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Note: When Cleal Holdings Pty Ltd (Plaintiff) sued JG King Developments (Defendant) for fraud in a land development joint venture, Defendant sought an order providing security for costs. Plaintiff initially offered security by means of a personal undertaking from its sole director in the amount of AUD 50,000 and provided documentation as to the value of his assets, the current amount in a personal bank account, and a title register search listing him as the sole proprietor of a property. Prior to the ruling, Defendant was concerned with the value ascribed to the assets and that the director was not holding the assets as a security. Plaintiff responded by proposing a bank guarantee of AUD 50,000 and in the interim an interest bearing trust account in the same amount until the guarantee could be arranged. Defendant did not accept the trust offer, but did accept the bank guarantee subject acceptable to wording. The Supreme Court of Victoria, Ierodiaconou, J., ruled that a bank guarantee would be acceptable as security for costs. The Judge also ruled that the amount of security would be AUD 112,360 based on expert testimony.

The Judge stated that a party was entitled to offer security in the least disadvantageous manner and a personal undertaking could be accepted by the court if the individual is not impecunious, ruling that the Plaintiff was not. The Judge ruled that Defendant would be adequately protected by the a mixture of the AUD 50,000 bank guarantee offered by Plaintiff and a AUD 62,360 personal undertaking from Plaintiff’s director totaling AUD 112,360. The Judge did not discuss the trust account, or Defendant’s objections, as it was only meant to be an interim arrangement and she was satisfied that the bank guarantee and personal undertaking would be provided quickly.

Defendant appealed this decision desiring that the full amount of security be provided by the bank guarantee or by paying the security into the court. The Supreme Court of Victoria, Digby, J., ordered Plaintiff to pay AUD 62,360 in to the court and maintain the bank guarantee for AUD 50,000. The Judge ruled that evidence had not been given to show that Plaintiff’s director had the ability to make a personal undertaking of more than AUD 50,000. Because of this, the Judge ruled that it was an error in discretion to allow the director to make a personal undertaking.

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