ILC Group v Sydney Water Corporation

Judgment (EX TEMPORE - REVISED 29 AUGUST 2014) 1HIS HONOUR: The plaintiff entered into a contract with the first defendant, Sydney Water, under which the plaintiff agreed to "maintain" a large number of properties owned by Sydney Water in the Sydney and Illawarra regions. It is the plaintiff's case that the work performed by it exceeded, in substance, what had been suggested as an appropriate basis for tender in the documents that gave rise to the contract. 2The contract between the plaintiff and Sydney Water appears to have been superseded in some way, which it is not necessary for present purposes to examine, by a further contract, for the same work in respect of the same or much the same properties, between the plaintiff and the second defendant, Spotless. 3It appears to be reasonably clear that the measurements quoted in the tender documents were imprecise. It is the plaintiff's case that, on a proper construction of the contracts, it was the obligation first of Sydney Water then of Spotless to measure, or remeasure, the relevant areas accurately and thus to work out the amounts actually payable. 4The contracts appear to have provided that if the area were found, upon measurement, to fall within a tolerance of plus or minus 25 per cent from the area given for tender purposes, then the work would be paid for at the tender rates. However, if the discrepancy exceeded that tolerance, the work was to be valued by the superintendent. 5I should say that it is not suggested that there was any element of misleading or deceptive conduct in that aspect of the tender. The documents make it clear that an assumed measurement was given for the purpose of ensuring comparability between the various tenders. To the extent that the assumed areas prove to be wrong then, as I understand it, the discrepancies would be addressed by one or other of the mechanisms that I have outlined. 6Be all that as it may, it is, as I have said, the plaintiff's case that the defendants, for the respective periods when they were "on risk", were bound to carry out accurate measurements and to remunerate the plaintiff, for the work that it had done, in accordance with those accurate measurements. 7In very broad terms, the contract between the plaintiff and Sydney Water subsisted from 2002 to 2008. The arrangements between the plaintiff and Spotless appear to have subsisted between about 2008 and 2010. For reasons which I do not presently understand, it is said to be the case that there was an overlap, and that both Sydney Water and Spotless may have been "on risk" for some period in 2007 and 2008. 8Thankfully, I am not concerned today with the merits of the dispute except in one respect. What I am concerned with is the defendants' application for security for costs. 9It is common ground that the corporate plaintiff would be unable, if called upon to do so, to meet adverse costs orders in anything like the amounts suggested by the defendants to be an appropriate assessment, on the ordinary basis, of the costs that they would be likely to incur. In the case of Sydney Water, that estimate exceeds $1.2 million. In the case of Spotless, the estimate exceeds $1.3 million. 10It does not appear to be suggested that any consideration of "proportionality" should be applied to reduce, in some way, the amounts of the estimates. In putting the matter that way, what I am intending to say is that it appears to be common ground that if the plaintiff succeeds, the likely amount it might be entitled to recover would be substantially greater than the costs incurred in getting it to that point. 11With a possible qualification, it was also common ground that the plaintiff's case was one brought in good faith and that it was a reasonably arguable case. The qualification is that Mr Bouris of counsel, for Sydney Water, submitted that the plaintiff's case must fail. I did not understand the argument. Whether that is a reflection on the argument or a reflection on my powers of comprehension, is a matter that others can decide. It is sufficient to say that I am not persuaded by the argument (to the extent that I did find it comprehensible). I do proceed on the basis that the case is both one brought in good faith and one that is reasonably arguable. 12Needless to say, the plaintiff sought to persuade me that its case was strong and the defendants (or Spotless at least) that it was weak. It is not necessary to enter upon that further refinement. 13Because of the conceded position as to the plaintiff, the jurisdiction to order security for costs, whether under s1335 of the Corporations Act 2001 (Cth) or otherwise, is enlivened. In those circumstances, the evidentiary, and perhaps persuasive, burden shifts to the plaintiff to show why an order for security for costs should not be made. In saying that, and to avoid any possibility of misunderstanding, I accept, as Mr Doyle of counsel put for the plaintiff, that the overall onus of proving, or justifying, the order sought always remains with the party who seeks that order. That is however a different concept to that which is embodied in terms such as "persuasive burden" and "evidential burden". 14The reason propounded by the plaintiffs, as to why there should be no security, is, fundamentally, that those who stand behind the plaintiff - its shareholders Mr and Mrs Guevara - have offered their personal guarantee for such costs (if any) as might be ordered against the plaintiff. It is important to be precise. The guarantee offered is one to pay to the defendants the amount of any costs in the proceedings which the plaintiff is ordered to pay to the defendants, following assessment and allowing for any offset in respect of costs payable by the defendants to the plaintiff. At one stage, the guarantee was restricted to costs incurred only after the defendants' notice of motions had been filed. That qualification is now not pressed. 15In addition, Mr and Mrs Guevara offer an undertaking to the Court that they will not take any step significantly to dissipate their assets outside their ordinary business activities, customary expenditure and existing liabilities and commitments until the later of either the conclusion of the proceedings or the fulfilment of their obligations under their guarantee (if those obligations fall for fulfilment). 16It is convenient at this point to note that Mr Leopold of Senior Counsel for Spotless and Mr Bouris devoted considerable attention to describing what they submitted were deficiencies in the form of the non-dissipation undertaking. Those criticisms were offered first in the written submissions that had been filed a couple of days ago, and secondly in the course of argument today. However, when the guarantee and undertaking were first offered to the defendants, the offer was made by letter which stated in substance that any reasonable amendment to the form of the guarantee (which in context necessarily included the form of the undertaking) would be entertained. The defendants did not avail themselves of that offer to point out the criticisms that they now make. 17To my mind, if the defendants wished to contend that the form of the guarantee or undertaking was inadequate, considerations of common sense, as well as considerations of the policy embodied in s 56 of the Civil Procedure Act 2005 (NSW) might suggest that they should do so promptly by return correspondence; and not through the mechanism of submissions in court. 18I do not regard that aspect of the defendants' conduct as reasonable. Having said that, it does not to my mind have any significant dispositive content, if only because the plaintiff remains prepared, according to Mr Doyle's submissions, to accommodate any reasonable drafting concerns that the defendants might have. I might add to that that, although the criticisms have been made known in the course of today, no amendment to the form of the undertaking has been proposed. 19The evidence for Mr and Mrs Guevara details, among other things, the assets of their company the plaintiff and their personal assets. As to the plaintiff, they point out that it has significant assets in the form of plant and equipment, but does not have liquid assets of a value sufficient to pay costs if called upon to do so. That appears to be the case. The paid up share capital of the company is $2. To the extent that its assets are realisable, that realisation would not meet costs of anything like the amount estimated. 20Mr and Mrs Guevara say that they do have assets. Those assets include a 40 hectare farm property; a superannuation policy; a house owned by Mrs Guevara and their son, Roberto, as tenants in common in equal shares; a house in El Salvador and personal assets including motor vehicles, household contents and the like. 21The farm property is the subject of what might be described as a joint venture for its redevelopment in conjunction with neighbouring properties. The venture includes seeking the rezoning of all the land in question, including that owned by Mr and Mrs Guevara, and, upon rezoning, the redevelopment in various ways that do not need to be considered. As one might expect, that joint venture is regulated by a complex suite of interlocking contractual documentation. The contents of those documents are the subject of a confidentiality order and I will not go into the detail; nor is it necessary to do so. 22One feature of the documents is that Mr and Mrs Guevara have given mortgages over their property, the effect of which is to secure their obligations restricting their ability to deal with the land while the joint venture project works its way through to finality. Thus, apart from anything else, the documentation restricts significantly their ability to use their land (which is presently valued at about $1.8 million) as or to raise security for costs. 23There was a mortgage to a bank. That mortgage has been paid out and the discharge is being registered. The land is otherwise unencumbered. 24The superannuation fund has a credit balance of about $578,000 and, it appears, funds invested of about $300,000. Although the trust deed is in evidence, I was not taken to its terms and I do not know whether and if so on what terms Mr and Mrs Guevara are presently able to access any part of the superannuation funds. I should note that when this and other documents were tendered, I informed counsel that if there was anything relevant in them, they would need to point it out, because I did not propose to look for myself among the six folders of material with which I have been favoured. 25The house owned by Mrs Guevara and Roberto Guevara junior is said to be valued at about $650,000 and to have a mortgage of about $473,000 encumbering it. Thus, the value of Mrs Guevara's equity in this property is not significant (assuming that the property could be realised for anything like the estimated value, and allowing for the costs and expenses of sale). 26The evidence as to the house in El Salvador is not particularly detailed, but it includes a statement of "understanding", on the part of Mr Guevara, "that the value of the house is in the order of $250,000". 27Returning to the plaintiff, it generates an income of about $50,000 per year after payment of wages to the family. Its plant and equipment had a cost of about $750,000, but has a depreciated value of about $260,000. Whether its realisable value is anywhere near the depreciated value is a matter which is open to question. 28There may once have been a theory that, to defeat an application for security for costs, in a context where the plaintiff, being a company, was unlikely to be able to pay them, it was sufficient for the directors to, as it was put, step out from behind the skirts of the corporation and bring their own assets into play. See Harpur v Ariadne Australia Limited [1984] 2 Qd R 523 at 532 (Connolly J, with whom Campbell CJ and Demack J agreed). 29If that were thought once to be a principle regulating the fate of applications such as the present, it is not so regarded now. More recent cases stress that the discretion to order security for costs is relevantly unconfined (the only restriction, if it is one, being that the discretion is one to be exercised judicially, on a consideration of all relevant factors (insofar as they are disclosed by the evidence). That point was made very clear in a number of cases. The authorities to 2007 were reviewed by the Court of Appeal of this State in Jazabas Pty Limited v Haddad (2007) 65 ACSR 276. See Basten JA at [9]-[27] and, in particular, see McClellan CJ at CL (with whom Mason P agreed) at [78]-[80]. 30In the last of those paragraphs, McClellan CJ at CL adopted with approval, the words of Malcolm CJ, speaking for the Court, in Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306 at 316. Malcolm CJ there said: "The availability of an undertaking of personal liability by the persons who stand behind the company is no more than a factor, albeit an important factor, to be taken into account in the exercise of discretion." 31In considering applications for security for costs, reference is often made to the judgment of Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 196-198. 32Beazley J commenced her discussion of the principles by stating that the discretion to order security is unfettered and should be exercised taking into account all the circumstances of the case. Her Honour said that there was no predisposition in favour of the order of security, once the jurisdictional fact was established.. 33However, her Honour continued, the cases define a number of "well established guidelines which the Court typically takes into account in determining any such application. Her Honour stated some seven guidelines: 1. That such applications should be brought promptly. This is a principle of longstanding: see Grant v The Banque Franco-Egyptienne Egyptienne (1876) 1 CPD 143; see also Smail v Burton [1975] VR 776 per Gillard J at 777; Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 8 ACLR 818 at 820; Bryan E Fencot Pty Ltd at 514. I should state immediately that there is no issue of delay in this case. 2. That regard is to be had to the strength and bona fides of the applicant's case are relevant considerations: see M A Productions Pty Ltd v Austarama Television Pty Ltd & Anor (1982) 7 ACLR 97 at 100; Bryan E Fencot Pty Ltd at 514. As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. (Bryan E Fencot at 514). 3. Whether the applicant's impecuniosity was caused by the respondent's conduct subject of the claim: see M A Productions Pty Ltd v Austarama Television Pty Ltd at 100. 4. Whether the respondent's application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate: see M A Productions v Austarama Television at 100; Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 per Clarke J at 545; Bryan E. Fencot at 513. In Yandil Holdings at 545 Clarke J stated the principle in these terms: [t]he fact that the ordering of security will frustrate the plaintiff's rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the court's discretion in the plaintiff's favour. This factor is related to the next, namely: 5. Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security: see Memetu v Lissenden (1983) 8 ACLR 364; Sent v Jet Corp (1984) 2 FCR 201; Bell Wholesale Co Pty Ltd v Gates Export Corp (1984) 2 FCR 1; Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR 120 at 123; Bryan E. Fencot at 513; Yandil Holdings at 545. The combined effect of these two principles was summarised by Meagher JA in Hession at 123 as follows: ...a company in liquidation against whom an order for security for costs is sought cannot successfully resist such an order merely by proving that it cannot fund the litigation from its own resources if an order for security is made; it must prove that it cannot do so even if it relies on the other resources available to it (the company's shareholders or creditors)...Finally, whilst it is both true and important that poverty must be no bar to litigation, what that means is that the courts must be astute to see that no person pursuing a claim which is not frivolous is precluded from doing so by the erection of obstacles which poverty is unable to surmount; it does not mean that proof of insolvency automatically confers an immunity from statutory provisions which deal with insolvent plaintiffs. 6. An issue related to the last guideline is whether persons standing behind the company have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking: see Cameron's Unit Services Pty Ltd v Kevin R Whelpton and Associates (Aust) Pty Ltd (1986) 13 FCR 46 at 53; Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304; Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325. 7. Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate: see Interwest Ltd v Tricontinental Corp Ltd (1991) 5 ACSR 621 at 626; Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq) (1979) ACLC 32,446; Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480; Weily's Quarries v Devine Shipping Pty Ltd (1994) 14 ACSR 186 where Zeeman J stated at 189: [t]he general proposition that security ought not to be ordered where the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt self-help procedures is no more than that, a general proposition. It ought not to be elevated to being a rule of law. In many cases of that nature it could be considered oppressive to require security and that in itself may be sufficient to refuse to make an order...[see] Sydmar Pty Ltd v Statewise Developments [above] and Interwest Ltd v Tricontinental [above]. [emphasis added]. 34The judgments in Jazabas reinforced the significance of those guidelines, but at the same time emphasised that they were not statutory criteria which must be ticked or crossed, the outcome of which process would dictate necessarily the fate of the application. 35In the present case, there has been some delay in the bringing of the applications. One point that Mr Guevara makes in his affidavit evidence is that the plaintiff has expended about $170,000 in costs after the statement of claim was served and before the applications for security for costs were filed. However, it was not suggested that this of itself should be a reason for refusing the application for security. 36As I have said, strength and good faith are matters that are essentially neutral, in the sense that good faith is assumed, and I am not prepared to do more than consider, as I do, that the claim has some reasonable prospect of success. 37The third, fourth, fifth, and sixth "guidelines" appearing from Beazley J's reasons are of some significance. There is no direct evidence that the plaintiff's relative impecuniosity was caused by the conduct of the defendants. If that is to be argued, it is a matter that needs to be proved clearly and directly. That point appears from the decision of McClellan CJ at CL in Jazabas at [94] to [96]. 38However, to put the matter in that way is slightly to misunderstand the way in which the plaintiff puts this aspect of its argument. What Mr Guevara says in substance is that the plaintiff has spent a large amount of money so far, and needs to spend a large amount of money more, to carry out the process of measurement which, it says, was the contractual obligation of the defendants. To that extent, Mr Guevara says, the plaintiff does not have the cash on hand that it would have had were it able to devote its resources to its own side of the contract, rather than to what it says was the defendants' side of the contract. 39I think there is some force in that proposition. Of course, if the plaintiff is wrong in its construction of the contract, then the significance of this factor diminishes. However, it cannot be assumed that the plaintiff will be proved to be wrong. 40The effect or consequence of what I have said is that, on the evidence, I think it is appropriate to conclude that the plaintiff's resources have been depleted by doing work that, on the plaintiff's construction of the contract, should have been undertaken by the defendants. 41It has not been submitted that the defendants have brought their applications purely as a tool, or a device, to shut the plaintiff out of its litigation. Thus, it has not been submitted that the applications are oppressive in that sense. However, it is submitted that if the application were granted, and the plaintiff were ordered to give security of anything like the amounts for which the defendants contend, then the plaintiff would be unlikely to be able to continue with the litigation. Mr Guevara has said that cash on hand, and cash likely to be generated during the course of litigation, will be used for payment of the plaintiff's costs. It would follow if that cash (present or expected) were diverted into the provision of security, then the plaintiff would be unable to continue to fund the litigation. 42In this context, it is appropriate to note that Mr Leopold criticised the plaintiff for not undertaking, or not showing that it had undertaken, enquiries of litigation funders and adverse cost insurers, to assist it in meeting the burden of costs if it is ordered to pay them. Mr Leopold referred to cases in which that had been taken into account as a relevant factor. One of those was the decision of Beazley P in Golden Mile Property Investments Pty Ltd (in liquidation) v Cudgegong Australia Pty Ltd [2014] NSWCA 224. Another was the decision of the Full Court of the Federal Court of Australia in Madgwick v Kelly (2013) 212 FCR 1. 43In the former case, Beazley P referred at [49] to the want of evidence as to whether steps had been taken to source litigation funding. In the latter case, Allsop CJ and Middleton J made similar observations at, in particular, [77]. The first of those cases involved a claim by a company in liquidation. The second involved a class action. Whatever may be usual or normal to be done by plaintiffs (or applicants) in those situations, it does not seem to me that the observations made by their Honours, directed as they were to the specific cases and the specific facts, have a great deal to do with the present application. 44I do not think that the plaintiffs can be criticised for failing to put on evidence of any search for litigation funding or adverse costs insurance. To the extent that I am allowed to call upon my own knowledge of such applications over the past 11 years, I might observe that this is the first time I have heard such a submission. 45Those standing behind the company who are likely to benefit from the litigation are, in substance, Mr and Mrs Guevara. Thus, the fifth and sixth of the guidelines stated by Beazley J in KP Cable arise for consideration. Mr and Mrs Guevara are not able to provide the necessary security, they say. On their description of their assets and the restrictions to which those assets are subject, that must be correct. However, they have offered their personal guarantee in support of the plaintiff. Thus, it is the strength of that guarantee, and the criticisms made of the associated undertaking, that need to be considered. 46One of the features emerging from the evidence given by Mr Guevara is that he and his wife have, as well as the assets that I have briefly summarised, the prospect of substantial revenues under the joint venture project. Of course, whether or not those revenues will be derived depends, among other things, on whether or not the joint venture proceeds to fruition. At present, it appears, a concept plan has been acquired or approved, upon which, if the appropriate planning consent is given, the joint venture may proceed. If that joint venture does proceed, then Mr and Mrs Guevara expect that they will receive steadily increasing revenues, from about 2016 onwards. If they were to receive those revenues, they would well and truly be able to pay any adverse costs order pursuant to the guarantee that they offer. However, as Mr Leopold pointed out, the bulk of those revenues will not be derived (if they are derived at all) until after the conclusion of this litigation. 47A point made by Mr Leopold and Mr Bouris was that the assets owned by Mr and Mrs Guevara, as deposed to by Mr Guevara, are not readily susceptible of realisation. Their 40 hectare farm property is tied up in the complex suite of agreements to which I have referred, and encumbered by mortgages effectively ensuring their continued performance of those agreements. The superannuation is only accessible on whatever terms the superannuation fund trust deed provides. In the event of bankruptcy it is a protected asset in any event. The property jointly owned by Mrs Guevara and Roberto Guevara junior is not a particularly substantial asset of Mrs Guevara, having regard to the difficulties of realisation and the comparison of the estimated value and estimated liability. The house in El Salvador may well be worth something in the order of $250,000. However, its realisation is not likely to be a simple matter. 48Thus, Mr Leopold submitted, Mr and Mrs Guevara should have done something such as show how they could utilise the expected revenue stream, to which Mr Guevara deposes, to raise funds now to enable them to provide security for costs. 49Mr Bouris took a somewhat divergent view. His submission was, as I understood it, that those revenue streams were imprecise and speculative and hence that they should be discounted as a possible source of payment. 50Mr Leopold submitted that if his client did obtain an order for its costs and did call upon the guarantee, it was likely that it would have to proceed to bankrupt Mr and Mrs Guevara, and in that event it was unlikely that it will recover the amount of its costs. 51The competing interests raise a question of considerable difficulty. On the one hand the plaintiff has what I have said I accept is a claim brought in good faith which has reasonable prospects of success. It is undoubtedly a claim that will cost a considerable amount to prepare and run. On the plaintiff's view of the world, the costs that it is incurring to prepare and run that case are, at least in terms of the measurement exercise, costs that should have been incurred by the defendants already in the performance of their contractual obligations. 52On the other hand, the defendants have shown that if they succeed they will incur substantial cost liabilities. They have shown, further (and it is common ground) that if they do get an order for costs, it is unlikely that the plaintiff will be able to satisfy it. There is thus the question of how one balances the risk to the plaintiff of making the order, which might in effect mean that the litigation is stultified, against the risk to the defendants if the order is not made and they succeed. 53Mr Doyle submitted at one point that it was appropriate to take into consideration the fact that the defendants were both major corporations, who, as he put it, stood in no special need of care and protection. That is undoubtedly the case. I do not think it can be gainsaid as to Sydney Water, and as to Spotless, it is a wholly owned subsidiary of a major listed public company. 54Mr Doyle referred to the judgment of Rares J in Top Stuff 4 Business Holdings Pty Ltd v Vodafone Pty Ltd (No 2) [2012] FCA 645. Mr Doyle referred in particular to what Rares J had said at (8), citing Basten JA in Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Limited [2007] NSWCA 344. 55It is sufficient for present purposes to set out Rares J's summary of what his Honour drew from the judgment of Basten JA: [8] As Basten JA noted in Pioneer Park [2007] NSWCA 344 at [56], it may be that when security for costs is sought, a court will be more sympathetic to a small corporation with limited funds as opposed to a major corporation. However, his Honour noted that large corporate defendants should not be seen as standing outside the policy behind s 1335 of the Corporations Act 2001 (Cth) and its analogues in respect of security for costs provisions. Nonetheless, as Brooking J said in Prime Forme Cutting Pty Ltd v Baltica General Insurance Co (1989) 8 ACLC 29 at 32-33, large corporations stand in no special need of care and protection. Basten JA said that it might be seen as oppressive to allow a large corporate respondent or defendant to obtain an order for security for costs, beyond the capacity of a corporate applicant or plaintiff to pay, so that it would be likely to stifle litigation if the claim had potential merit and the quantum of costs would, in any event, be a relatively insignificant amount for the corporate respondent or defendant. In those circumstances, his Honour opined that an order for security may constitute a form of "oppression" ([2007] NSWCA 344 at [56]). 56I think, even though the amount of costs sought in each case is large, it could be described as "a relatively insignificant amount for" each of the defendants. However, again, I cannot take that into account as a dispositive factor. It is, at best, something to be thrown into the mix; in particular, as it seems, in connection with consideration of the prospect of stifling the litigation if the order for security is made. 57Another factor which is often emphasised in the cases is that even a successful applicant for security for costs is not entitled to receive a full indemnity for those costs. There are numerous cases where, although an application for security has been upheld, the security ordered has been substantially less than even the discounted amount of the "ordinary basis" costs that the applicant might be entitled to receive at the conclusion of the litigation, were it to succeed. 58That is not directly in point in this case. However, it does suggest that the discretion to order security does not need always to be considered as a discretion to order security sufficient to provide an indemnity for costs, or an indemnity for "ordinary basis" costs. Thus, if it is said that a guarantee offered in lieu of security is insufficient, the question of insufficiency has to be assessed bearing in mind that even a successful applicant for security will not necessarily get all that it claims. 59In the present case, as it seems to me, there is a very real risk that if security is ordered, the litigation will be stifled. I say that because it seems to me that Mr Guevara has been frank in his disclosure of the circumstances of the company's assets and those of himself and his wife. Accepting that he has been frank (and no submission to the contrary was put), it is impossible to see how security of the order of $2.5 million could be raised. Even if I were to apply some arbitrary discount to the amounts sought, so that they were reduced (for example) to $2 million in total, Mr Guevara 's evidence is reasonably clear, that the plaintiff could not put up such security, and neither could he and his wife. I do not think that there is a great deal in Mr Leopold's submission that the income stream could be utilised to raise money. At the present stage of the joint venture project, that income stream could hardly be said to possess any real quality of certainty. 60On the other hand, Mr and Mrs Guevara are not without substantial personal assets. Those assets might have some problems of realisation, and they may not be relatively easily realisable. They are nonetheless substantial assets. Further, as time goes by and as the joint venture project progresses, their position, both as to assets and as to income, may well improve. 61Mr Doyle submitted, I think with considerable force, that it was unlikely that Mr and Mrs Guevara would enter bankruptcy, so as to avoid any real responsibility for the guarantee were it called upon. That must be correct. Assuming, as I do, that Mr Guevara 's evidence was given honestly and frankly, it is obvious that he and his wife have at least the prospect of very significant income in the future. It seems to me to be unlikely in the extreme that they would, as an alternative to paying out on any guarantee given by them, forfeit their rights to that to a trustee in bankruptcy who would assume control of the land on which the income stream is likely to be based. 62In short, were Mr and Mrs Guevara called upon at some time in the future, I think it is likely, as Mr Doyle submitted, that they would then turn their attention to utilising their assets, and if it is becoming more certain the income stream, to raise money to meet their liability. 63I accept that the mere fact of offer of a guarantee of personal liability is not sufficient to meet the application for security for costs. I accept, too, that the guarantee that is offered is not obviously one which is more than sufficient to meet the liabilities estimated by the defendants. Thus, I accept that if the applications are dismissed, on the basis that the guarantee and undertaking are given, that would not assure the defendants, as cash or a bank guarantee would (to the amount of the cash or guarantee), of payment in the event that they become entitled to payment. 64As against that, however, it is, as I have said, well established on the authorities that a successful applicant for security for costs is not necessarily entitled to receive security for the whole amount of those estimated costs. 65Balancing those factors, and taking into account, as is made clear in the judgment of Beazley J in KP Cable, that the factors of stifling litigation and willingness of persons standing behind the company to offer up their own assets are closely related, I conclude, in the particular circumstances of this case, that sufficient justice as to security for costs is done if the applications are dismissed on the basis that Mr and Mrs Guevara have given the guarantee to which I have referred and the undertaking to the Court to which I have referred. In reaching that conclusion I proceed on the express basis that the promise to deal reasonably with any requested changes to the wording of the guarantee will be honoured and, if the changes are justified, acted upon. 66For those reasons, upon the offer of guarantee and undertaking to the Court, I will order that the defendants' applications for security for costs be dismissed. 67I note that Mr Roberto Guevara and Mrs Carmen Guevara offer a guarantee in respect of costs of the defendants in terms of the "guarantee" initialled by me and dated today's date, and offer an undertaking to the Court in the terms of the "undertaking" stated in that document, which I note is signed by each of them. 68I note further that Mr and Mrs Guevara undertake to the Court that they will entertain any reasonable request by the defendants for amendments so as to improve the efficacy of that undertaking. 69On that basis, I order that the first defendant's notice of motion filed on 25 July 2014 and the second defendant's notice of motion filed on 3 July 2014 be dismissed.