Capital Finance Australia v Citadel Property Group [2009] NSWCA 196

In this case the lender sought to enforce and the borrower company and individual guarantor put on the usual bogus defensive cross-claim for damages (which coincidently eclipsed the amount being sought by the borrower). The lender responded by seeking security for costs on the cross-claim. The unanimous decision gave the following Arthur/Martha ratio:

While it is well established that a defendant should apply for security for costs at an early stage and any claim for security will be prejudiced if the application is delayed, the court is not bound to make an order for security at an early stage in the proceedings. It may be a proper exercise of discretion to defer making such an order until the defendant commences to incur substantial costs or is about to incur substantial costs.

It is difficult to see how anyone could follow this sort of mush and avoid a failed application. The whole purpose of the common law is to give certainty to litigants. If judges simply make it up as they go along that would be one thing, but to threat to penalise, if an application is delayed, and at the same time reserve the right to capriciously say that an application is too early is not real law. In the absence of rational jurisprudence Bransgroves Lawyers submit that the rule should be that an application for security for costs can be brought at any time. There does not seem to be any policy reason for denying it at any stage.

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