Federal Court of Australia

First Class Securities Limited v Global Future Holdings Pty Ltd (No 4) [2026] FCA 1525

ORDERS

THE COURT ORDERS THAT:

1.    The applicant provide security for the fifth, sixth and seventh respondents’ costs of the proceeding in the amount of $362,724 (Security).

2.    The Security be provided by 4:00 pm on 31 October 2026 by way of:

(a)    payment into Court of cleared funds; or

(b)    an unconditional bank guarantee from an Australian authorised deposit-taking institution that does not specify an end date and that is otherwise in a form acceptable to the fifth, sixth and seventh respondents.

3.    Until the Security is provided in accordance with order 2, the proceeding be stayed insofar as it concerns the fifth, sixth and seventh respondents.

4.    The fifth, sixth and seventh respondents have liberty to apply on 3 days’ written notice for further or other security if the Security proves insufficient, or if there is disagreement as to the acceptability of any bank guarantee provided in accordance with order 2(b).

5.    The applicant pay the costs of the fifth, sixth and seventh respondents of the interlocutory application filed on 20 August 2026.

6.    If either party contends for a different costs order to that provided for in order 5, then:

(a)    that party (the moving party) is to file and serve by 31 October 2026 submissions (not exceeding three pages) and any evidence upon which that party wishes to rely in support of its application;

(b)    the other party is to provide any submissions (not exceeding three pages) and any evidence that it wishes to rely upon, by no later than 14 November 2026;

(c)    the moving party may file any submissions in reply (not exceeding one page) by no later than 21 November 2026; and

(d)    the question of costs will be determined on the papers.

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

REASONS FOR JUDGMENT

GOODMAN J:

1    These reasons for judgment address an application by the fifth, sixth and seventh respondents (VKA Nominees Pty Ltd, JV Short Term Loans Pty Ltd and Mr Vincent Aquilina, together the JVSTL parties) for orders requiring the applicant to provide security for their costs.

2    The JVSTL parties seek such security on the basis that the applicant is, as is common ground, a company domiciled in Mauritius. They contend that in circumstances where there is no evidence that the applicant has any assets in Australia, and where counsel for the applicant in an earlier interlocutory application acknowledged that the applicant does not hold assets in Australia (see First Class Securities Limited v Global Future Holdings Pty Ltd (Freezing Orders) [2026] FCA 48 at [73] (Cheeseman J)), they will not be able readily to enforce any costs order in their favour against the applicant.

3    This is an important consideration in the exercise of the Court’s discretion to make an order requiring the provision of security for costs. As Kenny and Edelman JJ explained in Commissioner of Taxation (Cth) v Vasiliades [2016] FCAFC 170; (2016) 344 ALR 558 at 578 to 580 ([71] to [75]):

[71]    The discretion conferred by s 56 is a broad one, subject only to the limitation that it must be exercised judicially. The discretion has been sometimes described as unfettered and to depend on the particular circumstances of the case: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 4; 52 ALR 176 at 180. The latter observation might be thought a truism, save that it strongly indicates that the exercise of the discretion is not determined by rules.

[72]    The purpose to be served by making 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 respondent, if successful in defence, can enforce a judgment for costs in the respondent's favour. This purpose is, of course, relevant to an exercise of discretion. The factors that the courts have over time recognised as relevant to an exercise of discretion are relevant because they bear on the purpose for which an order for security for costs is made. Thus, if an applicant in a proceeding is ordinarily resident outside the jurisdiction, an award of security for costs means that a 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 at 50,422 (Gummow J). See also: Logue at [18] (Weinberg J); Gain Capital UK Ltd v Citigroup Inc (2015) 114 IPR 307; [2015] FCA 1009 at [18] (Yates J); and Oswal at [57] (Nicholas J).

…

[74]    Regarding the first principal consideration to which we have referred, however, there was no evidence before her Honour concerning either Mr Vasiliades’ assets or ordinary residence, although it was common ground that he was an Australian non-resident without apparent assets in Australia. The significance of this consideration was emphasised in PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; 5 ACSR 633 (PS Chellaram) (in which the respondents applied for an order that the appellant provide security for the costs of its appeal). In reasons for judgment awarding security, McHugh J stated (at ALR 323; ACSR 635):

To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.

[75]    The fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction is clearly a significant circumstance militating in favour of an applicant for security for costs. As the above passage highlights, however, there is no rule that security for costs will be awarded as of course where an applicant is resident out of the jurisdiction and has no assets within the jurisdiction. A case may disclose countervailing circumstances that properly justify refusing an application.

(italic emphasis in original; bold emphasis added)

4    As is clear from the above passage, the fact that an applicant is resident outside of Australia and has no assets within Australia is a significant circumstance militating in favour of an applicant for security for costs, but it is not of itself a sufficient basis for an order that security be provided. It is necessary to consider all of the circumstances.

5    In the present case, the applicant accepts that its domicile in Mauritius and its lack of assets in Australia weigh in favour of a grant of security, but submits that these factors are outweighed by the strength of the applicant’s case against the JVSTL parties and the resultant probability that there will be no costs order in favour of the JVSTL parties.

6    In most applications for security for costs, the strength of the applicant’s case is taken to be a neutral factor in the sense that the applicant’s claim (and any defence thereto) is treated as bona fide and arguable: see, e.g., Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 514 (French J); Fiduciary Ltd v Morningstar Research Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at 574 [37] to [38] (Austin J) and the authorities there cited; Hill v Zhang [2019] FCA 1562 at [40] (Griffiths J); General Trade Industries Pty Ltd (in liquidation) v AGL Energy Limited (No 2) [2023] FCA 556 at [207] (Derrington J); Tickle v Giggle For Girls Pty Ltd [2023] FCA 553 at [69] (Bromwich J); Auslink Golf Course Pty Limited v Zhongsheng Group Pty Ltd [2023] FCA 397 at [44] (Markovic J); and Dove v Xmeta Pty Ltd (formerly known as Everforex Financial Pty Ltd) (No 3) [2023] FCA 1320 at [124] (Goodman J).

7    That is not because the Court fetters its broad discretion by the application of a presumption of neutrality. Rather, it reflects the reality that applications for security for costs are, in the normal course, brought as early as possible in the proceeding, often before pleadings have closed and usually before the parties have served their evidence: see Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [98] to [99] (Bathurst CJ, Leeming JA and Barrett AJA) and General Trade Industries at [208] to [211].

8    As such, the Court’s ability to form a view as to the strength or otherwise of a party’s case is necessarily limited. Further, as Derrington J observed in Its Eco Pty Ltd v BPS Financial Limited [2022] FCA 842 at [23], undertaking a mini-trial within an interlocutory application for security for costs for the purposes of determining the strength of a party’s case is inappropriate.

9    In this proceeding, the applicant has filed an amended statement of claim (ASOC) and has filed some evidence in connection with earlier interlocutory applications, as well as evidence on this application. It is yet to be required to file all of the evidence upon which it proposes to rely at a hearing of this proceeding. The JVSTL parties have filed a defence to the ASOC and, of course, are yet to be required to file all of the evidence upon which they propose to rely at a hearing.

10    Counsel for the applicant fairly acknowledged that it will be difficult in many cases for the Court to form a meaningful view as to the strength of an applicant’s case, although the Court may form such a view in an appropriate case. Counsel also submitted that the present proceeding is an appropriate case.

11    I turn now to the applicant’s case, which is set out in the ASOC. That case, in broad outline, is as follows.

12    First, the salient allegations of fact are that:

(1)    the applicant and the first respondent (GFH) were parties to a written agreement entered into on 22 September 2025 (ASOC [14]). The terms of the agreement included that the applicant would invest USD $10 million with GFH for 10 business days and would receive back its principal together with a return of 55 per cent on the first USD $5 million, and a return of 30 per cent on the second USD $5 million (ASOC [15]);

(2)    the applicant entered into the agreement in reliance upon a suite of oral and written representations made to it by the third respondent, Mr Alande Mustafa Safi, on behalf of GFH and the second respondent (Paragon) (ASOC [8] to [13]);

(3)    between 26 September and 22 October 2025, the applicant transferred USD $5,009,986.05 to GFH (ASOC [17] to [20]);

(4)    from about 29 September 2025, GFH made a series of transfers of money, and in particular transfers of:

(a)    AUD $1,285,000 to the fourth respondent, Mrs Najmia Azim Safi (ASOC [21] to [24]);

(b)    AUD $200,000 to VKA Nominees (VKA Transfer) (ASOC [24A]);

(c)    AUD $3,359,713 to JV Short Term Loans (JV Short Term Loans Transfers) (ASOC [24B] to [24D]);

(5)    JV Short Term Loans transferred AUD $770,000 of the funds it received to Mr Aquilina (Aquilina Transfers) (ASOC [24E] to [24H]); and

(6)    GFH did not repay the funds advanced to it by the applicant or provide the promised returns, save for four payments totalling USD $552,563 (ASOC [25] to [28]).

13    Secondly, the applicant contends that GFH breached the agreement (ASOC [28], [32] to [33]).

14    Thirdly, the applicant contends that the representations were:

(1)    conduct in contravention of s 18 of the Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (ASOC [34] to [39]); and

(2)    fraudulent conduct (ASOC [41] to [43]; [47] to [53]).

15    Fourthly, the applicant contends that GFH, Paragon and Mr Safi were each involved in the others’ contraventions of s 18 of the ACL (ASOC [44] and [45]; [54]).

16    Fifthly, the applicant contends that each of the VKA Transfer, the JV Short Term Loans Transfers and the Aquilina Transfers:

(1)    was made by the transferors with the intention of defrauding the applicant (ASOC [63], as clarified during oral submissions);

(2)    is voidable pursuant to s 37A of the Conveyancing Act 1919 (NSW) or s 172 of the Property Law Act 1958 (Vic) (ASOC [65]);

(3)    is a transfer that the applicant is entitled to trace (ASOC [66] to [71]);

(4)    involved transfers of funds which the JVSTL parties hold on constructive trust for the applicant because:

(a)    those transfers comprised the receipt of property the subject of a Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105 type trust (Black v S Freedman trust) which arose because of the fraudulent conduct of Mr Safi (ASOC [71A], [76H], [76O] and [76V]);

(b)    those transfers were made in breach of GFH’s duties under the Black v S Freedman trust (ASOC [76I], [76P], [76W]);

(c)    those transfers occurred in circumstances in which VKA Nominees, JV Short Term Loans and Mr Aquilina had knowledge that such transfers constituted a breach of GFH’s duties under the Black v S Freedman trust (ASOC [76J], [76K], [76Q], [76R], [76X] and [76Y]); and

(d)    alternatively, because of the JVSTL parties’ subsequently acquired knowledge that the applicant asserts a proprietary claim to the funds transferred (ASOC [76M], [76N], [76T], [76U], [76ZA] and [76ZB]).

17    Finally, the applicant contends that as a result of the pleaded conduct, it has suffered a loss of USD $7,207,423.05 (ASOC [33], [40], [46], [55]) and lost an opportunity to invest elsewhere (ASOC [56] to [60]).

18    As noted above, the JVSTL parties have filed a defence to the ASOC. By that defence, the JVSTL parties, inter alia,

(1)    state that:

(a)    the VKA Transfer was made in payment of an invoice issued by VKA Nominees in respect of an application fee for further advances from JV Short Term Loans (as lender) and Paragon (as borrower) pursuant to a loan agreement between them entered into in 2019 (2019 loan agreement) (Defence [24A]);

(b)    the JV Short Term Loans Transfers were made in reduction of the debt owed under the 2019 loan agreement (Defence [24B]);

(c)    the Aquilina Transfers were made in reduction of the JV Short Term Loans’s indebtedness to Mr Aquilina (Defence [24F]);

(2)    deny (to the extent it is alleged) any intention on the part of the JVSTL parties to defraud the applicant;

(3)    deny that the VKA Transfer, the JV Short Term Loans Transfers and the Aquilina Transfers are voidable under s 37A of the Conveyancing Act or s 172 of the Property Law Act and say that: (1) they were purchasers in good faith not having notice of any intent to defraud creditors (s 37A(3) of the Conveyancing Act); and (2) the transfers were made in good faith or upon good consideration and in good faith to the JVSTL parties who did not have notice of any intent to defraud creditors (s 172(3) of the Property Law Act) (Defence [65]);

(4)    deny that tracing is available with respect to the VKA Transfer, the JV Short Term Loans Transfers and the Aquilina Transfers, for the reasons set out in (1) above (Defence [69]);

(5)    deny that they had knowledge that the VKA Transfers, the JV Short Term Loans Transfers and the Aquilina Transfers constituted a breach of GFH’s duties as trustee under a Black v S Freedman trust (Defence [76J], [76K], [76Q], [76R], [76X] and [76Y]); and

(6)    accept that they subsequently became aware that the applicant asserts a proprietary claim to the funds transferred, but deny that they are liable as constructive trustees because, inter alia, they were bona fide purchasers for value without notice (Defence [76M], [76N], [76T], [76U], [76ZA] and [76ZB]).

19    As is plain, there are many areas on which the parties have joined issue, including the central allegation that the JVSTL parties had the requisite knowledge that the funds the subject of the VKA Transfer, the JV Short Term Loans Transfers and the Aquilina Transfers were impressed with a Black v S Freedman trust and that those transfers constituted a breach of GFH’s duties as trustee under such a trust.

20    On this application, counsel for the applicant sought to demonstrate that the applicant’s case against the JVSTL parties was of such strength that the prospects of the JVSTL parties obtaining an order for costs against the applicant are so low that an order for security for costs ought not be made.

21    Counsel sought to do so by establishing that the applicant had a strong prima facie case as against the JVSTL parties because each of the elements of that case – broadly described as: (1) the fraud allegedly committed by Mr Safi ; and (2) the knowing receipt by the JVSTL parties of the proceeds of that fraud – was of sufficient strength.

22    As to (1), the Court was taken to observations made in previous judgments in this proceeding concerning applications for freezing orders to the effect that (on the basis of the evidence then before the Court) the applicant had a good arguable case and including various observations suggesting a good arguable case based upon fraud: see First Class Securities Limited v Global Future Holdings Pty Ltd [2026] FCA 1 (Shariff J); the judgment of Justice Cheeseman referred to at [2] above; and First Class Securities Limited v Global Future Holdings Pty Ltd (ex parte Third Party Freezing Order) [2026] FCA 201 (Shariff J). The Court was also taken to various documents upon which the applicant relies to establish the alleged fraud. Having considered those documents, I do not depart from the observations expressed in the previous judgments.

23    As to (2), the Court was taken to various documents, and submissions were made to the effect that various aspects of the defence of the JVSTL parties were inconsistent with those documents. I am not satisfied on the basis of that evidence and in circumstances where: (1) the proceeding as against the JVSTL parties is nascent; (2) there has been an extensive joinder of issue; and (3) the JVSTL parties are yet to be required to serve their evidence, that the Court is in a position to reach a conclusion as to the strength of the applicant’s case that the JVSTL parties knowingly received the proceeds of fraud. In particular, I am not in a position to be satisfied as to the strength of the allegation that the JVSTL parties had the requisite knowledge described at [19] above.

24    It follows that I am not satisfied that the prospects of the JVSTL parties obtaining a costs order are so low that an order for the provision of security for costs should not be made.

25    Thus, I proceed on the basis that the applicant’s case as against the JVSTL parties is bona fide and arguable and that the strength or otherwise of that case should be treated as a neutral factor.

26    The applicant did not rely upon any other potential countervailing factors.

27    In view of: (1) the weight to be accorded to the fact that the applicant has an overseas domicile and has no apparent Australian assets against which a costs order might be enforced; and (2) the absence of any countervailing factor of any weight, including the absence of any suggestion that the applicant would be prejudiced by providing the security, I am satisfied that orders for the provision of security for costs should be made.

28    The JVSTL parties initially sought security in an amount of $450,000, but have indicated that they would be content with an order for security in an amount of $362,724, being the amount that the applicant has suggested as a maximum amount for such security.

29    I will make orders accordingly, together with an order that the applicant pay the costs of the JVSTL parties on this application, subject to a reservation of the rights of each of the parties to seek a different costs order (noting that the JVSTL parties have indicated that they wish to be heard on the question of costs).

Associate:

Dated:    15 October 2026