Bo v Costi Cohen Pty Ltd

1. [1]

   By notice of motion filed on 10 February 2026, the respondent seeks, in summary, orders (1) that the appellant provide security for the respondent’s costs in the sum of $76,980 and (2) that the proceedings be stayed until payment is made by the appellant to the respondent in the sum of $17,137.94.

2. [2]

   As to the first order, the respondent relies on Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.21 — particularly subr (1)(a): that the appellant is ordinarily resident outside Australia. As to the second order, which was only faintly pressed, the respondent relies on the Court’s inherent jurisdiction.

Background

1. [3]

   The appellant is a natural person who, it appears, is a resident of China. The respondent is a corporation.

2. [4]

   The proceedings below were brought by the respondent against the appellant in the District Court of New South Wales: Costi Cohen Pty Ltd v Bo [2025] NSWDC 356. The respondent claimed damages for breach of an alleged agency agreement between the parties (the alleged breach being the appellant’s failure to pay a commission). The respondent also brought an alternative claim in quantum meruit. The appellant actively defended the proceedings, filing an amended defence and cross-claim.

3. [5]

   After a hearing over three days, the primary judge, Habib SC DCJ, found in favour of the respondent. On 26 September 2025, his Honour gave judgment against the appellant on the quantum meruit claim in the amount of $166,100, and ordered the appellant to pay the respondent interest in the amount of $17,137.94. His Honour also ordered that the appellant pay the respondent’s costs (which have not yet been agreed or assessed).

4. [6]

   On 26 September 2025 the primary judge also continued, until further order, freezing orders that had been made against the appellant before the hearing. Those orders prevented the appellant from in any way disposing of, dealing with or diminishing the value of any of his assets in Australia up to a value of $250,000. Those orders specifically identified a property at Macquarie Park in New South Wales. The evidence on the present application indicates that that property is worth at least in the order of $900,000; that the appellant is the registered proprietor; and that the property is unencumbered by any mortgage (whether registered or unregistered).

5. [7]

   The freezing orders had been varied in order to permit the appellant to complete the sale of the Macquarie Park property under a contract for sale dated 26 August 2024 for a sale price of $1,250,000. However, the contract for sale was terminated, and the uncontradicted evidence is that the appellant has not sought to sell that property since the termination of the contract on 3 October 2025.

Power

1. [8]

   Rule 51.50(1), which addresses security for costs in the Court of Appeal, provides: “In special circumstances, the Court may order that such security as the Court thinks fit be given for costs of an appeal.” Subrule (2) provides: “Subject to subrules (1) and (3), no security for costs of an appeal is to be required.” However, r 51.50(3) provides that subrr (1) and (2) “do not affect the powers of the Court under rule 42.21”.

2. [9]

   Rule 42.21 confers the Court’s general power to award security for costs under the rules. It applies to proceedings assigned to the Court of Appeal by reason of r 51.1(3), subject to the terminological modifications required by r 51.1(4).

3. [10]

   The respondent’s written submissions (at par 11) appeared to assume that the power in r 42.21 is subject to the requirement of special circumstances (as did the appellant’s written submissions at par 6). The respondent departed from that assumption in oral submissions; the appellant adhered to it (although perhaps faintly). The assumption may be doubted. On their face, the two rules provide independent powers to award security for costs: one where there are “special circumstances” (as to which, see Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247); the other where one or more of the criteria in r 42.21(1) are engaged. Since r 51.50(1) and (2) “do not affect the powers of the Court under rule 42.21”, it is difficult to see how a requirement of special circumstances could be a condition of the engagement of the powers under r 42.21. Nevertheless, as Handley AJA said in Fleming v Marshall [2010] NSWCA 152, “Although Pt 42 r 21 is applicable as a matter of power it is arguably relevant to the exercise of that discretion that the special rule in this Court does not apply to an application for leave to appeal and that power is only exercisable in special circumstances.”

4. [11]

   It is unnecessary in this case to decide whether a requirement of special circumstances applies in the Court of Appeal where r 42.21 is invoked. That is because the appellant not only conceded that, as a matter of fact, he is ordinarily resident outside Australia (which was established by the evidence on the application), but also accepted that, as a matter of law, the power in r 42.21(1)(a) is engaged. (However, as will be seen, as to discretion, the appellant submits that “foreign residency” is “a neutral factor”, for the reasons discussed below).

Discretion

1. [12]

   The respondent relies on four grounds in support of its application for security for costs.

   1. (1)

      The first is the fact that the appellant is ordinarily resident outside Australia. (The respondent submits that once the power in r 42.21(1)(a) is enlivened “the burden falls on [the appellant] to demonstrate why security should not be ordered.” To the extent that the word “burden” is intended to convey a legal onus, this submission should not be accepted. The fact that the power is engaged does not operate to impose a legal onus on the appellant to demonstrate that security should not be ordered.)

   2. (2)

      Secondly, the respondent submits that the appellant has “limited real property assets in New South Wales”.

   3. (3)

      Thirdly, the respondent complains that the appellant has not paid the interest amount of $17,137.94 ordered by the primary judge on 26 September 2025.

   4. (4)

      Fourthly, the respondent says that when it attempted to enforce the judgment below (which has not been stayed) by way of a Writ for Levy of Property at the property at Macquarie Park, the New South Wales Sheriff’s Office returned a Notice of Non Levy.

2. [13]

   The appellant’s submissions seek to put the matters on which the respondent relies in context, and advance countervailing considerations militating against an order for security.

3. [14]

   First, although I do not accept that foreign residency is, as the appellant submits, a wholly “neutral factor”, its force is very much reduced in the present case. The primary concern about foreign residency is that it may, when combined with an absence of assets in the jurisdiction (see e.g. McHugh J’s well-known statement in PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 at 323 about a party who “is resident out of the jurisdiction and has no assets within the jurisdiction”), have the practical effect of depriving a successful respondent of the benefit of an order for the costs of the appeal. Where the appellant is a foreign resident, security for costs is designed to give protection against the costs, delay and risks that a successful respondent might otherwise face in attempting to enforce a costs judgment in a foreign jurisdiction. There are strong reasons to doubt that the appellant’s foreign residency gives rise to any substantial concern of that kind in this case. Enforcement of any costs order in favour of the respondent is likely to take place in New South Wales, notwithstanding the appellant’s foreign residency.

4. [15]

   Far from being a litigant with no connection to this jurisdiction, the appellant points out that he has held a visa as a permanent resident of Australia since 16 May 2025. It is also relevant that it was the respondent which commenced the proceeding against the appellant, apparently knowing that he was ordinarily resident in China. The statement of claim identifies as the appellant’s address an address in China. The respondent does not appear to have been concerned that the fact of the appellant’s residence in China would deprive it of the fruits of a judgment — no doubt because of the reason identified in the next paragraph.

5. [16]

   The evidence indicates that the appellant has equity of at least $900,000 in the property at Macquarie Park in New South Wales. It is incorrect to describe that as “limited real property assets in New South Wales”. The Macquarie Park property is a substantial asset worth several times the amount at issue in the litigation. It is unencumbered by any mortgage. Nor has the respondent put before the Court any evidence to suggest that the appellant has any substantial unsecured liabilities to third parties which might be sought to be enforced by some means against the Macquarie Park asset to the respondent’s prejudice.

6. [17]

   The appellant submitted that even after allowing for the judgment debt, the interest on it, and the (as yet unquantified) costs order in favour of the respondent with respect to the costs below, there was likely to be “headroom” in the Macquarie Park property of at least about $600,000, which would be available to satisfy any costs order in this Court.

7. [18]

   It is relevant in this respect that the respondent has the benefit of an extant freezing order over the Macquarie Park property up to the value of $250,000. That order gives the respondent a degree of practical protection. But the respondent submitted that the combined effect of the judgment debt, the interest, and the costs order below would likely be to exhaust the $250,000 figure. The respondent’s concern is that there is no guarantee that any “headroom” in the asset will continue to be available to satisfy a costs order in this Court.

8. [19]

   At the hearing of the notice of motion, the appellant proffered the following undertaking to the Court:

9. [20]

   The respondent submitted that the Court should not accept that undertaking, given that the appellant has not complied with the order to pay interest (discussed below). I do not agree. The effect of the appellant’s undertaking will be to preserve the “headroom” in the Macquarie Park property pending the outcome of the appeal.

10. [21]

    That is a powerful reason for concluding that the respondent is adequately protected in respect of enforcing an order for the costs of the appeal.

11. [22]

    It should be noted that there was a very brief discussion at the hearing of the notice of motion of the question whether proceedings in bankruptcy could be brought against the appellant, notwithstanding his foreign residency, if he failed to pay any order for the costs of the appeal. But neither party made any affirmative submission about the likely operation of s 43(1) of the Bankruptcy Act 1966 (Cth) (which provides for the circumstances in which the Court may make a sequestration order on a petition presented by a creditor) in that situation.

12. [23]

    The appellant disputes the relevance of his failure to pay the interest amount — some $17,137.94. The respondent’s point is that, as a matter of form, the appellant is subject to an order to pay the interest amount, yet has not done so. The appellant’s explanation for not paying the interest appears to be (1) that despite its form as an order, the interest should properly be seen as forming part of the judgment debt (which the respondent is actively seeking to enforce); and (2) that no interest will be payable if the appellant succeeds in his appeal.

13. [24]

    The respondent acknowledges that the interest amount is in substance part of the judgment debt. In the circumstances, it is not clear why, as a matter of substance, the appellant’s failure to pay the interest amount constitutes an additional reason for granting security. The appellant’s failure to pay the interest does not appear appreciably to increase the risk that any costs order in favour of the respondent will not ultimately be satisfied.

14. [25]

    The circumstances that led to the Sheriff’s Notice of Non Levy, which was in evidence on the application, are obscure and are not explained in the respondent’s evidence. The notice refers to failed attempts to make contact with any occupant of the property. But it also records: “At this stage, we are not able to ascertain if the judgment debtor resides at this given address or owns any assets there.” The last five words suggest that the Sheriff may not have understood that the appellant was the registered proprietor of the property. In the absence of any evidence explaining what occurred, I do not accept for the purposes of this application that the notice establishes the proposition for which the respondent contends, namely, that it “faces a real risk of being unable to recover any costs order made in its favour on appeal”.

15. [26]

    The appellant relies on the following further considerations in answer to the application.

16. [27]

    First, that there is no real suggestion that the appellant is impecunious. So much may be accepted. On the other hand, on the assumption that the appellant is not unable to pay the judgment debt, it appears that his failure to do so may be explained only by unwillingness. In other words, there is a risk that the appellant will pay only if compelled to do so.

17. [28]

    Secondly, that the appellant is a natural person. Again, so much may be accepted. But rule 42.21(1)(a) clearly contemplates that security may be ordered against a natural person who is resident outside Australia. Here, the appellant does not point to any particular hardship, much less does he suggest that his appeal would be stultified, if security were awarded.

18. [29]

    Thirdly, that the appeal enjoys reasonable prospects of success. That there are arguable grounds of appeal was conceded by the respondent. Beyond that, it is not the Court’s function on the present application to form a view about the prospects of the appeal.

19. [30]

    Fourthly, the appellant submits that the evidence given by the respondent’s solicitor as to the costs and expenses incurred in the proceedings below is irrelevant to the present application. That is not necessarily so, given the existence of a freezing order capped at $250,000. But in circumstances where the costs below have not been the subject of any costs assessment; and where they appear, to put it neutrally, large relative to the amount claimed below (costs of $230,143.04 on a claim for $166,100); and in particular in light of the undertaking proffered by the appellant, this is a factor to be given little weight.

Conclusion on security for costs

1. [31]

   I am not persuaded that this is an appropriate case in which to order security for costs.

2. [32]

   That is principally because of a combination of the appellant’s equity in the unencumbered Macquarie Park property; the freezing order; and the undertaking proffered by the appellant. Together, those matters substantially answer the principal ground upon which security is sought, namely residence outside the jurisdiction.

3. [33]

   It is true that those matters do not make the recovery of a costs order as straightforward as would be the case if money had been paid into Court by way of security. But convenience is not the criterion. A respondent faced with an appellant ordinarily resident within New South Wales is not generally entitled to have the appellant pay money into Court by way of security for the respondent’s costs. The respondent is unlikely to be prejudiced by the appellant’s foreign residency. As noted above, enforcement of any costs order is likely to take place in New South Wales, notwithstanding the appellant’s foreign residency.

4. [34]

   The freezing order has already represented a significant intrusion upon what would otherwise be the appellant’s right to deal with his own property. The order was made for the protection of the respondent. On balance, I consider that that protection, when coupled with the undertaking proffered to the Court, suffices.

5. [35]

   The application for security should be dismissed.

6. [36]

   It follows that there is no occasion to address the detail of the evidence concerning the quantum of security which had been sought. It suffices for present purposes to say that the amount claimed — $76,980 — appeared on its face high in light of the amount in issue and the complexity of the appeal. Had I been persuaded to order security, it would have been in a much lower sum.

The stay

1. [37]

   Separately from the application for security for costs, the respondent also sought a stay of the appeal pending payment by the appellant of the interest sum, that is, $17,137.94. The only submission addressed to this question was made in writing as follows: “It would be fundamentally unjust to permit [the appellant] to prosecute his appeal while flouting his obligations under the 26 September orders. The Court’s broad inherent jurisdiction to stay proceedings to prevent an abuse of process provides a firm foundation for this relief.”

2. [38]

   No rule of court or authority was cited. No argument was developed explaining the alleged abuse of process. It does not follow from whatever exposure to execution or other process the appellant may have as a result of non-compliance with an order to pay the interest amount that the prosecution of the appeal is an abuse of process. The application for a stay should be dismissed.

Costs

1. [39]

   The respondent’s notice of motion is to be dismissed. However, that outcome was affected to a significant extent by the undertaking proffered in the course of the hearing of the notice of motion. The appropriate order is that the costs of the notice of motion be costs in the cause.

Conclusion

1. [40]

   I order as follows:

   1. (1)

      Upon the appellant by its counsel undertaking to the Court until further order of the Court:

   2. (2)

      The costs of the notice of motion be costs in the cause.