the judge. As has been noted, on that occasion, the judge made it clear that her Honour was assuming that security for costs was not being pursued and asked the 36 19 ACSR 68 at 71. 37 Ibid. -- 31 of 33 -- 32 parties to confirm that position. Senior counsel for Baker & MacKenzie and for the third and fourth respondents separately replied “that’s the position”. There was no evidence from any solicitor with the conduct of the proceeding on the part of any respondent which explained why security for costs was not raised between 29 July 2024 and late November 2024, a period when trial dates were vacated and reallocated and the judge was informed in a hearing that it was “correct” to assume that the respondents were no longer pressing for security. The non-compliance with the Court’s orders, in the context of the consolidated proceedings being managed on the Commercial List, and the statements made at the hearing on 30 August 2024 were significant matters. The statements in the reasons to the effect that the appellant “should have always been prepared for the possibility of being ordered to put up security for costs” and “[t]he issue never fully went away”, do not accurately reflect the procedural history leading to the applications. [92] The judge incorrectly concluded that the delay in making the applications was “adequately explained”. The forensic decisions previously made by the respondents not to pursue security despite court orders were not explained. The amendments to include the conspiracy case were not of themselves a compelling reason for the late applications given that the amendments were made with leave when trial dates had been set and the grant of leave had no impact on the timing or proposed length of the trial. No solicitor deposed that the amendments were the impetus for the late application. Prior to the amendments the consolidated proceedings were already substantial commercial litigation including a trial of four weeks. [93] Based on what had occurred in the conduct of the consolidated proceedings, the appellant was entitled to form the view that the issue of security for costs had gone away when no security for costs applications were filed in compliance with the 22 July orders. The statements made at the review hearing on 30 August 2024 confirmed the position. The fact that trial dates were vacated and new trial dates were allocated without any respondent raising with the judge or the appellant the prospect of applying for security for costs further confirmed the position. The significance of these matters was borne out by the evidence of Mr Prescott which outlined the respects in which the appellant had acted on the understanding and in the belief that no applications for security for costs were to be pursued. That evidence was consistent with how the appellant had contemporaneously reported the progress of the consolidated proceedings to the market. The appellant’s understanding and belief were entirely reasonable, given the history of case management, and having regard to the long-standing principle that applications for security for costs should be brought promptly. In this case, delay was a particularly cogent and powerful discretionary consideration which warranted the refusal of the applications. Orders [94] For the reasons expressed, the orders should be: 1. The appeal is allowed. 2. The orders made on 15 January 2025 are set aside. 3. Each of the following applications are dismissed: a. Amended application filed by the first and second respondents on 10 January 2025; -- 32 of 33 -- 33 b. Application filed by the third and fourth respondents on 18 December 2024; c. Application filed by the fifth respondent on 13 December 2024; d. Application filed by the sixth respondent on 13 December 2024. 4. The respondents pay the appellant’s costs of the applications referred to in paragraph 3. 5. The respondents pay the appellant’s costs of the appeal. -- 33 of 33 --