What happened: The Federal Court dismissed an insurer bid for $660,000 in additional security for costs in a EUR17.9 million trade credit dispute
Who's involved: BCC Trade Credit (trading as Bond and Credit Co), Tokio Marine & Nichido Fire Insurance, Marsh, and two Triumph Metals entities
What's at stake: $660,000 in additional security sought on top of $240,000 already agreed by consent
Why it matters: Consent orders on security for costs are binding contracts, not starting positions to be renegotiated when costs run higher than expected
Where it stands: Interlocutory application dismissed October 2, 2026. The underlying EUR17.9 million claim has not been tried
Two insurers agreed to put $240,000 in security for costs on the table. Then they came back and asked for $660,000 more.
The Federal Court was not having it.
In a ruling handed down on October 2, 2026, the court dismissed an application by BCC Trade Credit (trading as the Bond and Credit Co) and Tokio Marine & Nichido Fire Insurance Co Ltd to reopen a consent deal and seek additional security from Triumph Metals & Minerals Australia Pty Ltd and its Hong Kong affiliate.
The underlying dispute is substantial. The applicants say they traded in coal and copper anodes, that their buyers defaulted, and that EUR17.9 million is owed under a trade credit insurance policy. BCC Trade Credit and Tokio Marine are the insurers on the policy. Marsh Pty Ltd, the broker, is also a respondent but was not part of this application.
In October 2024, the two sides negotiated a security-for-costs arrangement - essentially, the amount the applicants would set aside to guarantee the insurers' legal bills if the applicants lost. They did the deal by email. The applicants accepted the insurers' figure of $240,000 to cover costs through mediation. Both sides confirmed the terms in writing. The resulting consent orders - court orders the parties agreed to together - were clear: the insurers could only seek more security after mediation had taken place.
No mediation has occurred. The insurers applied anyway.
It was found that the consent orders were not merely procedural housekeeping. They reflected what the court called a "real contract" between the parties. The email exchange made the terms plain: $240,000 up to and including mediation, no right to ask for more until after.
The insurers argued that significant, unforeseeable developments since October 2024 justified reopening the deal. They pointed to four things.
First, that the applicants' documents produced during the case revealed alleged backdating of trade documents, concurrent sales of the same goods to multiple buyers, and possible fraud. The court was not persuaded. Document review often leads to further enquiries and the insurers had not put a dollar figure on the extra work those enquiries generated.
Second, that the insurers had to amend their defence in February 2026. The court found that amending pleadings after document production is ordinary litigation, not the kind of exceptional change that would justify tearing up a deal. The relevant legal bills for that period came to less than $12,000.
Third, that forensic handwriting experts and a forensic accountant would likely be needed. The court accepted the need may not have been foreseeable but pointed out the insurers had had months to identify who those experts were and what they would cost. They had done neither.
Fourth, that the applicants' witness statements raised new matters. The court accepted the specific surprises were not anticipated but found they had not driven any particularly significant costs.
While the court confirmed it has the power to vary consent orders under rule 39.05(c) of the Federal Court Rules 2011, the test was whether variation was necessary to do justice between the parties. The agreement between them weighed heavily against it.
The insurers' costs had grown beyond what they expected. That, the court said, was a risk they accepted when they agreed to the October 2024 deal.
As a practical measure, it was indicated that the court would refer the parties to mediation once witness statements were complete, rather than waiting for expert reports. That move would bring forward the point at which the insurers could apply for further security under the original deal - and, more immediately, give both sides a chance to settle before expert costs balloon.
When two parties shake on a security-for-costs figure and lock it into consent orders, the court will not easily let one side walk it back because the litigation turned out to be more expensive than planned.
