Background
On 30 April 2026, Justice Jackman ordered the applicants (True EV Distribution Pty Ltd and two related entities) to pay $1,256,860 into court as security for costs in this commercial dispute, with the first tranche of $628,430 due by 31 May 2026. The applicants failed to meet that deadline.
On 1 June 2026, the respondents’ solicitors contacted the applicants requesting payment and received a response that a further two weeks would be needed. When asked to provide substantiation by 9 June 2026, no payment was forthcoming. On 10 June 2026, the applicants’ solicitor indicated they needed until 22 June 2026 to pay. That same day, the respondents filed an interlocutory application seeking dismissal of the entire proceedings under section 56(4) of the Federal Court of Australia Act 1976 (Cth) and rule 19.01(1)(c) of the Federal Court Rules 2011 (Cth) due to the applicants’ non-compliance with the security order.
Justice Jackman listed the interlocutory application for hearing on 29 June 2026, one week after the applicants’ foreshadowed payment date. However, on 26 June 2026 at 4:21pm—just one business day before the hearing—the applicants’ solicitor informed the court that the first tranche had been paid that day, approximately 26 days late.
The Court’s Holding
Justice Jackman dismissed the respondents’ interlocutory application seeking dismissal of the proceedings. The judge acknowledged that the applicants had ultimately complied with the security order, albeit substantially late and only after additional payment timeframes had been missed and the respondents had incurred costs preparing their application.
However, the court made a costs order against the applicants, finding that they should bear the respondents’ costs of preparing and pursuing the interlocutory application. The judge emphasized that the first tranche was paid “about four weeks late, and after the additional timeframes proffered on two occasions by the applicants had come and gone.” This costs order reflected the reality that the respondents’ preparation of the application and supporting affidavit and written submissions had been rendered necessary by the applicants’ default and repeated delays in payment.
The court also varied the pre-trial timetable to accommodate the delay while preserving the trial date of 6 October 2026 (estimated to run for three weeks). The judge adopted new dates proposed by the respondents for pre-trial steps, finding them reasonable, and granted liberty to apply on reasonable notice if the applicants sought further variation or vacation of the hearing date.
Key Takeaways
- Late payment of security for costs—even if ultimately made before dismissal is ordered—does not insulate the defaulting party from costs consequences.
- Courts will order payment of costs incurred by the other party in preparing and prosecuting an interlocutory application where late compliance with a security order forced that application to be brought.
- Repeated assurances of payment on specific dates that are then missed strengthen the case for costs orders against the defaulting party.
- Dismissal of proceedings for non-compliance with security orders is discretionary; courts may stay their hand if payment is ultimately made, but the paying party will typically bear the costs incurred as a result of the delay.
Why It Matters
This decision clarifies that the doctrine of security for costs is not merely a procedural formality, and that non-compliance carries real consequences even where the default is eventually cured. While the court did not use its ultimate sanction—dismissal of the action—it made clear that applicants and plaintiffs who delay paying ordered security will face costs liability for the applications and defensive measures their non-compliance necessitates. This creates meaningful incentive for timely compliance with security orders and discourages the strategy of delaying payment while seeking indulgence from the court.
For litigants in Australian federal court proceedings, the decision reinforces that security for costs orders must be treated seriously: late payment does not escape sanction simply because payment is eventually made before a dismissal hearing. The respondent’s costs in enforcing the order become a separate liability, and the credibility damage from broken payment promises weighs heavily against the non-complying party.