Australia, June 2 -- New South Wales Land and Environment Court issued text of the following judgement on May 2:

1. By motion filed on 14 March 2025, the second defendant seeks the following substantive order:

1. That there be an order that the plaintiff provide, by way of payment into court or other suitable means, security for costs in the amount of $111,695.24 plus GST. The proceedings are stayed until such security is provided.

2. In support of the motion, the second defendant relies upon the affidavit of the second defendant's solicitor John McIntosh made 14 March 2025 together with its annexures. There was one objection to that affidavit made by Mr Morgan for the plaintiff. The objection was to paragraph 3 which sets out a conversation that the second defendant's solicitor had with the second defendant in which she expressed her concern, based on what she had heard from a couple of people, as to the plaintiff's financial situation. I admitted that paragraph only as evidence of the state of mind of the second defendant and not truth of the contents of the statements made.

3. In opposition to the motion, the plaintiff relies upon the affidavit of the plaintiff's solicitor Gavin Mitchell Parsons sworn 27 March 2025 together with the annexures to that affidavit.

4. Each of the parties has helpfully prepared written submissions on the motion which I have had regard to. I have also heard brief supplementary submissions from counsel this afternoon.

5. The proceedings were commenced by statement of claim filed in May 2024. An amended statement of claim was filed on 2 July 2024.

6. A defence was filed on behalf of the second defendant on 14 August 2024.

7. The proceedings have not progressed too far because of difficulties that the plaintiff has encountered in serving the first defendant. I recently made orders for substituted service so as to permit the first defendant to be served.

8. In brief terms, the proceedings involve an alleged loan agreement between the plaintiff and the defendants pursuant to which the first defendant was the alleged borrower and, at least the second defendant, was a guarantor under the loan agreement.

9. The defence of the second defendant does not admit that the alleged agreement contains the terms alleged by the plaintiff in the amended statement of claim, nor does she admit the advances that are alleged in para 4 of the amended statement of claim. Paragraph 5 of the amended statement of claim, which relates to an alleged variation of the original loan agreement, is denied by the second defendant. The remainder of the allegations in paras 6, 7 and 8 are not admitted by the second defendant, and para 9 is denied. The second defendant denies that the plaintiff is entitled to the relief sought in the statement of claim.

10. The motion for security is brought pursuant to the inherent jurisdiction of the Court, rather than relying upon the provisions in the Uniform Civil Procedure Rules 2005 (UCPR).

11. In King v Liverpool City Council [2017] NSWSC 1148 at [21], Garling J stated:

... as is clear, the Court retains an inherent jurisdiction with respect to such applications. On such an application and the exercise of the Court's inherent jurisdiction, the Court should not make an order for security for costs unless satisfied that it is in the interests of justice so to do. Relevant to, although not determinative of, an application for security for costs are those matters listed in r 42.21(1A) of the UCPR.

12. In Mohareb v Harbour Radio Pty Ltd [2020] NSWCA 231, the Court (Bell P; Leeming JA; Simpson AJA) stated at [13]-[15]:

By subr (1B) an order for security for costs may not be made under r 42.21 against a natural person merely on account of impecuniosity.

Rule 42.21 is generally reflective of principles developed in earlier decisions. It may be taken that the considerations itemised in subr (1A) are relevant to the exercise of the inherent jurisdiction. The prohibition on ordering security for costs against a natural person only on the ground of impecuniosity reflects a principle of common law applicable to the exercise of the inherent jurisdiction.

Generally speaking, courts are reluctant to make security for costs orders against litigants who are natural persons: see Mr D v Ms P [2020] NSWCA 174 at [31] [39].

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/196a7dc2807759816d3ff3ab)

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