Liquidator loses $1.5 million security for costs fight

A purportedly “strong case” hasn’t cut any ice for a Sydney liquidator seeking to avoid stumping up $1.5 million in security for costs.

As is revealed in Ceni Enterprises Pty Ltd (in liq) v Sykes, in the matter of Ceni Enterprises Pty Ltd (in liq) [2024] FCA 842 Federal Court judge Brigitte Markovic rejected the key argument of Olvera Advisors’ Michael Billingsley, in which he proposed that his case against the defendants was so strong the court could and should take it into account in deciding to reject the defendants’ applications.

Billingsley has about $1.36 million in the liquidation accounts of Cerni Enterprises Pty Ltd and Glassurn Pty Ltd and is suing individuals Adrian Richard Sykes and David Buckley as well as Autosmart Australia Pty Limited and Sykes Phoenix Pty Ltd.

Billingsley wants orders that the defendants pay the plaintiff companies compensation; equitable compensation, as well as providing an account of profits and, in the alternative, an order that Autosmart pay the unpaid balance of a purchase price as defined in Billingsley’s concise statement lodged with the court in January 2023.

But $1.36 is well under the $1.5 million the defendants applied for and Billingsley will have to look to an unidentified litigation funder to bankroll prosecution of his case as a consequence of Justice Markovic’s ruling.

“As is apparent from Mr Billingsley’s evidence and their detailed submissions, the plaintiffs have formed the view that their case is strong and that the defendants’ defences will fail,” the judge said.

“But, in the absence of having before me, at the very least, the defendants’ evidence, it is, in my view, simply too early to assess the strength of the plaintiffs’ claims.

“That is particularly so given the detail of the claims, their gravity, that many aspects of them are denied and that the only evidence before me in support of the claims is that marshalled by Mr Billingsley who, unsurprisingly, has sought to present the case he is prosecuting at its highest.”

Billingsley has about three weeks to get the first half of the security paid into court, otherwise the proceedings will be stayed. Rubbing the salt in a little deeper, her honour also ordered that he pay the defendants’ costs of their applications.

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