Federal Court of Australia

Little Cashy Pty Ltd v Nesfall Pty Ltd as trustee for the Palmerston Property Trust [2026] FCA 928

ORDERS

THE COURT ORDERS THAT:

1.    The applicants provide security for the respondents’ costs of the proceeding in the amount of $1,250,000 by the provision of an unconditional bank guarantee from an Australian trading bank.

2.    If the security referred to in order 1 above is not provided by 17 August 2026, the proceeding be stayed until the security is provided or until further order.

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

REASONS FOR JUDGMENT

MCDONALD J:

Introduction

1    The respondents (Landlords) are the registered proprietors of the Gateway Shopping Centre at Lot 14828 in Palmerston, a satellite city of Darwin, in the Northern Territory. In 2018, the applicants, Little Cashy Pty Ltd (Little Cashy) and Dunstall Pty Ltd (Dunstall) (together, Tenants) opened the Landmark Tavern, a venue licensed for liquor and gaming which includes a nightclub in the basement. The Landmark Tavern operates out of a building on premises adjacent to the Gateway Shopping Centre, which the Tenants rent from the Landlords pursuant to a lease ultimately executed on 4 April 2018 (Lease). The Tenants operate the Landmark Tavern through a partnership (Landmark Partnership).

2    In this proceeding, the Tenants claim that the Landlords leased to the Tenants premises that were not suitable or fit for purpose, and which have given rise to nuisance, and that the Landlords are in breach of the terms of the Lease. In particular, and without describing the claim exhaustively, the Tenants claim that defects in the building on the premises have been the cause of several events which have resulted in the basement of the building being flooded with raw sewage, alarms, blockages and malfunctions of the sanitation system, temporary closures of the nightclub, and loss of income to the Tenants’ business. By their originating application dated 19 December 2024, the Tenants seek rectification of the premises by the Landlords, damages under the Australian Consumer Law and at common law (including exemplary and aggravated damages), interest, and costs.

3    By way of their interlocutory application dated 30 January 2026, the Landlords seek orders that the Tenants provide security for the Landlords’ costs of the proceeding pursuant to r 19.01 of the Federal Court Rules 2011 (Cth), that the proceeding be stayed if security for costs is not provided, and that the Tenants pay the Landlords’ costs of the interlocutory application. The source of the power to order security for costs which is regulated by r 19.01 of the Federal Court Rules is s 56 of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

4    In a related proceeding, action NTD 45 of 2025, the Landlords have sued the builder who was engaged to construct the building on the premises, J Hutchinson Pty Ltd (Hutchinson). Hutchinson has, in turn, sued a contractor, Axis Plumbing NT Pty Ltd (Axis), as a cross-respondent. Action NTD 45 of 2025 was originally commenced by the Landlords in the Supreme Court of New South Wales (NSW Proceeding). Neither the Tenants nor this Court was aware of the NSW Proceeding until it was transferred to this Court pursuant to an order made on 4 December 2025 by the Supreme Court of New South Wales under s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW).

5    Justin Coleman is the shareholder and sole director of Little Cashy. Michael Coleman is the shareholder and sole director of Dunstall. In the Landlords’ statement of cross-claim, they plead that the Tenants are in breach of the Lease and that, by reason of their breaches of the Lease, the Landlords have suffered loss or damage, including by incurring legal costs. The Landlords further plead that each of Justin Coleman and Michael Coleman is liable to the Landlords to the extent of the Tenants’ liability to indemnify the Landlords, by virtue of a guarantee contained in cll 30.1 and 30.2(a) of the Lease. I understand the position of the Tenants to be that they accept that Justin Coleman and Michael Coleman will be personally liable for any amount that the Tenants are ordered to pay to the Landlords by way of costs.

6    The present proceeding, action NTD 30 of 2024, had previously been listed for trial, to commence on 13 May 2026. On 12 December 2025, the Landlords applied for the vacation of the existing trial dates, following the transfer of the NSW Proceeding and the joinder of Axis as a cross-respondent in action NTD 45 of 2025.

7    The interlocutory application with which this judgment is concerned relates only to security for costs in relation to action NTD 30 of 2024.

8    For the reasons that follow, I have concluded that the Tenants should be required to provide security for the Landlords’ costs up to and including the trial. The amount of the security should be fixed at $1.25 million. The security should be provided by way of the provision of a bank guarantee. The proceeding should be stayed if security is not provided within 30 days. These orders are made on the basis that, absent a material change of circumstances, the parties should not expect that further tranches of security for costs will be ordered.

Principles relevant to an application for security for costs

9    The ground relied upon by the Landlords is the alleged inability of the Tenants to meet an adverse costs order in the event that they are unsuccessful in their claims against the Landlords. The matters which must be considered under r 19.01 of the Federal Court Rules include “whether there is reason to believe that the applicant will be unable to pay the respondent’s costs if so ordered”. Although s 1335 of the Corporations Act 2001 (Cth) is not distinctly relied on, the principles to be applied, in circumstances where the Tenants are corporations and the ground for the interlocutory application is their alleged inability to meet a costs order, are substantially the same as on an application under that section: see, eg, Boost Digital Pty Ltd v Centrebet Pty Ltd [2013] FCA 298 at [12].

10    In Federal Commissioner of Taxation v Vasiliades (2016) 344 ALR 558; [2016] FCAFC 170 (Vasiliades) at 579 [72], Kenny and Edelman JJ described the purpose of an order for security for costs as being “to ensure that a successful respondent to a claim will have a fund available within the jurisdiction of the court against which the respondent, if successful in defence, can enforce a judgment for costs in the respondent’s favour”. With a somewhat different focus, in Food Channel Network Pty Ltd v Television Food Network GP [2009] FCA 68 (Food Channel Network), Greenwood J set out (at [20]), by reference to Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 (at 306), that “the purpose of an order for security is to require a person to step out from behind the ‘skirts of the company’ and bring his or her own assets into play”. His Honour then summarised (at [20]) the observations of Cooper J in Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 10 ACLC 1394 (at 1399), as follows:

… [O]nce the shareholders have been exposed to personal liability, the weight to be given to the statutory purpose of an order for security against the corporation is gone. … [T]he offer by shareholders to accept personal liability for the costs of the corporation as a factor “weighing heavily” against the making of an order for security “notwithstanding that the worth of the shareholders may ultimately prove insufficient to satisfy any judgment in whole or in part”.

11    On the other hand, in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1, the Full Court of the Federal Court said:

[A] court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts.

12    The undertaking or offer of the natural persons standing behind a company to accept personal liability for the costs is one important factor to be taken into account in exercising the discretion to order security for costs and, though not determinative of the exercise of the discretion, might be decisive in a particular case: Food Channel Network at [19], Newtimber (Operations) Pty Ltd v Tarong Energy Corporation Ltd [2011] FCA 123 at [31], and KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 203-4.

13    The power to order security for costs is a broad discretionary power, subject only to the requirement that it be exercised judicially: Vasiliades at 578 [71]. A useful list of discretionary considerations that may bear on the grant or refusal of an interlocutory application for security for costs was set out by Edelman J in Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360 at [13], as follows:

(1)    the likelihood of the applicant being unable to pay the respondent’s costs;

(2)    the characteristics of the applicant including whether it is a corporation or a natural person, the wealth of the applicant, whether the applicant is a foreign resident and, if so, the assets held by the applicant in Australia;

(3)    whether any impecuniosity of the applicant was caused by the respondent’s conduct which is the subject of the claim, to the extent to which that can be assessed;

(4)    whether the application for security is oppressive;

(5)    whether the award of security would deny an impecunious applicant a right to litigate;

(6)    whether there are persons standing behind the applicant who are likely to benefit from the litigation;

(7)    whether the persons standing behind the applicant have offered any security or personal undertaking to be liable for the costs, and if so, the form of that security or undertaking;

(8)    whether the proceedings are in substance defensive in the sense of directly resisting proceedings already brought or seeking to halt the respondent’s self-help procedures so that the applicant is, in substance, forced to litigate;

(9)    whether the application for security had been brought promptly;

(10)    whether the applicant has any rights which it can exercise against assets of the respondent to satisfy an order for costs in its favour;

(11)    the strength and bona fides of the applicant’s case, although this will invariably only be determined in a provisional manner and in many cases will only be a broad brush impression of little weight; and

(12)    any factors relating to public interest.

14    The principles relating to the fixing of the quantum of security for costs were recently summarised by Moore J in Big Review TV Ltd (in liq) v FC Securities Pty Ltd [2025] FCA 222 (Big Review) at [39]:

… 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.

15    The Landlords submit that the issue of quantum does not arise because the Landlords seek security for costs fixed in the amount of $2,296,842.75, and the Tenants’ evidence and submissions have not addressed the issue of quantum, beyond submitting that the security (if any) should not be a full indemnity for the whole of the Landlords’ costs. The Landlords submit that they have never sought a full indemnity since the amount they seek is based on estimated costs discounted to a party and party basis. However, I understand the Tenants’ submission to be that any security ordered should not represent a full indemnity for the costs the Landlords might be ordered to pay; that is, that if security is ordered it should be in an amount less than the Landlords’ estimated party and party costs. I proceed on the basis that the evidence as to the quantum of the Landlords’ estimated party and party costs is not disputed, but that the Tenants submit that the security ordered should be less than that full amount. As the passage quoted in the preceding paragraph shows, the Court has a broad and general discretion with respect to the quantum of any security it may order.

Negotiations leading up to the filing of the interlocutory application for security for costs

16    On 20 December 2024, the Tenants filed the originating application in this proceeding. The Landlords’ present solicitors took over the conduct of the matter on 6 February 2025. The issue of security for costs was first raised by the Landlords in correspondence with the Tenants on 7 March 2025, which was prior to the filing of the Landlords’ defence on 17 April 2025. In their letter of 7 March 2025, the Landlords’ solicitors pointed out that each of the Tenants had issued share capital of $1; observed that it was “unclear what assets or funding [the Tenants] have to meet any adverse costs order that may be made by the Court”; requested that the Tenants provide copies of recent audited accounts and current management accounts; and stated that, if the Tenants failed to provide that information, the Landlords’ solicitors anticipated receiving instructions to file an application seeking security for costs.

17    In response, on 26 March 2025, the Tenants’ solicitors stated that they were prepared to provide security for costs in the form of “personal undertakings or guarantees secured against otherwise unencumbered real property assets”, but that an order for security for costs was premature at that stage, when the Landlords had not filed their defence and cross-claim. By letter dated 9 May 2025, the Landlords’ solicitors sought further details of the real property assets to which the Tenants’ solicitors had referred, and provided an estimate of the Landlords’ recoverable costs of the proceeding.

18    On 20 May 2025, the Tenants’ solicitors responded, stating that the parents of Justin Coleman and Michael Coleman were prepared to guarantee the payment of $1 million to the Landlords for costs if the Landlords were successful in the proceeding; that they would provide evidence of unencumbered title to a residential property owned by them and valued at around $3.5 million; and that they would provide an undertaking to the Court not to do any act that would encumber or otherwise impede the ability of the Landlords to enforce a costs order against the property, up to the amount of the guarantee. After the exchange of further correspondence, the Landlords’ solicitors, on 29 October 2025, provided a draft guarantee, the terms of which were rejected by the Tenants’ solicitors on 13 November 2025. On 24 November 2025, the Landlords’ solicitors suggested that the Tenants’ solicitors provide a revised draft guarantee.

19    On 5 December 2025, the Landlords informed the Tenants of the NSW Proceeding and the fact that it had been transferred to this Court. On 8 December 2025, the Tenants advised the Landlords that, in light of the Landlords’ conduct, including their unexplained default in serving their lay evidence, the Tenants considered that any demand for security for costs was now untenable and that, if the Landlords intended to seek security for costs they should make that application to the Court. At a case management hearing on 18 December 2025, the Landlords informed the Court that they proposed to apply for security for costs and, in accordance with timetabling orders made at that case management hearing, on 30 January 2026, the Landlords filed their interlocutory application for security for costs.

The Tenants should be required to pay security for costs

Is there reason to believe that the Tenants may not be able to pay an adverse costs order?

20    For the purpose of assessing whether the Tenants may not be able to meet an adverse costs order, the following discussion proceeds on the basis that, in the event that the Tenants are unsuccessful in the proceeding, a costs order against them in an amount of between $2 million and $2.5 million is possible.

21    Although the parties were critical of each other in respect of the timing of the filing of evidence in connection with the interlocutory application, I consider it appropriate to have regard to all of the evidence that is currently available in respect of the financial position of the Tenants. Even though the Tenants submit that the Landlords did not adduce evidence sufficient to establish that there is reason to believe that the Tenants could not meet an adverse costs order, the Tenants have now put before the Court some evidence of their financial position, and it is appropriate to have regard to that evidence in assessing whether the Tenants may not be able to meet an adverse costs order. In assessing the evidence, I bear in mind that the Landlords bear the burden of proof in relation to their application for security for costs, but also that it should be within the Tenants’ capacity to adduce clear evidence of their financial position: cf Blatch v Archer (1774) 1 Cowp 63; 98 ER 969.

22    The Landlords submit that there is reason to believe that the Tenants may not be able to meet an adverse costs order. Having regard to the evidence before the Court on the interlocutory application, I accept this submission. In reaching this conclusion, I do not place weight on the fact that, on 26 March 2025, the solicitors for the Tenants, in response to correspondence from the solicitors for the Landlords, indicated a willingness to provide security. I would not regard their willingness to do so, in order to avoid an argument about security for costs, as an admission that the Tenants could not meet an adverse costs order.

23    In the course of negotiations between the parties, the Tenants offered to provide security for costs in the form of guarantees given by the parents of the directors of the Tenants, rather than the directors themselves. The directors’ parents have also loaned money for the payment of the Tenants’ legal fees. The circumstances and reasons for the loan were not explained in the evidence. I accept that these circumstances suggest that the Tenants and their directors may not have been in a position to provide security themselves, or to pay the Tenants’ own legal fees without assistance, and that this in turn supports an inference that the Tenants may be unable to meet an adverse costs order, at least out of liquid assets.

24    The Tenants have produced some evidence of their financial circumstances. The evidence includes management accounts of Little Cashy as trustee for the Cashkalani Family Trust and of Dunstall as trustee for the Dunstall Family Trust. The business of the Landmark Tavern is carried on by the Landmark Partnership, the partners of which include Little Cashy and Dunstall in their capacities as trustees of those respective trusts. It is not necessary to set out the details of those accounts in these reasons, but I note that the management accounts suggest that, in each case, the entity concerned has a negative net asset position. (In the case of Little Cashy, that is so, even where its accounts record its partnership interest in the Landmark Partnership as an asset valued at over $9 million.) The Tenants also produced management accounts of Little Cashy as trustee for the J Coleman Family Trust, but it is not apparent that any assets held by Little Cashy in that different capacity would be available to meet an adverse costs order, or that those accounts have much relevance to the application for security for costs.

25    The Tenants point to the fact that they have been carrying on the Landmark Tavern business since 2018 and have a registered lease. They rely on a market valuation of the business of the Tenants, valued as a going concern for the purpose of obtaining bank finance. The business was valued as a going concern at $6.5 million in October 2025. I accept that the Tenants have established that their business generates sufficient cash flow that they are in a position to fund its continuing operation, and – at least with the assistance of the parents of the directors – to pay their own costs of the proceeding. However, that does not establish that the Tenants would be in a position to meet an adverse costs order which it is estimated would be in excess of $2 million. Evidence that a corporation conducts an ongoing business and has value as a going concern is relevant to the assessment of whether there is reason to believe it will be unable to satisfy an adverse costs order. However, those matters do not constitute an answer in themselves to an application for security for costs. The critical question is whether there is reason to believe that the Tenants may not have the practical capacity to meet an adverse costs order. The evidence does not demonstrate that the business of the Tenants, their liquor and gaming licences, and the Lease are assets that could be realised to meet an adverse costs order.

26    The business of the Landmark Tavern is carried on in a partnership, identified as the Landmark Partnership. No partnership deed is in evidence. The accounts of the Landmark Partnership indicate that the partners are the Cashkalani Family Trust (of which Little Cashy is the trustee) and the Dunstall Family Trust (of which Dunstall is the trustee), as well as a third trust, the Matomiet Trust. The Matomiet Trust is a trust associated with Tony Coleman, who is the brother of Justin Coleman and Michael Coleman. The partners are required to hold and apply the property of the Landmark Partnership exclusively for the partnership: see s 24(2) of the Partnership Act 1997 (NT). I accept the submission of the Landlords that the evidence adduced by the Tenants does not establish that the assets of the Landmark Partnership would necessarily be available to pay an adverse costs order incurred by two of its three partners when suing in their capacities as tenants.

27    The Landlords further submit that, as trustee companies, the Tenants should be treated, for the purposes of the application for security for costs, as if they had no assets; that the ability of each of the Tenants to satisfy any costs order in favour of the Landlords would depend on its right to be indemnified out of the assets which it holds as trustee; and that the Court should be satisfied that there is reason to believe that they will be unable to pay the costs of the Landlords if ordered to do so: see Discobell Pty Ltd v Franky Jay Pty Ltd [2016] NSWSC 437 at [27]-[28]; Re Eastmark Holdings Pty Ltd [2015] NSWSC 2071 at [3]-[4]. The Landlords point out that the relevant persons who stand to benefit from the litigation are not Justin Coleman and Michael Coleman (or at least, not only Justin Coleman and Michael Coleman) but the beneficiaries of the trusts which are identified as the partners in the Landmark Partnership. I accept these submissions.

28    Having regard to the evidence before the Court as a whole, I accept the Landlords’ submission that there is reason to believe that the Tenants could not meet an adverse costs order.

Discretionary considerations

29    The Tenants submit that it is inappropriate to require them to provide security for costs because the terms of the Lease include personal guarantees given by Justin Coleman and Michael Coleman as directors of the Tenants. They submit that “the Landlords already enjoy unlimited security for costs against the two directors of the Tenants personally”. They also point out that the Landlords have sued on the guarantees in their cross-claim, to which Justin Coleman and Michael Coleman are cross-respondents. The liability of Justin Coleman and Michael Coleman under the guarantees is denied in their defence to the Landlords’ cross-claim. In the course of submissions, I understood counsel for the Tenants to concede that, notwithstanding the general denial of liability in their defence to the Landlords’ cross-claim, Justin Coleman and Michael Coleman accepted that they would be personally liable under the guarantees in the Lease to indemnify the Landlords for their legal costs in the event that the Tenants’ action against the Landlords is unsuccessful. The Tenants submit that Justin Coleman and Michael Coleman have, in effect, come out from “behind the skirts” of Little Cashy and Dunstall, and that the purpose (or at least, one of the purposes) of an order for security for costs is therefore already satisfied.

30    The Landlords submit that the Tenants have not identified the beneficiaries of the trusts which form the Landmark Partnership, and so it is not clear who are the relevant natural persons who stand to benefit from the litigation. I accept this submission, although I am prepared to infer that Justin Coleman and Michael Coleman are among the beneficiaries, and that, as persons who are actively involved in operation of the Landmark Tavern business, they have a particular interest in its continuing operation and success. I regard the guarantees given by Justin Coleman and Michael Coleman as relevant to the exercise of the discretion, but not as providing a complete answer to the Landlords’ application for security for costs.

31    The Tenants submit that the interlocutory application for security for costs is an abuse of process that has as its primary objective the imposition of a severe financial burden on the Tenants as the price for pursuing their legitimate claims in the Court. It is not clear whether the Tenants press this submission, but, if so, I do not accept it. The interlocutory application was filed by the Landlords after the Tenants’ withdrawal of negotiations regarding security for costs (prompted by the Landlords’ revelation that the NSW Proceeding had been on foot for some time and had been transferred to this Court), and shortly after the Tenants had expressly invited the Landlords to bring such an application if they intended to seek security for costs.

32    The Tenants submit that the Landlords raised the prospect of security for costs early in the litigation, and did so “prematurely”, having regard to the obvious bona fides of the Tenants’ claims. I do not accept this criticism. It has often been said that applications for security for costs should be brought promptly: see, eg, Big Review at [30]. It was not inappropriate for the Landlords to raise the issue when the proceeding was at an early stage.

33    On the other hand, the Landlords’ interlocutory application for security for costs might be said to have been brought at a relatively late stage, given that the proceeding has been on foot since December 2024. However, the apparent delay in the Landlords’ bringing their interlocutory application is explained by the fact that the Landlords and the Tenants remained in negotiations regarding the provision of security for costs until early December 2025, and appeared close to resolving the issue of security for costs. The Tenants withdrew their offer to provide security for costs after they learned of the existence of the NSW Proceeding and the fact that it had been transferred to this Court, additionally citing the delay of the Landlords in serving their lay evidence. The sequence of events, and its impact on the negotiations with respect to security for costs, explains why the Landlords filed the interlocutory application when they did. The Tenants were on notice of the security for costs issue from an early stage in the litigation and, until 8 December 2025, had been negotiating on the basis that security for costs was to be provided in some form.

34    The Tenants submit that they have a strong case, and that this should weigh against the grant of security. Although much of the trial evidence in the proceeding has been filed, the parties did not address me on the evidence in any detail, and I am not in a position to make a realistic preliminary assessment of the strength of the Tenants’ case, beyond recognising that their claims appear to be clearly arguable and made in good faith.

35    The Tenants advance a submission to the effect that they should not be required to provide security for costs when, as they contend, the very defects which are the subject of the litigation have had a substantial adverse impact on the profitability of their business. However, the Tenants did not adduce evidence to the effect that the litigation would be stultified if they were required to provide security for costs.

36    The Landlords have adduced evidence which suggests that Justin Coleman and Michael Coleman are the registered proprietors of real property. On the other hand, the Tenants have not adduced evidence of the capacity of Justin Coleman and/or Michael Coleman to satisfy an adverse costs order, noting that any personal liability for the Landlords’ costs might be in addition to other amounts for which the Landlords, through their cross-claim, claim that Justin Coleman and/or Michael Coleman are personally liable under the guarantees in the Lease.

37    Further, the evidence indicates that the Tenants were in a position to raise security in the form of guarantees to be given by the parents of their directors, and there is nothing in the evidence to suggest that that would no longer be the case, were the Court to make an order for security for costs. In those circumstances, I am not able to conclude that the making of an order that the Tenants provide security for costs would stultify the proceeding.

38    The evidence before the Court does not demonstrate that the natural persons standing behind the Tenants are without means. Indeed, as noted above, the evidence does not exhaustively establish the identities of the beneficiaries of the three trusts which form the Landmark Partnership and which practically stand to benefit from the litigation.

39    In all the circumstances, I am satisfied that it is appropriate to make an order that the Tenants provide security for the Landlords’ costs.

The quantum of security to be provided and the method of providing security

40    As has been noted above, an order for security for costs need not provide a complete indemnity for the full amount of the costs that would likely be recoverable in the event that the applicant is unsuccessful and is ordered to pay the respondent’s costs of the litigation. In this case, weighing all the circumstances to which reference has been made above, I consider that an appropriate balance will be struck by making an order that the Tenants provide security for the Landlords’ costs in the amount of $1.25 million, to be provided by way of a bank guarantee.

41    In fixing the amount of security for costs, I have had regard to the Tenants’ apparent acceptance, in the course of submissions, that Justin Coleman and Michael Coleman will be liable to guarantee any costs which the Tenants are ordered to pay, by reason of the terms of the guarantees contained in the Lease. I accept that that prospective liability amounts to a kind of security, and means that two (though not, it would seem, all) of the persons who can be said to stand behind the Tenants will be personally liable for any costs that are ordered against the Tenants. The evidence adduced by the Landlords suggests that Justin Coleman, at least, is a person of some means, even though the Court does not have before it a complete statement of his financial position. I have also had regard to the apparent willingness of the parents of Justin Coleman and Michael Coleman, when negotiations were on foot, to provide a form of security of up to $1 million, and the availability for that purpose of valuable unencumbered real property owned by them. These considerations lead me to consider that the provision of further security, by way of a bank guarantee, is not likely to stultify the proceeding and will afford an appropriate measure of protection to the Landlords in the event of an adverse costs order.

42    The Tenants submit that, if security for costs is to be required, it would be appropriate to order that they provide security for the costs up to mediation, only, with the remainder of the security to be provided after the completion of a mediation. Given that the amount of the security that I would order is substantially less than that sought by the Landlords, I am not inclined to separate the provision of security for costs into two tranches.

The prospect of further applications for security for costs

43    It is not uncommon for the provision of security for costs to be dealt with in tranches, as the case management of a proceeding unfolds. That is often appropriate, including because the course of litigation, and the costs associated with it, can be difficult to predict. The present proceeding is somewhat unusual in that it had previously been listed for a trial to commence on 13 May 2026. As mentioned at [4] above, on 4 December 2025, the NSW Proceeding was transferred to this Court. Having regard to the substantial overlap of issues in the two proceedings and the risk of inconsistent findings in relation to the same matters, on 11 March 2026, I decided that the trial of the two proceedings should be heard together, with evidence in each to be evidence in the other. A consequence of that decision was that the trial in action NTD 45 of 2025 could not proceed in May 2026.

44    The present interlocutory application for security for costs was filed on 30 January 2026, at a point in time when the Landlords’ application for the adjournment of the trial was part heard (although the filing of the interlocutory application had been foreshadowed earlier). The evidence as to the estimated costs of the Landlords was based on the work done, and to be done, to bring the matter to trial, and, appropriately, additional security was not sought on the basis that the adjournment of the trial may result in an increase in the Landlords’ estimated costs.

45    A natural incident of the adjournment of the trial, and the hearing of the trial together with the trial in action NTD 45 of 2025, is that additional legal costs may well accrue for all parties. Given the relative lateness of the Landlords’ decisions to apply to have the NSW Proceeding transferred to this Court, to have action NTD 45 of 2025 heard together with this proceeding, and to seek the adjournment of the trial date towards which the parties in this proceeding had been working (albeit that there are reasons why those events occurred when they did, which were not wholly within the Landlords’ control), the Tenants should not be required to provide security for costs in an amount that is greater than the amount they would have been required to provide had those events not occurred.

46    It is unlikely that the Court would be inclined to make any further order for security for costs, should it appear in the future that the Landlords’ costs of the proceeding are likely to be greater than those which have been estimated to date. That observation does not preclude the Landlords from making a further application for security for costs should they decide to do so, but such an application would be unlikely to succeed in the absence of a material change of circumstances which was not itself an incident of either the adjournment of the trial or the trial of the two proceedings being heard together.

Conclusion

47    For the reasons given above, I consider it appropriate to exercise the discretion under s 56 of the FCA Act and r 19.01 of the Federal Court Rules by making the orders set out at the beginning of these reasons.

Associate:

Dated:    17 July 2026

SCHEDULE OF PARTIES