Supreme Court New South Wales Medium Neutral Citation: AquireFX Limited v Monoova Global Payments Limited [2024] NSWSC 1542 Hearing dates: 29 November 2024 Decision date: 04 December 2024 Jurisdiction: Equity - Commercial List Before: Ball J Decision: (1) The plaintiff is to provide security for the defendants' costs, in such form as agreed between the parties or failing agreement by payment into court, in the following amounts and at the following times: (a) An amount of $60,000 by 14 January 2025; (b) An amount of $60,000 within 28 days of the date on which the matter is fixed for final hearing; (c) An amount of $60,000 at least 42 days before the date on which the final hearing has been fixed to commence. (2) The proceedings be stayed if security is not provided in accordance with order (1); (3) The plaintiff is to pay the defendants' costs of the notice of motion filed on 22 October 2024. Catchwords: COSTS — Security for costs — Legal nature of the plaintiff — Plaintiff is a company — Where defendant's claim for costs meets the threshold requirement that plaintiff would be unable to pay the costs of the defendant if ordered to do so — Plaintiff had not advanced discretionary grounds for a refusal of security — Security for costs ordered COSTS — Security for costs — Quantum and form — Costs ordered to cover whole of the proceedings but payable across three tranches Legislation Cited: Australian Consumer Law Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: APFC No 1 Corporation v Insurance Australia Limited [2024] NSWSC 534 Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49 Incomlend Pte Ltd v Insurance Australia Ltd [2024] NSWSC 1482 Vertical Australia Pty Ltd v Air Company Vertical T-LLC [2012] NSWSC 719 Category: Procedural rulings Parties: AquireFX Limited (Plaintiff) Monoova Global Payments Limited (First Defendant) Monoova Payments Pty Ltd (Second Defendant) Representation: Counsel: B Cameron (Plaintiff) J Foley (Defendants) Solicitors: Concisus Legal Pty Ltd (Plaintiff) HWL Ebsworth (Defendants) File Number(s): 2024/218229 Publication restriction: None JUDGMENT Background 1. By a notice of motion filed on 22 October 2024, the defendants seek security for their costs of the proceedings. 2. The proceedings are somewhat perplexing. The plaintiff carries on a business of transferring money internationally in foreign currencies for its customers. In order to continue carrying on that business after its existing banking arrangements had been terminated, it entered into (it says) several contracts with the defendants by which the defendants established an account in the name of the plaintiff from which the defendants on instructions from the plaintiff would transfer money deposited into the account to nominated overseas accounts in the currency nominated by the plaintiff (relevantly, US dollars). The plaintiff used the account to transfer money for its clients. 3. The plaintiff claims that 19 payments totalling USD872,442.85 were not transferred from the account in accordance with the instructions it gave. It seeks to recover that amount as damages plus interest. It also says that its damages include its potential liability to its customers on whose behalf the 19 payments were made, although it appears that to date none of those customers has made any claims. 4. The claim is put in various ways. Unsurprisingly, the plaintiff claims that the defendants breached the contracts by failing to make the payments in accordance with the instructions and also by failing to exercise reasonable care in making the payments. However, the plaintiff also advances various other claims including a claim in negligence and a claim that the defendants engaged in misleading or deceptive conduct in contravention of various statutory provisions including s 18 of the Australian Consumer Law. The claims based on misleading and deceptive conduct are said to arise from representations made by the defendants before the contracts were entered into concerning the nature and quality of the services that the defendants would provide. There are also claims for unjust enrichment and breach of trust. 5. The defendants appear to accept that they did not comply with the plaintiff's instructions in relation to the 19 payments. Their principal defences are (1) on a proper accounting between the parties, the plaintiff owes them money and they are entitled to set‑off the amount owed against the amount claimed; and (2) the payments they did make benefited the plaintiff because they discharged other liabilities of the plaintiff to its customers, with the result that the defendants are entitled to an equitable set‑off in respect of those amounts as well. The defendants claim that the second defence is supported by the fact that none of the plaintiff's customers has so far asserted any claim against the plaintiff. 6. Security is sought under both Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.21 and s 1335 of the Corporations Act 2001 (Cth). Both raise the threshold question whether (to use the language of UCPR r 42.21(1)(d)) "it appears to the court on the application of a defendant … that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so …". If that question is answered in the affirmative, both provisions give the Court a discretion to order security. The threshold requirement 1. I am satisfied that the threshold requirement for security is satisfied in this case. The evidence is that the plaintiff made losses for each of the financial years ending on 30 June 2021, 30 June 2022, and 30 June 2023 (following termination of its banking arrangements). That included a net loss after tax in the financial year ending 30 June 2023 of $298,139. The plaintiff made a profit of $7,298 in the financial year ending 30 June 2024. 2. The plaintiff had total net assets as at 30 June 2024 of $414,305. However, those net assets included a deferred tax asset of $233,760. The assets also include an amount of $360,001 held on the plaintiff's behalf in a bank account in the name of one of the plaintiff's directors. The accounts do not record any liability of the plaintiff to its customers for the amount claimed in these proceedings. Consequently, the plaintiffs have realisable net assets of no more than approximately $190,000. On its own case, it has substantial potential liabilities to some of its customers. 3. Taking those matters into account there is reason to believe that the plaintiff will not be able to pay the defendants' costs if ordered to do so. Discretionary grounds for refusing security 1. No discretionary ground was seriously advanced for refusing security altogether. The plaintiff did submit that it had a very strong case. However, I do not think that the case can be said to be so strong that that would justify refusing security. The position might have been different if the case had been pleaded as a simple breach of mandate and it was clear that the plaintiff had compensated its clients for the amount of the payments or face claims from its clients to do so. However, that is not the position. 2. The plaintiff also submitted that its claim was essentially defensive in nature because the defendants had taken it upon themselves to appropriate the payments to satisfy amounts said to be owed by the plaintiff. I do not accept that submission. The plaintiff makes a positive assertion that the defendants failed to comply with its instructions in relation to each of the payments, with the result that the plaintiff is entitled to recover the amount of the payments. That case could not be described as a defensive claim. The parties' positions in relation to quantification 1. The amount of security claimed by the defendants is $300,223. The claim for that amount is supported by two affidavits from the defendants' solicitor, Mr Daniel Zabow. He gives the following estimate of the defendants' legal costs: Solicitor's costs (excluding GST) $279,400 Total disbursements (excluding GST) $116,270 Total (excluding GST) $395,670 1. Mr Zabow discounts solicitors' fees by approximately 30 percent and disbursements by approximately 10 percent to arrive at a figure of $300,223. 2. The plaintiff takes issue with Mr Zabow's assessment on two broad grounds. First, it says that the estimate is excessive having regard to the nature of the case. Second, the plaintiff says in essence that the defendants seek to advance a cross‑claim and that it should not have to provide security for that cross‑claim. It submits that it would be more appropriate for the Court to order security of $60,235 to cover the period up until the defendants have filed their evidence and to reconsider the question of security after that. Consideration 1. In my opinion, it is desirable to make an order for security in respect of the whole of the proceedings now, although the security should be provided in stages. In some cases, especially in complicated cases where the costs of the whole case are particularly difficult to estimate at the start, it is appropriate to order security to cover only a particular stage of the proceeding, or to give the applicant a right to apply for additional security. The present case does not fall into that category. Although the claim is substantial, it is not so large so as to justify multiple applications for security. Applications for security for costs themselves require the expenditure of significant sums of money. Mr Zabow estimates the defendants' costs of the current application to be approximately $30,000. The costs of future applications may be less, but they are still likely to be significant. This case does not warrant those costs. In saying that, however, I should not be understood as saying that the normal principles applicable to the variation of interlocutory orders do not apply to the order for security I propose to make. 2. The purpose of an award of security is not necessarily to provide security for all of the defendants' costs: Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49 at 175, cited with approval by Ward J in Vertical Australia Pty Ltd v Air Company Vertical T-LLC [2012] NSWSC 719 at [106] which was further cited with approval by Nixon J in APFC No 1 Corporation v Insurance Australia Limited [2024] NSWSC 534 at [105] and Pike J in Incomlend Pte Ltd v Insurance Australia Ltd [2024] NSWSC 1482 at [26]. Rather, security is fixed in an amount that takes account of all the circumstances of the case, including the applicant's estimated costs, the nature of the case, the amount involved, the plaintiff's prospects of success and the position of the parties. 3. Several points are particularly relevant in the present case. 4. First, the security should be proportionate to the amount claimed. 5. Second, the estimate of the applicant's costs should be reasonable having regard to the work to be done. In this respect, in my opinion Mr Zabow's estimate of costs, perhaps understandably, is conservative from his clients' point of view. He has assumed that there will be significant discovery involving a contested application. He has allowed approximately $31,000 for the contested application and approximately $34,000 for discovery itself. He has assumed that the defendants will issue eight subpoenas and that the costs of doing so will be approximately $37,000. He has assumed that the hearing will last four days, and he has allowed approximately $65,000 for costs incurred in "General Communications with solicitors/barristers for the plaintiff and with client". I am not prepared to conclude that those estimates are unreasonable. But they do seem high for a case of this type. 6. Third, it does seem apparent that a significant part of the defendants costs will be incurred in investigating what the defendants regard as the suspicious nature of the plaintiff's claim, which is said to arise from the complexity of the way in which the claim is pleaded and the fact that none of the plaintiff's clients appear to have complained about the fact that their money was not paid in accordance with their instructions. Although it is perfectly proper for the defendants to undertake those investigations, it is far from apparent that they should obtain security for the costs of doing so. 7. As against these considerations, it does not appear that the plaintiff's claim is unnecessarily complex, which will increase the costs of the proceedings. There is no reason why the defendants should not have security in respect of those costs. 8. Taking these matters into account, I have concluded that it is appropriate to order security in the sum of $180,000 to be provided in three tranches of $60,000 each, the first tranche to be provided within approximately 28 days of the date of this judgment (but making some adjustment for Christmas and New Year), the second tranche within 28 days of the matter being set down for hearing and the third tranche to be provided 42 days before the date on which the trial is fixed to commence. Costs and orders 1. The application for security was opposed by the plaintiff. In those circumstances, it is appropriate that the plaintiff pay the defendants' costs of the motion. 2. Accordingly, the orders of the Court are: 1. The plaintiff is to provide security for the defendants' costs, in such form as agreed between the parties or failing agreement by payment into court, in the following amounts and at the following times: 1. An amount of $60,000 by 14 January 2025; 2. An amount of $60,000 within 28 days of the date on which the matter is fixed for final hearing; 3. An amount of $60,000 at least 42 days before the date on which the final hearing has been fixed to commence. 1. The proceedings be stayed if security is not provided in accordance with order (1); 2. The plaintiff is to pay the defendants' costs of the notice of motion filed on 22 October 2024. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 December 2024