Federal Court of Australia

Insight Water Technologies, Inc v Pure Technologies US Inc [2026] FCA 74

ORDERS

THE COURT ORDERS THAT:

1.    The applicant provide security for the respondent’s costs of these proceedings by way of a first tranche for the period up until the completion of evidence in the amount of AUD $350,000 by the provision of an irrevocable bank guarantee issued by an Australian bank in favour of the respondent, or by payment into court, by 4:00 pm on 4 March 2026.

2.    If security is not provided in accordance with Order 1, the proceedings against the respondent be stayed until such security is provided.

3.    The applicant pay the respondent’s costs of the interlocutory application for security dated 21 November 2025.

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

REASONS FOR JUDGMENT

MOORE J:

Introduction

1    The respondent, Pure Technologies US Inc (Pure), seeks security for costs from the applicant, Insight Water Technologies, Inc (Insight). It has filed an interlocutory application dated 21 November 2025 to that effect.

2    The parties have filed evidence and written submissions. I indicated to the parties that I intended to deal with the dispute on the papers, and invited the parties to indicate if any party objected to that course. Both parties indicated that they had no objection to that approach. I admit into evidence the affidavits of Ms Crooks affirmed on 21 November 2025, Mr Shenkiryk affirmed on 15 December 2025, and Mr Wright affirmed on 15 December 2025.

3    There is no dispute between the parties that Insight is ordinarily resident outside the jurisdiction and has no assets in Australia. Insight concedes that it is susceptible to an order for security for costs. The primary area of dispute between the parties is the quantum of security that should be ordered.

4    Pure seeks payment of a first tranche of security in the sum of AUD $350,000, which it asserts is a fair allowance for a reasonable estimate of the professional fees and disbursements Pure is likely to incur up to the close of affidavit evidence. It also seeks leave to request further tranches of security at later stages of the proceeding.

5    In contrast, Insight asserts that security for costs should be limited to USD $20,000, representing the estimated costs of enforcing a judgment of this Court in the United States of America (USA) where Insight is domiciled. In the alternative, Insight asserts that if security is to be provided in tranches, the quantum of the first tranche should be calculated by reference to an earlier stage than claimed by Pure, namely at the completion of Insight’s evidence in chief.

Asset position of Insight

6    Insight is a company incorporated in the state of Delaware in the USA and is domiciled in the state of California.

7    As noted above, there is no dispute that Insight does not have any assets in Australia. Insight’s solicitors have asserted in correspondence with Pure’s solicitors that the company holds “significant assets” in the USA. However, no evidence as to the assets Insight holds in the USA, or indeed in any other jurisdiction, has been filed. The financial position of Insight is not known.

8    At a case management hearing on 12 December 2025, counsel for Insight indicated to the Court that it would be filing evidence addressing Insight’s asset position in the USA:

HIS HONOUR: …And so does that mean that your evidence will consist of demonstrating that you have more than sufficient assets in some other jurisdiction? Is it the US; what is the other jurisdiction?

MS YATES: Yes, the United States. So it would be - - -

HIS HONOUR: Yes.

MS YATES: - - - an affidavit as to the asset position and an affidavit from a US lawyer and possibly a short solicitor affidavit from my instructor.

9    I also made the following comment regarding my desire for the parties to address that issue in their submissions and evidence:

HIS HONOUR: - - - because there’s an important issue of principle there as to whether, you know, matters such as this, security should be limited to the cost of enforcement in an overseas jurisdiction or whether, in fact, security should be provided in Australia. So I need at least a submission on that topic, which has necessarily an interrelationship with the evidence because it may turn on whether, for example, the applicant has overwhelming assets in the US or not, and I don’t know what that evidence will look like at the moment.

10    Curiously, no evidence of Insight’s asset position has been filed to suggest Insight would be capable of satisfying a costs order if it was enforced in the USA. Instead, there are only bare assertions in the applicant’s submissions and in the correspondence that Insight holds any assets overseas.

11    The evidence Insight relied on in this application comprised an affidavit of Mr Shenkiryk, Insight’s Chief Executive Officer, affirmed on 15 December 2025, and an affidavit of Mr Wright, an attorney in the USA, affirmed on 15 December 2025. Mr Wright was retained as an independent expert witness.

12    Mr Wright was asked to provide an opinion as to the process which would be involved in seeking to enforce a costs order made by an Australian Court against a company which is domiciled in California, and to provide an estimate of the approximate legal costs which would be involved in seeking to enforce such a costs order in the USA. Mr Wright was asked to assume that Insight is incorporated in Delaware and domiciled in California. Mr Wright was not asked to assume anything about the asset position of Insight. Mr Wright expresses a view that California is the most appropriate forum for enforcing an Australian costs order because this is the state in which Insight “would hold its assets”. It appears that this view is based simply on the assumption he was asked to make that Insight is domiciled in California, rather than on any factual material. Mr Wright estimates that the enforcement of a costs order of this Court in California would cost approximately USD $20,000 in circumstances where the judgment debtor does not oppose the petition for recognition.

13    Mr Shenkiryk gives evidence that Insight’s main place of business and registered address is in California. Mr Shenkiryk otherwise simply provides:

(a)    an undertaking to this Court that if Pure seeks to enforce any costs judgment in the USA, Insight will not resist the enforcement of that costs judgment in the USA, including by not opposing any petition for recognition; and

(b)    evidence that Insight proposes to transfer USD $20,000 into the trust account of Pure’s solicitors as security to meet the costs of enforcing in California.

14    Neither of these affidavits addresses Insight’s financial position in Australia, the USA or anywhere else.

Enforcement of security in a foreign jurisdiction

15    The Court has a broad discretion pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) to make an order for security for costs in such manner and form as it directs, fettered only by the requirement that the discretion be exercised judicially: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 3 (Sheppard, Morling and Neaves JJ).

16    The courts have recognised that “the fact that a party bringing proceedings is resident out of, and has no assets within, Australia will be a significant circumstance militating in favour of the Court granting security for costs”: Derma Pen LLC v Biosoft (Australia) Pty Ltd (Security for Costs) [2022] FCA 885 (Derma Pen) at [9] (Perram J); Commissioner of Taxation (Cth) v Vasilades (2016) 344 ALR 558; [2016] FCAFC 170 (Vasiliades) at [75] (Kenny and Edelman JJ).

17    The purpose of ordering security for costs against an applicant ordinarily resident outside the jurisdiction is protective:

to ensure that a successful respondent will have a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement

(Energy Drilling Inc v Petroz NL [1989] ATPR 40-954 (Energy Drilling) at 50-422 (Gummow J); also quoted in Maxim’s Caterers Limited v Magnona Pty Ltd (No 1) [2010] FCA 450 at [6] (Jagot J)).

18    That said, there may be countervailing circumstances that properly justify the refusal of a grant of security: Vasiliades at [8] (Dowsett J) and [75] (Kenny and Edelman JJ). There is no absolute rule that security for costs must be awarded where an applicant is ordinarily resident outside the jurisdiction. The relevant consideration is how justice will be best served in the particular case, and whether there are any special circumstances or countervailing factors that properly justify the refusal of a grant of security: Energy Drilling at 50-422 (Gummow J).

19    There is no dispute between the parties as to the above principles. In fact, in its written submissions, Insight submitted as follows:

Where an application for security for costs is made against an applicant on the basis that it is domiciled overseas with no assets in Australia, the Courts have recognised that the ‘unacceptable disadvantage’ a respondent may face in enforcing a costs order may be met by an order that the Applicant provide security for an amount reflecting the costs of enforcing an Australian judgment for costs in the place where the Applicant has its assets …

20    Insight acknowledges that “it is susceptible to an order for security for costs” in circumstances where it does not hold assets in Australia and is ordinarily resident in the USA. Insight has not identified any countervailing factor or circumstance for why security should not be granted in favour of Pure. Its opposition to the application primarily relates to quantum and an assertion that security should be limited to the costs of enforcement in the USA.

21    In Derma Pen at [20], Perram J observed that limiting security to the costs of enforcing a judgment in the place where the foreign application has its assets may be appropriate where:

(a)    there are arrangements in place for the enforcement of Australian judgments in the jurisdiction of a foreign application; and

(b)    the Court is satisfied that the applicant has sufficient assets within that jurisdiction to satisfy a costs order in the proceedings.

22    Besanko J made similar observations in C.M.E. Blasting & Mining Equipment Ltd v Rock Tool Refurbishment Solutions Pty Ltd [2021] FCA 160 (C.M.E.) at [45] – [46] and [49]:

45    … First, there is an issue as to whether the approach of ordering security by reference to the costs of enforcement in the foreign jurisdiction is the correct approach in this case, and secondly, if so, the quantum of security.

46    The strongest case for taking this approach is one where two conditions are satisfied:

(1)    There is reciprocal enforcement of judgments legislation in the two jurisdictions; and

(2)    There is evidence that the foreign applicant is reputable and financially substantial.

…

49    The absence of the second condition may be fatal to an approach of assessing the quantum of security by reference to the costs of enforcement in the foreign jurisdiction.

23    While Insight sought to rely on the above authorities, among others, they do not assist it because Insight has not provided evidence, such as evidence of its assets in the USA, that would indicate it would be capable of satisfying any judgment against it. This alone, in the absence of any countervailing factor, is fatal to Insight’s assertion that assessment of the quantum of security should be limited to the costs of enforcement in California. There is no countervailing factor in the present case.

24    In C.M.E., Besanko J declined to fix the quantum of security by reference to the costs of enforcing a costs judgment in Canada, observing (at [50]):

In this case, there is no evidence about the applicant’s assets and liabilities, the location of those assets, and how difficult or easy it may be to enforce a judgment against them. It can, I think, be said that the applicant is a sizeable company with international trading relationships, but the evidence before the Court does not go beyond that.

In the present case, the evidence does not go even that far. There is no evidence as to the size or prominence of Insight.

25    It is not necessary in the circumstances to consider whether there is reciprocal enforcement of judgments legislation between Australia and California, or if Pure would encounter difficulties in enforcing a costs order in California.

26    Insight has been provided with an opportunity to identify the assets it holds in California, including in response to correspondence sent by Pure’s solicitors on this subject. As indicated above, it was tolerably clear at the case management hearing late last year that this was an aspect the Court would require Insight to address.

27    I am satisfied that Pure will be subject to an “unacceptable disadvantage” if security for costs is not granted, having regard to the lack of evidence that there are sufficient assets in Australia or otherwise that could satisfy an order for costs in favour of Pure.

28    I consider this to be an appropriate case for the grant of security for costs in favour of the respondent. For the reasons set out above, I will not limit that grant to the costs of enforcing a judgment in California.

Quantum of security

29    I now turn to the appropriate quantum of security that should be granted in light of the evidence before the Court of the likely costs to be incurred.

30    In Big Review TV Ltd (in liq) v FC Securities Pty Ltd [2025] FCA 222 at [39], I made the following observations regarding the process for calculating the quantum of security to be granted:

As to the quantum of security, an award of security by the Court is not intended to be a complete and certain indemnity for the costs actually incurred by the party having the benefit of the security: Brundza v Robbie & Co (No 2) (1952) 88 CLR 171 at 175 per Fullagar J; CIP Group Pty Ltd v So (No 4) [2024] FCA 1372 at [38] per Derrington J. Nor is the quantification of the appropriate amount of security to be awarded an exact science requiring a full assessment of costs. Instead, the Court may adopt a “broad-brush” approach having regard to the information before it: Carrano Investment Holding Pty Ltd v Siennamia Investments Pty Ltd [2022] NSWCA 262 at [24] per Gleeson JA.

31    Sensibly, Pure does not seek an order for security for costs referable to the costs of the entire proceeding. Rather, Pure seeks an initial tranche of security for estimated costs up to the close of affidavit evidence which, as presently timetabled, will occur on or before 19 June 2026.

32    In seeking security in the sum of $350,000, Pure relies on the evidence of Ms Katrina Crooks, a very experienced lawyer who is a Principal of Spruson & Ferguson Lawyers Pty Ltd, the solicitors for Pure, who deposes that:

(a)    Pure’s costs to date, since the commencement of the proceedings are $32,005, when including a 30% discount on professional fees and a 10% discount on disbursements (including counsel fees); and

(b)    up to the close of affidavit evidence, Pure will incur approximately $172,000 for professional fees which includes a 30% discount, and $234,000 for disbursements (including counsel fees) which includes a 10% discount, totalling $406,000.

33    Combining the fees at (a) and (b) above, Pure therefore estimates that it is likely to incur an amount of approximately $438,000 in recoverable costs up to the close of affidavit evidence. Pure’s request for security of $350,000 represents a further 20% discount on the amount it states it would be entitled to for this period of work.

34    Insight does not raise any issue as to the reasonableness of the quantum of costs Pure alleges have been incurred and will likely be incurred in the course of the proceeding.

35    Instead, Insight asserts that if the Court is against its primary position that security should be limited to the costs of enforcing a judgment in California, then the initial tranche of security ordered “should be referable up to the completion of [Insight’s] evidence in chief”. Insight submits that, by reference to the costs table in Ms Crooks’ affidavit, this would be approximately 70% of $200,000 (i.e. $140,000). This contrasts with Pure’s position that security should be awarded by reference to costs likely to be incurred until the close of the affidavit evidence.

36    Insight asserts that security should be calculated as at the completion of Insight’s evidence in chief, currently ordered to take place on or before 27 March 2026, because it will be apparent at that stage whether Pure has filed an infringement proceeding against Insight and this would factor into the quantum for any future tranches of security for costs.

37    I do not accept Insight’s fallback submissions, for a number of reasons.

38    First, it makes little sense to provide security for Pure’s costs up until the completion of Insight’s evidence in chief. The point of the order for security is to provide some protection to Pure for its costs. The first substantive tranche of costs for Pure will be the costs incurred in the preparation of its evidence in answer. However, the order sought by Insight would provide no security for that stage of Pure’s costs.

39    Secondly, the figure of $200,000 referred to by Insight would not appear to be correct. It is quite unclear how it was derived. Pure’s costs to date (on a 70% and 90% recovery estimate) are $32,005. The estimate of Pure’s costs for the “Second case management hearing, interlocutory hearings re security for costs, discovery, [and] consideration of Insight’s position statement on validity” is a further $45,000, which translates to $35,500 assuming 70% recovery for professional fees and 90% recovery for disbursements. Pure’s estimate of costs for “Consideration of evidence in chief filed by Insight and preparing evidence in answer” is a further $420,000, which translates to $338,000 assuming 70% recovery for professional fees and 90% recovery for disbursements. There is no combination of stages that sums to anything like $200,000. It may be that Insight was reading the figure for professional fees only (i.e. not including counsel fees) for the preparation of Pure’s evidence only, which is $200,000 prior to discount. However, if so, this is not the correct figure on any view.

40    There is no sensible reason to limit Pure’s security to the minor second stage totalling $35,500 before further discounting. Thus the correct figure must be calculated by including the evidence stage of $338,000. Further, it should include a figure incorporating the more modest estimate for consideration of evidence in reply, i.e. $40,000 without discount, which translates to $32,000 assuming 70% recovery for professional fees and 90% recovery for disbursements.

41    I note that the amount sought by Pure for security incorporates a further 20% discount to all of these figures.

42    Thirdly, I do not accept that the speculative possibility of Pure filing an infringement proceeding against Insight is a relevant factor in considering the quantum of security that should be ordered in relation to Insight’s claim. Such an eventuality might lead to a further order for security, but is not a reason to refrain from making an order for security referable up until the close of affidavit evidence at this stage. The costs to be incurred by Pure on Insight’s claim is unlikely to be materially affected by any claim for infringement.

Appropriate relief

43    I consider $350,000 to be an appropriate and reasonable quantum for a first tranche of security for Pure’s costs up until the close of affidavit evidence. It appropriately discounts the security claimed from the calculation of the likely costs, which calculation itself incorporates appropriate discounts for recoverability.

44    I propose to make an order in a conventional form that Insight provide such security by the provision of an irrevocable bank guarantee issued by an Australian bank in favour of Pure, or by payment into Court. The security should be provided within 21 days of the date of this Judgment, and the proceedings should be stayed if security is not provided.

45    Because the order for security is a first tranche only, Pure will have liberty to apply for an additional tranche in due course. There is no need to make an order to that effect in light of this observation.

46    Given Pure has succeeded in obtaining what it sought on its application, costs should follow the event. Pure’s interlocutory application sought an order for costs on an indemnity basis, but no submissions were made and no matters have been identified in support of such an order.

Associate:

Dated:    11 February 2026