Federal Court of Australia Gulf Conveyor Systems Pty Ltd v Gulf Integrated Systems Solutions Pty Ltd [2020] FCA 1245 File number: NSD 2216 of 2018 Judgment of: KATZMANN J Date of judgment: 28 August 2020 Catchwords: PRACTICE AND PROCEDURE — referee appointed pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) to provide opinion on whether security for costs should be granted and, if so, in what amount — whether report should be adopted, rejected or varied Legislation: Corporations Act 2001 (Cth) s 1335 Federal Court of Australia Act 1976 (Cth) s 54A Federal Court Rules 2011 (Cth) r 28.67 Cases cited: Chocolate Factory Apartments v Westpoint Finance Pty Ltd [2005] NSWSC 784 Fairfield Pastoral Holdings Pty Ltd v Ridge Estate Pty Ltd (No 2) [2020] FCA 312 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd [2018] FCA 647 Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited (No 3) [2012] FCA 106 Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340; 19 ANZ Ins Cas ¶62-158 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 68 Date of last submission/s: 7 August 2020 Date of hearing: Determined on the papers Solicitor for the Applicant: Mr T Lee of Terence Lockyer Lee & Associates Counsel for the Respondents: Mr M Rose Solicitor for the Respondents: MinterEllison ORDERS NSD 2216 of 2018 BETWEEN: GULF CONVEYOR SYSTEMS PTY LTD Applicant AND: GULF INTEGRATED SYSTEMS SOLUTIONS PTY LTD First Respondent MARK ANTHONY AZZOPARDI Second Respondent JASON LENKO ANTUNOVICH (and others named in the Schedule) Third Respondent order made by: KATZMANN J DATE OF ORDER: 28 AUGUST 2020 THE COURT ORDERS THAT: 1. The report of the referee dated 1 July 2020 be adopted in whole. 2. The applicant provide security for the respondents' costs in the sum of $727,000. 3. The amount be paid in two tranches: $400,000 within 28 days and the balance by the time the applicant's evidence in chief is filed. 4. The security be provided by payment into Court or by unconditional bank guarantees in a form acceptable to the New South Wales District Registrar and be held by the District Registrar until further order. 5. The applicant pay the respondents' costs of, and incidental to, their security for costs application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT KATZMANN J: Introduction 1 This is a dispute arising out of a joint venture in which the applicant, Gulf Conveyor Systems Pty Ltd, and the fourth respondent, Oil and Gas Solutions Pty Ltd, were allegedly engaged and which was managed by the first respondent, Gulf Integrated Solutions Pty Ltd (GIS). The alleged purpose of the joint venture was to market and project manage business opportunities presented by the applicant's technology and a patent it jointly owned with a third party. 2 In this proceeding the applicant claims that GIS breached a shareholders' agreement in numerous respects, that GIS repudiated the agreement, and that the applicant accepted the repudiation. It also claims that, after the termination of the agreement, GIS continued to use a version of the applicant's unregistered trade mark without its permission, thereby engaging in conduct amounting to misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law and the tort of passing-off. It alleges that all of the respondents were engaged in unconscionable conduct. Through a cross-claim GIS alleges that, in breach of an oral agreement for the provision of design services to BHP Billiton Iron Ore Pty Limited, the applicant failed to pay invoices totalling in excess of $680,000, which amounts to unjust enrichment, and that the applicant has also failed to repay a loan in the sum of $150,000. 3 The proceeding was commenced in November 2018. At that stage there were three respondents: GIS and two individuals. On 8 March 2019 the respondents applied to the previous docket judge, Rares J, for security for costs. His Honour made an initial order for interim security in the sum of $10,000 for the sole purpose of providing for the respondents' costs of preparing a defence. At the same time he made a number of other orders including programming orders for dealing with the security for costs application. Since then, two additional respondents were joined, the pleadings were expanded, and the defence and cross-claim filed. The applicant's statement of claim has been amended twice and a further application for amendment is pending. The matter has been before the Court on no fewer than nine occasions. The parties attended a mediation and the respondents have provided discovery. 4 The respondents filed three affidavits in support of their application for security for costs, the applicant two in opposition. Both also filed submissions. 5 On 10 March 2020 I ordered that Jenni Priestley, one of the Court's senior national judicial registrars, be appointed a referee to deal with the security for costs application, more particularly to conduct an inquiry into two questions arising in the proceeding: whether security for costs should be granted and, if so, in what amount. I also ordered that the inquiry be conducted on the basis of evidence that had been filed to date, to the extent that it dealt with matters relevant to those questions, without cross-examination of deponents of affidavits unless the referee considered it would be helpful, and in the manner which, in the referee's opinion, was the most efficient and practical in order to answer the questions, with as little formality and expense as was reasonably possible. 6 The referee produced her report on 1 July 2020. Her answers to the two questions were as follows: (1) the applicant should provide security for the respondents' costs of the proceeding either by way of payment into Court or by the provision of unconditional bank guarantees in a form acceptable to the District Registrar and held by him until further order; and (2) the amount of security to be paid by the applicant should be $727,000. 7 The applicant urged the Court to reject the report or, alternatively, to vary it by reducing the sum by at least half. The respondents urged the Court to adopt it. The applicant asked the Court to decide the matter on the papers, a course to which the respondents consented. For the following reasons I have decided that the report should be adopted in its entirety. The relevant principles 8 The power to appoint a referee and to deal with a referee's report is conferred by s 54A of the Federal Court of Australia Act 1976 (Cth). Section 54A provides: Referral of questions to a referee (1) Subject to the Rules of Court, the Court may by order refer: (a) a proceeding in the Court; or (b) one or more questions arising in a proceeding in the Court; to a referee for inquiry and report in accordance with the Rules of Court. (2) A referral under subsection (1) may be made at any stage of a proceeding. (3) If a report of a referee under subsection (1) is provided to the Court, the Court may deal with the report as it thinks fit, including by doing the following: (a) adopting the report in whole or in part; (b) varying the report; (c) rejecting the report; (d) making such orders as the Court thinks fit in respect of any proceeding or question referred to the referee. 9 Division 28.6 of the Federal Court Rules 2011 (Cth) establishes rules for the conduct of a referral. 10 After the referee has provided the Court with a written report, r 28.67 comes into play. It provides: Proceeding on report (1) After a report has been given to the Court, a party may, on application, ask the Court to do any of the following: (a) adopt, vary or reject the report, in the whole or in part; (b) require an explanation by way of a further report by the referee; (c) remit on any ground, for further consideration by the referee, the whole or any part of the matter that was referred to the referee for inquiry and report; (d) decide any matter on the evidence taken before the referee, with or without additional evidence; (e) give judgment or make an order in relation to the proceeding or question. (2) A party must not adduce in the Court evidence given in an inquiry. 11 If a party makes such an application the Court may grant or refuse the order sought or make a different order: see r 1.41. No application was filed by either the applicant or the respondents. But a request was made, both orally and in writing, and at the request of the applicant I made an order on 27 July 2020 dispensing with any requirement for the filing of a formal application. 12 On the face of things the Court is given a broad discretion, as the applicant submitted. But the exercise of the discretion is governed by principles drawn from the object and purpose of the relevant rules. Those principles are well-established. They were summarised by McDougall J in Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 at [12] and Chocolate Factory Apartments v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [7]. Although these principles were formulated in the context of Pt 72 r 13 of the Supreme Court Rules 1970 (NSW), that rule is not materially different from r 28.67 of the Federal Court Rules and the same principles have been cited with approval in numerous judgments of this Court: see, for example, Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited (No 3) [2012] FCA 106 at [3]–[9] (Jacobson J); Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340; 19 ANZ Ins Cas ¶62-158 at [10] (Allsop CJ); Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd [2018] FCA 647 at [6]–[7] (Burley J). The relevant principles are these. 13 First, an application made under the relevant rule is not an appeal. The Court does not conduct a hearing de novo or a rehearing. A party who is dissatisfied with a referee's report is not entitled to require the Court to reconsider and redetermine afresh matters, whether of fact or law, which the party wants to contest. See Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 562–563 (Gleeson CJ). "The right to be heard does not involve the right to be heard twice": Super Pty Ltd at 567 (Mahoney JA). 14 Second, the discretion to adopt, vary or reject a referee's report is to be exercised in a manner consistent with the context and purpose of the relevant rules. The purpose of the rules is to provide, where the interests of justice so require, "a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest": Super Pty Ltd at 563. 15 Third, if the source of a party's dissatisfaction with a report is a question of law or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh. 16 Fourth, "if the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection": Chocolate Factory Apartments at [7]. In this context, "patent misapprehension of the evidence" means a lack of understanding of the evidence and not the weight attributed to it; and "perversity or manifest unreasonableness" means a conclusion that no reasonable tribunal of fact could have reached: Chocolate Factory Apartments at [7]. 17 But in general, the referee's findings of fact should not be re-agitated before the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee has expertise. It is not enough for an aggrieved party to point to errors of fact which would be amenable to correction by an appellate court. 18 Fifth, even if it were to be shown that the Court might have come to a different conclusion in some respect from that reached by the referee, absent any error of the kind referred to above, it would not be a proper exercise of the discretion conferred by r 28.67 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report. 19 Sixth, the Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee the evidence and submissions upon which they wish to rely. 20 Seventh, although the reasons given by the referee may appear to be adequate, where the party challenging the report contends that they are not because the referee did not deal with "very significant evidence", the Court may examine the evidence to see whether the reasons were in fact inadequate because they omitted to refer to such evidence: Chocolate Factory Apartments at [7]. 21 Eighth, if the Court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the Court may decline to adopt the report or examine the evidence to see whether the expense of a further proceeding before the referee is justified. The referee's report 22 After a brief introduction, the referee began by describing the background to the application and identifying the materials to which she had had regard in preparing the report. She then referred to the statutory sources of power to grant security for costs and addressed the "threshold question" raised by s 1335 of the Corporations Act 2001 (Cth), namely, whether there is reason to believe that the applicant would be unable to pay the respondents' costs in the event that the respondents succeeded in their defence. She summarised the respondents' evidence on this question, noted that it was unchallenged, and concluded that the threshold question had been satisfied. 23 The referee then turned to consider the exercise of the discretion. To this end she addressed a list of factors typically taken into account by the Court. 24 First, the referee noted that the application was brought "at an appropriate time", the interim order made by Rares J, and the subsequent delay, but concluded that it was not attributable to the respondents. 25 Second, the referee considered the strength and bona fides of the applicant's case. She observed that an application for security for costs is not intended to become a mini-trial of the substantive issues, noted that the proceeding was "hotly contested", and acknowledged that it raised serious questions to be tried. But she said that it had not been demonstrated that the applicant had such "a high degree of probability of success" so as to weigh against the grant of security. 26 Third, the referee addressed the question of whether the applicant's impecuniosity was caused by the respondents' conduct the subject of its claim, noting that the applicant's "counsel" (in fact its solicitor, Mr Lee) had indicated in his written submissions that the applicant did not rely on this ground. 27 Fourth, the referee observed that no evidence led by the applicant would cause her to conclude that the security for costs application "in and of itself" was oppressive in the sense that it was being used to deny the applicant a right to litigate. 28 Fifth, the referee considered that the proceeding could not be characterised as defensive having regard to the way the term is generally used in the authorities. She also noted that no claim had been made for interim relief to restrain any respondent from infringing the patent the subject of the proceeding. 29 Finally, the referee observed that the applicant had made it clear that Colin Benjamin, a director of the applicant, and the deponent of the only affidavit upon which the applicant relied, was not prepared to provide either security or an undertaking to be liable for the respondents' costs. 30 The referee concluded that there were no discretionary factors against the grant of security. 31 The referee then addressed the question of quantum. To this end she examined the evidence in some detail and concluded that the respondents' lawyers had already carried out substantial work. They had costed that work (including counsel's fees) at over $970,000 excluding the work on their defence which was the subject of the interim order. Future costs in defending the proceeding were estimated at more than $540,000, so that the total gross professional fees and disbursements up until the close of evidence were estimated at $1,523.471 (including GST). The referee noted with concern the "very substantial increase in the anticipated costs of the respondents" since the application had been filed in March 2019. 32 The referee referred to the principles for quantifying security for costs and applied them. In the result, she applied a number of discounts before arriving at the figure of $727,000. Should the report be rejected? 33 The applicant contended that the report should be rejected for the following reasons. 34 First, it filed and served amended submissions dated 9 March 2020 which were 19 pages long and annexed numerous documents none of which was addressed in the referee's report. The Court was invited to review those submissions and examine the evidence for itself. 35 In her report the referee said that she had had regard to the applicant's submissions dated 10 February 2020 and did not mention the amended submissions dated 9 March 2020. 36 The applicant submitted that the failure to address the 9 March 2020 submissions in her report "led to a finding that no reasonable finder of fact could have made". I cannot accept this submission. The applicant did not identify the relevant finding. If the implication is that it is the decision that security should be given, I reject it. 37 The absence from the report of a reference to the amended submissions is of no moment. The applicant did not submit that the referee did not address or consider the 10 February 2020 submissions. The applicant accepted that the referee had read the 9 March 2020 submissions before the inquiry and the referee stated in her report that she had had regard to the materials to which she was taken by the advocates for the respective parties. There is no reason why I should not take the referee at her word. 38 The applicant complained that the referee did not mention the amendments in her report. But the amendments do not appear to be substantial and the applicant did not indicate how any failure to refer the amendments or any particular amendment gave rise to an error that would warrant the rejection of the report. The applicant submitted that during oral argument he had taken the referee to para 31 of the 9 March 2020 submissions. While some amendments were made to that paragraph, the submissions concerning that paragraph were confined to subpara 31(e) which had not been amended. 39 The applicant also complained that the referee did not refer to all of the written submissions. But the referee was not obliged to refer to them all in her report, especially since it was a term of the referral that the report not exceed 10 pages. I reject the submission made in reply that (contrary to what she said in her report) the referee confined her consideration to the oral submissions. 40 Second, the applicant contended, in para 23 of her report, the referee made a number of errors. In that paragraph the referee stated: As to the question of the strength and bona fides of the Applicant's case this was the focus of the Applicant's written and oral submissions before me. Counsel for the Applicant made lengthy submissions about the conduct of the Respondents including relying on what he described as a "factual matrix of deception and deceit and most probably criminality" on the part of the Respondents. Those allegations are not pleaded or substantiated by any evidence that I was taken to and cannot in my view properly be considered as matters that should weigh against the discretion to grant security. 41 The applicant submitted that the referee was incorrect "on three fundamental bases": (1) The oral submissions were not directed to the strength and bona fides of the applicant's case "at all" but to the conduct of the respondents and the subject was only addressed in para 26 of the submissions to the referee. (2) The referee did not address para 16(b)(ii) those submissions and, because the discretion is "unfettered", it was wrong of the referee not to consider any disentitling conduct on the part of the respondents merely because it had not been pleaded. (3) During the hearing the referee was "specifically" referred to those paragraphs of the submissions, which "detailed the elements of criminality by specific reference to documents", and it "appears" that the referee has not addressed this material, although "it was assumed" that the referee would do so after the inquiry. 42 In support of points 1 and 3, the applicant referred to a transcript of the hearing before the referee but the transcript is not before the Court and no application was made to tender it on the present application. 43 Since the applicant's case is concerned with the conduct of the respondents, the first point is difficult to understand. Although it is far from clear, it appears from its submissions in reply that the applicant's contention is that the conduct in question is the allegedly disentitling conduct, said to amount to "criminality". The applicant submitted in reply that this was "very significant evidence", which the referee overlooked. And it is this "evidence" the Court was invited to examine to see whether the reasons of the referee are in fact inadequate because they omitted to refer to it. 44 As for point 2, it is not in dispute that the particular allegations were not pleaded. The applicant said that they are the subject of the pending application to further amend its pleading. Paragraph 16(b)(ii) of the previous submissions reads: The allegation as to the applicant's failure to plead any allegation as to the alteration of GIS invoice INV-0046 being criminal in nature is deceptive. While the Further Amended Statement of claim (FASOC) pleads no such allegation, the proposed Second Further Amended Statement of Claim (SFASOC) which is annexure B to the applicant's interlocutory application dated 23 October 2019 does, where it states in paragraph 66(c) "unlawfully deleting material information in the form of alleged hours worked from tax invoice number 46 provided to BHPBIO and otherwise altering the tax invoice" (page 168). (Original emphasis.) 45 It is little wonder, in the circumstances, that the referee did not expressly address para 16(b)(ii) of the previous submissions. 46 That the allegations were made in the submissions and that the referee's attention was drawn to "evidence suggesting that the respondents … may have engaged in criminal activity" does not establish that the referee was wrong to conclude that the allegations were not substantiated by any evidence to which she was taken. The only document to which my attention was drawn was the document at p 168. But that document is p 24 of "the proposed Second Further Amended Statement of Claim". It could hardly be described as evidence. 47 On any view of the matter, the failure to specifically mention the particular allegations of criminal conduct does not warrant the rejection of the report. In any case, on the face of the report, the referee had regard to the material to which she was taken. She simply concluded that it did not support the allegations and, as a result, could not weigh against the grant of security. 48 With respect to point 3, the only paragraph of the previous submissions to which the applicant referred on the present application was para 31(e), which was directed to the question of whether the litigation involves "matters of public interest". In those submissions the applicant began with the following quote from Pioneer Park Pty Ltd (In Liq) v Australia and New Zealand Banking Group Limited [2007] NSWCA 344; 25 ACLC 1707; 65 ACSR 383; 2 BFRA 753 at [58] (Basten JA): The nature of the public interest, the circumstances in which it arises in particular litigation and the basis on which an application for security is made would all be relevant in determining the role of a claim that litigation promotes the public interest. 49 It is difficult to see the relevance of the quotation, since neither the nature of the relevant public interest nor the circumstances in which it arises in the litigation were identified (at least not expressly), and no claim was made, so far as I can tell, that the litigation promotes the public interest. The rest of para 31(e) reads: There is documentary evidence annexed to affidavits filed in the Court suggesting that the respondents, either acting separately or in some combination, may have engaged in criminal activity (paragraphs 15(b)(v), 15(c), 15(d) and 16(b) above). It is submitted that the foregoing is a factor which the Court should consider in its unfettered discretion in deciding whether security for costs should be granted or not. (Emphasis added.) 50 The referee addressed the suggestions of possible criminal activity in her report. I am not satisfied that her treatment of them discloses error. 51 The third error the applicant contends that the referee made was put this way (without alteration): [W]hile Contestable allegations of criminality are not apt for resolution through the interlocutory processes of civil litigation: Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83 per Mason J at [98], nevertheless the demonstrable conduct of the respondents should go to the unfettered discretion of the Court, and further it is in the public interest that such allegations be aired before the Court. 52 I find this submission utterly unpersuasive. Here there were only allegations of criminality. The observation by Mason P in Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at [98] is entirely apt. It is not clear what the applicant means by "the demonstrable conduct of the respondents". No argument was advanced to justify the proposition that it is in the public interest to air the allegations. Even if it were, it was open to the referee to conclude that the alleged deception and deceit and what Mr Lee described then as "probable criminality" and in para 31(e) as a suggestion of possible criminality "should [not] weigh against the discretion to grant security". 53 Apart from these three matters, the applicant makes other allegations which could not justify the rejection of the report. 54 The applicant argued that the referee's statement that no claim for interim relief had been made to restrain any respondent from infringing the patent was a verbatim repetition of a submission of the respondents and "infers" that the referee gave no consideration to the previous submissions, referring to para 13(a) of those submissions. 55 But para 13(a) of the previous submissions supports the referee's statement. 56 Paragraph 13(a) referred to prayer 7 of the amended originating application in which a permanent injunction was sought restraining the respondents from using the applicant's intellectual property. A claim for a permanent injunction is not a claim for interim relief. No claim for an interim injunction has ever been made. Indeed, at para 13(a), the applicant submitted that "[t]he nature of the case dictated against seeking interim relief". Perhaps the applicant's complaint is that the referee did not refer to the explanation that was given for why interim relief had not been sought. That explanation was that "the respondents appear to have neither discovered nor produced all relevant documents passing between themselves and Novum [described in the further amended statement of claim as a third-party design consultant and in the previous submissions as a potential competitor]". Whatever the applicant meant in para 13(a), I would not draw the inference the applicant invited. Moreover, even if that inference were available, the failure to refer to the explanation would provide no proper basis for rejecting the report. The absence of a reference to the explanation in the report is of no consequence. 57 The applicant also argued that the report should be rejected because no evidence was given to the referee that, if the applicant were unable to pursue its claim because of an order for security, GIS would not pursue its cross-claim or proposed amended cross-claim. It relied on Fairfield Pastoral Holdings Pty Ltd v Ridge Estate Pty Ltd (No 2) [2020] FCA 312 in which White J refused to order security for costs because of "a high degree of overlap" between the subject matter of the claim and the cross-claim. The applicant submitted that there was a similar degree of overlap in the instant case, although the submission was little more than an assertion. 58 It is common ground that this argument was not raised before the referee. In those circumstances, it is not open to the applicant to raise it on the present application. 59 For all these reasons, I am not persuaded that the report should be rejected. The question then is whether it should be varied. Should the report be varied? 60 The applicant submitted that "should the Court order security, the amount determined by the referee [should] be reduced by one-half to $364,000.00 or less, payable or secured in two tranches by an irrevocable and unconditional bank guarantee or insurance bond". 61 In support of this application, the applicant sought to rely on additional evidence. That evidence was contained in an affidavit of Colin Benjamin, a director of the applicant, sworn on 26 July 2020. The mere fact that the Rules countenance the filing of additional evidence does not mean the Court is bound to receive it. The relevance of the evidence in Mr Benjamin's recent affidavit is obscure. In these circumstances, the additional evidence is rejected. 62 The applicant began its submissions on this point by referring to a handwritten graph entitled "Respondents' Security for Costs Movement of Total Amounts of Legal Costs", which was apparently provided to the referee. The purpose of this graph, as I understand it, was to demonstrate substantial increases in the respondents' costs estimates since September 2019. 63 The applicant complained that the referee did not refer to the graph in her report or address its submission that, "based on the divergence in estimated cost", Mr Taylor's most recent estimate "was of little or no probative value". I can discern no error in the way the referee dealt with Mr Taylor's evidence. The applicant adduced no evidence of its own on this subject. The weight to be attached to the evidence was a matter for the referee. She was not bound to accept the applicant's submission. 64 The applicant also complained that the affidavit containing the estimate was served three business days before the inquiry, but no complaint was made that this constituted a denial of procedural fairness. Conclusion 65 I am not satisfied that a proper basis has been established for rejecting or varying the referee's report. No question of law was raised. The applicant did not complain about the application of legal standards to established facts. The report reveals no error of principle or want or excess of jurisdiction. Nor does it disclose any perverse or unreasonable finding of fact. On the material before her, the referee was entitled to come to the conclusions she reached. 66 Orders will therefore be made that the report be wholly adopted and that the applicant provide security in the manner proposed by the referee and in the amount she determined. Despite the respondents' objections, I consider it reasonable that it be paid in two tranches: $400,000 within 28 days and the balance by the time of filing of the applicant's evidence in chief. 67 Costs should follow the event. 68 For completeness, I note that in submissions in reply the applicant asked that the $10,000 the subject of the previous order be returned. No order to this effect was sought and it is outside the scope of the present application. The submission on which it was apparently founded — that the respondent "acted so as to cause the delay" — was rejected by the referee, and rightly so. Even if the submission had been soundly based and an order for the return of the $10,000 had been sought, I would have refused it. It will be recalled that this sum was awarded to enable the respondents to prepare their defence. I fail to see how subsequent delays attributable to the respondents' conduct could justify such an outcome. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann. Associate: Dated: 28 August 2020 SCHEDULE OF PARTIES NSD 2216 of 2018 Respondents Fourth Respondent: OIL AND GAS SOLUTIONS PTY LTD (ACN 143 501 464) Fifth Respondent: ANTHONY LUKE CONNOR