If you are defending a long-running commercial claim brought by an impecunious plaintiff, security for costs in Queensland may still be available to you — even years into proceedings. A December 2025 decision of the Supreme Court of Queensland has confirmed that defendants are not automatically locked out of applying for security simply because litigation has been on foot for years. The decision in ADLU Pty Ltd v Ertech (Queensland) Pty Ltd & Anor [2025] QSC 328 is significant tactical authority that every commercial defendant — and their insurer — should know about.
What Is Security for Costs?
Security for costs is a court-ordered financial safeguard for defendants in civil litigation. When a court makes a security for costs order, the plaintiff is required to pay a specified sum of money into court — or provide an alternative form of security — as a condition of continuing their claim. The money sits in court as a guarantee that, if the defendant ultimately succeeds and is awarded costs, those costs can actually be recovered.
Without such an order, a defendant who wins at trial may find itself with a costs order it cannot enforce — particularly where the plaintiff is a company with few assets, or one that has restructured its business during the course of the proceedings.
In Queensland, the primary legislative framework for security for costs is found in the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). Rule 670 confers the court’s general discretionary power to order security. Rule 671 sets out the threshold conditions that must be satisfied before the discretion can be exercised. One of the most commonly invoked grounds is rule 671(a): where the plaintiff is a corporation and there is reason to believe it will be unable to pay the defendant’s costs if ordered to do so.
An important feature of a security for costs order is its procedural leverage: until the plaintiff pays the required security into court, proceedings are stayed. The litigation cannot move forward. For defendants defending long-running, expensive claims, this can be a powerful tool to manage costs risk and, in some cases, bring the proceedings to a practical halt if a financially weak plaintiff cannot fund the required security.
What Happened in ADLU v Ertech?
ADLU Pty Ltd v Ertech (Queensland) Pty Ltd & Anor [2025] QSC 328 was a Supreme Court of Queensland decision handed down on 4 December 2025. It arose from long-running commercial proceedings that had been on foot since 2019 — nearly six years before the security for costs application was heard.
The facts relevant to the application were as follows:
- 2019: The plaintiff (ADLU Pty Ltd, whose principal was referred to as “Spence”) commenced proceedings against the first defendant, Ertech (Queensland) Pty Ltd.
- 2021: Ertech raised the prospect of applying for security for costs. After correspondence between the parties, Spence asserted that it was financially sound and capable of meeting any adverse costs order. Ertech accepted this and did not pursue the application at that time.
- Mid-2025: Ertech learned new information that suggested Spence’s financial position had materially changed since 2021. Specifically, it became aware that the plaintiff was no longer actively running its business, which appeared to have been taken over and run by a new entity.
- Late 2025: Ertech applied for security for costs, approximately six years after proceedings commenced.
The plaintiff opposed the application on the basis, among other things, that Ertech had sat on its hands for nearly five years since first raising the issue, and that the application was too late.
The Key Legal Question: Was It Too Late?
The central legal question was whether the delay in bringing the security for costs application was fatal to Ertech’s case.
There is a well-established principle in Australian courts that security for costs applications should be brought promptly — ideally at the commencement of proceedings or very soon after. Courts have historically been reluctant to grant security where a defendant has allowed proceedings to advance substantially before raising the issue, on the basis that prejudice to the plaintiff increases with delay (having already incurred legal costs that would be wasted if proceedings are stayed or discontinued).
The conventional wisdom, therefore, was that a defendant who waited six years had almost certainly left it too late. The decision in ADLU v Ertech challenges that assumption in Queensland.
How Did the Court Exercise Its Discretion?
The Court was satisfied that the threshold test under rule 671(a) of the UCPR was met — that is, there was reason to believe the plaintiff would be unable to pay Ertech’s costs if ordered to do so. This was the foundational condition, and the plaintiff did not ultimately displace it.
On the question of delay, the Court accepted Ertech’s explanation for why it had not pursued security earlier:
- Justified restraint in 2021: When the issue was first raised, Spence asserted it was financially sound. The Court found it was consistent with UCPR rule 5 (the overriding obligation to facilitate the just and expeditious resolution of disputes) and the preconditions in rule 671 that Ertech did not proceed with the application at that time. There was no reason to doubt Spence’s representation.
- Changed circumstances in 2025: Ertech’s concerns only crystallised when new information emerged in mid-2025 suggesting the plaintiff’s financial position had materially changed from what had been represented in 2021. The business appeared to have migrated to a new entity, raising real doubt about the original plaintiff’s ability to fund any costs order.
- No demonstrated prejudice: Critically, the plaintiff could not demonstrate that it had suffered prejudice as a result of the delay in bringing the application. There was no evidence that Spence had incurred costs or taken steps in the proceeding in reliance on an assumption that no security application would be brought.
In the absence of demonstrated prejudice to the plaintiff, the Court was satisfied that the timing of Ertech’s application did not outweigh its legitimate need for protection against the risk of unrecoverable costs.
The Court ultimately ordered that ADLU provide security for Ertech’s costs, covering the period from mid-2025 to the expected conclusion of the proceedings.
Why This Decision Matters for Queensland Defendants
This decision is significant for several reasons.
First, and most importantly, it appears to be the first time the Queensland Supreme Court has ordered security for costs after a proceeding has been on foot for almost six years. Prior to this decision, many practitioners assumed that allowing proceedings to advance for multiple years without raising security effectively barred the application. ADLU v Ertech confirms that is not the law in Queensland.
Second, the decision validates a watch-and-wait approach where a defendant has an initial basis for concern about the plaintiff’s financial position, raises the issue but is reassured by the plaintiff, and then renews the application when circumstances genuinely change. Defendants who act in good faith in accepting a plaintiff’s assurance of financial soundness will not necessarily be penalised for that reasonableness later.
Third, the decision has particular relevance in the context of corporate restructuring and phoenix activity. Commercial litigation in Australia often drags on for years. During that time, a plaintiff company that was financially healthy at commencement may undergo restructuring — ceasing to trade, transferring its business to a related entity, or simply running out of money. ADLU v Ertech confirms that defendants can act on this change when they become aware of it, even late in proceedings.
Fourth, the decision reinforces that the court’s overriding discretion under rule 670 of the UCPR is genuinely broad. Delay is a relevant factor, but it is not automatically decisive. The absence of prejudice to the plaintiff is critical. Where a defendant can explain the delay and the plaintiff cannot point to concrete prejudice, the balance can still favour making the order.
For our commercial litigation lawyers in Brisbane, this decision is a valuable addition to the toolkit. It means that defendants and their advisers should not write off a security application simply because proceedings are advanced. The question is always whether the circumstances justify the application — not merely when it is brought.
When Should You Apply for Security for Costs?
Notwithstanding ADLU v Ertech, the general principle remains: earlier is better. A security for costs application brought promptly at the outset of proceedings is far easier to win than one brought years in. The reasons are practical:
- The plaintiff has had less opportunity to incur costs in reliance on an assumption that no application would be made.
- The court is less likely to view the application as a tactical manoeuvre to derail a case that has been running for years.
- Financial information about the plaintiff is more likely to be current and reliable.
That said, ADLU v Ertech establishes that the door is not automatically closed merely because proceedings are advanced. The following circumstances may justify a late application:
- A material, demonstrable change in the plaintiff’s financial position since the commencement of proceedings.
- The emergence of information (corporate searches, financial statements, market intelligence) that the plaintiff is no longer running its business or has transferred assets.
- Evidence of restructuring, voluntary administration, or related-party dealings that raise genuine concern about recoverability of costs.
- An earlier application was not pursued because the plaintiff gave assurances of financial soundness that the defendant had reasonable grounds to accept.
In any of these circumstances, legal advice should be sought promptly. The stronger the explanation for why the application was not brought earlier, and the weaker the plaintiff’s evidence of prejudice, the better the prospects.
Strategic Considerations for Defendants and Insurers
For corporate defendants and their liability insurers managing long-running Queensland litigation, ADLU v Ertech offers several practical takeaways:
Monitor the plaintiff’s financial position throughout the proceedings. Conduct periodic ASIC searches and monitor financial indicators — trading activity, PPSR registrations, related-party transactions, and news reports. If something changes, act on it.
Document your assessment at each stage. If you raise security for costs and then decide not to pursue it (as Ertech did in 2021), document why. Keep the correspondence with the plaintiff. If you later need to explain the delay, contemporaneous records will be critical.
Don’t assume Phoenix activity is too late to address. If a plaintiff company transfers its business to a related entity mid-proceedings, that may be exactly the kind of changed circumstance that justifies a fresh security application. Take advice immediately — and consider whether insolvency considerations (including potential insolvent trading or voidable transactions) are also in play.
Assess prejudice to the plaintiff carefully. The court in ADLU v Ertech was influenced by the absence of any demonstrated prejudice to the plaintiff from the delay. If the plaintiff has simply continued litigating as it otherwise would have, that is a strong basis for arguing the delay should not be decisive.
Consider the tactical value of a security order. If the plaintiff genuinely cannot fund the required security, a security for costs order may effectively end the litigation. Even if proceedings are merely stayed while security is paid, that puts financial pressure on a plaintiff of limited means and can create a window for settlement discussions. For defendants with significant exposure to adverse costs in a losing case — including companies in the debt recovery space facing counterclaims — this option deserves serious consideration.
Key Takeaways
- Late security for costs applications are not automatically fatal in Queensland. ADLU v Ertech [2025] QSC 328 confirms the court’s discretion under UCPR rule 670 is genuine and flexible.
- A material change in the plaintiff’s financial position can justify a late application, particularly where the defendant previously accepted the plaintiff’s assurances of financial soundness.
- Absence of prejudice to the plaintiff is critical. If the plaintiff cannot point to concrete prejudice from the delay, the balance is more likely to favour the defendant.
- This appears to be the first QSC order for security after nearly six years — a landmark data point for Queensland commercial litigation practice.
- Early applications remain preferable but the decision gives defendants a second bite at the apple in appropriate circumstances.
- Corporate defendants and insurers should monitor plaintiff financial health throughout long-running proceedings and act promptly when circumstances change.
Frequently Asked Questions
What is security for costs in Queensland?
Security for costs is a court order under the Uniform Civil Procedure Rules 1999 (Qld) requiring a plaintiff to pay money into court as security for the defendant’s legal costs. If the plaintiff loses the case, the defendant can access the security to recover its costs rather than chasing an asset-poor plaintiff. Until the security is paid, proceedings are stayed.
When can a defendant apply for security for costs?
A defendant can apply at any time during proceedings, provided it can satisfy at least one of the threshold conditions in UCPR rule 671 — most commonly that there is reason to believe the plaintiff (being a corporation) will be unable to pay the defendant’s costs if ordered to do so. Prompt application early in proceedings is strongly preferred, but ADLU v Ertech confirms a late application can succeed in the right circumstances.
Can a security for costs application be made late in proceedings?
Yes — although it is harder to obtain. The court will consider the reason for delay, whether the plaintiff has suffered prejudice as a result, and the overall balance of justice. In ADLU v Ertech [2025] QSC 328, the Queensland Supreme Court granted security nearly six years into proceedings, accepting that the defendant’s delay was justified by the plaintiff’s earlier assurances of financial soundness and that no prejudice had been demonstrated.
What happens if a plaintiff cannot pay the security ordered by the court?
If the plaintiff fails to comply with a security for costs order, the defendant can apply to the court to have the proceedings dismissed or stayed. In practice, an inability to pay security can bring litigation to an end — a significant tactical outcome for defendants facing long-running claims from financially weak plaintiffs.
Need advice about security for costs or a long-running commercial dispute? Boss Lawyers regularly act in complex commercial litigation and insolvency matters in Queensland. If you are defending a claim and have concerns about the plaintiff’s ability to meet a costs order, speak with us about your options.
To learn more about how we approach complex commercial litigation in Queensland, visit our Commercial Litigation Lawyers Brisbane page. You may also find these related articles useful:
- Garnishee Orders in Queensland: How to Collect a Judgment Debt
- Shareholder Disputes: Your Rights and Remedies Under the Corporations Act
- Commercial Dispute Resolution in Brisbane: Litigation, Mediation & Arbitration
Call Mark Harley on 1300 267 711 or contact Boss Lawyers online.
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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
