Rainmont Pty Ltd (in liquidation) v Seymour Whyte Constructions Pty Ltd [2026] QSC 125

Sarah Ferrett | Sarah Cahill | Max Rylance

Key takeouts

• Security for costs applications must be brought and prosecuted promptly. Defendants cannot keep security for costs “up its sleeve” and deploy it when strategically convenient.
• The court will closely scrutinise delay in seeking or pursuing security, particularly where that delay disrupts the efficient progression of the proceeding.
• Security for costs is a “powerful weapon” and may be reduced or refused where it is used oppressively or as a means of stalling litigation.
• Even where a plaintiff is in liquidation and unable to meet an adverse costs order, security remains a discretionary remedy. The court will weigh factors including the merits of the claims, procedural conduct of the parties and the overarching objective of resolving disputes quickly and at a minimum expense.

Facts

In 2015, Rainmont Pty Ltd (Rainmont) carried out traffic sign construction and maintenance works for Seymour Whyte Constructions Pty Ltd (Seymour Whyte) across six Queensland building projects.

Following Rainmont’s administration and subsequent liquidation in early 2016, Seymour Whyte exercised its contractual right to take the works out of Rainmont’s hands and suspend further payments. Seymour Whyte advised that it would undertake a reconciliation of completion costs but never provided one.

In 2022, Rainmont commenced proceedings seeking payment for completed works and the release of retention monies. Seymour Whyte defended the claims and advanced various set off claims, including alleged overpayments, defects and delay related losses.

In February 2025, the parties consented to orders requiring Rainmont to provide $150,000 security for costs up to mediation. Rainmont provided that security and the mediation proceeded in October 2025.

Following the unsuccessful mediation, Seymour Whyte notified Rainmont that it intended to seek further security. However, it did not file a second application until April 2026, approximately six months later. During that period, Seymour Whyte refused to take further substantive steps in the proceeding until the security issue was resolved.

Decision

Freeburn J ordered Rainmont to provide a further $150,000 in security by way of an indemnity from its litigation funder’s insurer but otherwise dismissed Seymour Whyte’s application for $300,000 security.

Security for costs is not a litigation tactic

One of the primary issues was Seymour Whyte’s delay in bringing the application and its decision to effectively pause the proceeding until the application was determined.

The Court affirmed that security for costs is not “a card that a defendant can keep up its sleeve and play at its convenience“. A plaintiff is entitled to know at an early stage whether security will be required, before substantial resources are committed to the litigation.

The Court rejected Seymour Whyte’s submission that there had been no delay. A six month period elapsed between the failed mediation and the filing of the application, with no adequate explanation for that delay. The Court also noted Seymour Whyte’s earlier five month delay in filing its amended defence, despite doing so under an agreed court timetable.

More significantly, the Court found that Seymour Whyte had used the prospect of a further security application as a means of preventing the proceeding from advancing. Seymour Whyte had expressly communicated that it would not engage in further procedural steps until the security issue was resolved. Freeburn J considered that approach inconsistent with the objectives of the Uniform Civil Procedure Rules 1999 (Qld), which require disputes to be resolved justly, expeditiously and at minimum expense.

A “powerful weapon” that must be used carefully

The Court observed that security for costs is a “powerful weapon”, because of its potential to delay or derail litigation, a party seeking security must pursue the remedy in a manner involving the least possible oppression of its opponent.

Freeburn J was particularly concerned by the prospect of serial security applications. The previous order only covered costs up to mediation and the application before the Court sought security only up to the first day of trial, leaving open the possibility of a third application for costs incurred during trial itself. The Court observed that repeated security applications generate significant costs without advancing the substantive issues in dispute and can become counterproductive to the efficient resolution of proceedings.

Merits and nature of the claims

While the Court was not required to determine the merits of the underlying dispute, those merits remained a relevant discretionary consideration.

Freeburn J observed that Rainmont’s claims were relatively straightforward claims for payment for completed work and recovery of retention monies, some of which appeared to have been admitted in Seymour Whyte’s own payment schedules. By contrast, Seymour Whyte’s setoff claims appeared more complex and, importantly, were not advanced through the contractual reconciliation and accounting mechanisms contemplated by the subcontracts after work had been taken out of Rainmont’s hands.

Although the Court emphasised that no definitive conclusions could be drawn at the interlocutory stage, it considered the apparent strength of Rainmont’s claims and the difficulties facing Seymour Whyte’s setoff claims to be a modest factor weighing against further security.

Alternative security may be sufficient

Rainmont’s litigation funder offered an indemnity from its insurer for $150,000. The Court accepted that indemnity as meaningful and enforceable security. In doing so, Freeburn J reiterated that security for costs is not intended to provide a defendant with complete protection or a guaranteed indemnity against all costs exposure.

The offer therefore weighed heavily in favour of limiting any further security to the amount already proposed by the funder.