Federal Court of Australia TS Lucas Pty Ltd v Anatinus Pty Ltd [2024] FCA 943 File number: QUD 87 of 2024 Judgment of: DERRINGTON J Date of judgment: 3 July 2024 Date of publication of reasons: 21 August 2024 Catchwords: PRACTICE AND PROCEDURE – application for security for costs – no dispute that security should be ordered – only dispute as to quantum Legislation: Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 (Cth) Cases cited: Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2015] FCA 1164 Canaipa Developments Pty Ltd v TLC Jones Pty Ltd [2021] QSC 237 General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd [2020] FCA 1562 Global Access Limited v Educationdynamics, LLC [2010] 1 Qd R 525 Gumm v Commissioner of Taxation [2024] FCA 71 Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018 Norcast S.ár.L v Bradken Limited [2012] FCA 765 Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd (No 2) [2006] NSWCA 147 Vale Belvedere Pty Ltd v BD Coal Pty Ltd [2011] 2 Qd R 285 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 45 Date of hearing: 3 July 2024 Counsel for the Applicants: Ms S Philippou Solicitor for the Applicants: Stonegate Legal Counsel for the Respondents: Mr A Psaltis Solicitor for the Respondents: Buchanan Rees Dispute Lawyers ORDERS QUD 87 of 2024 BETWEEN: TS LUCAS PTY LTD ACN 607 721 317 ATF DARK BLUE TRUST First Applicant TIMOTHY SIMON LUCAS Second Applicant AND: ANATINUS PTY LTD ACN 641 596 554 ATF THE JUNE EDMONDS-CLOWES FAMILY TRUST First Respondent RAYTRACER PTY LTD ACN 637 132 266 Second Respondent MAXART TECHNOLOGY GROUP PTY LTD ACN 641 968 194 (and others named in the Schedule) Third Respondent order made by: DERRINGTON J DATE OF ORDER: 3 July 2024 THE COURT ORDERS THAT: 1. Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth), the second applicant, Timothy Simon Lucas, be removed as a party to the proceedings. 2. The first applicant provide security for the respondents' costs of the proceeding in the sum of $90,000, by payment of that amount into Court or in a form acceptable to a Registrar of the Federal Court of Australia, within 60 days of the date of these Orders. 3. The proceedings be stayed pending compliance with Order 2 above. 4. The applicants are to pay the respondents' costs of the application to remove the second applicant as a party to the proceedings, together with any costs thrown away by the inclusion of the second applicant as a party to the proceedings. 5. The respondents' costs of the application for security for costs filed 16 May 2024 be their costs in the cause. 6. The parties are to cause the proceedings to be listed for a further case management hearing within 7 days of payment of security for costs in compliance with Order 2 above. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DERRINGTON J: Introduction 1 By an interlocutory application filed on 14 May 2024, the respondents seek security for their costs of the proceedings in the amount of $203,011 pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), r 19.01(1)(a) of the Federal Court Rules 2011 (Cth) (the Rules) and s 1335 of the Corporations Act 2001 (Cth) (Corporations Act). They also seek an order pursuant to r 19.01(1)(b) of the Rules that the proceedings be stayed until such time as security is given, and an order pursuant to r 19.01(1)(c) that the proceedings be dismissed if security is not given as ordered. 2 The underlying disputation concerns the shareholding rights in the third respondent company, Maxart Technology Group Pty Ltd (MTG), which is a developer of military technology. By the current proceedings, the applicants seek to set aside certain expert determinations made pursuant to the terms of a shareholders' agreement between MTG and its shareholders (Shareholders' Agreement). The shareholders are the first applicant, TS Lucas Pty Ltd as trustee for the Dark Blue Trust (which will be referred to as the "Lucas Shareholder"), and the first, fourth and fifth respondents (which will be referred to as the "Clowes Shareholder", the "Thompson Shareholder" and the "Coulson Shareholder" respectively). Each of the shareholders are the corporate entities of the natural persons who are, or were previously, directors of MTG. 3 The proceedings were commenced by the Lucas Shareholder and its controller, Mr Timothy Lucas. No relevant claim was made by Mr Lucas in the action, and there was some debate between the parties as to the appropriateness of his inclusion as a party. It was ultimately conceded by the applicants that he ought to be removed as a party, and prior to the hearing of the application for security for costs, Ms Philippou, counsel for the applicants, appropriately made an application for his removal. That was not opposed, and an order was made to that effect. 4 The proceeding now continues with only the corporate applicant, the Lucas Shareholder, as the protagonist. The proceeding 5 As mentioned, the action includes a dispute between MTG's shareholders. The Shareholders' Agreement, which is the catalyst of the dispute, was entered into on 4 August 2020. 6 A disagreement arose amongst the shareholders of MTG in 2023. It related to a call for submissions by the Commonwealth of Australia, through its Department of Defence, on or about 7 March 2023 in relation to certain counter-robotic and autonomous system capabilities for the Australian land forces. On 18 April 2023, the Lucas Shareholder caused a subsidiary of MTG to submit a response to that call for submissions. It is alleged by the respondents that the response contained certain incorrect statements about the Lucas Shareholder and a subsidiary of MTG, Raytracer Pty Ltd (being the second respondent in the proceeding). 7 Subsequently, on 17 May 2023, the Clowes Shareholder, through its then solicitors, notified the Lucas Shareholder that it perceived that the Lucas Shareholder had breached the Shareholders' Agreement in certain respects. 8 Relevantly, cl 10 of the Shareholders' Agreement contains a mechanism for the resolution of disputes which requires the parties to, first, attempt to resolve the dispute, and if that is ineffective, to refer the matter to an expert for determination. Clause 10.2, which concerns the referral of a dispute to an expert, provides as follows: 10.2 Referral (a) If, after using their best efforts as required by clause 10.1, the Shareholders are unable to resolve the dispute, any Shareholder to the dispute may require the matter to be referred to an appropriately qualified expert from the Australian Commercial Disputes Centre (Expert) for resolution by expert determination. (b) If a dispute is referred in accordance with clause 10.2(a), the referral will be on the following basis: (1) the Parties must provide the Expert with any information or material reasonably requested by the Expert; (2) the determination of the Expert will be binding on the Parties; and (3) if the Parties cannot agree on the basis of sharing costs between themselves, the matter will be determined by the Expert. 9 On 12 July 2023, the solicitors for the Clowes Shareholder, the Thompson Shareholder, and the Coulson Shareholder referred the dispute to the Australian Disputes Centre (ADC) (formerly the Australian Commercial Disputes Centre) for determination. The alleged "Event of Default" in respect of which the dispute arose was articulated in paragraphs 3.3 and 3.4 of that letter as follows: 3.3 The alleged "Event of Default" (as defined in the Shareholders' Agreement) committed by Lucas Shareholder was as follows: (a) on 18 April 2023, Mr Lucas (who was then a director of MTG) caused Raytracer to submit a tender to the Australian Defence Force (Tender Response); (b) on 19 April 2023, MTG and its remaining directors discovered that the Tender Response contained the following statements: (i) in section C.1. Key Subcontractors: "Mechanical and conceptual development of Slingstone has been completed by Remote Sense (ABN 93 600 467 342) which is an entity owned by Raytracer's CEO Tim Lucas"; (ii) in section C.2. Key Subcontractor, the organisation details of Remote Sense as a key subcontractor; and (iii) at the top of page 23: "Mechanical and conceptual development of Slingstone has been completed by Remote Sense (ABN 93 600 467 342) which is an entity owned by Raytracer's CEO Tim Lucas. Relevant IP will be assigned or licenced in the future to fulfil necessary bio commercialization requirements"; (c) however: (i) Remote Sense is not "an entity owned by Mr Lucas" but rather, it is a business name owned by T S Lucas Pty Ltd as trustee for the T S Lucas Trust; and (ii) Remote Sense is not part of the Maxart group of companies but rather, it is a business name owned by a company in which Mr Lucas is the sole director, sole company secretary and sole shareholder; and (d) in the circumstances referred to in subparagraphs 3.3(a)-(c) above, our clients allege that Lucas Shareholder has breached multiple provisions of the Shareholders' Agreement, including provisions requiring that: (i) each Shareholder must procure that any Director appointed by it discloses as soon as practicable to the Company (i.e., MTG) the nature of any business opportunity or leads which come to the attention of the Director or the Shareholder and which relates to the business of the Company; and (ii) each Shareholder must ensure that it, any Related Entity and any Director appointed performs their duties to the best of their abilities. 3.4 As noted above, Lucas Shareholder denies that it has committed any "Event of Default" (as defined in the Shareholders' Agreement). (Emphasis in original). 10 It is, perhaps, the terms of the letter of referral, particularly those paragraphs extracted above, which give rise to the current dispute. Following the letter, a further disagreement arose between the parties as to the process of the expert determination, including who ought be responsible for the payment of fees to the ADC and, subsequently, as to the cost of the determinations made. 11 On 12 October 2023, the Honourable Kevin Lindgren AM KC, a former judge of this Court, was appointed by the ADC to determine the dispute. Thereafter, some procedural steps were directed for the purposes of resolving the dispute. There is no need to go into the minutiae of that on this application, but it suffices to say that the Lucas Shareholder did not fully participate in the expert determination process. Any involvement by it was sporadic, though it did include the execution of the agreement to appoint Mr Lindgren as the expert to determine the dispute. That, too, however has also provided an avenue of some disputation. 12 Although the matter progressed before Mr Lindgren, the Lucas Shareholder did not substantively participate. It failed to provide submissions in relation to the matter and it did not appear at the hearing. 13 On 24 November 2023, the Lucas Shareholder, by its solicitors, wrote to the ADC purporting to withdraw from the expert determination process on the basis that it was "not in a financial position … to proceed with the current expert determination proceedings". On 14 December 2023, the Lucas Shareholder, by Mr Lucas, wrote to Mr Lindgren seeking to clarify his "current financial constraints, which significantly impact [his] capacity to engage in the Expert Determination proceedings as they are", and that he was resultingly "compelled … to opt for self-representation and try to do [his] best to respond". Later, in January 2024, the Lucas Shareholder obtained representation, and its lawyers wrote to Mr Lindgren advising that they had been engaged and seeking an extension of time to comply with Mr Lindgren's directions. Although that extension was given, the Lucas Shareholder failed to comply with the directions. 14 On 4 February 2024, Mr Lindgren made his first determination and called for further submissions from the parties. On 7 February 2024, the solicitors for the Lucas Shareholder wrote to Mr Lindgren notifying him that the Lucas Shareholder intended to seek advice about the expert determination from counsel, that it was unable to participate in the expert determination any further, and that it would make an application to this Court, subject to the advice it received from counsel. 15 Mr Lindgren subsequently made a further determination about the matter in favour of the Clowes Shareholder, the Thompson Shareholder and the Coulson Shareholder, and a determination that the Lucas Shareholder should bear the costs, or part of the costs, of the determinations. 16 On 19 February 2024, the Lucas Shareholder commenced the present proceeding, seeking to set aside the determinations on the basis that Mr Lindgren had determined matters beyond the scope of those referred to him and that certain errors of law vitiate the determinations. A review of the concise statement in which the errors are identified gives rise to some immediate concerns about the veracity of the action overall. That is particularly so in relation to paragraph 24(a) of the concise statement, which, on its face, does not seem to grapple with the nature of proceedings that seek to avoid an expert determination. Nevertheless, broadly speaking, the concise statement can be read as alleging, in part, that Mr Lindgren exceeded the scope of his authority and purported to determine matters which were beyond the scope of the referred dispute. 17 On 6 March 2024, the respondents' solicitors wrote to the applicant's solicitors explaining their concerns about the ability of the Lucas Shareholder to meet an order for costs, should it not be successful in the present action, and requesting documents evidencing its financial position. 18 On 17 March 2024, the applicant's solicitors responded, asserting that it was not impecunious. Despite subsequent inquiries being made of the applicant to disclose its asset status, no financial information was provided. 19 Ultimately, it conceded that the circumstances for making an order for security for costs existed, and that some form of security was warranted. That is, presumably, because of the Lucas Shareholder's inability to meet an order for costs. 20 As a result, all that remains to be determined on the present application is the quantum of the security which ought to be ordered. Applicable principles 21 The application was brought under s 1335 of the Corporations Act, s 56 of the Federal Court Act and, for good measure, r 19.01 of the Rules. The power in s 1335 of the Corporations Act is engaged where there is reason to believe that a corporate applicant will be unable to pay the costs of the respondent if it is successful in its defence. Similarly, it is relevant to the discretionary power under s 56 of the Federal Court Act if the respondent can demonstrate that there is reason to believe that the applicant will be unable to pay the respondent's costs if ordered. As mentioned, there was no dispute that the discretion to order security arose in this case. 22 The principles upon which the Court exercises that discretion are well settled and were set out in the careful submissions of counsel appearing for both parties. There is no need to restate them in any detail. 23 As was stated in General Trade Industries Pty Ltd (in liq) v AGL Energy Ltd [2020] FCA 1562 [32] (General Trade v AGL), it is uncontroversial that the purpose of an order for security for costs is to provide a successful respondent with protection for the costs it will incur in defending the proceeding. The Court's discretion to make an order for security must be exercised judicially, but is otherwise unfettered — the governing consideration is what is required by the justice of the matter, which depends entirely on the circumstances of the case. 24 In determining the appropriate quantum of security to be ordered, the process is necessarily broad brush, but the Court must weigh the objective of ensuring adequate and fair protection for the parties seeking security against avoiding injustice to the applicant. The Court does not seek to provide the respondent with a complete indemnity, but will endeavour to set an amount which is neither illusory nor oppressive: Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018 [97] – [98]; see also Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2015] FCA 1164 [63]; Norcast S.ár.L v Bradken Limited [2012] FCA 765. The appropriate amount of quantum 25 In the course of the hearing, the respondents sought to rely upon the affidavit of Mr Luke Buchanan, a solicitor with extensive experience in litigation matters. His affidavit identified, in detail, the steps which he perceived would be required in the course of the proceeding and what he anticipated were the rates at which the persons engaged in fulfilling those steps would charge. Appropriately, the respondents also obtained an independent expert's opinion as to the costs of the proceeding. That came in the form of a report by Ms Elizabeth Harris, an expert on matters of costs, which report complied with the Court's requirements for expert evidence. In Ms Harris' opinion, if the respondents were successful, their recoverable costs would be $203,011. 26 The applicant relied upon the affidavit of one of its solicitors, Mr Wayne Davis, and his assessment of the costs of the proceeding, including the steps involved and the costs of each of those steps. He concluded that the respondents' recoverable costs would be in the order of $77,000. 27 On any view, and without any disrespect whatsoever to Mr Davis, when the Court is required to choose between independent expert evidence on the one hand, and the evidence of a solicitor acting for one of the parties in the litigation on the other, it is difficult to go past the independent expert's evidence. I have often queried the ability of solicitors, whilst exercising their duty to a client, to proffer an impartial affidavit, even one being within the scope of their expertise: see, for example, General Trade v AGL [39]; Gumm v Commissioner of Taxation [2024] FCA 71 [128] – [130]. Happily, in this case, there is little need to choose between the two competing opinions. Where appropriate, however, the evidence of Ms Harris has been preferred, simply because of her independence. 28 One issue which attracted the attention of the parties in the course of the hearing was whether the applicant, the Lucas Shareholder, is effectively in the position of a defendant. In other words, whether the proceedings are properly characterised as being defensive in nature: see Willey v Synan (1935) 54 CLR 175. Where that is the case, courts are prone to decline making an order for security or will reduce the amount required to be provided. 29 The concept of a plaintiff being in the position of a defendant was discussed at length by Applegarth J in Global Access Limited v Educationdynamics, LLC [2010] 1 Qd R 525. There, his Honour dealt with a similar question in the context of a disputation between parties as to the registration of a domain name, that being a matter which was regulated by an external dispute body. Relevantly, the parties had entered into an agreement which required any disputes about domain name registration to be adjudicated by an external dispute body. In accordance with that agreement, the first defendant (being the "complainant" in the dispute process) filed a complaint which ultimately resulted in a decision concluding that the domain name should be transferred to it by the plaintiff (being the "respondent" to the complaint). The plaintiff then commenced proceedings in the Supreme Court of Queensland seeking to overturn that decision. On an application by the first defendant seeking an order for security for costs, the plaintiff argued that its action was defensive in nature. In addressing that question, Applegarth J considered the possibly analogous position of a person who might seek to challenge an adjudicator's determination under the building and construction industry security of payment legislation, which is common in each State. His Honour referred to the decision in Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd (No 2) [2006] NSWCA 147, in which it was held (at [10]) that a party instituting court proceedings to challenge an adjudicator's determination is fairly regarded as being in substance a plaintiff, rather than merely defending a claim made against it. That was compared with the circumstances where a company seeks to challenge a statutory demand, being one where it is recognised that the applicant may be in the position of a defendant. After considering these matters, Applegarth J held (at 533 [29]) that, whilst an adjudicator's decision under security of payment legislation has statutory recognition, the analogy between that and the circumstances of determination of the rights to a domain name was strong. However, his Honour then observed that, in ascertaining whether proceedings are truly defensive in nature, it is preferable to have regard to the character of the adjudication decision and the nature of the proceedings that the plaintiff was obliged to commence if it wished to avoid its consequences. 30 Ultimately, his Honour determined that the plaintiff in the case before him had voluntarily submitted to the process which meant that any complaint raised would be referred to an adjudicator. That process had the consequence that the plaintiff was bound by the adjudication and if it chose to challenge it, it would be required to commence the proceedings. His Honour observed that the consequences which the plaintiff sought to avoid in that case did not arise by force of statute, but merely by the contractual terms to which it had voluntarily agreed. As his Honour observed (at 539 [57]), the proceedings sought to avoid consequences that arose by reason of the plaintiff's contractual acceptance of an adjudication process, and it was the one invoking or resorting to the Court's jurisdiction for the purpose of establishing rights or obtaining relief. It was not, therefore, in substance in the position of a defendant for the purposes of the security for costs application. 31 The observations of Applegarth J are applicable in the present case. Here, the parties voluntarily entered into the Shareholders' Agreement which contained a clause which refers a dispute between the parties to an expert for determination. That has the consequence that, if one party wishes to challenge that determination, they themselves are required to commence a proceeding and are the prosecutors of that action. It follows that the proposition that the present action is defensive in nature, cannot be accepted. 32 That, however, is far from the end of the matter. 33 As Mr Psaltis, counsel for the respondents, submitted, applications to set aside an expert determination are akin to applications for judicial review: see Canaipa Developments Pty Ltd v TLC Jones Pty Ltd [2021] QSC 237 [60]. The Court's obligation on applications of this nature is to assess whether or not the decision made by the expert accords with the contractual agreement between the parties. That is, usually, a question of whether the adjudicator or expert decided that which the relevant contract required them to decide. In many instances, that ought not be a relatively difficult task — one generally needs to look only at the contractual powers or the agreement between the parties to refer the matter to an expert, what was referred to the expert, and what the expert in fact decided: see Vale Belvedere Pty Ltd v BD Coal Pty Ltd [2011] 2 Qd R 285, 297 [36]. In most cases, the evidence is very limited and it should be. 34 Whilst in this case the concise statement leaves something to be desired in terms of the articulation of the applicant's case, it became evident in the course of submissions that this is a relatively straightforward matter which has developed undue complexity by reason of the case advanced by the respondents. As has been mentioned, the letter referring the matter to the ADC for consideration set out the terms of the dispute. Unfortunately, the articulation of the dispute was poor with the result being, at least on one view, that Mr Lindgren's determinations possibly exceeded the matters he was required to decide. That, of course, is only a preliminary observation, and far from a final determination. 35 On another view, the matters referred for determination may have been broader than those expressly identified in the letter. As Mr Psaltis correctly identified, the articulation of the "Event of Default" alleged to have been committed by the Lucas Shareholder was not conclusory or conclusive, but inclusive. The letter alleged that the Lucas Shareholder had breached multiple provisions of the Shareholders' Agreement, "including" those provisions set out in the letter. This is relied upon by the respondents as justifying the existence of a broader dispute than that which appears from the face of the referral letter. That, of itself, may give rise to difficulties that would not usually arise in matters of this nature. However, Mr Psaltis added that the respondents might argue that the applicant is estopped from denying that Mr Lindgren's determinations exceeded the dispute which was referred. That seems to be supported by allegations that the Lucas Shareholder engaged in the process before Mr Lindgren to some extent and with knowledge that the dispute was wider than that specifically referred to in the letter. The claims of estoppel are perhaps joined with issues of waiver and election. This, as Mr Psaltis submitted, requires the adducing of greater evidence than that which might normally be found on an application of this nature. It might also be apprehended that it is these issues which gives rise to the conclusion that the matter will involve a two-day hearing rather than a single day — the length of the hearing being another matter which was in issue between the parties. 36 Thus the question to be answered is, "How does this affect the outcome of the application for security for costs?". On the one hand, for the applicant, it is said that these arguments implicitly go beyond the case raised by it and are, in effect, in the nature of a counterclaim. There is some force in that. On the other hand, the respondents might contend that the arguments are just a defence to the claim that the expert's determinations should be set aside. There is also force in that. 37 On any view, the issues of estoppel, waiver and election take this case out of the ordinary for this type of proceeding. Whilst not acknowledging the existence of any fault on the part of the expert, it assumes that such might have occurred. If that is so, as it may be, the cause of that is more than likely to have been the poorly written letter of referral. On that basis, if the respondents are in the position of having to rely upon estoppel, waiver or election, one might query why the applicant ought pay for the respondents' costs of rectifying that which arose from their default. In such circumstances, it is preferable that the applicant not be required to provide security in relation to the resolution of those issues at this juncture. That might be different by the end of the hearing, but, at present, the burden of the issues for which the respondents are responsible, should not be borne by the applicant. It is, therefore, appropriate to assess the likely costs in this matter on the basis of a standard application of this nature, being one which would require only one day for the hearing. 38 Helpfully, Mr Psaltis identified that it was quite possible to reduce Ms Harris' estimate to account for a one-day hearing, rather than two. He suggested that, taking a broad brush approach, the estimate would reduce to some $160,000. 39 One has to pause at that point because it requires acceptance that, removing from Ms Harris' assessment the steps required for a two-day hearing, the resulting calculation is correct. That is difficult to do. Even in these days of exorbitant legal fees, a one-day hearing in this Court ought not to cost $160,000. I suspect that most judges would baulk at the proposition that that would be so, even though it is based on Ms Harris' assessment. 40 At this point, Mr Davis' evidence should also be taken into account. He assessed an amount of $100,000 as being appropriate for a one-day hearing, and applied a reduction of 26% to calculate costs on a party/party basis at $77,000. He then reduced the amount slightly more to $62,000. That approach is, generally not inappropriate, but it pitches the amount too low. One must take into account that, at the end of the day, if the respondents are successful, it may be on the estoppel, waiver or election claims, in which case the amount of $62,000 would be not insignificantly below the costs payable on a party/party basis. Taking into account all the considerations, an amount of $100,000 should be adopted as the appropriate starting point. 41 Nevertheless, it is important to be mindful that, in an ordinary case of this kind, only a few documents would be required for a hearing. That would suggest that there should be a substantial diminution to the amount of $100,000. However, as has been mentioned, the circumstances of this case are slightly unusual. Whilst the sum of $100,000 for a one-day hearing seems to be excessive, it is not greatly so in the circumstances. Ultimately, on a broad brush analysis, the amount of $90,000 appears to be appropriate security for the respondents' costs of these proceedings. 42 For completeness, it ought to be noted that it was suggested that the reductions ought to take account of the fact that an order for security might stifle the proceedings. That submission must be rejected on the basis that there is no evidence that those who stand behind the Lucas Shareholder and who might benefit from the proceedings have exposed their assets to the risk of litigation. Disposition 43 For the reasons given, it should be ordered that the applicant provide security for the respondents' costs of the proceeding in the sum of $90,000. The proceedings should be stayed pending the provision of that security. 44 The respondents sought an order that the applicant pay their costs of the application. They were successful in their application, but only in part. The applicant had, and has for some time, indicated a willingness to provide security for costs, albeit at an amount which was less than, but not greatly less than, the amount ordered. Nevertheless, as Mr Psaltis rightly identified, it remained necessary for the respondents to make the application. 45 In the circumstances, the order which appropriately reflects the outcome is that the respondents' costs of the application for security for costs be their costs in the cause. In that way, if the respondents ultimately succeed, their costs will be covered, but if the applicant succeeds, it will not be able to recover its costs from the respondents. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate: Dated: 21 August 2024 SCHEDULE OF PARTIES QUD 87 of 2024 Respondents Fourth Respondent: DM THOMPSON PTY LTD ACN 641 479 692 ATF COGNITION TRUST Fifth Respondent: COULSON FAMILY PTY LTD ACN 164 515 431 ATF THE COULSON FAMILY TRUST