Fiorentino & Anor v Mohamed [2005] NSWSC 1177

New South Wales Supreme Court

CITATION : Fiorentino & Anor v Mohamed [2005] NSWSC 1177

HEARING DATE(S) : 14/11/05

JUDGMENT DATE : 21 November 2005

Equity Division JURISDICTION : Corporations List

JUDGMENT OF : Barrett J

DECISION : Security for costs ordered

CATCHWORDS : PROCEDURE - security for costs - no matter of principle

LEGISLATION CITED : Uniform Civil Procedure Rules 2005, rule 42.21

Pino Fiorentino and William James Hamilton in their capacity as liquidators of Fox Home Loans Pty Limited (In Liquidation) - First Applicant PARTIES : Fox Home Loans Pty Limited (In Liquidation) - Second Applicant Nasser Mohamed - Respondent

FILE NUMBER(S) : SC 1213/05

Mr J.T. Svehla - Applicants COUNSEL : Mr T. Hall - Respondent

SOLICITORS : HAL Lawyers - Respondent

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

BARRETT J

MONDAY, 21 NOVEMBER 2005

1213/05 PINO FIORENTINO AND WILLIAM JAMES HAMILTON IN THEIR CAPACITY AS LIQUIDATORS OF FOX HOME LOANS PTY LIMITED (IN LIQUIDATION) & ANOR v NASSER MOHAMED JUDGMENT 1 In a judgment delivered on 17 October 2005, I described an application that Mr Angelo D'Angelo, a solicitor, had made in these proceedings: "The applicant, Mr D'Angelo, is a solicitor upon whom an examination summons has been served by the liquidator of Fox Home Loans Pty Limited. By his interlocutory process filed on 12 October 2005, he seeks several orders. The first is an order that he be provided with 'conduct money' for his past and future attendances in response to the examination summons. The second is expressed to be an order pursuant to s.536 of the Corporations Act 2001 (Cth) that the court enquire into 'the current public examination proceedings' and direct that the liquidator file and serve an affidavit setting out particular matters. The third is also expressed to be an order pursuant to s.536 and is an order that the 'current series of public examination hearings' be 'suspended pending further order and compliance by the liquidator to the satisfaction of the court' with the second of the orders to which I have referred. The applicant is not the only person who has been or is to be examined." 2 Mr D'Angelo no longer presses for any of this relief, except the order with respect to what he calls "conduct money". That will presumably be progressed in due course. In Mr D'Angelo's place, however, has arisen Mr Nasser Mohamed who, by interlocutory process filed on 28 October 2005, seeks, in the first instance, an order that Mr Mohamed's solicitors and counsel be allowed to inspect "the Liquidator's affidavits and initiating process filed in support of the public examination proceedings" and an order that "the public examination proceedings be stayed". There is a definition of "public examination proceedings" in a part of the interlocutory process headed "Pleaded Case". That section refers to: "… an arrangement in which the firm of Solicitors trading under the name 'Hicksons Lawyers', Deloitte and the Liquidator would carry out public examination proceedings ('the public examination proceedings') ostensibly under the powers vested in the liquidator pursuant to Corporations Act 2001 (Cth), Section 596C …" 3 I infer from this that "the public examination proceedings" to which the interlocutory claim in Mr Mohamed's interlocutory process refers are all Part 5.9 examinations that the liquidators have initiated. 4 The interlocutory seeks, as final relief, a variety of orders impugning the conduct of the liquidators in initiating and continuing the Part 5.9 examinations and dealing with the liquidators in various ways involving, in essence, their removal. 5 After Mr Mohamed's interlocutory process had been filed, the liquidators filed an interlocutory process seeking an order that he provide security for the liquidators' costs of and incidental to Mr Mohamed's interlocutory process. I heard the liquidators' application on 14 November 2005. 6 For the purposes of the security for costs application, certain matters were accepted as common ground, as follows: 1. Mr Mohamed claims standing as a creditor of Fox, having acquired by deed of assignment dated 26 October 2005 a debt of $2,420 owing by Fox to a barrister. Notice of the assignment was given to the debtor on that day. The assignment was by way of gift. 2. Based on possible figures for the total extent of Fox's debts as suggested by the report as to affairs (high of $7.7 million, low of $5.9 million), this debt of $2,420 represents something like 0.03% or 0.04% of total debts. 3. Mr Mohamed lives with his elderly mother and is her carer. His only regular income is a carer's pension of $580 per fortnight. Otherwise, he works intermittently as a consultant to Money Talks Pty Ltd (a finance intermediary) and its principal, Ms Sabbarese. 4. Mr Mohamed has been present during visits to Ms Sabbarese by representatives of Deloittes. As a Justice of the Peace, he took a statutory declaration made by a person giving information for a loan being arranged by Ms Sabbarese. 5. On the basis of the report as to affairs, there is not expected to be any distribution to creditors. 6. Mr Mohamed's application was initiated as a result of Mr D'Angelo's application not proceeding. 7 From that common ground, I proceed to other relevant factual matters. I begin with matters appearing from a report to creditors made by the liquidators and dated 4 November 2005. Fox was a mortgage broker or mortgage originator which arranged mortgage finance for persons in need of it. Fox did not itself lend money. It introduced borrowers to third party mortgage lenders. Some of those persons were themselves introduced to Fox by intermediaries or brokers. One such third party mortgage lender is Firstmac. In so far as is presently relevant, Firstmac made thirteen mortgage loans to persons introduced by Fox. Firstmac obtained mortgage insurance from Genworth in respect of those loans. Firstmac has lodged a proof of debt in the winding up of Fox in a sum of $1,815,000 being an amount of losses it says it will incur if Genworth does not accept liability in relation to the thirteen loans. Firstmac has informed the liquidators that Genworth does not accept liability. The liquidators have rejected Firstmac's proof of debt. Firstmac has appealed to the court against the rejection. The appeal is pending. 8 Under Fox's contractual arrangements with Firstmac, trailer commissions were receivable by Fox from Firstmac. The liquidators have assessed the net present value of these at some $600,000. Firstmac contends that, because of conduct of Fox and relevant agents of Fox, Firstmac no longer has a liability to pay trailer commissions. 9 The liquidators say in the report to creditors that there is some factual overlap between the dispute with Firstmac over the proof of debt for $1,815,000 and Firstmac's contention that it is not liable to pay trailer commissions. In very broad terms, the proof of debt may turn out to be sustainable and the right of Fox to receive trailer commissions may be prejudiced if certain findings of irregularity are made in relation to particular mortgage loans in respect of which Fox played an intermediary role. It is with a view to investigating those matters that the liquidators have embarked upon a series of Part 5.9 examinations. Genworth has provided certain financial assistance in connection with the examinations. The liquidators see the interests of Fox and the interests of Genworth as coinciding to the extent of a common interest in proper investigation of possible irregularities surrounding loans. The liquidators' report refers to fifteen persons already examined. These include three officers of Firstmac, a number of borrowers, a number of vendors to borrowers, some introducers and brokers (including Ms Sabbarese, the principal of Money Talks Pty Ltd), a lawyer for brokers, introducers, facilitators and borrowers (Mr D'Angelo), a valuer, and the external accountant of Fox (Ms Harbulot of Harbulot Associates Pty Ltd). 10 By way of further factual background, I quote from the liquidators' report: "The examinations which have been conducted since August 2005 (which examinations have been able to be conducted by reasons of the Indemnity from Genworth) have uncovered conduct by officers and agents of the Company which on a preliminary view may constitute fraud in relation to mortgages placed by the Company with Firstmac. Evidence on oath has been given by the former external accountant for the Company that tax returns which were false were prepared under the instructions of Michael Murray the Managing Director of the Company to enable the former and current directors Michael Murray and Stefan Cattuzzato through a company they controlled BNC Mediolanum Pty Ltd (of which we are also the Liquidators) to obtain two mortgage loans through Firstmac based on false tax returns of a third company also controlled by same, namely Foxcorp Financial Services Pty Ltd (of which we are also the Liquidators). These comprise two (2) of the thirteen (13) mortgage loans. There is also evidence on oath that other false tax returns were prepared by the external accountant for Stefano Cattuzzato from verbal information supplied by him showing false inexistent tax agents, the returns printed and given to Stefano Cattuzzato for a cash fee and then deleted from the computer system immediately thereafter. In addition, evidence adduced during the examinations both orally and documentary may indicate that at least one of the directors and controllers of the Company Stefano Cattuzzato obtained a financial advantage in relation to 1 to 5 of the remainder of the 13 mortgage loans under investigations in the examinations. These 5 loans exhibit highly irregular features including: 1. the Contract Price on the face of the Contract (not the amount paid) was significantly in excess of the true price (that is the amount actually paid). 2. that that was done to enable a loan to be obtained in an amount being around 80% of that false contract price. 3. the mortgage loan obtained comprised the entirety of the monies paid in relation to the purchase of the property including the amount paid to vendor, stamp duty, the purchaser's legal costs, and a significant fee to persons who put the transaction together including mortgage brokers and other persons and this director and controller of the Company. 4. In relation to these 5 mortgage loans, there is evidence of false documentation created to support the loan application including group certificates, bank statements, term deposit statements, letter from employers, rental property income statements and birth certificates. 5. The valuations for these 5 properties were at the false contract price by the same valuer supported by non existent comparable sales in some instances." 11 The solicitors acting for Mr Mohamed (who are also the solicitors for Mr D'Angelo) wrote to the liquidators on 7 November 2005 asking a number of questions including: (a) what benefit the current examinations were expected to provide for Fox's creditors; (b) whether the examinations had been conducted so as to confer a benefit on Genworth that would not otherwise have been available to it; and (c) whether Genworth is a creditor of Fox. 12 This brought a comprehensive response dated 10 November 2005 from the liquidators. Questions (b) and (c) above were answered in the negative. The purposes of the examinations were described in some detail. They included the purposes of seeking to clarify whether the Firstmac proof of debt should be reconsidered; seeking to clarify whether action should be taken against Firstmac to recover trailer commissions which might be worth up to $600,000 on a net present value basis; investigating possible bases for legal action against certain persons, for example, Mr D'Angelo, Money Talks Pty Ltd (and its principal Ms Sabbarese) and the accounting firm Harbulot & Associates (and its principal Ms Harbulot) some of whom have professional indemnity assurance. 13 It is also relevant to quote from a summary of relevant events and matters annexed to the letter of 10 November 2005 sent by the liquidators to Mr Mohamed's solicitors. It begins by referring to the hearing before me on 17 October 2005: "7. At Court on 17 October 2005, during the hearing before Barrett J were present, not only your client D'Angelo but also: (a) Sabbarese and her counsel Mr Accoto; (b) Fiorucci; (c) Mr Andrew Neilan ('Neilan') and his solicitor Ms Krysyna. Neilan is another examinee. He, through his company AMN Consultancy Pty Ltd, obtained financial benefits in relation to each loan in which Sabbarese, Fiorucci and/or D'Angelo were involved in their various capacities. Each of these persons stood to benefit from the orders D'Angelo sought: namely, to stop the examinations. To date each of Sabbarese, Fiorucci and Neilan have claimed 'privilege' before answering all questions during their examinations. In addition, each of them has indicated he or she seeks the benefit of orders under section 128 of the Evidence Act 1995 (NSW) in relation to evidence which he or she gives which tend to prove that he or she has committed an offence or is liable to a civil penalty. 8. In his reasons for judgment Barrett J, at [4] [scil, [9]] commented: 'I have some concern that, in making the complaints in relation to which he refers to s.536, the applicant is seeking to advance a case which goes beyond his own interests. Why he should be concerned about other examinees is not clear. It is said on his behalf that he is a solicitor who wishes to place before the court matters of concern which he thinks should be brought to the court's notice. Another possible connotation is that he is acting in a collateral way in the interests of persons who have not come forward in a direct fashion seeking to challenge examination summonses served upon them. I make no findings on these matters." In this regard, the Liquidators note that a number of examinees, including Sabbarese, Fiorucci and Neilan and their respective legal advisers all attended the hearing of D'Angelo's Interlocutory Process before Barrett J on 17 October 2005. 9. On 24 October 2005, your firm on behalf of Mr D'Angelo filed and served an Amended Interlocutory Process which sought to comply with Barrett J's orders and also served further affidavit evidence. 10. On 28 October 2005 (day 12 of the current examinations), Mr Maxwell of Counsel appeared, instructed by your firm, on behalf of Mohamed before Registrar Silva and sought to adjourn or stay the examinations listed for that day in light of Mohamed's Interlocutory Process. Mohamed relied upon all of the affidavits served by your firm on behalf of D'Angelo in support of his Interlocutory Process. In addition there was an affidavit by Mohamed. 11. At 10am on 28 October 2005 (day 12 of the current examinations), Mr Maxwell of Counsel appeared, instructed by your firm, on behalf of Mohamed before Registrar Silva and sought to adjourn or stay the examinations listed for that day in light of Mohamed's Interlocutory process. Mohamed relied upon all of the affidavits served by your firm on behalf of D'Angelo in support of his Interlocutory Process. In addition there was an affidavit by Mohamed. 12. Mohamed's affidavit sworn 27 October 2005 ('Mohamed's affidavit') paragraph 1 discloses that one day earlier, he had acquired for an undisclosed amount by a deed of assignment a debt of a barrister Rohan de Meyrick in the sum of $2,420.00. Mohamed sought to make his application as a person having relevant interest and concern, namely as a creditor of the Company. 13. Fox's Report as to Affairs ('RATA') as at 10 December 2004, date of appointment of Administrators of the Company, shows 66 creditors with debts of $2,137,330.16. 41 creditors of the Company have made claims totalling $7,715,601.08. Mohamed's claim of $2,420.00 represents 0.03% of potential total creditors' claims (this includes Firstmac's proof of debt in the amount of $1,815,000.00 which was rejected by the Liquidators and is now subject of appeal). This increases to 0.04% when the total amount of creditors' claims is reduced to $5,900,601.08 by excluding Firstmac's proof of debt. If Firstmac succeeds on its appeal of the proof of debt, the total creditors' claims increase from $5,900,601.08 to $7,715,601.08 and Mohamed would represent 0.03% (as opposed to 0.04%) of potential total creditors' claims. 14. Mohamed's application to stay the examinations on 28 October 2005 was on day 12 of the current round of examinations which commenced on 23 August 2005 (there also having been 3 days of examinations in March 2005). Persons to be examined on that day included Sabbarese, Fiorucci and Neilan. Also to be examined was Ms Jenny Dukici ('Dukici') an associate of Neilan in respect of 7 of the loans originated through the Company. Dukici received a financial benefit from at least 5 of these loans. Each such person's examination was part heard, stood over from earlier occasions. 15. Mohamed, it appears, has at least the following associations with persons involved in the 13 loans originated through the Company and subject of the examinations: (a) Mohamed provides consultancy services through an entity known as 'Australian Finance Group': see paragraph 2 of Mohamed's affidavit. (b) Those consultancy services are provided to Money Talks Pty Limited, the mortgage broker of which Sabbarese is a principal: see paragraphs 2 and 3 of Mohamed's affidavit. (c) A significant part of Money Talks Pty Limited's income in the period of the 13 loans under investigation was from AFG: see bank statements produced by Money Talks. See Exhibit 'C' to the affidavit of Effie Ioakimaros sworn on 8 November ('Ioakimaros' Affidavit'). (d) Mohamed was in the presence of Sabbarese when she was interviewed by Deloitte on 1 June 2005; see paragraph 3 of Mohamed's Affidavit. (e) Mohamed appeared in court when Mr Ross Lo Giudice ('Lo Giudice') was examined on 24 August 2005. He disclosed to the Court that he was Lo Giudice's 'adviser': See Exhibit 'D' to Ioakimaros' Affidavit. (f) Lo Giudice's wife, who is presently serving a custodial sentence for fraud, previously worked for Money Talks under Ms Sabbarese. See page 33 of transcript of examination of Lo Giudice. (g) Mohamed was in the presence of Fiorucci when an employee of Deloitte sought to interview him in June 2005. (h) Mohamed as a justice of the peace witnessed a Statutory Declaration of Ms Stefano Intelisano the father of a borrower under one of the 13 loans being investigated: see Exhibit 'B' to Ioakimaros' Affidavit. 16. Mohamed discloses his current financial situation to be that he is in receipt of a carer's pension: see Mohamed's Affidavit. 17. Mohamed has not disclosed in his evidence: (a) Whether he paid anything to take the assignment of the debt to become a creditor of the Company; (b) His ability to meet the fees and disbursements of Hal lawyers and his counsel and also those of the Liquidators and of the Company if he is unsuccessful on his Interlocutory Process; (c) How he came to make the decision to become a creditor of the Company at this late stage of the examinations (given his earlier knowledge of and attendance at those examinations); (d) What interest he really has in halting the examinations; (e) How he came to use and retain Hal Lawyers then acting for D'Angelo; (f) The true nature (financial and otherwise) of his associations and relations with D'Angelo, Sabbarese, Money Talks, Fiorucci, Neilan, AMN Consultancy Pty Ltd, Dukici, Lo Giudice and Mrs Rosa Lo Giudice; (g) Any association or involvement (financial or otherwise in any of the 13 loans originated through the Company the subject of the examinations); (h) His knowledge of the matters the subject of Mohamed's Interlocutory Process, from whom he obtained that knowledge, and how he has been in a position to instruct Hal Lawyers and Counsel and form bona fide beliefs, that are his beliefs, so as to commence and maintain this action especially in circumstances where Mohamed's Interlocutory Process mirrors D'Angelo's Amended Interlocutory Process filed 4 days earlier. 18. This being said, after Registrar Silva refused Mohamed's application to adjourn the examinations at 10am on 28 October 2005, he instructed his solicitors and counsel to make an ex parte application to the duty judge in the same terms whilst the Liquidators by their Counsel were conducting examinations before Registrar Silva. 19. At about 11:20am on 28 October 2005, Mohamed's Counsel informed Registrar Silva that the duty judge (Justice Gzell) had been approached and Mohamed's application had been referred to Justice Campbell at 12pm. Accordingly, Registrar Silva adjourned the examinations pending the outcome of that application. 20. Shortly after 12 pm on 28 October 2005, Mohamed's Interlocutory Process came before Justice Campbell. Justice Campbell stated words to the effect that he was not impressed with the bringing of such an application this late and declined to stay the examination proceedings while Mohamed's Interlocutory Process stood in the list to be reached as and when a judge became available. 21. Present in the court before Justice Campbell were all or most of the following persons: (a) Sabbarese and her counsel Mr Accoto (b) Fiorucci and his counsel Mr Djemal (c) Neilan and his solicitor Ms Krysyna (d) D'Angelo and his solicitor Mr Hall 22. The examinations then proceeded before Registrar Silva. The Liquidators sought to distribute the available time remaining amongst the balance of the examinees. 23. At about 3.25 pm counsel for Fiorucci at the recommencement of his examination made an application before Registrar Silva as to who should be in Court, in substance mirroring a number of the arguments in Mohamed's application. In the course of that application, Mohamed's legal advisers informed the Court that Mohamed's application was listed before Justice Windeyer at 3:30pm. Accordingly, the examinations were adjourned for that day by Registrar Silva. 24. Thus, Sabbarese, Fiorucci and Dukici were not examined. They incurred the cost of attendance with their legal advisers (counsel or solicitors) and there was much wasted expenditure on the Liquidators' side. 25. When the matter came before Justice Windeyer, Sabbarese, Fiorucci, Neilan, Dukici (as well as Mohamed) and their legal advisers were in Court. 26. The affidavit of Mr Gordon Scurr sworn 31 October 2005 ('Scurr's Affidavit) on behalf of Mohammed seeks to highlight the Liquidator's, Mr Pino Fiorentino's, discussions at Court on 28 October 2005 with lawyers of Hicksons and employees of Deloitte. Scuirr's Affidavit, however, does not mention the circumstances of the discussions at Court as between the legal responsibilities of Mohammed, D'Angelo, Sabbarese, Fiorucci, Neilan and Dukici. 27. Justice Windeyer noted that as there was no further examinations dates presently listed he would make directions only. Justice Windeyer did however engage in the following exchange with Counsel for Mohamed: His Honour: 'What is your client's interest?' Maxwell: 'He is a creditor' His Honour: 'What is his interest?' Maxwell: '$2,420.00' His Honour: 'Oh come on, is this a class action?' Maxwell: 'I don't have instructions that it is' 28. In all of the above circumstances, including: (a) The timing of Mohamed's application and the persons (examinees) who would (and did by the tactics employed on that day) benefit from relief of Mohamed's Interlocutory Process going before Justices Campbell and Windeyer; (b) The commercial and possible social relations between some or all of these examinees and Mohamed; (c) Mohamed's involvement in aspect [sic] of the subject loans originated through the Company; (d) The timing of the assignment of the debt and its trivial amount having regard to the number and claims of other creditors of the Company; (e) The use of a common solicitor to D'Angelo; (f) The significance and gravity of the issues being examined and the potential consequences in particular, for examinees with which Mohamed has an association; (g) The apparent impecuniosity of Mohamed; (h) The significant costs of Mohamed's Interlocutory Process; lead the Liquidators to be most concerned that Mohammed's application is brought by a person without means, unable to meet any adverse costs order, with tangible benefits for persons (examinees) associated with Mohamed, brought very late in the course of the examinations, and which is contrary to the interest of the Company as a whole." 14 The last factual matter to be mentioned is that Ms Sabbarese, who has already been examined, has, through solicitors, indicated to the liquidators by letter dated 2 November 2005, that Ms Sabbarese is aware of Mr Mohamed's application. Her solicitors then expressed a view that Ms Sabbarese should not sign the transcript of her examination before Mr Mohamed's application has been determined. Furthermore, the letter, by asking that the liquidators "extend the time for signing", seems to overlook the important fact that the requirement to sign is imposed by an order of the court. 15 I turn now to the principles to be applied upon an application for security for costs. Mr Svehla of counsel, who appeared for the liquidators, made it clear that he bases his client's application on both rule 42.21 of the Uniform Civil Procedure Rules 2005 and the court's inherent jurisdiction. The aspect of the rule which arises for consideration is paragraph (e) which refers to a situation where the court is satisfied "that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so". 16 I begin, therefore, with the first of the matters to which this provision directs attention. Mr Mohamed is not a person the liquidators have sought to examine. To that extent, he has no interest whatsoever in whether the examinations continue. He is, however, a creditor by virtue of the assignment to him, by gift, of the debt owed by Fox to the barrister. The assignment occurred on 26 October 2005. He filed his application directed towards termination of the examinations two days later. It is by no means difficult to infer (and I do infer) that he acquired the debt solely for the purpose of giving himself some colour of standing to bring this application. 17 Why, as a creditor by assignment for $2,420, would he have seen fit to bring the application? Some abstract desire to right what he saw as wrong might be one reason. But I reject that as unrealistic, given that, while he may appear to have only a theoretical sum of $2,420 at stake, he acquired the debt by gift and is therefore at no financial risk and does not have any good reason to expend considerable sums in legal fees to pursue some general desire to see a perceived wrong righted. It was said on Mr Mohamed's behalf that he may be, as it were, a "target" of the liquidators' investigations, given the references to him as the Justice of the Peace who took a statutory declaration from a person involved in a loan transaction apparently under investigation and his role as a consultant to Ms Sabbarese and her Money Talks business, both of which are the subject of investigation and inquiries by the liquidators. But there is nothing before me suggesting that the liquidators see Mr Mohamed as a person of interest, from the point of view of possible recovery proceedings or other actions. The mere fact that someone acts as a consultant to a particular business or takes a statutory declaration as a Justice of the Peace in no way indicates that the person is the object of any suspicion. 18 Mr D'Angelo, an examinee, made an earlier attempt to obtain a stay of all examinations being conducted by the liquidators. He abandoned that attempt after my judgment of 17 October 2005. Within days, Mr Mohamed had filed a virtually identical application. It is clear that Mr Mohamed simply took up where Mr D'Angelo left off, having acquired the debt by gift to provide some formal basis for his doing so. I infer from this that Mr Mohamed is playing a part in a plan that involves an orchestrated attempt by certain persons who have been or are to be examined to halt the series of examinations upon which the liquidators have embarked and which is partially complete. 19 In the light of these matters, I am satisfied that, in bringing his application to have the examinations stayed, Mr Mohamed is proceeding not for his own benefit but for the benefit of some other person or persons, being one or more of the persons who have been or are to be examined. 20 It is therefore necessary to address the question whether there is reason to believe that Mr Mohamed will be unable to pay the costs of the liquidators, as respondents to his interlocutory process, if ordered to do so. The first step in doing so is to quantify the likely costs of the respondents. That matter is addressed in a letter of 4 November 2005 from the liquidators to Mr Mohamed's solicitors. The letter estimates (giving reasons) $27,570 as the cost to the liquidators of defending Mr Mohamed's interlocutory process. I did not understand that estimate to be challenged. I therefore accept it. 21 With a carer's pension of $580 per fortnight as his only known income and no evidence that he has any assets (apart from a debt of $2,420 owed by a company the winding up of which is expected to yield no return to creditors), Mr Mohamed is, in my estimation, a person of whom it can clearly be said that there is reason to believe that he will be unable to pay costs of the order of $27,570 if ordered to do so. Indeed, the same assessment would hold good in relation to costs substantially less than $27,570. 22 With the matters raised by rule 42.21(e) thus determined favourably to the present applicants, I proceed to consider other factors relevant to the question of security for costs. I see only two such matters as pertinent in this case. 23 It is necessary to address the general question whether Mr Mohamed's claim is bona fide and has reasonable prospects of success. As to bona fides, the circumstances in which Mr Mohamed, with no apparent financial interest, arose in place of Mr D'Angelo to continue the challenges originally mounted by Mr D'Angelo, create real and substantial doubts whether he is proceeding in good faith. As to the question of reasonable prospects of success, the liquidators' own account of the reasons for which they are pursuing the examinations would tend to suggest that an ulterior or impermissible purpose on the liquidators' part is unlikely to be found, although I do not intend, by saying this, to express any concluded view. However, the initial assessment must be that Mr Mohamed's case is weak. 24 The other question to be considered is whether an order for security for costs would unduly stultify Mr Mohamed's application. Given his financial circumstances, it may be expected that an order for security would mean that Mr Mohamed was unable to continue with his application, at least if the security had to be provided out of his own moneys. But because he is acting in the interests of one or more other persons, it may be assumed that other financial resources are available to him, so that no finding of undue stultification should be made. 25 All the factors requiring consideration in this particular case point strongly towards the making of an order for security for the liquidators' costs in the full amount of $27,570. 26 The orders of the court are as follows: 1. That Nasser Mohamed, the applicant under the interlocutory process filed on 28 October 2005, do give security in the sum of $27,570 for the costs of the respondents to that interlocutory process. 2. That such security be provided by payment of the sum of $27,570 into court to abide the making of orders as to costs upon or after determination of that interlocutory process. 3. That the said interlocutory process be stayed until such security is so provided. 4. That the costs of the applicants of and incidental to the interlocutory process filed on 8 November 2005 be paid by Nasser Mohamed, the respondent thereto. **********