BankWest v Daleport [2010] NSWSC 1207

This was a construction loan gone bad. Bankwest sought judgement for $14 million against the developer (a company) and a guarantor (the developer’s sole director and shareholder). The developer cross-claimed seeking $87 million in damages on the basis that Bankwest represented that it would finance all three stages of a development (which it did not do so).

Bankwest argued that before the cross-claims could be allowed to continue the developer should be ordered to provide security for their costs (so that if Bankwest won it would be able to recover its costs). The developer argued it was not liable to provide security for costs because its cross-claim was defensive in nature. The judge rejected this:

In my opinion, the cross-claim extends beyond being purely defensive and seeks to claim substantial damages far exceeding the alleged liability to Bankwest. That claim will involve the plaintiff incurring costs which it would not have incurred had the cross-claim been confined to matters relating to the defence of the Bankwest’s claim. The developer has become, in substance, a plaintiff and is susceptible to an order for security for costs.

The next question was the developer’s financial position such that there was “reason to believe it would be unable to meet any costs order made against it.” The evidence showed the Developer had no appreciable share capital, was not trading, was making no profit, all of the security properties, save one, had been sold, there were no other substantial assets, and the remaining property was advertised for sale but the likely sale price would be significantly less than the debt of $11 million owed to Bankwest. Accordingly the court ordered the developer pay security for costs in the sum of $60,000.

Click here to read the full judgment

Scroll to Top