ON 13 SEPTEMBER 2001, the Supreme Court of NSW delivered Idoport Pty Limited and Anor v National Australia Bank Limited and 8 Ors; Idoport Pty Limited and Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited “JMG” v National Australia Bank Limited   NSWSC 744 (13 September 2001).
In a class action proceedings against the National Australia Bank, the Supreme Court of NSW made an order for security for costs against the plaintiff.
The principles relevant to ordering the provision for security for costs against a plaintiff include:
- The court has the power to order security for costs against plaintiffs who are natural persons.
- The court’s discretion in making the order is broad.
- The purpose is to protect the court’s ability to properly exercise its jurisdiction to order costs to the successful party.
- The court needs to seek a balance between protecting the defendant and avoiding injustice to an impecunious plaintiff by shutting him or her out of the proceedings or otherwise prejudicing him or her in the proceedings.
- The inability of the plaintiff to satisfy a costs order weights heavily in the exercise of the court’s discretion.
- A court must be satisfied that a plaintiff is unable (rather than unwilling) to provide security for costs before it can regard the proceedings to be stultified by the order.
- The defendant may seek security for the costs incurred before proceedings commences, provided that they were incurred “in reasonable anticipation of litigation.”
- Costs are to be calculated by reference to a clear methodology rather than mathematical certainty.
- Courts are to factor into their estimate a discount for the prospect that the proceedings will not proceed to a full hearing and settle at mediation.
In these particular proceedings, the provision for security for costs was ordered in the sum of $6,212,962.
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