Federal Court of Australia

Waterproofing Technologies Pty Limited v Perri (No 6) [2025] FCA 1080

ORDERS

UPON:

(a)    the giving of an undertaking by the first applicant dated 26 August 2025 and provided to the Court, being an undertaking to the first, second, third, sixth, eighth and eleventh respondents (the relevant respondents) and to the Court to meet any obligation of the second applicant pursuant to any costs order in these proceedings in favour of any of the relevant respondents;

(b)    the giving of an undertaking by Athanaseris Holdings Pty Limited dated 22 August 2025 and provided to the Court, being an undertaking to the relevant respondents and to the Court that, in the event and to the extent that the assets of the first applicant are insufficient to meet any obligation in relation to any costs orders in these proceedings in favour of any of the relevant respondents (including any obligation pursuant to the undertaking in (a) above), Athanaseris Holdings Pty Limited will forgive the debt owed to it by the first applicant to the extent necessary to enable the first applicant to meet that obligation; and

(c)    the giving of an undertaking by Athanaseris Holdings Pty Limited dated 22 August 2025 and provided to the Court, being an undertaking to the relevant respondents and to the Court that, in the event that an adverse costs order is made against either or both applicants in favour of any of the relevant respondents in these proceedings, and those costs are not met by the applicants, Athanaseris Holdings Pty Ltd will pay those costs,

THE COURT ORDERS THAT:

1.    The application by the relevant respondents for security for costs be dismissed.

2.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOORE J:

1    This is the fourth judgment dealing with interlocutory applications heard by me at an omnibus hearing. It gives effect to (and must be read with) Waterproofing Technologies Pty Limited v Perri (No 5) [2025] FCA 986 (Waterproofing No 5). It should also be read with Waterproofing Technologies Pty Limited v Perri (No 3) [2025] FCA 934, and terms defined in that judgment and used in this judgment have the same meaning. This judgment finalises the interlocutory application of the Perri Parties for orders that the applicants in the proceedings provide security for their costs.

Outcome of application for security for costs

2    In Waterproofing No 5, at [22], I said that I proposed to make orders dismissing the application for security for costs if three undertakings in a form specified in that paragraph were provided. Since delivering Waterproofing No 5, three undertakings in a form consistent with the undertakings set out in paragraph [22] of that judgment have been provided.

3    Notwithstanding this, the Perri Parties have filed further evidence and made further submissions about whether I should proceed as foreshadowed in Waterproofing No 5. The applicants in turn filed responsive evidence. I allowed this to occur, because the undertaking set out in paragraph [22(a)] of Waterproofing No 5 had not previously been proffered by the applicants, and the undertakings set out in paragraphs [22(b)] and [22(c)] of Waterproofing No 5 were modified (i.e. perfected) versions of the undertakings that previously had been proffered.

4    In essence, the Perri Parties complain that the financial position of Athanaseris Holdings Pty Ltd (Athanaseris Holdings), the provider of two of the undertakings, is quite uncertain and the evidence before the Court does not permit the Court to have any confidence as to the financial standing of Athanaseris Holdings and whether the undertakings it proffers are of any value. The Perri Parties say that the evidence reveals that the main property assets are held on trust, and that Athanaseris Holdings is subject to various security encumbrances.

5    I accept that the evidence of the financial position of Athanaseris Holdings is lacking in weight. In Waterproofing No 5 at [16], I said that I would not place much weight on the evidence as to the financial position of Athanaseris Holdings. Notwithstanding the further evidence that I have received from the applicants, that remains the position.

6    However, that does not mean that I should reach the opposite conclusion from that expressed in Waterproofing No 5 and order security. The more important financial position is that of the applicants. The first undertaking, being the cross-undertaking, is directed towards the Perri Parties being able to access the assets of Waterproofing Technologies in the event that any costs order is made against Polyseal Victoria alone. The second undertaking improves the financial position of Waterproofing Technologies by reducing the indebtedness of Waterproofing Technologies to Athanaseris Holdings in the event that the assets of Waterproofing Technologies (and Polyseal Victoria) are insufficient to meet a relevant costs order. The third undertaking (also given by Athanaseris Holdings) merely provides some degree of additional comfort for the Perri Parties. An undertaking in a somewhat similar form was proffered, and so I will make the refusal of relief conditional upon the giving of that undertaking, but the grant of security is not dependent upon proof of the financial capacity of Athanaseris Holdings to support the undertaking. In those circumstances, I propose to make the orders foreshadowed in Waterproofings No 5.

Explanation concerning the submissions

7    In Waterproofing No 5 at [11] – [13], I expressed concerns about the circumstances that led to written submissions being made that were positively misleading having regard to the true position, as revealed in the tax returns (final and draft) placed into evidence in the proceedings in response to a Notice to Produce from the Perri Parties called on at the hearing. In particular, I was concerned that submissions were made that the business of Polyseal Victoria had “always been profitable”, that “its net asset position has substantially increased over that period” (which, in context, was made by reference also to the position of Waterproofing Technologies up to 30 June 2024), and that “its gross profitability had substantially increased over that period”. The true position, as revealed by relevant documents for the 2023 and 2024 financial year, was that Polyseal Victoria had made substantial losses in those years and its net asset position had substantially deteriorated from being materially positive to substantially negative (negative $2,085,925).

8    As I observed in Waterproofing No 5, at [13], these submissions had the real potential to cause the court’s consideration of this issue to miscarry. As I also observed at [13], the true position must have been known to relevant representatives of the applicants.

9    In these circumstances, I ordered that the applicants file and serve an affidavit explaining the circumstances in which the submissions in paragraphs [57] and [59] of the applicants’ written submissions dated 28 April 2025 came to be made.

10    Somewhat surprisingly, although an affidavit was filed and served by the applicants in purported compliance with this order, it did not provide any proper explanation of the circumstances in which paragraphs [57] and [59] of the written submissions came to be made, not least because it said nothing at all about paragraphs [57] and [59]. Rather, the affidavit provided a chronology to the effect that:

(a)    draft submissions had been prepared by counsel on or before 22 April 2025;

(b)    the 2023 and 2024 financial accounts of Polyseal Victoria (which did not go into evidence, but were said at the hearing on 26 August 2025 to be broadly equivalent to the 2023 tax return and draft 2024 tax return that did) were provided to “the legal representatives” (being an undefined term) on 23 April 2025;

(c)    the written submissions were filed on 28 April 2025;

(d)    the tax returns that went into evidence were provided on the morning of 1 May 2025; and

(e)    “[t]hese materials should have been carefully considered and the Court should have been informed of the need to update paragraph 56 of the written submissions.”

11    This was by no means an informative explanation of what happened, including because it did not even mention paragraphs [57] and [59], it said nothing about who the relevant “legal representatives” were (and how this related to the preparation of a draft by counsel), and said nothing about the knowledge of the applicants’ representatives. In these circumstances, on 26 August 2025, an order was made that the applicants file and serve a further affidavit explaining the circumstances in which the applicants’ written submissions dated 28 April 2025 came to be made.

12    The affidavit that was filed in response indicated, for the first time, that the financial statements had been provided to counsel but he did not review or consider them because he was focussed on other aspects of the applications. It did not provide any further information or explanation about why none of the solicitors acting for the applicants considered them, or any information about the position of the applicants’ representatives themselves, notwithstanding my express reference to their position in Waterproofing No 5 at [13].

13    The impression gained from this material is that the solicitors simply forwarded the relevant material to counsel without considering it themselves, and counsel did not review the material. Nor does it appear that anyone reviewed the material called for under the Notice to Produce or considered its significance for the submissions that had already been made in writing. The evidence is entirely silent on the position of the applicants themselves: for example, whether any representative of the applicant saw the submissions or provided any instruction that they be filed.

14    The Perri Parties submit that:

…[I]t is surprising, unfortunate, and not believable that no legal representative, including [any of the at least four solicitors and junior counsel] looked at and reviewed such relevant and important documents in the five days leading up to the filing of the Applicants’ written submissions.

15    Whilst I do not accept the submission that it is “not believable” (because I accept that mistakes may be made), I otherwise agree with this submission. The financial position of the applicants, including Polyseal Victoria, was a critical issue for a substantive part of the interlocutory application of the Perri Parties, being their application for security for costs. A striking aspect of the applicants’ submissions in response to that application was that they presented reasonably current financial information for the first applicant, but information for the second applicant that was three years old. That highlighted the importance of more recent financial information for Polyseal Victoria, which was apparently provided to the legal representatives of Polyseal Victoria more than a week prior to the hearing.

16    In all of the circumstances, and having regard to the direction made, I would have expected a much more comprehensive explanation of how the submissions came to be made.

17    I will not, however, make any further order about this matter. It is a matter for the applicants as to whether any further steps are taken.

Costs

18    I discussed and foreshadowed the relevant order as to costs in Waterproofing No 5. There is no need to say anything further on the topic. I will made the foreshadowed order.

Associate:

Dated:    3 September 2025

SCHEDULE OF PARTIES