Federal Court of Australia

Barber v Blackmagic Design Pty Ltd (Security for Costs) [2026] FCA 1378

ORDERS

THE COURT ORDERS THAT:

Application for security for costs

1.    Subject to order 2 below, the defendants’ interlocutory application for security for costs be dismissed.

2.    Unless, within 14 days of these orders, the plaintiff undertakes to the Court in terms to the Court’s satisfaction that he will not further encumber by way of security interest his shares in the first defendant without first giving the second and third defendants at least 14 days’ written notice of his intention to do so, order 1 above be recalled and vacated and replaced with orders as follows:

(a)    Within 28 days of 17 September 2026, the plaintiff provide security for costs to the second and third defendants in an initial sum of $500,000 either by way of payment into court or otherwise in a form acceptable to those defendants or, failing their agreement, acceptable to the Court.

(b)    The second and third defendants have leave to apply for further security for costs at an appropriate time, but not before 28 days after the close of pleadings.

Case management

3.    By 15 October 2026, the defendants file and serve their defence.

4.    By 29 October 2026, the plaintiff file and serve any reply.

5.    The matter be listed for case management on 13 November 2026.

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

REASONS FOR JUDGMENT

(delivered ex tempore; revised from the transcript)

STEWART J:

1    Blackmagic Design Pty Ltd is an Australian registered corporation with its principal place of business in Melbourne. It is the first defendant in the proceeding.

2    Grant Petty and Douglas Clarke are the second and third defendants respectively. They are the directors of the corporation and each hold 22,575,000 of its shares. They live in Melbourne.

3    The plaintiff is Peter Barber. He was a director of the corporation from its incorporation in 2001 until December 2016. He holds 17,850,000 shares in the corporation. He lives in Singapore.

4    Messrs Barber, Petty and Clarke are the only shareholders. Mr Barber’s shareholding accordingly amounts to 28.33% of the issued shares.

5    Mr Barber brings an oppression suit in which, by his amended originating application, he seeks the following relief:

(1)    an order under s 233(1)(d) of the Corporations Act 2001 (Cth) that Messrs Petty and Clarke purchase his shares in the corporation;

(2)    alternatively, an order under ss 233(1)(i) and (j) of the Act that the defendants not obstruct any process for the sale of his shares in the corporation and that they provide reasonable assistance and cooperation with any potential purchaser;

(3)    alternatively, an order under s 233(1)(a) of the Act that the corporation be wound up;

(4)    alternatively, an order under s 233(1) of the Act that a receiver be appointed to sell all of the shares in the corporation, or such of those shares as the Court determines;

(5)    alternatively, an order declaring that pursuant to s 461(1)(k) of the Act the corporation be wound up on just and equitable grounds; and

(6)    costs.

6    Notably, Mr Barber has subsequently committed to not seek the winding up of the corporation or any costs against it if it does not oppose the other relief. Also, he has committed to pay the reasonable costs of the corporation in meeting any document discovery obligations on it.

7    Notwithstanding those commitments, all three defendants are actively defending the proceeding and are commonly represented. I will return to that aspect.

8    The defendants apply for security for costs in the proceeding in the sum of $5 million to be provided in tranches. They do so on the basis that Mr Barber is resident outside Australia and that he has limited and, in any event, illiquid assets in Australia which might be available to satisfy any costs judgment in due course. The sum of $5 million is arrived at as two-thirds of a rough estimate of the defendants’ combined lawyer-client costs through to final judgment.

9    It is common ground that the only assets that Mr Barber has in Australia are his shares in the corporation. He also indirectly owns shares in another Australian corporation through a Singaporean corporation owned and controlled by him. Such indirect shareholding does not amount to holding assets in Australia which might be available to satisfy a costs judgment in Australia, so I take no further account of it.

10    The essential principles governing whether security for costs should be ordered in such a case are well-settled.

11    The discretion to order security for costs under s 56 of the Federal Court of Australia Act 1976 (Cth) (and r 19.01 of the Federal Court Rules 2011 (Cth)) is broad and subject only to the limitation that it be exercised judicially. That is to say, the exercise of the discretion is not determined by rules: Federal Commissioner of Taxation v Vasiliades [2016] FCAFC 170; 344 ALR 558 at [71] per Kenny and Edelman JJ.

12    The purpose to be served by an order for security for costs is to ensure that a successful respondent to a claim “will have a fund available within the jurisdiction of the Court against which the respondents, if successful in defence, can enforce a judgment for costs in the respondent’s favour”: Vasiliades at [72]. Importantly, it is not the case that unless there is such a fund available within the jurisdiction of the Court, security for costs should be ordered. Rather, an order for security for costs will only be made in the exercise of discretion if a court is satisfied that it is necessary to ensure that a fund is available to meet costs: Yara Australia Pty Ltd v Oswal [2013] VSCA 156; 41 VR 245 at [122] per Priest JA, Macauley AJA agreeing, citing Energy Drilling Inc v Petroz NL [1989] FCA 184; (1989) ATPR 40-954 at 50,422 per Gummow J.

13    The form of an asset within the jurisdiction will be immaterial so long as it is adequate to achieve its object as security: Yara at [10] per Redlich JA. That object, as mentioned, is to be able to “enforce a judgment for costs”. One factor to be taken into account in exercising the discretion to require security for costs is whether the non-resident applicant has “substantial property of a fixed and permanent nature within the jurisdiction that can be made available to meet a costs order”: Shurat HaDin, Israel Law Centre v Lynch (No 2) [2014] FCA 413 at [20] per Robertson J. That is because in such a case, the mischief to which security is directed arguably does not arise: David Clarke Air Conditioning Pty Ltd v Quann (No 2) [2016] WASC 176 at [9] per Le Miere J. In Shurat HaDin, the non-resident applicant’s real property in Australia was sufficient to cause Robertson J not to order security for costs provided that the applicant undertook not to diminish or dispose of or further encumber his interests in the property without first giving 21 days written notice (at [22]).

14    There is no rule that an applicant resident outside the jurisdiction with no assets in the jurisdiction will be ordered to pay security for costs; there may be countervailing circumstances that properly justify refusing an application: Vasiliades at [75].

15    Fairness lies at the heart of the exercise of the discretion – fairness as to whether security should be ordered and fairness as to the amount: Madgwick v Kelly [2013] FCAFC 61; 212 FCR 1 at [92] per Allsop CJ and Middleton J; Vasiliades at [90].

16    Since incorporation, the corporation has grown rapidly to become one of the world’s leading innovators and manufacturers of creative video technology.

17    In its audited 2025 annual report, the corporation reported total net assets of around $351.5 million – that being total assets of $485.021 million against total liabilities of $133.477 million.

18    The corporation also reported an increase in revenue from the previous financial year, from $515.641 million to $550.031 million. Indeed, it reported “remarkable growth in Blackmagic Cloud revenue, with millions of new users adopting project and media collaboration between DaVinci Resolve, our cameras and network storage products” and “strong downloads of our DaVinci Resolve software for Mac, Windows and Linux, and our Blackmagic Camera app for iPhone and Android”. It reported that “DaVinci Resolve is incredibly popular, with over a million downloads every month and a continuing and steady increase in revenue”. The corporation also paid off more than $21 million in debt in FY25 leaving it debt free. It uses its cash profits for research and development expenses.

19    Mr Barber’s principal basis for resisting an order that he provide the defendants with security for costs is what he says is the very considerable value of his shares in the corporation. Those shares are to be regarded as located in Australia where the share register is kept (Corporations Act, s 1070A(4)(a)), and would be available to meet any costs judgment against Mr Barber in due course.

20    The defendants resist that case on the basis that the value of the shares in the corporation is the subject of dispute in the proceeding, and is therefore yet to be determined, and the shares in any event do not provide a sufficiently liquid fund to amount to adequate security for costs.

21    The weakness in the defendants’ case insofar as the value of the shares is concerned is that they have elected to say nothing about the actual value of the shares in the corporation, yet they have it entirely within their power to bring forward relevant evidence as to that value. I infer that if there was any proper basis on which to make a significant challenge to Mr Barber’s case as to the value of the shares in the corporation, the defendants would have brought that forward. In those circumstances, and in the light of its very positive 2025 annual report dealt with above, I infer that the value of the shares in the corporation is equivalent to at least its equity, ie some $351 million. I consider that to be a conservative approach to the value of the shares.

22    On that basis, Mr Barber’s approximately 28% shareholding is worth nearly $100 million. He has, however, encumbered his shares by way of registered security interests up to a maximum of nearly $20 million – although they are presently encumbered to an amount a little under $12 million. There is accordingly unencumbered value of more than $80 million. Against that, the defendants seek security for costs in the sum of $5 million. Even allowing for considerable error in the calculation of the value of the shares in the corporation, and a depreciation in that value over time, on any view there is ample value in Mr Barber’s shareholding in the corporation to meet any costs order in due course – there is a surplus of some $75 million.

23    It is not necessary that Mr Barber’s assets in the jurisdiction are in a more liquid form. When considering cases that have dealt with whether shares amount to adequate security, the different stages of the inquiry must be borne in mind. At the first stage in respect of a plaintiff resident abroad, the question is whether there are assets within the jurisdiction which will be available to enforce a costs judgment in due course. If there are no such assets available, and the court is minded to require that security be put up, the form of that security is highly relevant. It is at that stage that it might readily be concluded that shares in a private company are not sufficiently liquid to be able to be pay a costs order within a reasonable period of time.

24    In the present case, unless he overly further encumbers them or disposes of them in the interim, Mr Barber’s shares in the corporation will be an available asset of his within the jurisdiction which can be the subject of enforcement of a judgment for costs. Such shares will be able to be attached and sold in enforcement, and given their huge value relative to any likely costs judgment, the fact that they might be sold at a considerable discount in such circumstances does not detract from their adequacy as security.

25    Against that, the defendants point to a loan agreement between Mr Barber as borrower and Pallas Litigation Funding Pty Ltd as lender. Under an amendment to that agreement, Mr Barber has the ability to borrow up to the amount of $2.7 million at 15% per annum to fund his own legal costs in the current proceeding. Pallas Litigation Funding Pty Ltd has a registered charge on Mr Barber’s shares in the corporation as security for any amount of that loan. Under cl 4.1 of a Specific Security Agreement (Shares) referred to in the loan agreement, Mr Barber agreed not to create or allow another interest in, or dispose of or part possession with, any of the shares. The defendants submit that that contractual commitment by Mr Barber stands in the way of his shares in the corporation amounting to a sufficient asset, or a sufficiently liquid asset, within the jurisdiction.

26    The defendants also point to the existing encumbrances on the shares referred to above, being registered security interests in favour of BMD Interlok Pty Ltd in the amount of $1,259,820 and Domazet FT 3 Pty Ltd as trustee for The Domazet Family Trust No. 3 currently in the amount of $10,600,000 but subject to a maximum of $15,700,000. The defendants submit that in the absence of positive evidence to the contrary, I should infer that the relevant security documents contain a similar clause restricting dealings in the shares. I do not consider that there is sufficient basis to draw such an inference, but I accept for the purpose of the argument that there is such a clause.

27    Mr Barber submits, and I accept, that such contractual restrictions on his ability to deal in the shares do not answer his case that the shares are an available asset within the jurisdiction against which a costs judgment can be enforced. That is because the value of the shares in total vastly exceeds the encumbrances plus any potential costs judgment, such that a sale of the shares in execution will readily pay off the debts secured by the registered security interests as well as the costs judgment. Thus, the contractual restrictions will not get in the way of payment of any costs judgment.

28    Further, even if there was some difficulty in selling Mr Barber’s shares to a third party in order to meet a costs judgment, a tranche of the shares to the value of any costs judgment could readily be transferred to Messrs Petty and Clarke to satisfy that judgment. It is said on their behalf that for them to take such shares as payment of the costs order may not be in line with their investment strategies at the time, and that it would not provide cash to pay their legal costs. That may all be true, but it offers them very substantial comfort that they will not be out of pocket on costs. They will in any event have had to pay their costs along the way, and the evidence is that they are each of very considerable personal means which suggests that they will not have to rely on exchanging the shares for money. These are powerful discretionary considerations.

29    It is also relevant that Mr Barber’s asset in the jurisdiction is the subject of the litigation, and that part of his case is that he has by the oppressive conduct of Messrs Petty and Clarke been prevented from liquidating his shares in the corporation and realising their value. Although that case is obviously yet to be determined, on what is currently before me, there is evidence of Mr Pretty promising to obstruct Mr Barber’s efforts to realise value for his shares. The fact that that was before the corporation entered into a settlement deed with Mr Barber is not to the point – it is evidence of a future intention which could readily have outlasted the settlement. I consider that it would be unfair to force Mr Barber to liquidate other assets, or to borrow money against the security of his shares in the corporation, in order to put up security for costs to the defendants. The evidence is that he would have to do that.

30    In the circumstances, although Mr Barber resides abroad he has substantial assets within the jurisdiction that will be reasonably available for the enforcement of any costs judgment in due course. Subject to one proviso, the above considerations are sufficient to satisfy me not to exercise the discretion in favour of ordering security for costs and to dispose of the application. It should be dismissed with costs.

31    The proviso is that Mr Barber should be prepared to undertake not to further encumber his shares in the corporation without first giving the defendants at least 14 days’ written notice of his intention to do so. That is in order to obviate the risk that the value of the shares is eroded by further encumbrances to the point that there is no longer an asset of sufficient value within the jurisdiction to satisfy a costs judgment in due course. It would enable Messrs Petty and Clarke to approach the Court for appropriate relief, such as an injunction against further encumbrance unless security for costs is established. If Mr Barber fails to give such an undertaking, he should then be ordered to put up security for costs. I consider that an initial tranche of $500,000 within a further 14 days is a fair and adequate way of doing that, subject to the defendants having leave to apply for further security for costs in due course but not before 28 days after the close of pleadings.

32    Although that is sufficient to dispose of the application for security for costs, there is an additional consideration. It is that notwithstanding Mr Barber’s commitment to not seek the winding up of the corporation or to seek any costs order against it, and to pay its reasonable costs of meeting any document discovery obligations, the corporation continues to actively defend the proceeding. Moreover, it continues to do so jointly with Messrs Petty and Clarke, including jointly seeking security for costs in the sum of $5 million. No direct evidence has been adduced by the defendants as to how they are dividing the costs between them.

33    In the affidavit in the interlocutory application by his solicitor, Mr Barber made the point that the defendants’ solicitor’s affidavit supporting their interlocutory application does not differentiate the costs expected to be incurred by the corporation from the costs expected to be incurred by Messrs Petty and Clarke. In response, the defendants’ solicitor, Mr Grieve, stated in a further affidavit that he did not agree with that comment “in circumstances where the security for costs application has been brought jointly by all three Defendants and provides an estimate of the costs that will be incurred by all Defendants collectively to trial” (emphasis in the original).

34    Mr Grieve went on to say that in his view there would be no utility in distinguishing between the three defendants with regard to costs likely to be incurred because there are many allegations in the statement of claim which refer to the conduct of the corporation, such that much of the work that he anticipates will be needed to be performed is likely to be for both the corporation and for Messrs Petty and Clarke. He also stated that he considers that it would be disadvantageous and unfair to Messrs Petty and Clarke if the corporation were to be separately represented as the individual defendants would need to give evidence of their involvement and conduct as directors and shareholders and they would separately need to liaise with lawyers acting for the corporation and give evidence on behalf of the corporation.

35    I will return to this, but the short point for now is that the defendants have not put on any evidence as to how the costs will be apportioned between them other than that they will all be liable for all the costs. I take that to be a joint and several liability, such that if the corporation pays the costs then the individual defendants will have no further liability for them. Although they would then have a liability to the corporation, in circumstances where they are the only directors and the majority shareholders of the corporation, that liability may be more apparent than real.

36    It is trite that a company’s funds are not to be used to defend the majority against the minority: Re D G Brims & Sons Pty Ltd [1995] QSC 53; 16 ACSR 559 at 591-2 per Byrne J, citing Advance Bank Australia Ltd v FAI Insurances Ltd (1987) 9 NSWLR 464 at 493 per Mahoney JA. The onus of justifying participation and expenditure lies on the company: Power v Ekstein [2010] NSWSC 137; 77 ACSR 302 at [112]-[115] per Austin J. Indeed, the test of whether the company’s participation and expenditure is proper is whether it is necessary or expedient in the interests of the company as a whole, and in considering that test the court’s starting point is “a sort of rebuttable distasteful for such participation and expenditure, and initial scepticism as to its necessity or expediency, and so a company that has actively participated bears a heavy onus”: Re A Company (No 1126 of 1992) [1994] 2 BCLC 146 at 155-156 per Lindsay J, cited with approval in Power v Ekstein at [114].

37    The defendants point to allegations in the statement of claim that the corporation failed to do certain things, such as to provide information and assistance or to reply to correspondence. Also, attention is drawn to the allegations that the corporation concluded a deed of settlement with Mr Barber in 2017 which has not been properly honoured. Those are the same allegations that Mr Grieve refers to in saying that there is no utility in apportioning costs between the different defendants. However, those contentions entirely miss the point – no relevant relief is sought against the corporation and the allegations apparently against the corporation are in substance allegations that Messrs Petty and Clarke as the only two directors and the majority shareholders abused their positions by causing the corporation to do or not to do the things that are alleged against it. The corporation has no legitimate interest in defending against those allegations and it has no legitimate interest in the relief sought by Mr Barber. There is no apparent justification for the corporation actively defending the proceeding.

38    There is no discrete interest that has been identified which would justify the corporation taking any active role in defending Mr Barber’s proceeding. Or, to put it differently, the Court’s distaste and initial scepticism with regard to the corporation’s active participation has not been rebutted; the heavy onus has not been discharged.

39    In those circumstances, it would be open to infer that the reason why Messrs Petty and Clarke have caused the corporation to actively defend the proceeding is so that they can have the corporation meet the whole – or at least a substantial proportion – of the costs of defending the proceeding. If that is what they are doing, it is quite improper. The result would be that Messrs Petty and Clarke may have no expenses for costs in the proceeding, so a costs order in their favour may amount to little. That is because on the indemnity principle, they can only recover costs which they have paid or are liable to pay: Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [8] per Redlich and Mandie JJA. Also, the corporation is unlikely to get a costs order in its favour even if Mr Barber is unsuccessful in his proceeding because he seeks no order against the corporation.

40    Putting that possible inference to one side, I consider that the joint conduct of the defence by the corporation as well as the two directors and shareholders in those circumstances, without differentiating between them for the security for costs that is sought, is a relevant matter. It would weigh heavily in the exercise of my discretion against ordering Mr Barber to put up security for costs. It amounts to strong countervailing circumstances.

Associate:

Dated:    17 September 2026