FEDERAL COURT OF AUSTRALIA Fairfield Pastoral Holdings Pty Ltd v Ridge Estate Pty Ltd (No 2) [2020] FCA 312 File number: SAD 312 of 2018 Judge: WHITE J Date of judgment: 11 March 2020 Catchwords: PRACTICE AND PROCEDURE – application for security for costs – Applicants appear unable to pay the Respondents' costs in the event that they fail in their action – Applicants resist the application by reference to their claim and the Respondents' cross-claim arising out of substantially the same factual matrix – whether there is a "high degree of overlap" between the subject matter of the two claims – where, in the event that security is not provided and the Applicants' claim is stayed, the Respondents intend pursuing two claims against the Applicants which overlap with claims made by the Applicants – security refused. Legislation: Australian Consumer Law s 18 Corporations Act 2001 (Cth) s 1335 Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules 2011 (Cth) r 19.01 Cases cited: Aquatown Pty Ltd v Holder Stroud Pty Ltd [1995] FCA 1667; (1995) 18 ACSR 622 Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 2) [2017] FCA 1102 Concrete Constructions Pty Ltd v Dalma Formwork Pty Ltd [1999] NSWCA 16 Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360 Imperial China Tours Pty Ltd v Petrovski [2017] FCA 1005 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 735; (2005) 146 FCR 144 Sydmar Pty Ltd v Statewide Developments Pty Ltd (1987) 73 ALR 289 Total Development Supplies Pty Ltd v GRD Building Pty Ltd [2008] FCA 844 Date of hearing: 11 June 2019 Registry: South Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 61 Counsel for the Applicants and Cross-Respondents: Mr S Ower SC Solicitor for the Applicants and Cross-Respondents: 1878 Elix Lawyers Pty Ltd Counsel for the Respondents and Cross-Claimants: Mr T Cox SC Solicitor for the Respondents and Cross-Claimants: Charlton Rowley ORDERS SAD 312 of 2018 BETWEEN: FAIRFIELD PASTORAL HOLDINGS PTY LTD ACN 603 973 584 First Applicant FAIRFIELD PASTORAL HOLDINGS NO 1 PTY LTD ACN 600 365 544 Second Applicant AND: RIDGE ESTATE PTY LTD ACN 165 731 706 First Respondent STEVEN PHILIP VAN NIEKERK Second Respondent PHILIP FREDERICK VAN NIEKERK (and another named in the Schedule) Third Respondent AND BETWEEN: RIDGE ESTATE PTY LTD ACN 165 731 706 (and another named in the Schedule) First Cross-Claimant AND: FAIRFIELD PASTORAL HOLDINGS PTY LTD ACN 603 973 584 (and another named in the Schedule) First Cross-Respondent JUDGE: WHITE J DATE OF ORDER: 11 march 2020 THE COURT ORDERS THAT: 1. The application for security for costs is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT WHITE J: 1 This judgment concerns an application by the respondents for an order that the applicants provide security for their costs. The respondents seek the order pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), s 1335 of the Corporations Act 2001 (Cth) and r 19.01 of the Federal Court Rules 2011 (Cth) (the FCR). 2 The amount of security sought by the respondents is $610,000 or such other amount as the Court may determine. They seek the complete stay of the applicants' claims until the security is provided. 3 Save for one matter, it is not necessary to refer in any detail to the principles which generally guide the exercise of the Court's discretion to order security. Those principles were summarised recently by Edelman J in Concrete Mining Structures Pty Ltd v Cellcrete Australia Pty Ltd (No 2) [2016] FCA 360 at [9]-[13]; by Kenny J in Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 2) [2017] FCA 1102 at [18]-[20]; and by Gleeson J in Imperial China Tours Pty Ltd v Petrovski [2017] FCA 1005 at [20]-[28]. The content of those principles was not in issue on the present application. 4 Section 1335(1) of the Corporations Act contains a threshold requirement for the exercise of the Court's discretion to order security, namely, that it appear by credible testimony that there is reason to believe that the corporate applicant will be unable to pay the costs of the respondent in the event that the respondent succeeds. Counsel for the applicants conceded that that threshold question was established in the present case, namely, that there is reason to believe that the applicants will be unable to pay the respondents' costs in the event that they fail in their action. On the evidence, that concession was in the nature of a recognition of the inevitable. 5 The applicants submitted nevertheless that the discretion to order security should not be exercised. Given their concession concerning the threshold question, they have the evidential onus of establishing why security should not be ordered: Concrete Mining Structure at [12]. 6 For this purpose, the applicants relied principally on the content of the cross-claim brought by the first and second respondents. They drew attention to authorities in which courts have held that, when there is a high degree of overlap between the subject matter of the claim of an applicant and the claim of a cross-claimant, an order for security is not generally made. Those authorities are Sydmar Pty Ltd v Statewide Developments Pty Ltd (1987) 73 ALR 289 at 300; Concrete Constructions Pty Ltd v Dalma Formwork Pty Ltd [1999] NSWCA 16 at [15], [24]; Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 735, (2005) 146 FCR 144 at [71]-[74]; and Total Development Supplies Pty Ltd v GRD Building Pty Ltd [2008] FCA 844, at [30]-[35]. 7 In Sydmar, Smart J said that a court would be slow to allow an action to be stayed because of an inability to provide security but a cross action covering substantially the same factual issues to proceed. In the circumstances of that case, his Honour considered that relevant parts of the defendant's defence to the plaintiff's action formed the basis, and a substantial part, of the defendant's cross-claim. 8 In Dalma Formwork, Sheppard AJA (with whom Mason P and Handley JA agreed) approved the following statement of Rolfe J at first instance, at [15]: In circumstances where the claim and the cross-claim arise out of the same, or essentially the same, factual matrix this, in my opinion is a very important consideration. It has been frequently and consistently said by Judges sitting in this Division that an order for security will not generally be made in such circumstances, in the exercise of the Court's discretion. It would, in my view, be quite wrong to preclude a party from litigating matters by way of a defence to a cross-claim merely because that party has been the initial institutor of the proceedings. The conduct of the other party may have forced the allegedly impecunious party to take the litigious initiative, whilst not constituting misconduct. Put simply if [Concrete] seeks to recover any part of the debt the issues raised by Dalma in its claim would be available to it as a defence, and there has never been any suggestion that a party could be precluded from defending proceedings, where the defence is bona fide, by reason of impecuniosity. It is, therefore, a somewhat arid exercise to be considering an application for security for costs if the plaintiff can be cast in the role of a defendant and can litigate the very matters the subject of its claim by way of defence. Sheppard AJA also noted the indication by Rolfe J that the situation just identified could be overcome by a defendant which stated unequivocally that it would not pursue any claims against the plaintiff in the event of an order for security being made and not met, at [16]. 9 In Nine Films, Lindgren J referred to the general principle that security should not be ordered when an application and the defence to it, on the one hand, and the cross-claim and defence to it, on the other, cover the same factual and legal territory, at [75]. 10 Total Development Supplies involved an application of the principles discussed in Dalma Formwork. 11 The applicants contend that circumstances of the kind discussed in these authorities exist in the present case such as to make it inappropriate for them to order security. This was the principal issue between the parties on the question of whether an order for security should be made. 12 The applicants submitted in addition that two of their claims were defensive in nature and that this too militated against the appropriateness of an order for security. In support the applicants referred to KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 202D-F; and Aquatown Pty Ltd v Holder Stroud Pty Ltd [1995] FCA 1667, (1995) 18 ACSR 622. 13 Finally, the applicants also submitted that an order for security should also be refused by reason of the respondents' delay in bringing the application. 14 It is appropriate to commence by referring to the issues in the litigation. Factual setting 15 The applicants are Fairfield Pastoral Holdings Pty Ltd (FPH) and Fairfield Pastoral Holdings No 1 Pty Ltd (FPH No 1). From February 2015 until 11 December 2015, FPH was known as Regional Pastoral Properties Pty Ltd. 16 There are four respondents to the proceedings. They are Ridge Estate Pty Ltd (Ridge Estate), Steven Philip van Niekerk (Steven), Philip Frederick van Niekerk (Philip) and Brenda Lynn van Niekerk (Brenda). Steven is the son of Philip and Brenda. The sole share in Ridge Estate is owned by Andrew John van Niekerk who is also a son of Philip and Brenda. Philip is the sole director of Ridge Estate. 17 Steven was declared bankrupt on 26 June 2014 and discharged from that bankruptcy on 17 June 2017. 18 FPH was established on 2 February 2015 and now has five shareholders. The two principal shareholders are Andrew James Hamilton and Cradle Estate Pty Ltd. Cradle Estate is a company associated with, and said to be controlled by, Steven but the evidence presently does not indicate the precise nature of his relationship with it. 19 FPH No 1 is a wholly owned subsidiary of FPH. Mr Hamilton, a cardiologist, is the sole director of both FPH and FPH No 1. 20 FPH is, or at least until recently has been, the trustee of the Piney Ridge Trust, pursuant to a Deed of Trust executed in April or May 2016. Brenda is named as the primary beneficiary of that trust. 21 Most of the dealings which give rise to the applicants' claims have been between Mr Hamilton and Steven. 22 The applicants allege that FPH was registered to undertake a business identifying and acquiring rural properties with a view to obtaining: (a) income streams from: (i) the grant of leases or licences; (ii) disturbance payments for coal seam gas well placements on the land (Disturbance Payments); and (b) capital growth. Mr Hamilton referred to this as "the Fairfield Pastoral model" and he said that it emanated from discussions he had had with Steven in late 2014. 23 The applicants' statement of claim is now in its third iteration (the FASC). In the FASC, the applicants plead that Mr Hamilton and Steven agreed that Steven would perform services as a consultant to FPH pursuant to which he would identify and source suitable pastoral properties for purchase and lease. The applicants claim that, in consideration of those services, Ridge Estate would be paid a consultancy fee of $15,000 per month exclusive of GST. By their defence, the respondents contend that the agreement was for Ridge Estate to be paid a total of $30,000 per month, $15,000 for Steven's time and $15,000 for anticipated expenses. Although forms of a written consultancy agreement recording the arrangements were prepared, none was ever executed by both FPH and Steven. 24 The applicants claim that FPH commenced payment of the consultancy fee of $15,000 per month from 12 February 2015 and continued doing so until September 2018. The total of the consultancy fees paid is said to be $709,500. 25 On 2 November 2018, FPH terminated the consultancy by written notice to Steven. 26 The applicants also plead that, in early 2018, FPH No 1 was the corporate project manager for the refurbishment of a warehouse at Yennora in New South Wales, and that it had appointed Steven as the project manager for the works. The applicants' claims 27 The FASC pleads claims of diverse kinds: (a) a claim for damages caused by alleged misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law. The conduct is said to comprise Ridge Estate, Philip and Steven misleading Mr Hamilton as to Steven's intentions with respect to the performance of consultancy services of the kind contemplated by the proposed consultancy agreement and as to Steven's purported performance of those services. The damages claimed comprise the aggregate of consultancy fees paid, the amount which the applicants paid in purchasing motor vehicles for the use of Steven and/or Ridge Estate in the performance of the consultancy agreement, various expenses incurred by Steven and/or Ridge Estate in the performance of the consultancy agreement which were reimbursed by the applicants and cash advances made by the applicants to Ridge Estate at the request of Steven; (b) conversion or detinue. The applicants plead that Ridge Estate, Steven and Philip have wrongfully failed and refused to deliver up possession of property of two kinds: (i) items owned by FPH; and (ii) items owned by FPH No 1. Originally, the applicants also sought orders for the delivery up of five motor vehicles (three Land Rovers and two Porsches) but that claim, apart from issues of costs, has been resolved by consent orders; (c) a restitutionary claim (made in the alternative to the misleading or deceptive conduct claim) in respect of the aggregate consultancy fee. The applicants allege a total failure of consideration and the unjust enrichment of Ridge Estate; (d) a claim for repayment by Ridge Estate of loans said to have been made by FPH No 1 by way of cash advances in the period from July 2015 to October 2018 at the request of Steven; (e) a claim for payment of the amount of secret commissions (totalling $175,000) said to have been demanded by, and paid to, Steven by two contractors engaged to perform work on the Yennora warehouse; (f) a claim for payment of amounts outlaid by FPH in the purchase of Lot 2, 252 Piney Ridge Road, Brukunga in South Australia (Lot 2). Lot 2 is adjacent to Lot 1, 252 Piney Ridge Road, Brukunga (Lot 1) which, at all material times, has been owned by Ridge Estate. The applicants plead that Ridge Estate wished to purchase Lot 2 but did not have the means to do so. FPH then agreed with Ridge Estate and Steven that it would become the trustee of a trust (the Piney Ridge Trust) which would purchase Lot 2 for $750,000, would pay from its own funds $30,000 as a deposit and a further $59,500 towards the purchase price, and borrow the balance from National Australia Bank (NAB) secured by a mortgage over Lot 2 and a personal guarantee from Mr Hamilton. The applicants plead that Ridge Estate and Steven agreed that they would, within 90 days of the settlement on Lot 2, refinance Lots 1 and 2 so as to repay the amount contributed by FPH and discharge the indebtedness to NAB. They plead that Ridge Estate and Steven has failed to do so; (g) a claim for payment of an amount paid by QBE Insurance to Ridge Estate or Steven by way of insurance indemnity in respect to property held on Lot 1 or Lot 2 which FPH asserts should have been paid to it; (h) a claim for the payment of the unpaid portion of the purchase price for cattle said to have been sold by FPH No 1 to Ridge Estate ($37,720); (i) a claim for the payment of $30,272 in respect of the agistment of 40 cattle of Ridge Estate on Lot 2; and (j) a claim for payment of an amount received by Ridge Estate from a third party in respect of use of Lot 2. 28 Apart from these monetary claims, the applicants also seek relief by way of declarations as to their ownership of various chattels and an order for delivery up of certain chattels. 29 I have referred to the applicants' pleading that they were misled by Steven and through him Ridge Estate into entering into the consultancy arrangement and in the making of the payments pursuant to it. In fact, they make wide-ranging claims that a number of acts by Steven and/or Ridge Estate before the entry into the consultancy agreement, or in the purported performance of it, constituted shams. The shams alleged by the applicants include: (a) a claim that, in September 2012 when it was apparent that Steven faced the prospect of bankruptcy, a company with the name Fairfield Pastoral (referred to in the FASC as "Original Fairfield") was incorporated with two shares and two directors with the intention that one of the two directors (Mr Dooley) would hold his one share as a bare Trustee for Steven and would exercise his powers as a director in accordance with Steven's directions and wishes; (b) a claim that at some unspecified time, a trust known as the KEC EDU Trust was created with Mr Dooley as trustee. The applicants allege that this was a sham because, instead of Mr Dooley holding the property on the Trust in accordance with the terms of the Trust Deed, it had been agreed that he would hold that property as bare trustee for Steven; (c) a claim that in October 2012, Original Fairfield, Mr Dooley and another company, Pelway Pty Ltd, agreed that Original Fairfield would hold certain property on trust known as the QPU Trust, for which there would be two units, one being issued to Pelway as trustee for the Nestor Superannuation Fund and the other issued to Mr Dooley as trustee for the KEC EDU Trust. The applicants allege that this was a sham because the subjective intention of Steven and Mr Dooley was that the latter would not hold the unit in the QPU Trust in accordance with the instructions creating the Trust, but as bare trustee for Steven; (d) the registration of Ridge Estate in September 2013 with Andrew as sole director and beneficial owner of its single share was a sham because the actual subjective intention of Steven and Andrew was that Andrew would at all times act in accordance with Steven's directions and hold the single share as bare trustee for Steven; (e) a claim that the replacement of Andrew as director of Ridge Estate by Philip later in September 2013 was a sham for the same reason; (f) a claim that the creation of the Ridge Estate Trust in 2013 was sham because the subjective intention of Steven, Ridge Estate, Philip and Andrew was that Ridge Estate would not hold any property on trust in accordance with the terms of the instrument creating it, but instead would hold it as bare trustee for Steven; (g) a claim that the appointment of Philip as director of Original Fairfield was a sham because the intention of Steven and Philip was that Philip would act in accordance with Steven's directions; (h) a claim that the registration of Cradle Estate with Philip as director and beneficial owner of the single share was a sham because the subjective intention of Steven and Philip was that Philip would act in accordance with Steven's directions and hold the share as a bare trustee for Steven; and (i) finally, a claim that Steven, and through him Ridge Estate, purported to, but did not, undertake any of the duties required under the consultancy agreement and misled the applicants in several respects as to the activities which had been undertaken and as to the results of those activities. In particular, the applicants allege that Steven's representations to them concerning his work was "in accordance with the sham arrangements". 30 The applicants also plead that later in October 2012, Original Fairfield as trustee of the QPU Trust purchased a property at Wieamballa in Queensland (the Fairfield Property) for the purpose of obtaining Disturbance Payments. The applicants do not allege that this purchase was a sham; 31 A peculiar feature of the applicants' claims is that, with the exception of the claims concerning consultancy agreement and Ridge Estate, it is not apparent that the pleaded shams have any bearing on the particular claims for relief identified by the applicants in their Further Amended Originating Application (the FAOA). In particular, it is not apparent that several of the pleaded shams are pleas of material facts in support of the relief claimed in the FAOA. 32 This is a necessarily brief summary of the claims brought by the applicants and the allegations they make but it suffices to indicate the diverse nature of the claims. The respondents' defence 33 By the defence filed to an earlier iteration of the statement of claim, the respondents deny the allegation of misleading or deceptive conduct. They plead that Mr Hamilton and Steven made two agreements: a joint venture agreement with respect to the identification and acquisition of properties and a services agreement pursuant to which Steven would undertake the tasks in pursuit of the business of the joint venture. They contend that FPH was formed as the joint venture company. The respondents plead that Steven and Ridge Estate did undertake significant work in performing the agreements; that their work resulted in the identification of, and entry into contracts for, the purchase of several properties; and that settlement on the purchases did not occur by reason of the failure of FPH to provide the funds for that purpose. 34 The respondents deny liability with respect to the motor vehicles and with respect to the expenses claimed by the applicants on the basis that they were incurred in the performance of the consultancy agreement. They dispute the applicants' ownership of most, but not all of the chattels which are claimed. 35 As part of their defence to the applicants' plea that Ridge Estate and/or Steven and/or Philip have wrongfully detained items belonging to FPH, the respondents plead that, in early November 2018, Mr Hamilton, without lawful authority, took from Lot 1 several items, including a John Deere tractor (defined as "the Misappropriated Equipment"), which were owned by Ridge Estate. 36 The respondents deny nearly the whole of the applicants' claim with respect to the alleged receipt by Steven of secret commissions, but do not plead any additional matters. 37 Although the respondents acknowledge that Steven requested FPH and Mr Hamilton to assist Ridge Estate and Steven's family to purchase Lot 2, they allege that the agreement by which FPH and Mr Hamilton did so contained terms which differ from those alleged by the applicants. 38 The respondents also deny liability to the applicants with respect to the remaining claims. It is not necessary for present purposes to detail those defences. 39 The respondents have not yet filed an amended defence to the FASC. The Court directed that any such amended defence be filed by 3 May 2019, but the respondents did not do so. Nor have they sought an extension of time in which to file an amended defence. The cross-claim 40 The first two respondents to the applicants' claim, Ridge Estate and Steven, bring a cross-claim against FPH and FPH No 1 and Mr Hamilton. Although they were granted leave on 2 April 2019 to file and serve an amended cross-claim by 3 May 2019, Ridge Estate and Steven did not do so. At the hearing of the security for costs application on 11 June 2019, counsel for Ridge Estate and Steven presented the form of the proposed amended cross-claim but they have still not sought an extension of time in which to file and serve that document. The consequence is that the summary of the cross-claim which follows is derived from the Notice of Cross-claim and the Statement of Cross-claim filed by Ridge Estate and Steven on 25 February 2019. 41 The cross-claim makes a variety of claims. 42 First, the cross-claimants allege breaches by FPH in failing to make payments, at the agreed rate, after March 2015, pursuant to the consultancy agreement (styled in the Notice of Cross Claim as "the Services Agreement") and seek damages in respect of alleged breaches of the joint venture agreement which they alleged was formed to pursue the Fairfield Pastoral model. They also seek damages in respect of the alleged failure by FPH and/or Hamilton to provide the funds to allow the sale of properties located by Steven in Queensland to be completed. These damages are sought on the basis of breach of contract and on the basis of alleged misleading or deceptive conduct by Mr Hamilton in representing that he would provide or procure the funds to enable purchases of identified properties to be completed. 43 Secondly, the cross-applicants seek orders for the delivery up of various items of equipment (the "Misappropriated Equipment") as defined in the Statement of Cross Claim. Some of this is equipment is the same, or substantially the same, as the equipment which is the subject of the applicants' own claim. 44 Thirdly, the cross-claimants claim expenses incurred by Steven in maintaining the vehicles provided for his use which have not yet been reimbursed by FPH or FPH No 1. 45 Finally, the cross claimants seek relief in respect of Lot 2, including orders in respect of its ownership and/or damages for breach of trust. In particular, they seek orders that FPH transfer the legal title in Lot 2 to Ridge Estate, together with associated orders. Consideration 46 Counsel for the respondents disputed that there was a "high degree of overlap" between the subject matter of the claims and the subject matter of the cross-claims. He pointed to a multiplicity of factual assertions in the FASC which have no relevance to the subject matter of the cross-claim. These included most of the allegations of sham made by the applicants. 47 I agree with counsel that there are a large number of factual allegations in the FASC which are of the character for which the respondents contend. Some seem to have limited relevance to the applicants' own claims and some seem to be a pleading of matters of context or background rather than being in the nature of facts which are material to the causes of action asserted by the applicants. 48 However, in my view, the existence or otherwise of the overlap asserted by the applicants is to be determined principally by reference to the nature of the claims and the issues to which those claims give rise, rather than by a paragraph by paragraph analysis of particular factual assertions. 49 Plainly, there is some overlap between the claims made by the applicants and the claims made in the cross-claim: (a) both the claim and cross-claim contain claims damages arising from the performance of the consultancy agreement. The fact that the cross-claimants allege both a joint venture agreement and a services agreement, and breaches of both, rather than a single consultancy agreement, does not alter that circumstance. The applicants also claim relief with respect to the conduct of Steven and Ridge Estate concerning the entry into the consultancy agreement (the misleading or deceptive conduct claim) to which there is no counterpart in the cross-claim. However, it appears that the identification of the terms of the parties' agreement(s) which will be necessary for the respective breach of contract claims, will be closely linked to the discussions and negotiations concerning the formation of the agreement(s) and, therefore, to the applicants' misleading or deceptive conduct claim. (b) the applicants' claims of sham in relation to the entry into, and performance of the consultancy agreement, appear to have a significant factual overlap with the cross-claim concerning performance of the agreement(s) alleged by the cross-claimants; (c) the cross-claimants' claim with respect to the alleged misleading or deceptive conduct by Mr Hamilton in the performance of the agreements appears to have a significant overlap with the matters on which the applicants will rely for their claims with respect to the performance of the consultancy agreement and the sham which they allege; (d) the cross-claimants' claim for delivery up of the Misappropriated Equipment has an overlap with the applicants' claim with respect to the recovery of property of FHP and FHP No 1, as well as with its claim for declaratory relief with respect to the ownership of that property; and (e) there is an obvious overlap between the issues (and the evidence which will be material to the resolution of those issues) concerning the competing claims with respect to Lot 2. 50 These overlapping claims and issues appear to be significant in the litigation. 51 Perhaps recognising that the Court may take that view, the solicitor for the respondents and cross-claimants deposed, on the day of the hearing of the application for security, that he had instructions from Steven and Philip (the latter in his capacity as director of Ridge Estate) that, in the event that the applicants did not proceed with their claim because of a failure to provide the security which the Court may order, the cross-claimants would not proceed with any of the claims against the applicants in their own capacities. It was evident that this commitment was made with a view to attracting the qualification to which Rolfe J had referred in Dalma Formwork, namely, the qualification to the principle that security should not be ordered when there is significant overlap between the issues on an application and the issues on a cross-claim unless the respondent states unequivocally that it will not pursue claims against the plaintiff in the event that an order for security is made and not met. 52 The solicitor deposed, however, that the cross-claimants would pursue: (a) the claims against FHP in its capacity as trustee of the Piney Ridge Trust and related claims against Mr Hamilton; and (b) the claim against Mr Hamilton relating to the removal of the "Misappropriated Equipment". 53 The solicitor went on to depose that he expected that a trial of the cross-claim, confined to the identified issues, would take in the order of two days. 54 Unfortunately, the solicitor did not identify the "related claims against Mr Hamilton" which the cross-claimants wished to pursue at the same time as pursuing the claim against FHP in its capacity as trustee of the Piney Ridge Trust. No "related claims" of that kind are referred to in the Notice of Cross-Claim, nor are any such claims made in the Statement of Cross-Claim as presently filed. It is accordingly unclear whether this is a mistake by the solicitor or a reference to the relief which may be sought by the cross-claimants against Mr Hamilton in the event that they are permitted to file and serve an amended cross-claim. 55 However, the respondents' and cross-claimants' position departs from the approach of Rolfe J in Dalma Formwork and acknowledged by the Court of Appeal at [15]-[16] in one important respect. His Honour contemplated that the existence of overlapping claims would not preclude an order for security if the defendant indicated that it would not pursue any claim against the plaintiff in the event of an order for security being made and not met. Far from giving such an unequivocal commitment, the respondents and counter-claimants do intend to pursue the claims just identified. 56 Moreover, both of the identified claims which the cross-claimants will pursue overlap with those of the applicants. This means that an order for the provision of security would have the effect that the applicants will not, without providing security, be able to pursue their claims with respect to the two identified subject matters, but that the cross-claimants will. Further, in that event, the applicants will be able to defend the cross-claimants' claims, but in doing so not be able to seek their own relief. 57 The submissions of the respondents and cross-claimants did not explain satisfactorily why it would be appropriate to preclude the applicants from pursuing their claim with respect to the Piney Ridge Trust and with respect to the Misappropriated Equipment without providing security, while at the same time permitting them to pursue their claims with respect to the same subject matter. It may of course be open to the applicants in that circumstance to bring their own claim for security for costs with respect to the pursuit of the cross-claim but that does make inapplicable the underlying principles stated in Sydmar, Dalma Formwork and Nine Films. I note again the statement of Rolfe J in Dalma Formwork at first instance that it would "quite wrong to preclude a party from litigating matters by way of a defence to a cross-claim merely because that party has been the initial institutor of the proceedings". 58 What the position may have been had the respondents and cross-claimants committed themselves to not pursuing any part of the cross-claim at all in the event that security was ordered, but not provided, need not be considered presently. 59 For this reason, the application for security for costs should be refused. That makes it unnecessary, strictly speaking, to consider the applicants' submissions concerning the defensive nature of their claims concerning Lot 2 and the Misappropriated Equipment and the alleged delay of the respondents' in bringing the application for security. I indicate, however, that the merits of the defence of delay to the application for security did not appear to be particularly strong. 60 It is also unnecessary to consider the respective submissions concerning the quantum of the security sought by the respondents. Nor is it necessary to consider the adequacy of the undertaking proffered by Mr Hamilton and another entity, PPD (Investments) No 1 Pty Ltd, with respect to part of the security sought by the respondents. Summary 61 For the reasons given above, the application for security is refused. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate: Dated: 11 March 2020 SCHEDULE OF PARTIES SAD 312 of 2018 Respondents Fourth Respondent: BRENDA LYNN VAN NIEKERK Cross-Claimants Second Cross-Claimant: STEVEN PHILIP VAN NIEKERK Cross-Respondents Second Cross-Respondent ANDREW HAMILTON Third Cross-Respondent FAIRFIELD PASTORAL NO 1 PTY LTD ACN 600 365 544