Federal Court of Australia

Triumph Metals & Minerals Australia Pty Ltd v BCC Trade Credit Pty Ltd (Security for Costs) [2026] FCA 1454

ORDERS

THE COURT ORDERS THAT:

1.    The first and second respondents’ interlocutory application dated 10 September 2026 be dismissed with costs.

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    The applicants bring this proceeding against the respondents, BCC Trade Credit Pty Ltd (trading as the Bond and Credit Co), Tokio Marine & Nichido Fire Insurance Co Ltd and Marsh Pty Ltd, for payment of EUR17.9 million alleged to be owed under or arising in relation to a policy of trade credit insurance. The applicants allege that they traded in coal and copper anodes, that the purchasers of those commodities defaulted on their payment obligations, and that the amounts owed are “Insured Debts” under the trade credit insurance policy in issue.

2    For convenience I will refer to the first and second respondents as the insurers and the third respondent as the broker.

3    The proceeding was commenced in January 2023.

4    In July 2023, orders were made by consent that the applicants provide security for the costs of all three respondents up to and including the filing of the applicants’ reply in the sum of $97,000 and that the respondents have liberty to apply for further orders in respect of any further security only after the filing of the applicants’ reply. The applicants provided that security. They filed replies to the insurers’ defence and, separately, to the broker’s defence in June 2024.

5    In September 2024, orders were made by consent that the applicants furnish security for the costs of the broker up to and including mediation in the additional sum of $180,000. The present interlocutory application does not concern further security for costs for the broker.

6    On 14 October 2024, orders were made by consent in these terms:

1.     Pursuant to r 19.01 of the Federal Court Rules 2011 (Cth), the applicants provide security for the costs of the first and second respondents up to and including any mediation in the sum of AU$240,000, to be paid by way of unconditional bank guarantee from an Australian bank within 28 days from the date of these orders.

2.     Only after any mediation will the first and second respondents have liberty to apply for orders for any further security for costs.

7    Those consent orders followed a negotiation between the applicants and the insurers in an exchange of emails on 10 and 11 October 2024. On 10 October 2024, the applicants’ solicitor wrote to the insurers’ solicitor that she was instructed to accept the latter’s offer, “being $240,000 up to and including mediation”. She also stated that she would “write … formally tomorrow” but that she wanted to confirm the acceptance in the meanwhile. The insurers’ solicitor replied thanking the applicants’ solicitor for the confirmation and saying that he would “await [her] formal correspondence tomorrow”.

8    On the following day, the applicants’ solicitor set out the terms of proposed orders in an email and asked the insurers’ solicitor to confirm whether they were agreed. The latter replied, confirming that the insurers “agree with the proposed orders”. Those are the terms on which the orders were then made, as quoted above.

9    In those circumstances, the parties formally agreed the terms of the orders. It is not the case, as submitted on behalf of the insurers, that the agreement between the parties contained only the acceptance of the offer as communicated on 10 October 2024. That acceptance made it clear that formal correspondence would follow, which indeed it did and the proposal in that formal correspondence was accepted. The agreement between the parties is as recorded in that correspondence, ie only after any mediation would the insurers have liberty to apply for orders for any further security for costs.

10    This is not a case where the recordal that the orders were “by consent” has the meaning that one or more of the parties did not object to them; rather, the orders evidence a “real contract” between the parties: see Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 at 189 per Lord Denning MR for a discussion of that distinction which is much cited in the Australian case law.

11    The insurers now seek leave to apply for further security for costs notwithstanding that no mediation has yet occurred. If leave be granted, the insurers seek further security in the sum of $660,000.

12    The applicants oppose leave being granted to the insurers – the applicants seek to hold the insurers to the agreement embodied in the consent orders and submit that the Court should not disturb that agreement. The applicants also submit that the additional sum of security that is sought is excessive and that if any further security for costs is to be ordered it should be in a far lesser sum.

13    The first issue that arises for consideration is whether the Court can disturb the parties’ agreement as embodied in the October 2024 consent orders and, if it can, in what circumstances it can (or would) do so.

14    It is not in dispute that the October 2024 consent orders are interlocutory orders, rather than being final orders. As such, the Court has the express power under r 39.05(c) of the Federal Court Rules 2011 (Cth) to vary those orders even though they have been entered. Even aside from the rules, the Court has the discretionary power to remain in control of its interlocutory orders: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 178; RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd [1988] FCA 142; 18 FCR 389 (RD Werner & Co) at 392 per Woodward and Foster JJ. That discretionary power exists and applies even though the orders were made by consent pursuant to an agreement between the parties: Trust Company (Nominees) Ltd, in the matter of Angas Securities Ltd v Angas Securities Ltd (No 4) [2016] FCA 1240 at [27] per Beach J (an appeal from that judgment was dismissed in Trust Company (Nominees) Ltd v Angas Securities Ltd [2017] FCAFC 187).

15    What then are the circumstances in which the discretion to vary consent orders made pursuant to an agreement between the parties may be exercised? It is important to distinguish here between final orders and interlocutory orders. Different principles and considerations attend the setting aside or varying of final orders that were made pursuant to an agreement between the parties than those that are applicable in the case of interlocutory orders. Thus, the line of cases dealing with final orders can be put to one side. They include Harvey v Phillips [1956] HCA 27; 95 CLR 235 (“the only question is whether the agreement on which the consent order was based can be invalidated or not” at 244); General Credits Ltd v Ebsworth [1986] QSCFC 21; [1986] 2 Qd R 162 (to the same effect at 165 per de Jersey J, Connolly and Thomas JJ agreeing); Bizuneh v Minister for Immigration and Multicultural Affairs [2000] FCA 126 at [18]-[22] per Burchett, Carr and RD Nicholson JJ.

16    Paino v Hofbauer (1988) 13 NSWLR 193 (Paino) is also a case where final orders that were made by consent pursuant to an agreement between the parties were sought to be varied. However, the variation that was sought was only as to the time for performance. The Court held that the applicable rules of court gave it a discretion to vary the time for performance under the final orders but that “the case would need to be exceptional” before the discretion would be exercised (per McHugh JA at 198F, Samuels and Clarke JJA agreeing). Lachlan v HP Mercantile Pty Ltd [2015] NSWCA 130; 89 NSWLR 198 at [27]-[28] per Bathurst CJ, Beazley P and McColl JA is to the same effect. It may be that the discretion in relation to varying interlocutory orders that embody the agreement of the parties is to be approached in the same way. That is how it has been approached in the Supreme Court of New South Wales: see, for example, Guo v Xu [2021] NSWSC 460 at [162]ff per Rees J.

17    The governing principle in this Court in varying interlocutory consent orders that embody the parties’ agreement is that “if circumstances arose which made it necessary, [the parties] would be entitled to apply to the court for a variation of the orders to which they had consented” and that “the fact of their consent would be a relevant consideration for the court in deciding whether to order a variation”: RD Werner & Co at 391.

18    It was said in Chavez v Moreton Bay Regional Council [2009] QCA 348; [2010] 2 Qd R 299 at [35] by Keane JA (Holmes JA and McMeekin J agreeing) that the approach taken in RD Werner & Co is “more liberal” than that taken in Paino, ie the difference between a variation being “necessary” or the case being “exceptional”. The Court nevertheless found it unnecessary to resolve any such difference, instead adopting its own language by holding that the discretion to vary a consent order should be exercised “only in cases where there is good reason for depriving the other party of the benefit of a free and voluntary agreement” (at [39]).

19    I am bound to apply RD Werner & Co, but in any event there does not appear to me to be any meaningful difference between the three intermediate appellate court authorities just mentioned. The important points to note are that the Court does have a discretion to vary the orders notwithstanding that they were made pursuant to an agreement between the parties, and that the fact of the agreement is an important factor weighing against the exercise of the discretion. I consider that the requirement that the variation be “necessary” means that the Court should be satisfied that the variation is necessary in order to do justice between the parties. A centrally relevant consideration in evaluating where the justice of the case lies is what might be said to be the injustice of varying the orders contrary to the agreement of the parties. That is the approach that I intend to take.

20    The insurers’ case as to why it is necessary that they be granted leave to apply now for further security, and in that way vary the orders previously made by consent, is that there have been significant developments in the proceeding since the October 2024 orders were agreed which could not have been anticipated at that time.

21    To evaluate that case, it is necessary to consider the circumstances in which the October 2024 orders were agreed.

22    On 16 July 2024, by letter from Kennedys to Emerson Lewis Lawyers, the insurers foreshadowed to the applicants an application for additional security for past and anticipated future costs up to mediation (ie less the security already received) in the sum of $347,581. However, they stated that they would accept, in settlement of any dispute about the sum of the security, the amount of $298,000. The insurers’ anticipated further costs were set out in a schedule to the letter, Annexure A. It included costs for:

(1)    Continued detailed investigation into five trades including analysis of 25 bills of lading;

(2)    Correspondence in respect of discovery; preparation of documents for discovery and inspection; and review of documents produced by the applicants and the broker;

(3)    Brief, confer with, and obtain expert reports – including from commodities trading experts (non-ferrous metals and coal);

(4)    Preparation of lay evidence;

(5)    Preparation for and attendance at further case management hearings; preparation for and attendance at interlocutory hearings (in relation to further subpoena applications concerning overseas based parties and discovery);

(6)    Preparation for and attendance at mediation; and

(7)    Fees for third-party investigators and two to four expert witnesses.

23    By letter dated 1 August 2024, Emerson Lewis Lawyers on behalf of the applicants rejected the “offer” that additional security for costs in the sum of $298,000 be provided. Instead, a sum of $150,000 was offered for the insurers’ past and future costs up to and including any mediation, “such sum representing a reasonable reflection of past costs incurred and future costs estimated to be incurred for the items set out in Annexure A” to the letter just referred to. That is to say, the applicants and the insurers had a common acceptance that Annexure A was a reasonable characterisation of the work expected to be done up to and including any mediation, the difference between them being the reasonable costs of that work.

24    As mentioned, it was ultimately agreed on 10/11 October 2024 that the amount of additional security to be provided “up to and including any mediation” would be $240,000.

25    In an affidavit by their solicitor, Penelope Taylor, the insurers have identified the work that has been done since the applicants filed and served their replies and which they anticipate is still required to be done up to a mediation. Save for the costs associated with the different items, there are few differences between what was set out in Annexure A and what is now set out. The insurers rely on the following as being additional work that could not reasonably have been expected or foreseen.

26    First, it is said that the applicants’ discovered documents revealed that the applicants were involved in the backdating of transaction documents, concurrent trades of the same goods to multiple buyers and fraud in relation to the alleged trades. (I should record as an aside that the applicants deny the allegations of impropriety and they offer what seems on the face of it to be a plausible explanation, although those are matters for trial in due course.) The insurers say that the discovered documents also revealed further issues relating to the involvement of Marketlend in relation to the proceeding as a potential funder or assignee, which have required consideration. It is said that the complexity of the review of the applicants’ discovered documents because of those matters could not have been anticipated at the time that the October 2024 orders were agreed.

27    I am not convinced that those are significant matters. The review of discovered documents often leads to further necessary enquiries. The scale of such enquiries in this case has not been quantified with reference to its cost, so I am unable to assess whether it is of such a scale as to not have been reasonably foreseeable, or to be such as to be properly regarded as outside the risk that the insurers accepted in agreeing to the October 2024 orders.

28    Second, the insurers amended their defence in February 2026 which was not expressly anticipated in Annexure A. They say that those amendments arose out of the discovered documents, which was unexpected. However, it is ordinarily to be expected that amendments to pleadings might have to be made as a consequence of discovery. I accept that the particular amendments that were made may not have been able to be anticipated prior to the discovery, but the fact of amendments having to be made is not unexpected. I therefore do not regard that to be a particularly significant consideration. It is also not possible to identify from the evidence how much of the additional security now sought is attributable to the pleading amendment. I note that Kennedys’ invoices for January and February 2026 (being the period in the lead up to the filing of the amended defence) total less than $12,000. In the context of this litigation, that is not a particularly noteworthy amount.

29    Third, the insurers say that as a consequence of the documents that have been discovered “it is likely that [they] will now need to lead evidence from additional experts, including forensic documentary experts and a forensic accountant”. It is said that the need for those additional expert witnesses could not have been anticipated at the time of agreeing the October 2024 orders as the need for such evidence only became evident following the review of the applicants’ discovered documents. That much may be accepted, however that review of the documents was done prior to the filing of the amended defence in February 2026. There has been ample time for the insurers to form a view as to whether they actually need the additional experts, who they are and what they are likely to address. They have also had ample time to identify what the cost of such further experts is expected to be. However, all that they can say at this time is that it is “likely” that they would need such experts, and they have not led any evidence as to the cost of those experts other than to make an estimate based on costs incurred in other proceedings. However, there is no basis on which I can properly or adequately assess whether the experts in the other proceedings, and hence their costs, are comparable. In those circumstances, I do not consider this to be a significant matter.

30    Fourth, it is said that the applicants’ lay evidence refers to new matters and documents not previously disclosed. It is said that the absence of those documents and the need to seek discovery of that material could not have been anticipated in October 2024. Although it would always reasonably be anticipated that the opposing side’s lay evidence might contain some surprises, I accept that the particular surprises were not reasonably anticipated. However, it is not apparent that they in themselves have led, or will lead, to any particularly significant costs being incurred.

31    Although I accept that the insurers have as a fact incurred greater legal costs than what was anticipated by them in October 2024, I am not satisfied that the further work was such as to not have been reasonably within their expectation or contemplation at that time. It seems to me that it is work that has arisen naturally in the course of the litigation. That it has cost substantially more than was anticipated is a risk that the insurers took in agreeing the October 2024 orders.

32    I also do not consider the provisional liquidation of the second applicant and the holding company of the first applicant to be particularly material. That the applicants would be required to provide security for costs to the respondents because there is a real risk that any future costs order in favour of the insurers might not be met was never in issue. The only issue was the quantum of that security. On the evidence before me, the negotiations with regard to that quantum did not take into account a quantification or assessment of the risk of the applicants being unable to pay a future costs order; that there is such a risk was taken for granted and was common ground. The negotiations focused rather on the work that was reasonably required to be done and its likely cost. Also, the companies are no longer in provisional liquidation so it is difficult to assess what impact on the assessment of the risk them having been in provisional liquidation might have had.

33    In all the circumstances, I do not consider that it is necessary in order to do justice between the parties to go behind their agreement in October 2024 with regard to the amount of security for costs to be provided by the applicants to the insurers up to and including any mediation. To put the matter differently, this is not an exceptional case. Neither has good reason been established for depriving the applicants of the benefit of their agreement. Thus, the application by the insurers for leave to apply for further security for costs at this stage should be dismissed.

34    That said, I do appreciate that the insurers have incurred substantially greater costs than they anticipated that they would have incurred by this stage in the proceeding. Also, as accepted by the solicitor for the applicants, I do not consider that it is necessary that a mediation take place only after the preparation and filing of expert evidence. I do not anticipate that the expert evidence will add much to the case insofar as the efficacy of any mediation is concerned, and the cost of its preparation will be significant. I therefore propose to refer the parties to mediation once the lay evidence is complete. That will ameliorate, to some extent, the risk that the insurers carry in relation to a future costs order in their favour not being met.

35    I will hear the parties on the costs of the interlocutory application.

[Discussion about costs]

36    The costs should follow the event.

37    I accordingly make the following order:

1.    The first and second respondents’ interlocutory application dated 10 September 2026 be dismissed with costs.

Associate:

Dated:    2 October 2026

SCHEDULE OF PARTIES