The quantum of security
71 In the calculus of the amount of security which might be provided, it is necessary to keep in mind that the sum of $850,000 has been held in the trust account of Bartley Cohen as security for the costs of the derivative proceedings since March 2023. Thereafter, additional sums have been added in respect of security for the costs of additional respondents to the derivative actions, with the result that the total amount now held is $1,175,000. As mentioned, following the filing of this application, the parties agreed that an order should now be made to the effect that the amount held in the trust account be treated as security for all of the So interests' claims for costs in respect of the derivative action. The making of that order will provide substantial security for those parties. On the other hand, the evidence indicates that the costs expended by the So interests to date well exceed that amount, as do the costs which are expected to be incurred in future. Further, the sum may also be used to cover the costs of the other respondents, such that it may not be sufficient in the event that it needs to be called upon.
72 Mr Williams gave evidence as to the costs incurred or expected to be incurred by the So interests. Unfortunately, the force of that analysis was deprived of some of the weight which it would otherwise have had, by reason of the calculations having been prepared by a solicitor in the employ of Colin Biggers & Paisley, rather than by Mr Williams. That solicitor did not give evidence and was unable to be cross-examined about it. Mr Kelly KC, counsel for the Clancy interests, took an appropriate forensic decision not to cross-examine Mr Williams on that topic and, though he was criticised for that, it was not justified. There would have been little point in cross-examining Mr Williams on the detail of the information appearing in an analysis which he did not prepare; it would be most unlikely that he would have been able to explain any assumptions underlying the conclusions reached.
73 It must be doubted whether solicitors, whilst exercising their duty to a client, are capable of proffering an impartial affidavit on an application of the present kind: see, for example, General Trade Industries Pty Ltd (in liquidation) v AGL Energy Limited [2020] FCA 1562 [39]; Gumm v Commissioner of Taxation [2024] FCA 71 [128] - [130]. Even a solicitor of extraordinarily high standing such as Mr Williams will find it difficult to make a calculation that, in the evaluative process, does not tend in favour of their client's interests. It is not merely by accident that, on applications of this kind, the costs estimated by the solicitor for the applicant for security are almost always greater than the costs estimated by the solicitor for the party resisting the making of the order.
74 Here, there was no affidavit from the solicitors for the Clancy interests which suggested a lower figure and that may indicate, to some extent, the general accuracy of Mr Williams' calculations. That said, Mr Benjamin Cohen, the solicitor for the Clancy interests, did make a number of observations about particular parts of Mr Williams' costs estimates which, if accepted, would lead the Court to reach a lower amount of costs for the purposes of the application. For the reasons referred to above, there is no need to descend into the relative merits in this case.
75 It can be accepted that the cross-examination of Mr Williams did disclose that, whilst he is the partner responsible for the conduct of the litigation on behalf of the So interests, he is not heavily involved in it on a day-to-day basis, and it was apparent that he was not regularly taking instructions from the clients, nor closely involved in the discovery process. That is in no manner a criticism and, indeed, it is to be expected given the structure of major legal firms. However, in the present circumstances one might have expected that a person more closely aware of the particular circumstances of the case would put themselves forward such that they would be able to fully justify each item of the expected expenditure. It was also of some concern, as Mr Kelly KC submitted, that Mr Williams was unable to explain why it was that an expert's costs estimate was not obtained for this application as had been obtained for similar previous applications.
76 In any event, after taking into account the amount which is held by Bartley Cohen as security for the costs of the derivative action, the amount actually sought by the So interests on this application was said by Mr Williams to be a further $800,000, being for the costs expected to be incurred up to the first day of trial.
77 However, even when it is understood that only a further $800,000 is sought, it should be recognised that the evidence as to the expected future costs was advanced at a high level of generality. That is particularly unfortunate in circumstances where the amount sought would be a substantial order for security at a late stage in the proceedings. As the action has been on foot for some time, it might be expected that some detail could be given as to the steps which have to be taken to finalise the proceedings, so as to properly explain the amount of the expenditure claimed.
78 As was submitted on behalf of the Clancy interests, the available calculations do not take into account that, by the orders made by agreement, the So interests will have the benefit of the money which has been provided by way of indemnity for the costs the derivative claims brought by the Carver's Reach entities. That is significant in the present context.
79 Further, as has been mentioned, it is well accepted that in making an order for security, the Court does not give the party seeking the order a complete indemnity against costs. That is more poignant in this case where the evidential support for the figure of approximately $800,000 is weak and where the evidential basis for the claims made by the Clancy interests on the one hand, and on behalf of the Carver's Reach entities on the other, overlap substantially.