t . the oo ugh ey . cad "188 PRACTICE AND PROCEDURE ~ Security for Costs - lmpecunious company - source of power - s.56 Federal Court Act - 0.28 Federal Court Rules - s.533 Companies Code (WA) - s.79 Judiciary Act ~ inherent jurisdiction inappropriate term - implied incidental power - principles for exercise of discretion ~- whether predisposition to order or unfettered discretion - reliance on possible frustration of applicant's claim - financial standing of parties behind applicant - bona fides and merits of claim - cause of impecuniosity - delay - quantum - principles on which assessed. BRYAN E. FENCOTT AND ASSOCIATES PIY CID v ERETTA PTY LTD, JOHN COOKE, BEMBOKA NOMINEES PTY LTD, NARDO PTY LID AND HIKKADWA PTY LTD WAG No. 83 of 1984 FRENCH J. ed > 31 March 1987 (hry fi~ Perth - IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NO. WAG 83 of 1984 IN A MATTER of an Application for Damages pursuant to the Trade Practices Act 1974 as amended. BETWEEN: BRYAN E. FENCOTT AND ASSOCIATES PTY LTD Applicant and ERETTA PTY LTD First Respondent and JOHN COOKE Second Respondent and BEMBOKA NOMINEES PTY LID Third Respondent and NARDO PTY LTD Fourth Respondent and HIKKADWA PTY LTD Fifth Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 31 MARCH 1987 WHERE MADE: PERTH wae THE COURT ORDERS THAT: l. The applicant do on or before 21 April 1987 give further security for the respondents' costs by way of lodgment with the Court of a bank guarantee in the amount of $10,000.00. Proceedings other than proceedings relating to _ the giving of such security be stayed until the security is given or Further order. The costs of the motion to be the respondents in any event. There is liberty to apply generally. The applicant no later than seven days after giving security as aforesaid, apply to the Registrar for an appointment to fix a hearing date. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL CCURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NO. WAG 83 OF 1984 IN A MATTER of an Application for Damages pursuant to the Trade Practices Act 1974 as amended. BETWEEN: BRYAN E. FENCOTT AND ASSOCIATES PTY LTD Applicant and ERETTA PTY LID First Respondent and JOHN COOKE Second Respondent and BEMBOKA NOMINEES PTY LTD Third Respondent and NARDO PTY LTD Fourth Respondent and HIKKADWA PTY LTD Fifth Respondent CORAM: FRENCH J. 31 March 1987 REASONS FOR JUDGMENT This is a motion for an order that the provide further security for costs. applicant 2. The action which was commenced in this Court on 20 September 1984 arises out of the sale by the applicant of its interest in the Craigie Tavern. In 1982 the Craigie Tavern was operated by the first respondent as trustee of the Craigie Tavern Unit Trust. The applicant was a beneficiary of that Trust, its interest represented by the allocation to it of 10 out of 40 units. By a written agreement dated 27 October 1982, it sold that interest for $41,263.00 to the third, fourth and fifth respondents who were the other unit holders. The applicant complains it sold at an undervalue because of statements made on behalf of the trustee by its accountant the second respondent, that turnover and profits of the business for the year ended 30 June 1982 were down on the previous year. The representations so made are said to constitute conduct by the first respondent in trade and commerce that was misleading and deceptive. The applicant also alleges against the third, fourth and fifth respondents that they, being controlled by directors of the first respondent and with knowledge of or access to information relating to the turnover and profits of the Tavern for the year 3. ended 30 June 1982, knew or had constructive knowledge that the price paid by them for the applicant's units was not their true value. In proceeding to purchase the applicant's units they were, 1t is said, in breach of a fiduciary duty. They were not parties to the application as filed but were joined by order of Burchett J. on 19 August 1986. On 28 November 1984 no defences had been filed for the first and second respondents but they brought a motion for an order for security for costs which came before Toohey J. on that day. The motion was not opposed and an order was then made in the following terms:- "1. The Applicant give security in the amount of $5,000 for the costs of the Respondents of and incidental to the proceedings 1n a form to be agreed by the parties and in default of agreement to. be determined by the Court. 2. Further proceedings on the Applicant's claim against the Respondent be stayed until security is provided. 3. Liberty be reserved to either party to apply generally upon 7 days notice to the other party. 4. The Applicant pay the Respondents' costs of the application by way of Notice of Motion filed on the 8th day of November, 1984." counsel for the applicant had said on the hearing of the motion that there was never any question that his client's directors were prepared first and second respondents on 1] May 1985. 4. Some months passed 1n which nothing happened although to give security. The matter was brought on again before Forster J. by the appearance by the applicant and his Honour ordered:- "aT, and discovery has been given and interrogatories administered and answered. move for "dT, The applicant give security for the costs of the Respondents in the sum of $5,000 by the payment unto Court of the said sum within 14 days of this day the court further orders that: The parties be at liberty to apply on two days notice. The applicant pay the respondents costs of this application in any event." A payment into court was made on 16 May. The proceedings have now progressed to the point where The action is ready for trial. The respondents now the following orders:- The Applicant do within seven (7) days of the date hereof give further security for the Respondents' costs to the satisfaction of the Court by way of payment into Court of the further sum of $10,000.00 and that in the meantime, all proceedings herein other than the proceedings relating to the giving of such security be stayed. There was then no 5. 2. The Applicant do pay the Respondents' costs of and incidental to this application. The applicant last filed an annual return at the office of the Corporate Affairs Commission in 1985. That was a return for the year ended 30 June 1984. It showed that as at 30 June 1984 the applicant was a company with an issued capital of $3.00, liabilities of $89,314.00 and no fixed assets. It was owed debts from two other proprietary limited companies in the amount of $131,605.00. However the uncontradicted evidence was that it dad not appear that the debts would be recovered. The applicant had not traded in the financial year ending 30 June 1984. Counsel for the applicant conceded on the hearing of the motion that the applicant 1f£ unsuccessful in these proceedings, would be unable to pay the respondents' costs. I should add that there was no evidence placed before the Court as to the financial standing of those who would benefit by these proceedings if the applicant were successful. Nor was there any evidence of the ability or willingness of the shareholders or any creditors of the applicant to meet the respondents' costs should the action fail. However counsel for the applicant made it clear to the Court that his client intended to instruct senior counsel at the trial of this action. 6. The progress of the application from its tnstitntion ta the present day may be set out in tabular form as follows:- Event Date Application f1led with statement of claim against first respondent and second respondent. Notice of Appearance by first and second respondents. Directions hearing adjourned 21 days. Directions hearing adjourned to date to be fixed. Order for security for costs against applicant in form to be agreed by parties - Toohey J. Order for payment of $5000 as security within 14 days - Forster J. Payment in made. Callover - matter stood over - Toohey J. Amended statement of claim filed. Request for further and better particulars of statement of claim. Further and better particulars of amended statement of claim filed. Directions given by Toohey J. Additional further and better particulars of statement of claim. Defence of first and second respondents. Callover - no order made. First and second respondents' discovery. 20 September 1984 8 October 1984 11 October 1984 1 November 1984 28 November 1984 1 May 1985 16 May 1985 28 June 1985 2 July 1985 11 July 1985 6 September 1985 ll September 1985 3 October 1985 28 October 1985 20 December 1985 9 January 1986 be pen —apepewee ye opens worres tT eras - Tor! ese cr racy a as AL Wer cack Pace Ler hea aan heii ad CT oe 7. Directions for applicant to give discovery - applicant to pay first 1 and second respondents' costs. 4 March 1986 Applicant's discovery filed. 26 March 1986 ; First and second respondents' | interrogatories delivered. 11 April 1986 ; Directions 3 June 1986 Motion to amend statement of claim and to join third, fourth and fifth respondents adjourned. 21 duly 1986 Change of applicant's solicitors. 24 July 1986 Applicant's answers to interrogatories filed. 28 July 1986 Order on respondents' motion for answers to interrogatories. Applicant to pay respondents' costs. Other motion adjourned ~- Muirhead J. 29 July 1986 I Order allowing joinder of additional respondents and amendments to statement of claim - Burchett J. 20 August 1986 Amended defence of first and second respondents. 9 September 1986 Defence of third, fourth and fifth respondents. 9 September 1986 ' Request for further and better particulars of statement of claim. 10 September 1986 Directions hearing adjourned to 3/10/86. No appearance for applicant ~- Forster J. 2 October 1986 Directions - order for answers to request for particulars, further and better discovery, interrogatories and in relation to expert evidence ~ Forster J. 3 October 1986 Further and better particulars filed. 4 November 1986 \ Supplementary interrogatories from ' respondents to applicant filed. 15 December 1986 Further discovery by respondents. 10 December 1986 a e Fhe Leseatel a Latte hh 8. Further discovery by respondents. 7 January 1987 Applicant's answers to supplementary interrogatories. 20 January 1987 Motion for further security adjourned to 30 March 1987 12 March 1987. The respondents contend that due to d@gelays by the applicant in its prosecution of the matter they have incurred substantial costs. To date, according to the affidavit of Gordon Craig Shepherd, they amount to $10,532. It appears from the chronology that the applicant has not been vigorous in its prosecution of the action. Without entering into a quantitative analysis, it can also be said that to some extent this has increased the costs incurred by the respondents. Exhibited to the affidavit of Shepherd is a detailed schedule of costs incurred by the respondents from September 1984 to the present time. Each item has been costed according to the Federal Court scale. The schedule was prepared by the respondents' solicitors. They have informed Mr Shepherd that there is still a substantial amount of work to be done and additional sums to be incurred by way of legal costs and disbursements before the conclusion of trial and judqment. They have estimated that these would exceed $5,000. On this basis total costs for the respondents would exceed $15,000. eee gS. As to the correctness of these estimates there was no effective challenge and I accept that they are within a reasonable range of likely costs given that both sides anticipate a trial extending over about a week. I was told that the respondents also intend to instruct senior counsel to appear at the trial. For the purpose of this decision I will not however proceed on the assumption that it would be reasonable in the circumstances to instruct senior counsel. The representations alleged against the first and second respondents are as set out in paragraph 6 of the further amended statement of claim filed 3 September 1986:- "In the course of dealings between the applicant and the first respondent from January 1982 or thereabouts to June 1982 and in the course of negotiations as to the price of the 10 units in the period from 3 September 1982 up until about 27 October 1982, the first and second respondents represented to the applicant by its servants or agents: (a) that the turnover and profit of the business for the year ended 30 June 1982 were down on the previous year." Paragraph 7 alleges, inter alia, that the representation alleged in paragraph 6 was confirmed in writing by a letter dated 7 October 1982 addressed by the second respondent to the applicant through 1ts solicitors. A copy of what is said to be that letter is exhibited to an affidavit sworn on 6 March 1987 by Gordon Gray Shepherd, a director of the first respondent. 10. Its text 1s as follows:- "Dear Sirs, CRAIGIE TAVERN UNIT TRUST Reference is made to your letter dated 2nd September, 1982 regarding the interests of Brian E. Fencott & Associates Pty. Ltd. in the above unit trust. We have been advised that the remaining unit holders are willing to acquire all of the interests held by Brian E. Fencott & Assoc1lates Pty Ltd in the trust estate at the date of this letter for a consideration of $60,000 payable in case unconditional. The unit holders have determined the $60,000 as fair and reasonable after taking into consideration: (a) The unit holding being offered is a minority interest; (b) The down turn in the sales figures being experienced by the Tavern resulting from competition from the Whitfords Tavern which commenced trading in January, 1982. The offer by the unit holders will remain firm for a period of 14 days from the date of this letter." Shepherd in his affidavit denies the representation attributed to himself and to Frederick Pawle. Further he says, that all information known to the directors of the first respondent at the relevant time and relating to the value of the units was given to the applicant. He also contended that a valuation of the Tavern carried out shortly prior to the sale of the units by the applicant, indicated that the price paid for the applicant's units equalled or exceeded their true value. ll. The valuation carried out by Collier Milne Pty Jtd was dated 18 August 1982 and was prepared for General Credits Limited following an approach to that company for finance for the construction of another tavern. According to Shepherd the contents of this valuation were not known to the respondents prior to their purchase of the applicant's units. The report showed a valuation at 18 August 1982 of $650,000 on the basis of an unencumbered title. It 1s not at all apparent from the materials provided by the respondents just how this valuation supports their case. Indeed, the applicant in answers to interrogatories sworn by one of its directors, Mr B.E. Fencott, indicates his belief as at June 1981 that the value of the tavern was $650,000 which after appropriate deductions for encumbrances and loans, would have left his ten units valued at approximately $84,000. A draft report from the first respondent's accountants dated 1 December 1986 was also exhibited to Shepherd's affidavit. This showed a figure of $43,775 as a fair value for the applicant's units. The status of the "draft" was not clarified in the affidavit material. to conclude that the respondents are bona fide in their defence to the applicant's claim. drawn that the applicant's claim 1s not brought bona fide or that 12. On the evidence before me on the motion, 1f 18 possible 1t has no reasonable prospect of success. No such conclusion should be drawn except upon evidence of the clearest kind. to the legal principles governing the exercise of the discretion Against this factual background it 1s necessary to turn to make the order that the respondents now seek. Court to order that an applicant in proceedings give security for costs. The Source of the Power There is a general power conferred upon the Federal Section 56 of the Federal Court of Australia Act 1976 provides:- "56(1) The Court or a Judge may order a plaintiff in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. (3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given. It does not permit the conclusion to be 13. (4) If security, or further security, 1s not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed. (5) This section does not affect the operation of any provision made by or under any other act or by the rules of Court for or in relation to the furnishing of security." The mode of invoking the exercise of the power regulated by 0.28 of the Federal Court Rules which provides:- "1. In this Order - (a) references to an applicant extend to any person who makes a claim for relief in any proceeding; and (b) references to a respondent extend to any person against whom a claim for relief 1s made in any proceeding. Application 2.(1)An application that an applicant shall provide security for costs shall be made by motion upon notice. (2) The notice of motion shall be supported by an affidavit stating the material facts and _ the =~+grounds upon which security for costs is sought. Cases for Security 3.(l)Where, in any proceeding, it appears to the Court on the application of a respondent - (a) that an applicant is ordinarily resident outside Australia; (b) that an applicant is suing, not for his own nears benefit, but for the benefit of some other . person and there is reason to believe that the - - applicant will be unable to pay the costs of the respondent if ordered to do so; (c) subject to sub-rule (2), that the address of an applicant is not stated or 1s mis-stated in his originating process; or is TEs oye eennyp owes i : 14. (d) that an applicant has changed his address after the commencement of the proceeding with a view to avoiding the consequences of the proceeding, the Court may order that applicant to give such security as the Court thinks fit for the costs of the respondent of and incidental to the proceeding. (2) The Court shall not order an applicant to give security by reason only of paragraph (1)(c) if at appears to the Court that the failure to state his address or the mis-statement of his address was made without 1untention to deceive. Manner of giving security. 4. Where the Court orders an applicant to give security for costs, the security shall be given in such manner, at such time, and in such terms (if any), as the Court may by order direct. Stay or Dismissal. 5.(1l)Where the Court orders that the applicant provide security for costs, 1t may order - (a) that the proceeding on any claims by the applicant for relief be stayed until security 1s provided; or (b) that if the applicant fails to comply with the order to provide security within the time limited in the order, the proceeding be thereafter stayed or dismissed. (2)Subject to sub-rule (1), the Court may set aside or vary any order made under this Order. (3)Where a proceeding stands dismissed pursuant to an order under this Order, that order shall not be set aside or varied except in special circumstances. Saving 6. This Order does not affect the provisions of any Act of the Commonwealth or of a State or Territory under which the Court may require security for costs to be given." hemor ge ene emeet meen eee meee en pepe eetpeetpe ete eee eters ee ete tees Ser eee ee nate ne peer ene erm ee - 15. Tn Jet Corporation of Australia Pty Ltd v Petres Pty Ltd (1983) 50 ALR 722 Northrop J. suggested at 731 that sub-rule 3(1) imposed limitations or restrictions on the unfettered discretion conferred by sub-s.56(1) of the Act. That proposition was not addressed on the appeal from his Honour's decision in Sent v Jet Corporation of Australia Pty Ltd (1984) 54 ALR 237. It was however overtaken by the observations of the Full Court in Bell Wholesale Co. Pty [Ltd v Gates Export Corporation (1984) 52 ALR 176, 178:- "No doubt s.59 1s the source of the power to make rules of court in relation to matters of practice and procedure. But these rules cannot operate so as to limit the wide power conferred by s.56 itself." This being an application for security for costs in respect of a corporate plaintiff, it is also necessary to have regard to the provisions of sub-s.533(1) of the Western Australian Companies Code 1981:- "(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, 1f it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and stay all proceedings until the security 1s given." e = Perr erry te ra Tre TT Co 16. By virtue of s.79 of the Judiciary Act the power so conferred on State Courts in Western Australia is also applicable to the Federal Court sitting in that State - Bell Wholesale Co. Pty Ltd v Gates Export Corporation (supra) at 179, Sent v Jet Corporation of Australia Pty Ltd (supra) at 251. In A.J. Thompson Pty. Ltd. v K.L.K. Manufacturing Pty Ltd (1985) 3 ACLC 414 reference was made to an inherent jurisdiction in the Court to order security for costs. The Federal Court however being a creature of statute, it is in my respectful opinion, inappropriate to speak of it as possessing an inherent jurisdiction. - Jackson v Sterling Industries Ltd [1986] ATPR 40-735 per Bowen CJ at 47,999 and Woodward J. at 48,007. With the qualification that it does not derive its existence directly from the constitution, it may be said of the Federal Court as Sir Hayden Starke said of the High Court in Rv Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 464:- "To the Constitution and the laws made under the Constitution 1t owes its existence and all its powers and whatever jurisdiction is not found there either expressly or by necessary implication does not exist." That 1s of course quite consistent with the existence of implied incidental powers necessary to the exercise of the jurisdiction and powers conferred on the Court by the statute - 17. see also Parsons v Martin (1984) 58 ALR 395 at 40]. Where however the relevant powers are, as here, conferred directly, it 1s unnecessary to voyage into penumbral regions in search of more of the same. Relationship Between General and Special Powers The legislative framework within which the present motion 1s brought provides, in s.56, a general power applicable to all plaintiffs and in s.533({1) of the Companies Code (1981) (WA) as applied to the court by s.79 of the Judiciary Act, a special power relating to corporations. The fact of the existence of the special power and the policy that 1t expresses may be treated as considerations relevant to any congruent exercise of the general power. The practical consequence in most cases will be that, within the range of application of the special power, the general power will be exercised in the same way as would the special power. An analogous approach is reflected in the treatment by the Supreme Court of Queensland of the relationship between its inherent jurisdiction and the power under s.533(1) of the Companies Code 1981 (Q1d). In Harpur v Ariadne (No. 2) (1984) 8 ACLR 835, Connolly J. with whom Campbell CJ and Demack J. agreed, spoke at 838 of 18. sub-s.533(1) laying down a principle to be applied ain the exercise of the Court's general inherent jurisdiction. Alternatively, the Court may as a matter of discretion, decline to exercise the general power in the area of operation of the special power - see Snow v Deputy Federal Commissioner of Taxation 87 ATC 4078 at 4085-4096. It 1s therefore possible and appropriate to deal with the motion for further security as though it directly invoked the exercise of the power under s.533 of the Companies Code (WA). As will appear however, there have been differing judicial views as to the way in which that power should be exercised. Principles Governing the Exercise of the Discretion To Order Security for Costs It is a venerable principle that poverty or even insolvency on the part of a plaintiff will not of itself attract a requirement for security for costs conditioning the right to institute and/or conduct legal proceedings. Declining an application for a rule to show cause why a plaintif£ should not give security for costs, Alderson B. in Ross v Jacques (1841) 8 M. & W. 135 at 136 said:- a - - -—= -- oe a Fe ea ee 8 19. ",.ethe plaintilf€ is within the jurirsdiction of the Court, and her poverty is no reason why she should give security for costs. The case of a plaintiff suing in forma pauper1s 1S an instance of that." See alsa Cowell v Taylor (1885) 31 Ch. D,34, Le Mesurier v Fergusson (1903) 20 TLR 32 (C.A.); Re Emery [1923] P.184 at 189, Sir Lindsay Parkinson & Co. Ltd v Triplan Ltd (1973) 2 All ER 273 at 276; Pearce v Naydler (1977) 1 WLR 899 at 902. It is an important exception to that principle that an impecunious plaintiff who is only a nominal plaintiff, that is to say, who sues for the benefit of another, may be required to give security. - Cowell v Taylor (supra), Mackie v Clough (1891) 17 VLR 20, Lloyd v Hathern Station Brick Co. Ltd (1901) 85 LT 158, Re Emery [1923] P.184, 189, Semler v Murphy (1968) Ch.183, Co-Operative Farmers and Graziers District Meat Supply Ltd v Smart {1977] VR 386 at 387. It 1s an exception expressly recognised in 0.28 r.3(1)}(b). Section 533 of the Companies Code makes the case of the corporate plaintiff a further, albeit statutory, exception to the general principle. Its antecedents go back to the Companies Act of 1862. t } | 20. Connolly J. said of 1t in Harpur v. Ariadne (No. 2) (1984) 8 ACLR 835 at 838:- "RK provision in these terms has been in the Companies Acts since, at the latest, the Companies Act 1862 which was described by Sir Francis Palmer as the Magna Carta of co-operative enterprise. Plainly enough it was enacted with full knowledge of the ancient rule that the impecunlosity of the plaintiff should not deny him his day in court and in the view that sound reasons of public policy did not call for such a rule in relation to joint stock companies. So regarded 1t served to deny the application to them, in cases where security was sought against them, of the rule which applied to satural persons." The question of the proper approach to the exercise of the discretion under this provision and its legislative predecessors has been judicially agitated on many occasions with varying results. In Imperial Bank of China, India, and Japan v Bank of Hindustan, China, and Japan [1866] Ch.App. 437 at 438 Turner Lud speaking of s.69 of the Companies Act 1862, albeit in the context of the appropriate level of security that should be ordered said:~ "This 1S a special enactment under a special state of circumstances, and cannot be governed by any general rule which has reference to a different state of circumstances, and the rule of the Court does not apply to this case." At one time it was thought that if it could be shown that a corporate plaintiff would be unable to pay the defendant's 21. costs, an order for security was mandatory. - Northhampton Coal Iron and Waggon Co. v Midland Waggon Co. (1878) 7 Ch.D. 500 at 503-504 and Pure Spirit Co. v Fowler (1890) 25 OBD 235 at 237; Annual Practice 1966 p.206. This proposition was raised before the Court of Appeal un Sir Lindsay Parkinson & Co Ltd v Triplan Ltd (1973) 2 All ER 273. Lord Penning MR at 285 concluded that 1f there is reason to believe that the company cannot pay the costs, then security may be ordered. There was not however any requirement that it must be ordered. "The court", he said "has a discretion which it will exercise considering all the circumstances of the particular case". Lawton LJ agreed:- " ...the court has a discretion and that discretion ought not to be hampered by any special rules or regulations, nor ought it to be put into ae straitjacket by considerations of burden of proof". Cairns LJ left open the possibility of a more restrictive view at 286 where he said:- ",..I agree that there is or at least may be, a discretion in the Court in relation to the matter. In my view the highest at which 1t can be put in favour of the applicants for security is the way in which it was put in the Irish case to which Lord Denning MR has ome meempeny ge 22. referred, Peppard & Co. Ltd v Boqoff [1962] IR 180 at 188, where 1t was said that there remains a discretion in the court which may be exercised in special circumstances; and, assuming that 1S a correct statement of the law, I am quite satisfied that there were special circumstances here." The substantial weight of authority in Australia has rejected any suggestion that a defendant is entitled to an order for security as of right where the impecuniosity of the company has been established. (For an early view to the contrary see Labor Daily Ltd v Keller (1939) 56 WN (NSW) 113). There have however, been conflicting judicial opinions expressed on whether the discretion that does exist should be exercised with a pre-disposition in favour of the making of an order. In Buckley v Bennell Design and Construction Pty Ltd (1974) 1 ACLR 301, the Court of Appeal in New South Wales considered s.363 of the Companies Act 1961 (NSW). Street CJ enunciated the policy of the section at 303:- "It reflects the concern of the legislature that, in permitting the incorporation of a limited liability entity, 1t was necessary to ensure that persons who might have dealings, whether voluntary or involuntary, with such an entity should have a measure of protection against the consequences of limited liability. In cases of contract the other party to the dealing would be on notice of the limited liability of the company and, the transaction being voluntary, he could be presumed to be 23. competent to look after his own interests in Ehat regard. Where, however, a company commences litigation against another party, that other party could find himself involuntarily prejudiced by the limited liability character of the plaintiff who had commenced proceedings against him. To protect the other party from the consequence of limited liability, there has always in companies legislation been a provision along the lines of s.363 of the New South Wales Act. In administering the policy laid down by provisions of that nature, the Courts have been concerned to achieve a balance between ensuring that adequate and fair protection is provided to the other party, and avoiding injustice to impecunious companies by unnecessarily shutting them out or prejudicing them in the conduct of litigation." Accepting that there were grounds for treating the discretion as unlimited, his Honour nevertheless observed at 305 that over its many years of history the section had been construed by the courts in a Manner indicating some pre-disposition in favour of granting a defendant who is sued by an impecunious company the protection of an order for security. He regarded the "unfettered discretion" approach of the majority in Parkinson, as an over correction in response to the view that an order for security was a matter of right once it was shown that the corporate plaintiff was impecunious. His Honour's view as expressed at 305 was:- "It seems to me that the discretion could properly be regarded as ordinarily exerciseable so as to protect a defendant sued by an impecunious company, but that, if the court in any case takes the view that this protection should not be afforded to the defendant, 1t has an unlimited and unrestricted discretion to give 24. effect to such view without having to look for special circumstances. I prefer to regard the discretion conferred by the section as being one which should be exercised merely with a predisposition in favour of the defendant party." That observation was, with respect, as later pointed out by Needham J., obiter - see MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 1 ACLC 404 at 407. The Court of Appeal was considering an application to extend time within which to seek leave to appeal against a decision refusing an order for security for costs. The application was refused on the basis of delay. The other two members of the Court, Moffitt P. and Hutley JA. did not enter upon a discussion of the principles regulating the exercise of the discretion. The views of the Chief Justice were adopted in a number of later decisions.- Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133 at 136 per Meares J., Tradestock Pty Ltd v INT (Management) Pty Ltd (1977) 14 ALR 52 at 56 per Smithers J., Specialised Building Materials Pty Ltd v EU Occusted Pty Ltd (1981) 37 ACTR 8 at 10 per Kelly J, Southern Cross Exploration NL v Fire and All Risks Insurance Co. Ltd (1985) 1 NSWLR 114 at 122 per Waddell J. J_& M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790, involved an application for security for costs pursuant to s.533 of the Companies Code (NSW). W a wy, § 4 wer th ty = pe eae oe "rey ory | arated ep t rept me < Q r The application was brought by the respondent to a pending appeal 25. un relation to a decision of Fox J. Speaking generally of the provision and its antecedents at 792 Bowen CJ said:- "The precursor of this section seems to have been introduced into company legislation to protect defendants against the risk that plaintiffs under the shield of limited liability might use litigation as a weapon of aggression putting defendants to expense they would not be able to recover under an order for costs. In this respect, the legislation placed company litigants in a different position from individual litigants so far as security for costs was concerned. The section 1s remedial. Thus the word "plaintiff" is given a wide meaning. It includes an appellant. Where the situation referred to in the section is established by credible testimony a discretion arises in the court to order security and the general disposition is to order security. However, the discretion is a wide one and the circumstances may be such that an order for security will be refused." In Drumdurno Pty Ltd v Braham (1982) 42 ALR 563, Sweeney J. also proceeded on the basis that Buckley v Bennell laid down a correct guide to the exercise of the discretion. In his own expression of the proper approach at 565 however his Honour said:- "In exercising its discretion the court needs to weigh up the competing interests of the parties having regard to all of the facts and circumstances of the particular case." 26. In Ilat Mominees Pty Ltd v Murraqong Nominees Pty Ltd (1980) 48 FLR 385 at 386 Smithers J. expressed support for the "predisposition" in a way that rather narrowed the gap between that approach and the unfettered discretion of Parkinson:- "Putting the case at its highest for the respondent, who 1s the applicant on this motion, the situation would be that, once impecunlosity of the company is shown, there might be in the absence of further material a predisposition towards the protection of the respondent from being sued by the impecunious company. But it is also very clear that once the court enters upon considerations relevant to the particular case _ the ultimate decision must depend upon the balance of justice and common sense." In Newton's Travel Service Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd (1982) 44 ALR 163 his Honour did not refer to Buckley v Bennell at all and appeared at 166 to approve of the formulation of the majority 1n Parkinson. Parkinson attracted support in England where a wide operation was attributed to the exercise of the discretion by Lane J. in T. Sloyan & Sons (Builders) Ltd v Brothers of Christian Instruction (1974) 3 All ER 715. is Honour rejected a submission that it was narrower than that conferred by the Rules of the Supreme Court. Megarry VC in Pearson v Naydler (1977) 1 WLR 899 at 903 adopted an approach similar to that of Lane J.:- 27. "Where the sole plaintiff is a limited company and its financial condition brings 1t within section 447, the court has the discretionary power to order 1t to gqive security for costs that I have already mentioned in relation to the Parkinson case [1973] OB 609. In Bilcon Ltd v Feqmay Investments Ltd (1966) 2 OB 221, 228, Nield J. concluded from the apparent financial frailty of the plaintiff company there that this made it "just" for him to order the company to give security for costs. As was pointed out during argument, the word "just" which the judge took from RSC., Ord. 23, r.1, does not in fact appear in section 447; but it seems to me to be an entirely appropriate term to apply in a case where Parliament has not laid down any express criteria for exercising the discretionary power." There 1s now a strong line of Australian authority which can fairly be said to support the majority view in Parkinson. Such support seems implicit in the judgment of Brinsden J. in Process Engineering Pty Ltd v Derby Meat Processing Co. Ltd (1977] WAR 145 at 147. In the Full Court of South Australia in John Arnold's Surf Shop Pty Ltd (In Liquidation) v Heller Factors Pty Ltd (1979) 22 SASR 20, Mitchell J. with whom King Cd agreed, referred to Buckley v Bennell (supra) and at 34 said of s. 363 of the Companies Act (1961) (SA) :- "T am of the opinion that to approach s.363 with a pre-disposition to make an order for security for costs would be to fetter the discretion which the legislation has left unfettered. It would be, as it seems to me, equally wrong to exercise the discretion 1n favour of making an order merely because the section enables such an order to be made as it would be to refuse an order merely because the company is impecunious." 28. Legoe J. at 328 saw $.363 as setting the boundaries of a defendant's application and leaving the decision whether an order for security should be made evenly balanced in the scale of judicial discretion. In M.A. Productions Pty. Ltd. v Austarama Television Pty Ltd (1982) 1 ACLC 405, Needham J., cited the South Australian decision in John Arnold's Surf Shop (supra) and made it clear that he did not regard himself as bound by the dicta of the Chief Justice in Buckley v Bennell so far as they related to a predisposition in favour of an order. His Honour accepted that the court should do justice to each of the parties attempting not to prejudice the defendant and attempting not, if possible, to shut out the plaintiff from litigating its complaints. In Spiel v Commodity Brokers Australia Pty Ltd (in Liquidation) (1983) 35 SASR 294. Bollen J. with whom Zelling and Wells JJ agreed, reaffirmed the position adopted in John Arnold's Surf Shop and at 300 said:- "The discretion is a wide one. The judge or magistrate asked to order security for costs should not approach the application with any pre-disposition at all. I think it follows that the circumstances in which the discretion should be exercised in favour of making an order cannot be stated exhaustively. Nor should there be any attempt to do so. The judge or magistrate must decide according to his view of the justice of the case. There should be no complaint at the imprecision of that statement. Beyond saying that the judge or magistrate ep ee ee ett ane neers ees ees 29. must behave judicially, one cannot define or delimit or categorise the circumstances in which security should be ordered to be given. It is quite another thing to speak of some matters which are capable of assuming importance in an application for security." The Full Court of the Federal Court in Bell Wholesale Co Pty Ltd v Gate Export Corporation (1984) 52 ALR 176 did not expressly address the issue. Relying upon s.56 of the Federal Court of Australia Act as the relevant source of power the Court held that it was unnecessary to find any alternative source of power in that case. The question whether the congruent applicability of s.533 affected the mode of exercise of the discretion under s.56 was not canvassed. At page 180 in the judgment however, 1t was said:- ",..the court's discretion is unfettered; each case must depend on its own circumstances;...." In Sent v Jet Corporation of Australia Pty Ltd (1984) 54 ALR 237, Smithers J. with whom Sweeney J. agreed, left open the correctness of the "predisposition" approach. At 255 his Honour said:- epee ns ee peeeprypmes eens aarp ere FER Tn Weryacae meeeeery pop ae oe — cow owe pen RI pe PERE of 30. "T£ 1t is going too far to say, as was said by Street CJ in Buckley v Bennell Design and Construction Pty Ltd, supra, at 303, and as I accepted in Tradestock Pty Ltd v INT (Management) Pty Ltd supra, that the discretion conferred by the section should be exercised merely with a predisposition in favour of the defendant party, nevertheless, the discretion 1s for the protection of the defendant from the unfair and possibly burdensome consequences of an unsuccessful claim against him by an impecunious company. In every case of such an action, where the result 1S in real doubt, risk of those consequences exists, and the need for protection exists. To my mind the statutory purpose 1s itself a factor deserving the weight in the exercise of the discretion. And the greater the quantum of loss if the risk materializes and the less apparent the chances of success, the greater the weight. As was said by Megarry vc in the observations mentioned above, "the statute not only opens the jurisdiction but also provides a substantial factor in the decision to exercise it." Blackburn CJ in Plaza Print Pty Ltd v South British Insurance Co Ltd (1984) 54 ACTR 3 at 6, expressly preferred the approach taken in the South Australian cases and by the majority in the Parkinson case. Toohey J. preferred the South Australian approach in Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 2 ACLC 286 at 287. So too Fisher J. in A.J. Thompson Pty Ltd v KLK Manufacturing Pty Ltd (1985) 3 ACLC 414 at 418. Judicial decision making on equivalent provisions under New Zealand companies legislation has followed a similar line. In Jollands Limited v Whitley [1949] NZLR 290, the Supreme Court comprising Fair and Cornish JJ. said that the language of s.380 of the Companies Act 1933 (NZ) (similar in terms se pmete em.) pene mmpeiasm snmp oh wep pm wpe es 31. to s.533) was such as to "give to the Court an entire and absolute discretion such as exists in England, as to whether or not any security should be ordered". In Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No. 2) [1977] NZLR 516 at 519 Quilliam J. regarded the views of Lord Denning and Lawton L.d. in the Parkinson case as authoritative for New Zealand purposes. In National Bank of New Zealand Ltd v Donald Export Trading Ltd (1980) 1 NZLR 97 the Court of Appeal at 102 found it "unhelpful to attempt to introduce any suggestion of predisposition one way or the other in the exercise of the discretion". Their Honours nevertheless approved the observation by Megarry VC in Pearson v Naydler (supra) that the inability of the plaintiff company to pay the defendant's costs is "a matter which not only opens the jurisdiction but also provides a substantial factor in the decision whether to exercise it". The preponderance of Australian, English and New Zealand authority favours the treatment of the discretion conferred by sub-s.533(1) of the Companies Code (WA) as a discretion to be exercised according to the merits of each case without any particular predisposition and I will so approach 1t in this case. Tene ee - - eo — Tt ——- tay Ons tht 9? a) Sar ie ae y aera ies wpe ae - yobe rer on aah ECON EM G2 TAT mT resem. Un 1 rem en Rr } pore a ia is 32. In doing so I note that there is a logical similarity between the case of a nominal plaintiff who sues for the benefit of another and the company which sues for the benefit of its shareholders, or in extrem1is, its creditors. This logical similarity has not, so far as I can see, resulted in any judicial perception that favours an order for security against a corporate plaintiff by reason of its corporate nature. In Co-Operative Farmers and Graziers Direct Meat Supply Ltd v Smart (1977) VR 386 the plaintiff was a registered co-operative to whom the provisions of the Companies Act 1961 (vic) did not apply. It sued by its receivers and managers. An argument that it should be treated as a nominal plaintiff suing for the benefit of its secured creditors was rejected by Kaye J. But the Court will look to the substance of the parties be they shareholders or creditors who stand behind the company and stand to gain if its litigation is successful. It has been held that an order for security should not be declined on the ground that 1t would frustrate the litigation unless the plaintiff company establishes that those who stand behind it and will gain from the litigation are also without means 33. - Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 52 ALR 176 at 179. The burden of showing such impecuniosity rests upon the company seeking to resist the order. Where such persons are financially able to provide adequate security, then it has been said that generally speaking 1t is inappropriate to refuse an order — Yandil Holdings Pty. Ltd. v Insurance Company of North America (1985) 3 ACLC 542 at 545. For example where the litigation is instigated and supported financially by a secured creditor of the company, the risk of that creditor pursuing his own interests in the action with no risk as to cost, 18 a weighty consideration - Sent v Jet Corporation of Australia Pty Ltd (1984) 54 ALR 237 at 253. This readiness to look through the corporate veil is also reflected in a passage from the judgment of Smithers J. in Tradestock Pty Ltd v INT (Management) Pty Ltd (supra) at 59:- ",..indeed it is a major, if not a dominating, consideration in this case that the plaintiff company is but a legal entity without substance, a convenient financially bereft alter ego for the two shareholders. Its capital is minimal, its assets are not disclosed but the inference to be drawn 1s that they are minimal, and it is not shown that it has any business of substance. This is not the case of a company whose shareholders have commztted capital and established a real business but finds itself currently without funds for some business reverse. This company would appear to be the type of legal entity, par excellence, which Parliament had in mind when it passed s.363(1)." : a a os TF Beseemes ty pee ro wer " ye . yy vie 7B reared rock oelennl Vateay vi " ary - Vv, 34. Factors Relevant to the Exercise of the Discretion (1) Whether The Order Will Frustrate the Plaintiff's Claim It 1S apparent that there will be cases in which the making of an order to give security for costs may put a corporate plaintiff in a position where it 1s unable to prosecute its claim. In Pacific Acceptance Corporation Ltd v Forsyth (No. 2) (1967) 2 NSWR 402 at 407 Moffitt P. said:- "...the very basis of the exercise of jurisdiction to order security for costs against a company as distinct from an individual is that the company is impoverished. It recognises that if a company wins it will get the benefit of its verdict and an order for costs against the defendant to the advantage of those who have an interest in the assets of the company, but that the defendant sued will, if successful, be at a disadvantage in being unable to recover his costs if the company is Financially insecure and that it 1s fair that he be placed in an equal position with the company by the company providing or having provided by those concerned in the fruits of the litigation, a means of the defendant sued recovering his costs, if he wins. The court in considering whether it ought to make an order as between two parties to an action ought prima facie to leave to the plaintiff to determine how it can best overcome any problems arising from its own umpoverishment, internal structure and composition of ats assets and liabilities and where it 1us_ under official management, whether it overcomes these problems with or without leave of the court under Part IX, or with or without the assistance of individuals interested in the assets of the company and the outcome of the litigation." 35. In Collignon Developments Pty. Ltd. v Wurth (1975) 1 ACLR 314 at 316 Needham J. questioned whether the possible frustration of the plaintiff's litigation was a consideration under s.363 and said that 1t was not accepted by Moffitt J. in the Pacific Acceptance Corporation case aS a matter going' to discretion. His Honour did not need to decide the point as there was no evidence in support of the contention in any event. For myself I doubt that Moffitt J. went so far as to exclude the possible effects of the order from ever being considered in relation to the exercise of the discretion. In Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (supra) Meares J. thought it correct as a general proposition that the effect of an order for security frustrating a plaintiff's right to litigate its claim, is not a ground for refusing to order that security be given. His Honour relied upon Pacific Acceptance Corporation Ltd, Collignon Developments and Buckley v Bennell. It is in my respectful view questionable whether these cases are authorities for the proposition that the potential frustration of a plaintiff's claim is not relevant to the exercise of the discretion. Certainly they stand against any contention that such frustration requires that an order for security be declined. The New Zealand Court of Appeal in National Bank of New zealand Limited v Donald Export Trading Ltd (1980) 1 N2LR 97, also penn oer oer oo = ee aH , zat ah yp rarrmury A nT }! Wren ry Cahir tend adeds aaa tse yl H a adopted the passage quoted above from the judgment of Noffitt P. in Pacific Acceptance Corporation. The Court did so in the context of its expressed opinion which immediately preceded the citation of the passage that:- "...21t 1s within the competence of a Court to make an order for security even though it 1s obvious that the ability of the company to comply with it will depend on the willingness of shareholders, creditors and the like to provide the necessary funds." In Tradestock Pty Ltd v INT (Management) Pty Ltd (1977) 14 ALR 52 at 58 Smithers J. accepted as a relevant factor that the making of an order for security for costs might well mean that the plaintiff's action could never proceed. So too did Sweeney J. in Drumdurno Pty Ltd v Braham (1982) 42 ALR 563 at 570, and Needham J. in M.A. Productions Pty Ltd v Austarama Television Pty Ltd (1982) 1 ACLC 404 at 407. It was regarded as a matter of importance by Rogers J. in Memutu v Lissenden (1983) 8 ACLR 364 at 365 and in Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542 at 545 where Clarke J. said:- "The fact that the ordering of security will frustrate the plaintiff's rights to litigate 1ts claim because of 1ts financial condition does not automatically lead to the refusal of an order. Nonetheless 1t will usually operate as a powerful factor in favour of exercising the Court's discretion in the plaintiff's favour." 4 inne oe - - = eee, tye ae -erere yes ray ae oy amma ered 4, 4 eee gop ee AL Trp pre oeetart '* = + re, Py 37. The effect of the authorities 1s, in my opinion, that the probability or certainty that an order for security for costs will frustrate the plaintiff's claim will not automatically lead to such order being withheld. It 1s however a factor relevant to the granting of an order and will weigh against it where there is no party standing behind the company who is in a position to provide the necessary security. Nothing has been said or addressed by way of evidence to indicate that the making of the order sought will frustrate the applicant's claim. Indeed as noted earlier, counsel for the applicant said quite unequivocally that his client intended to instruct senior counsel on the trial. It is not at all clear to me that the case warrants senior counsel but the expressed intention of the applicant indicates that 1t is being supported in the lrtagation by a person or persons of some financial standing. (ii) Merits of the Plaintiff's Claim The bona fides of the claim and its merits may be considered in the exercise of the discretion - Sir Lindsay Parkinson Ltd v Triplan Ltd (1973) 2 All ER 273 at 285, Process Engineering Pty Ltd v Derby Meat Processing Co. Ltd [1977] WAR 145 at 147, Concorde Enterprise Ltd v Anthony Motors (Hutt) Ltd (No. 2) (1977) 1 N2ZLR 516 at 520, MA Production Pty Ltd v Austarama Television Pty Ltd (1982) 1 ACLC 404 at 407, Newtons Travel Service Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd 38. (1982) 44 ALR 163 at 166, Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 2 ACLC 286 at 287. Collignon Developments Pty Ltd v Wurth (1975) 1 ACLR 314 at 315 suggests that the discretion must be exercised on the assumption that the defendant will be successful. That view 1s, with respect, difficult to reconcile with the substantial line of authority supporting the propriety of a consideration of the merits of the claim. It 1S a proposition expressly considered but not accepted in Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (supra) at 135. It is consistent with authority and the existence of a broadly based discretion that the bona fides and merits of the claim be taken into account where there 1s material from which some assessment can be made. Where there is a claim prima facie regular and disclosing a cause of action, I see no reason why the Court would, in the absence of evidence, proceed on the basis that the claim was other than bona fide with a reasonable prospect of success. In this case as already indicated, I am not prepared to make a finding either that the applicant's claim is not brought 39. bona fide or that 1t has no reasonable prospect of success. I am however satisfied that the respondent has a defence which is bona fide and has a reasonable prospect of success. (111) The Cause of the Plaintiff's Impecuniosity If the impecuniosity of the plaintiff be attributable to the defendant, that fact may weigh against an order for security - Parkinson (supra) at 287, Lynnebry (supra), MA Production (supra) at 407, Tradestock (supra) at 59, Ilat Nominees Pty Ltd v Murragong Nominees Pty Ltd (1980) 48 FLR 385. In the present case there is no evidence nor was any submission made to support a proposition that the impecunious position of the applicant results from any conduct on the part of the respondents. (iv) Delay The application for security must be made promptly - Foss Export Agency Pty Ltd v Trotman (1950) 67 WN (NSW) 1, Buckley v Bennell (supra) at 308. The further a plaintiff has proceeded in an action and the greater the costs it has been allowed to incur without steps being taken to apply for an order for security for costs, the more 40. difficult it will be to persuade the Court that such an order 1s not, in the circumstances, unfair or oppressive. The same broad principle holds true where the application is, as in this case, to increase the amount of security already ordered. Its application is mitigated by the fact that the plaintiff will have been placed on notice by an earlier application that security for costs is an issue. In this case the original order was made without opposition by the applicant. Further, the parties were given liberty to apply on 2 days notice. It has been said that delay on the part of the defendant may give rise to a waiver of the defendant's entitlement to security for costs - Jennings Ltd (In Holding) v Cole [1934] Nz Gaz. L.R. 165, Roumel1 Food Stores (NSW) Pty. Ltd. v The New India Assurance Co. Ltd (1972) 1 NSWLR 227. In Southern Cross Exploration NL v Fire & All Risks Insurance Co. Ltd (supra) Waddell J. said that the approach to delay should reflect the following well known passage in Lindsay Petroleum Co. v Hurd (1874) LR 5PC 221 at 240:- 41. "...Two circumstances, always important in such cases (that 1s where a defendant relies on the doctrine of laches) are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy." In the context of the broad discretion under s.533 and consistently with that approach delay is best regarded simply as a factor whose consequences are to be weighed in the balance in determining what 1s just between the parties. In the circumstances of this case, including' the existence of the previous security order, the inclusion of a provision for liberty to apply and the absence of any evidence of prejudice, I do not consider that there 1s any basis for a finding that the lapse of time since the original order weighs against the making of an order for further security. Quantum If security is to be ordered then it must in the language of s.533 be "sufficient". Beyond the limits imposed by the meaning of the word, there 1s nothing to limit the amount of security which can be ordered - Imperial Bank of China, India, and Japan v Bank of Hindustan, China, and Japan (1866) 1 Ch.App 437 at 438 per Knight Bruce LJ. 42. It is clear that the security may extend not only to future costs but also to costs already incurred - Brocklebank & Co. v The Kings Lynn Steam Ship Co. (1878) 3 CPD 365, Procon (Great Britain) Ltd v Provincial Building Co. Ltd (1984) 1 WLR 557, Southern Cross Exploration NL v Fire and All Risks Insurance Co. Ltd (supra). In fixing the amount of the security the Court must look firstly at the whole case and take into account, inter alia, the chance of 1t collapsing without coming to trial. It is not bound to give the amount of security which a defendant says will be the amount of his costs. - Dominion Brewery Ltd v Foster (1897) 77 LT 507. The Court may in such a case, order somewhat less than if there seems to be every prospect that the action will be fought to a finish. - T. Sloyan & Sons (Builders) Ltd v Brothers of Christian Instruction (supra) at 720. The Court does not set out to give a complete and certain indemnity to a defendant - Menhaden v Citibank NA (1984) 55 ALR 709 at 715 per Toohey J. The process of estimation embodies to a considerable extent, necessary reliance on the "feel" of the case after considering relevant factors - Pearson v Naydler (supra) at 907. 43. In my opinion, having reaqard to the evidence, the figure for costs already incurred and costs likely to be incurred before the matter comes to trial 1S a reasonatle and reasonably conservative estimate which was not challenged by the applicant. On the materials presently before me there does appear to be a reasonable prospect that the case will be fought to a conclusion. It is said now to be ready for trial. In the circumstances, I am of the view that the sum of $10,000 proposed by the respondents is appropriate. Conclusion The category of factors relevant to the exercise of the discretion to order security for costs 1s not closed. The salient features in this case have been described above and there is little about it which in this context may be said to be exceptional. In the circumstances of the case as outlined, I am satisfied that it is appropriate to make an order that the applicant give further security for costs in the amount of $10,000. ewe et ey erenal ihacananrar iar Lo mat DIONE yr eere eT tary SUR any. 44. I hereby certify that the preceding forty three (43) pages are a true copy of the Reasons for Judgment herein of his Honour Nr Justice French. Associate: Ci gcbaeth ete son a pate: ,7/ Aprit SUF 7 Counsel: - for the Applicant: Mr A. Camp instructed by Granich & Associates . for the Respondents: Ms C. Tan instructed by Dwyer Durack 30 March 1987 Date of Hearing: Date of Judgment: 31 March 1987 . qe re cer Saeed Eee a sake Panats mri sree As