Colgate-Palmolive Company v Cussons Pty Limited

REASONS FOR JUDGMENT On 5 June 1997 I pronounced judgment in this matter, dismissing the application against all respondents. At that time the respondents respectively sought orders in their favour for costs. Such orders were sought on a complete indemnity basis or, alternatively, on an indemnity basis after the provision by the respondents jointly of a "Calderbank" offer in early February 1997. The orders for costs were sought, in the first instance, against the applicant. However, an order was further sought that if the applicant did not pay such costs within a period of 28 days after taxation of costs, Ian Francis Yates ("Mr Yates") would become liable for such costs jointly with the applicant. In addition, orders were sought to the effect that if such taxed costs remained unpaid 56 days after their taxation, the respondents should be at liberty to apply for an order that a person who allegedly maintained the applicant in the action should show cause why he or she should not pay such of the respondents' costs as had not then been paid. On 1 August 1997 I heard argument as to the basis upon which orders for costs in this matter should be made. I further heard argument on whether Mr Yates should be personally liable for the respondents' costs, should all costs not be paid by the applicant in accordance with an order of the Court. Mr Yates was represented separately from the applicant on 1 August 1997. The respondents have liberty to apply on the issue of whether any order should be made against a third party other than Mr Yates. CLAIMS FOR INDEMNITY COSTS As the Full Court of this Court has recently pointed out in Re Wilcox; ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 per Cooper and Merkel JJ at 732: "The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown. The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis. The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur." The jurisdiction of the Court to order costs is conferred by s 43 of the Federal Court of Australia Act 1977 (Cth) ("the Federal Court Act"). So far as is here relevant, s 43 provides as follows: "(1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court ... (1A) [not here relevant] (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge." The discretion to award costs conferred on the Court by s 43 of the Federal Court Act is to be exercised in the context of O 62 of the Federal Court Rules. O 62 r 4 provides as follows: "(1) Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to any person, that person shall be entitled to his taxed costs. (2) Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to - (a) a proportion specified in the order of the taxed costs; (b) the taxed costs from or up to a stage of the proceeding specified in the order; (c) a gross sum specified in the order instead of the taxed costs; or (d) a sum in respect of costs to be ascertained in such manner as the Court may direct." The "taxed costs" for which O 62 r 4 provides are costs taxed on a party and party basis (Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225). In Re Wilcox; ex parte Venture Industries Pty Ltd the Full Court confirmed (per Black CJ at 729 and Cooper and Merkel JJ at 732-733) that the discretion to depart from the ordinary rule in favour of party and party costs is not to be exercised unless the justice of the particular case so requires or some special or unusual feature arises. That is, as the Chief Justice pointed out at 729 - "in the ordinary case, costs will follow the event and the court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity". In Colgate-Palmolive Company v Cussons Pty Limited, Sheppard J, whilst acknowledging that the categories of case in which costs on some basis other than a party and party basis may appropriately be ordered are not closed, noted some of the circumstances in which a departure from the usual rule has been considered warranted. His Honour instanced the following: (a) the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; (b) particular misconduct that causes loss of time to the Court and to other parties; (c) the commencement or continuation of proceedings for some ulterior motive, or in wilful disregard of known facts or clearly established law; (d) the making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions; (e) an imprudent refusal of an offer to compromise; and (f) proceedings involving a contemnor. His Honour was careful to note, however, that the existence of circumstances capable of warranting the making of an order for costs on a basis more generous than party and party costs to the person in whose favour the order is made does not compel the making of such an order. Costs are always in the discretion of the Court. In this case it was contended on behalf of all respondents that the proceeding was commenced and continued in disregard of established legal principle, and that, properly advised as to the law, the applicant should not have brought and persisted in the claims. The respondents identified the real issue of liability in the case as that of whether the resumption proceeding was negligently conducted by reason of the reliance placed by the second and third respondents in this proceeding, as counsel for the applicant as plaintiff before the Land and Environment Court, on valuation evidence given in writing and orally by Messrs Parkinson, Woodley and Egan. It is convenient in this regard to look at the position of the second and third respondents separately from that of the first respondent. The duty of care said to be owed by the second and third respondents to the applicant was formulated in the following paragraph of the original statement of claim in the proceeding filed on 29 January 1993: "13. The Second and Third Respondents were under a duty of care to the Applicant to ensure that reasonable care was taken when they gave advice to the Applicant in relation to the preparation of evidence to be used at the Resumption Proceedings." The particulars of loss and damage said to have been suffered as a consequence of the negligence of the second and third respondents were that "[t]he decision of the Land and Environment Court did not take into account or provide compensation for" particular items of special value. No cause of action other than negligence was at that time pleaded against the second and third respondents. It is accepted that the original application and statement of claim were filed close to the expiration of a limitation period in order to protect the position of the applicant. On 30 April 1993, and before defences were filed on behalf of any respondents, the applicant filed an amended application and an amended statement of claim. Those documents formulated the case of the applicant in significantly greater detail than the original application and statement of claim. In addition to the claims in negligence, the documents invoked "breach of brief" against the second and third respondents and the provisions of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA") and s 42 of the Fair Trading Act 1987 (NSW) ("the FTA") against all respondents. In answer to the amended application and amended statement of claim, the second respondent by a defence filed on 15 July 1993 pleaded, amongst other things, as follows: "12. In answer to the whole of the Amended Application and Amended Statement of Claim, the Second Respondent says that the matters in respect of which the Applicant sues the Second Respondent in negligence, under the Trade Practices Act and under the Fair Trading Act are matters in respect of which the Second Respondent has immunity from suit by reason of the fact that such matters concern the preparation for and conduct of the proceedings in Court." I understand the reference in the above paragraph to the matters "in respect of which the Applicant sues the Second Respondent in negligence" to be intended to encompass the applicant's plea of "breach of brief". Whether it was or not is immaterial, as the final version of the statement of claim advanced no claim in contract or for "breach of brief" against the second and third respondents. The defence of the third respondent filed on 19 July 1993 pleaded in answer to the claims of negligence and "breach of brief" that: "[T]he facts alleged in the amended statement of claim even if true, disclose no maintainable cause of action in negligence against him as they relate to claimed acts or omissions intimately connected with the conduct of the proceedings in question, and the third respondent has immunity from suit in respect of such allegations." In answer to the claims of breaches of statutory duties, the third respondent pleaded as follows: "[T]he third respondent says that the applicant's claims against him pursuant to the Trade Practices Act, 1974 (Cth) and the Fair Trading Act, 1987 (NSW) may not be maintained, because the conduct complained of ... was such as to be intimately connected with the conduct of the proceedings in question, and the third respondent has immunity from suit in respect of such allegations." The applicant was thus put on notice promptly after the filing of the amended statement of claim that the second and third respondents invoked in answer to the claims against them the common law immunity of barristers from liability in negligence. It was contended by the applicant first, that notwithstanding the well established common law immunity of barristers from liability in negligence in respect of in-court conduct, the claims made in this proceeding against the second and third respondents were not limited to claims for mishandling the resumption proceeding in the Land and Environment Court and that, in any event, the immunity does not extend to negligent inadvertence to consider a matter. Secondly, the applicant contended that the common law immunity of barristers had no relevance to the claims made in this proceeding of breaches of statutory duties. I shall not rehearse here my reasons for judgment in the proceeding. In my view, at all times during the life of the proceeding, the applicant, if properly advised, should have known that its case against the second and third respondents in negligence was fraught with legal difficulty. However, I am not prepared to conclude that, if properly advised, the applicant should have known that its case was hopeless (see per French J in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303). The precise ambit of the common law immunity of barristers had not been authoritatively determined. Indeed, it may not yet have been so determined. What of the claims against the second and third respondents for breaches of statutory duties? At the time that the proceeding was instituted, there was little authority on the question of whether proceedings could be brought against a barrister pursuant to s 52 of the TPA or s 42 of the FTA. At the time of the commencement of the hearing, the decision of Santow J in Prestia v Aknar (1996) 40 NSWLR 165 had been published. His Honour rejected the contention that s 42 of the FTA was applicable to all professional activity. His Honour's reasons gave little encouragement to any person maintaining a proceeding under the FTA against a barrister. However, such reasons could be seen as suggesting that if s 42 of the FTA did reach to the in-court conduct of a barrister, the common law immunity of barristers would thereby be overridden. It is of significance for present purposes to note that the applicant's claims against the second and third respondents based on s 52 of the TPA and s 42 of the FTA were based on the same factual allegations as its claims against them in negligence. The costs of the two classes of claims will therefore be interwoven. The abandoned claims for breach of fiduciary obligation and of failure to claim holding-costs, whilst no doubt of significance to all parties and particularly to the second and third respondents, contributed so little to the total cost of the proceeding that they may be placed to one side for present purposes. This may well be a borderline case. However, it would, in my view, be too harsh to categorise the applicant's case against the second and third respondents as "hopeless" by reason of established law. It could, in my view, more fairly be seen as a case involving considerable legal difficulty and enjoying limited authoritative support. There is nothing in itself improper or unreasonable in the pursuit of claims involving legal difficulty. In so far as the first respondent (who represented all of the partners of Abbott Tout Russell Kennedy, solicitors ("ATRK")) is concerned, it was by his further amended defence filed on 4 March 1997, that he pleaded, for the first time, that the claims made against ATRK alleging negligence and breach of contract were claims in respect of which ATRK could invoke immunity from suit to the same extent as a barrister. Prior to that further amended defence, the first respondent had pleaded that ATRK had discharged their obligations under their retainer and at common law by briefing competent counsel and acting on their advice in respect of all functions normally performed by solicitors in respect of litigation such as the resumption proceeding before the Land and Environment Court. In effect, the first respondent could be understood to have pleaded at this time that ATRK had no professional responsibilities to the applicant beyond briefing counsel and acting on their advice. In interlocutory argument before me this argument was described as the "post-box" defence. Having regard to my above conclusions as to the strength of the applicant's case as a matter of law against the second and third respondents, I necessarily conclude that the applicant's case against the first respondent could not fairly be categorised as "hopeless" as a matter of law. Certainly, in my view, it could not have been so described prior to the filing of the first respondent's further amended defence on 4 March 1997. The claim of the respondents for orders for costs on an indemnity basis was also pressed on the basis that the evidence called on behalf of the applicant failed to address the central issue in the proceeding, namely that of whether the resumption proceeding was negligently conducted in that reliance was placed only on the valuation evidence given in writing and orally by Messrs Parkinson, Woodley and Egan and thus on no additional valuation evidence. The respondents draw attention to the fact that the only expert called by the applicant did not expressly address the issue of whether competent counsel, or competent solicitors, could have had the view that it was appropriate to place reliance on such valuation evidence unsupplemented by further valuation evidence. Particularly having regard to the acknowledged complexity of valuation law, this lacuna in the evidence apparently available to be called by the applicant is striking. As was pointed out by the High Court in Rogers v Whitaker (1992) 175 CLR 479 at 487: "In Australia, it has been accepted that the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill." Although, as the decision of the High Court in Rogers v Whitaker illustrates, that standard is not to be determined "solely or even primarily by reference to the practice followed or supported by a responsible body of opinion in the relevant profession or trade" (at 487), such evidence has always been regarded as an appropriate starting point for the courts. Its importance is the greater, and may be decisive, where issues of professional skill and judgment concerning complex matters are concerned (Rogers v Whitaker at 489). The present case involved such issues. The professional judgment of the second respondent was crucial to the way in which the resumption claim before the Land and Environment Court was presented. The basis on which that judgment was made was explained in considerable detail by the second respondent in his affidavit sworn on 21 December 1995 and filed on 22 December 1995. If the views of the second respondent as to the law and as to the appropriateness of the valuation evidence of Messrs Parkinson, Woodley and Egan were views which it was reasonably open to a senior counsel to hold at the time of the resumption proceeding, it would follow that complaint could not sensibly be made about a junior counsel or solicitors holding and acting on the same views. Yet it would appear that the only expert whose evidence was relied on by the applicant was not asked to consider or express an opinion on whether such views were views which it was reasonably open to a senior counsel, or indeed a junior counsel or solicitor, to hold at the relevant time. In my view the applicant ought not to have persisted with the proceeding without, within a reasonable time of the service of Mr Simos' affidavit sworn on 21 December 1995, seeking and obtaining expert evidence that it was not reasonably open to Mr Simos at the time of the resumption proceeding to hold the views recounted in Mr Simos' affidavit. That reasonable time may, in my view, be considered to have expired three months after the date on which Mr Simos' affidavit was served. It was not suggested that such affidavit was not served on the same day as it was filed, and I shall assume that it was so served. I am not persuaded by the argument that the applicant was not properly put on notice of the defence to be advanced by the second respondent until Mr Simos' affidavit sworn on 17 February 1997 was filed and served. Mr Simos' affidavit sworn on 21 December 1995 reveals with considerable particularity the views which he took of the expert evidence of Messrs Parkinson, Woodley and Egan. It also discloses, although in less detail than in his affidavit sworn on 17 February 1997, the importance attached by Mr Simos to the decision of the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. The importance which the applicant seeks to attach to Mr Simos' failure in his affidavit sworn on 21 December 1995 to refer to the decision in Baringa Enterprises Pty Limited v Manly Municipal Council (1965) 15 LGRA 201 is, in my view, unwarranted. Even if the applicant's view of the significance of that decision is accepted, the issue remained of whether the alternative valuation approaches adopted by Messrs Parkinson, Woodley and Egan were not in the circumstances reasonably open to be adopted to the exclusion of the Baringa Enterprises approach. There is a further factor of relevance so far as the evidence called on behalf of the applicant is concerned. The substance of the applicant's case was that it wasted monies (ie costs resulting from unnecessary hearing time before the Land and Environment Court) in attempting to value the subject land by reference to notional capital income streams, and that it was deprived, by reason of the manner in which its resumption claim was prepared and presented, of the chance to obtain damages from the Land and Environment Court for its enjoyment of a significant "head start" over other potential developers of the subject land, and for the special value of the subject land to it by reason of steps taken towards the establishment of a unit trust to hold 50% of the equity in the markets. It sought to be compensated by an award of damages from this Court. As to the claim that time was wasted before the Land and Environment Court, Cripps CJ, the trial judge in the resumption case, had made it clear in awarding the applicant its costs of the resumption proceeding that it was "an oversimplification to view [his] judgment as resolving against Yates the issue of capitalisation of rents". His Honour indicated that on the basis of such evidence he had found that the subject land had special value to the applicant. Authorities in support of the "head start" claim were identified by the applicant as Kennedy Street Pty Limited v The Minister [1963] NSWR 1252 and Baringa Enterprises Pty Limited v Manly Municipal Council (1965) 15 LGRA 201. I shall not repeat here what I said in my reasons for judgment concerning the difficulty involved in extracting relevant principles concerning the calculation of "head start" damages from these authorities. Crucial to the applicant's claim to have suffered "head start" damages was that it was, as it pleaded in par 42 of its further amended statement of claim, in a position as at the date of resumption immediately to start building markets on the subject land. In par 25 of the further amended statement of claim, the applicant pleaded that in August 1983 financing for its markets proposal was confirmed in a letter of acceptance received by the applicant from a nominated banker. Mr Yates gave affidavit evidence in support of this plea. The evidence called at trial showed both the plea and Mr Yates' affidavit evidence in this regard to be false, and that Mr Yates either knew or ought to have known that it was false. Moreover, no challenge was mounted by the applicant to the evidence given by a solicitor who was acting for the applicant as at the resumption date that, at about that time, the title to the subject land was "cluttered with caveats and there was a great deal of negotiating with all the parties involved". In my view the applicant persisted with a claim that it was in a position as at the date of resumption immediately to commence building on the subject land when the evidence that was, or ought to have been, available to it established to the contrary. As to the claim for special value based upon the proposed unit trust, again the evidence failed to support crucial allegations set out in the further amended statement of claim. Again it was apparent, in my view, that Mr Yates knew or ought to have known that such allegations were false. The fact that the applicant persisted with the proceeding without apparent regard to significant deficiencies in the evidence available to be called to establish its case is sufficient, in my view, to enliven the discretion of the Court to make orders for costs on a basis other than a party and party basis. It is not in the circumstances necessary for me to give detailed consideration to a "Calderbank" offer jointly made by the respondents by letter dated 5 February 1997. However, I note that by such letter the respondents offered to pay the applicant's costs as agreed or taxed, plus the sum of $100,000. Such offer was expressed to be open until 4 pm on Friday 7 February 1997. Although the offer was made late in the life of the proceeding and was open for only a short time, the affidavit evidence of Mr Yates does not suggest that these were a significant factors in his deciding that the applicant should not accept the offer. In the circumstances, the decision of the applicant not to accept the offer was, in my view, imprudent. Do the interests of justice indicate that the discretion of the Court to make orders for costs on a basis other than a party and party basis should be exercised in this case? Counsel for the applicant placed reliance on the failure of any respondent to seek summary dismissal of any or all of the applicant's claims. I have already reached the conclusion that the applicant's claims could not, as a matter of law, have fairly been described as hopeless. There was a significant dispute between the parties as to the facts. The test to be applied on a application for summary dismissal is a severe one (General Steel Industries Ltd v Commissioner for Railways (1964) 112 CLR 125). I do not consider that the respondents ought now to be disadvantaged for not having pursued the remedy of summary dismissal. So far as the second respondent is concerned, the evidence before me on this application reveals that he sought the advice of senior counsel on this precise issue and accepted advice that such a course ought not to be followed. It was also contended on behalf of the applicant that the respondents extravagantly retained separate legal representation. In the alternative it was argued that the second and third respondents ought not to have been separately represented. Whether any of the costs of the respondents were reasonably incurred will be a matter for the taxing officer. However, the applicant's claims against the three respondents were separately pleaded. There were, in my view, real grounds for apprehending a risk of conflict of interest between the first respondent on the one hand and the second and third respondents on the other. I do not consider that it is plain beyond argument that no conflict between the second and third respondents could reasonably have been foreseen. On this application I wish to go no further than to say that I do not regard the separate representation of the respondents as a factor telling against the making of orders for costs on a basis other than that of party and party. No argument was put to me that any reserved costs in the proceeding should be dealt with other than as part of the costs of the proceeding generally. In all of the circumstances of this case, I consider that justice requires that the applicant pay: (a) the taxed costs of each of the respondents, including reserved costs (if any) up to and including 22 March 1996; (b) the costs, including reserved costs, of each respondent thereafter in a sum to be ascertained on the basis that such sum is to comprise all costs except so far as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, each respondent will be completely indemnified by the applicant for his costs. CLAIM FOR AN ORDER AGAINST MR YATES It was not disputed that the Court has jurisdiction to order costs against a non-party (Knight v FP Special Assets Limited (1992) 174 CLR 178; Caboolture Park Shopping Centre Pty Limited (In Liq) v White Industries (Qld) Pty Ltd (1993) 54 FCR 224). In Re Talk Finance and Insurance Services Pty Ltd [1994] 1 Qd R 558, Moynihan J, exercising a jurisdiction conferred by the Rules of the Supreme Court of Queensland, ordered non-parties, namely directors of a party company, to pay costs on an indemnity basis. The power of this Court to award costs is conferred in terms no less wide than the rule relied on by Moynihan J in Re Talk Finance and Insurance Services Pty Ltd. I am satisfied that s 43 of the Federal Court Act confers on this Court jurisdiction to award costs on an indemnity basis against a non-party. In Knight's Case at 192 - 193, Mason CJ and Deane J stated: "For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party ... That category of case consists of circumstances where the party to the litigation is an insolvent person or a man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made." Although the above statement was strictly obiter, I consider it an appropriate guide to the exercise of my discretion in this case. I turn to consider the financial circumstances of the applicant. The financial accounts of the applicant for the financial year ending 30 June 1995 are in evidence. They show that, as at 30 June 1995, the applicant had total current assets of $1,769,961 and total shareholders' equity of $2,101,566. The material current assets comprised an unsecured loan to Yates Business Centre Unit Trust. The non-current assets are described as "intangibles". The Balance Sheet of the Yates Business Centre Unit Trust as at 30 June 1995 shows that at that time the total liabilities of the trust exceeded its total assets by $265,855. The directors of Yates Business Centre Pty Limited, the trustee of the Yates Business Centre Unit Trust, are the same as the directors of the applicant, namely Mr Yates and Mr Victor Leong. A balance sheet of the applicant as at 30 June 1996, prepared for management discussion purposes only, is of limited assistance in understanding the applicant's present financial position. I note, however, that it discloses no current assets. The evidence before me on this application discloses that from December 1992 to April 1997 accounts were rendered in respect of legal costs and disbursements in connection with the preparation and presentation of the applicant's case in this proceeding totalling approximately $1.6 million. Payments totalling more than $450,000 towards the applicant's legal costs have been made by Jillinda Pty Ltd (the trustee of the Yates Family Trust), Yates Security Services Pty Ltd, Woolloomooloo Foundation Pty Ltd and a Mr P. Baker. The profit and loss statement of the applicant for the year ending 30 June 1995 does not show any expenditure on legal costs; nor does the profit and loss statement, prepared for management discussion, of the applicant for the year ended 30 June 1996. Correspondence in evidence before me on this application discloses that the applicant has from time to time experienced apparent difficulty in arranging for its legal costs to be paid. In the absence of any evidence from Mr Yates as to the financial means of the applicant to meet significant orders for costs or concerning the history of payment of the applicant's own legal costs and disbursements, I am prepared to act on the basis that the applicant may be regarded as lacking the means to make payment within a reasonable time of any substantial orders for costs which might be made against it. That is, I am prepared to approach this application on the basis that the applicant is to be regarded as "a man of straw" as Mason CJ and Deane J used that expression in Knight's Case. It is not in dispute that Mr Yates has played an active part in the conduct of this litigation. As I found in my reasons for judgment, except during a period when the applicant was in official liquidation, Mr Yates has been in effective control of the applicant since its incorporation in 1975. Mr Yates is one of only two directors of the applicant. He holds the only A class share issued by the applicant which, while it is held by him, gives him the right to exercise at any general meeting of the applicant votes equal to three quarters of the total votes which could be exercised by all shareholders. His affidavit evidence on this costs application makes it clear that it was he who gave all significant instructions on behalf of YPC concerning this proceeding. The records of the Australian Securities Commission show that Mr Yates and Jillinda Pty Ltd, the trustee of the Ian Yates Family Trust, are the only shareholders of the applicant and that they hold their shares beneficially. I conclude that Mr Yates had a real and personal interest in the subject of this litigation. Subject to consideration of a matter to which I turn below, the above factors suggest that it would be contrary to the interests of justice for Mr Yates to be able to be shielded by the applicant from any liability for the respondents' costs of the proceeding. The matter to which I refer is the failure of the respondents, or any of them, to apply for security for costs in the proceeding. In my view, such failure is a matter which, along with other matters, may appropriately be taken into account on an application of this kind. Where a company which is apparently without means to pay an order for costs in favour of a respondent initiates litigation, the appropriate course will ordinarily be for such respondent to seek an order for security for costs (see Knight's Case per Dawson J at 204). Those who stand behind the company may then make a decision, ordinarily at an early stage, as to whether to make the financial commitment necessary to allow the litigation to proceed. The evidence before me discloses that the respondents did from time to time during the course of the proceeding give consideration to applying for an order or orders for security for costs. In doing so they had regard to the annual returns of the applicant filed with the Australian Securities Commission. Such returns showed the applicant to have significant shareholders' equity. The solicitors for the first respondent on two occasions sought from the solicitors for the applicant more detailed financial information concerning the applicant than was disclosed by the Australian Securities Commission returns. Such information was not provided to them. In the circumstances I do not consider that it was unreasonable for the respondents not to have made application for an order or orders for security for costs. An order will be made that Mr Yates be jointly and severally liable for the costs of each of the respondents but on the basis that no steps may be taken by or on behalf of any respondent to recover his costs from Mr Yates before the expiration of forty two clear days from the date of taxation of such respondent's costs.