Lanai Unit Holdings P/L v Mallesons Stephen Jacques [2016] QSC 2

PROCEDURE - COSTS - SECURITY FOR COSTS - PRACTICE MATTERS - where the plaintiff is a trustee - where the plaintiff commenced proceedings seeking damages against the defendant for negligence under the Trade Practices Act 1974 (Cth) for misleading and deceptive conduct - where the plaintiff may be unsuccessful to pay costs in the event of a successful defence - where the defendant applies for security for costs - where there is delay in bringing the application - whether the security should include past costs or future costs of the proceeding

Civil Proceedings Act 2011 (Qld), s 15

Corporations Act 2001 (Cth) s 1335

Trade Practices Act 1974 (Cth), ss 52, 82

Uniform Civil Procedure Rules 1999 (Qld), rr 5, 670, 671, 681

ACN 006 577 162 Pty Ltd (formerly Harrop Engineering Australia Pty Ltd) & Ors v Beauville Pty Ltd [2014] VSC 298, cited

Bossichix Pty Ltd v Martinek Holdings Pty Ltd [2009] QCA 154, cited

Bruce Pie and Sons v RH Mainwaring, English & Peldan [1985] 1 Qd R 401, followed Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301, considered

Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176, cited

Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd [2007] QSC 262, cited DIF III Global Co-Investment Fund L P v BBLP LLC [2015] VSC 484, cited

Felsink Pty Ltd v City of Maribyrnong & Anor [2007] VSC 49, cited

Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148, applied

KP Kable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; [1995] FCA 76, cited

Major v Woodside Energy Ltd [No 5] [2009] WASC 357, cited

Pathway Investments Pty Ltd v National Australia Bank Limited [2012] VSC 97, referred to

Porzelack KB v Porzelack (UK) Ltd [1987] 1 All ER 1074, cited

re Beechworth Land Estates Pty Ltd (admin apptd) (No 3) (2015) 106 ACSR 495; [2015] NSWSC 733, cited

Silverstone Holdings Pty Ltd v American Home Assurance Co [2003] WASC 139, cited

[1] Jackson J: The defendant applies for security for costs. The application is brought under rules 670 and 671 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") and s 1335 of the Corporations Act 2001 (Cth). The plaintiff is a company. It appears by credible testimony that there is reason to believe it will be unable to pay the costs of the defendant if the defendant is successful in its defence. As well, the plaintiff is a trustee suing for the benefit of the beneficiaries of the Lanai Unit Trust. Accordingly there may be two bases for an order for security for costs under r 671 and s 1335. However, the defendant relied upon the first ground only.

[2] The defendant's evidence was that until the first day of the trial the standard costs and outlays would be as follows:

Standard costs from now and up to the first day of trial

[3] The plaintiff does not dispute that an order for security should be made. The disputed questions are the amount of security that should be ordered and the stage of the proceeding up to which they should be ordered. The dispute as to the amount has two limbs: first, the extent to which security for past costs should be ordered having regard to delay by the defendant in bringing the application; second, the quantum of any security, whether for past costs or future costs.

[4] The proceeding is a claim for damages for negligence or under s 82 of the Trade Practices Act 1974 (Cth) for contravention of s 52 of that Act. In 2009, Lanai Apartments Pty Ltd was the trustee of the Lanai Unit Trust. In 2011, the trustee went into receivership and eventually it went into liquidation.

[5] On 7 November 2014, the plaintiff was appointed as the replacement trustee. It brings this proceeding in that capacity.

[6] Leading up to 2009, the trustee was carrying on business as the developer of a site at Mackay. The project comprised the construction of an 11 storey building containing approximately 80 residential apartments.

[7] The defendant acted as solicitors in connection with the project. It drafted contracts for use (ultimately by the trustee) for the presale of lots in the proposed community titles scheme for the land and building. The draft contract was utilised for 45 pre-sale contracts.

[8] The building was developed using construction finance sourced from a bank.

[9] On 17 March 2009, the community titles scheme for the land and building was established.

[10] As to liability, the plaintiff alleges that:

(a) the defendant failed to include a provision that complied with the requirements of s 212(1) of the Body Corporate and Community Management Act 1997 (Qld) when drafting each of the pre-sale contracts;

(b) the failure was a breach of the defendant's duty to exercise reasonable skill and care as solicitor;

(c) as a result of the alleged breaches each of the buyers under the pre-sale contracts was entitled to cancel the contract in accordance with s 212(3) of that Act.

[11] As to causation and loss, the plaintiff alleges that:

(a) the buyers under 10 of the pre-sale contracts cancelled their contracts relying on the non-compliance with s 212(1);

(b) it obtained lower prices on resale of the particular lots than under the original pre-sale contracts;

(c) the total amount of the difference was $2,086,783.[1]

(d) as well, the buyers under 21 of the pre-sale contracts renegotiated their contracts relying on the error;

(e) the renegotiation was "on terms more favourable to the purchasers".

[12] The amount of the difference for the re-negotiated contracts has not yet been precisely particularised.[2]

[13] The plaintiff claims the difference as loss suffered as a result of the defendant's alleged breaches of duty.

[14] The plaintiff also alleges that it suffered loss and damage in the form of additional expenses and loss of the use of the sale proceeds that otherwise would have been received.

[15] Finally, the plaintiff alleges that it is entitled to recover the losses incurred on the receivership and eventual liquidation of the trustee as further loss and damage suffered as a result of the alleged breaches of duty.

[16] A summary of the progress of the proceeding to date is as follows:

(a) on 12 November 2014 the plaintiff started the proceeding;[3]

(b) on 3 December 2014, the defendant searched ASIC's records as to the plaintiff's incorporation which revealed that it was incorporated on 5 November 2014 and had a share capital of $3.00;

(c) on 2 December 2014, the defendant's solicitors made a request for particulars and for copies of documents referred to in the statement of claim;

(d) on 3 December 2014, the defendant's solicitors requested the plaintiff's solicitors to advise as to the plaintiff's financial ability to meet a costs order if it was unsuccessful. In particular, it was said:

"I thought we should flag this as it is something we have to raise relevantly promptly (which is why I am raising it now)";

(e) on 8 December 2014, the plaintiff's solicitors responded to the request for particulars with some information which was provided on the footing that it was not to be regarded as a formal response. They further advised the case was being funded by some but not all of the unit holders of the trust. Lastly, they continued:

"We had anticipated that you would make a request for security for costs and we have instructions that such security can be provided if necessary.

We would be content to move forward on the basis which you suggested on providing tranches of security as the litigation reaches various stages. Please advise the amounts that you require and the stages at which you propose they be provided.";

(f) on 28 January 2015, the defendant's solicitors explained that they were concerned about trying to plead to allegations about the 21 re-negotiated contracts "in the dark". They made the point that without the particulars requested, including what the re-negotiated terms were or why and when they arose, the defendant could not legitimately investigate or plead on the question of causation of loss;

(g) on 5 March 2015, the defendant filed a defence at the insistence of the plaintiff although the requested particulars had not been provided;

(h) on 19 March 2015, the plaintiff's solicitors requested particulars of the defence;

(i) on 10 April 2015, the defendant provided interim disclosure of contracts to the plaintiff to enable particulars to be provided;[4]

(j) on 30 April 2015, a reply was filed and served;

(k) on 15 May 2015, the respective solicitors discussed the provision of the particulars requested by the defendant and whether the proceeding should be placed on the commercial list;

(l) on 16 June 2015, the solicitors for the defendants sent a r 444 letter concerning the particulars which had not been provided by the plaintiff;

(m) on 16 June 2015, the solicitors for the defendant provided a draft commercial list statement to the solicitors for the plaintiff;

(n) on 18 June 2015, the solicitors for the defendant provided an estimate of the defence costs for the purposes of security for costs up to the first day of trial. The amount was $1,146,000, broken into five "tranches" as follows:

3. Disclosure (including non-party disclosure) $ 120,500

4. Case preparation/evidence gathering stage $ 485,000

The solicitors for the defendant requested a response within seven days.

(o) on 19 June 2015, the solicitors for the plaintiff responded, complaining of an "unexplained six month and ten day delay" on the issue of security and seeking further information as to the amount of the estimated costs which related to costs already incurred. The unstated but apparent purpose of the request was to resist security for past costs;

(p) on 23 June 2015, the solicitors for the defendant requested whether the plaintiff was seeking to resile from the position communicated on 8 December 2014;

(q) on 26 June 2015, the solicitors for the plaintiff advised that they had instructions to apply under UCPR r 483 for the determination of separate questions on the issue of liability. They continued:

"Obviously this proposal has a considerable bearing on the issue of security for costs and we will await your response before corresponding further on that issue."

(r) on 23 July 2015, the solicitors for the defendant responded saying that they did not consider that it was appropriate at present to consider separate questions;

(s) on 24 July 2015, the solicitors for the defendant requested the solicitors for the plaintiff's position in respect of security for costs;

(t) on 31 July 2015, the solicitors for the plaintiff pressed that their client's position was that the issue of liability should be determined separately and that would have a large bearing on the security for costs and quantum of any security likely to be awarded;

(u) in July and August 2015, the parties corresponded about the adequacy of the statement of claim;

(v) on 30 October 2015, the proceeding was reviewed;

(w) on 13 November 2015, the proceeding was entered on the commercial list and directions were made for the filing of the application for security for costs.

[17] In relying on delay as a discretionary factor to decline to order security the plaintiff broke up the progress of the proceeding summarised above as follows:

(a) from 12 November 2014 to 3 December 2014 ("first period") - when the defendant first inquired about security for costs. The plaintiff submits these are past costs incurred without notice by the plaintiff of any intention for the defendant to seek security for costs which should not be the subject of any order;

(b) from 8 December 2014 until 18 June 2015 ("second period") - during which the plaintiff submitted that there was unexplained delay while the plaintiff incurred costs of $68,300.03 to its prejudice. The plaintiff submitted that no order for security should be made in respect of the defendant's costs for that period;

(c) from 18 June 2015 until 1 December 2015 ("third period") - during which the plaintiff submitted that the defendant delayed in bringing the application and the plaintiff incurred further costs of $88,143 to its prejudice.

[18] The parties made competing submissions as to the correct approach to and the evidence about the past costs incurred by the defendant. The plaintiff relied on Buckley v Bennell Design & Constructions Pty Ltd,[5] and cases which followed it, including Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd.[6] In Buckley, Moffitt P said:

"The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money towards litigating its claim."[7]

[19] This statement has been repeated or paraphrased on subsequent occasions. To the extent that it says that the plaintiff is "entitled" to know its position, in my view, the statement is too strong. The powers under r 670 and s 1335 are discretionary and are not to be fettered by statements that a party is "entitled" to know its position.

[20] The facts of the present case illustrate the folly of an unguarded statement of that kind. The plaintiff is a $3 company. It appears to have been incorporated to become the trustee of the Lanai Unit Trust. The unit trust may be a sole venture unit trust. If so, the inference is available that plaintiff exists for the purposes of bringing a claim against the defendant. The sole director and shareholder of the plaintiff appears to be a solicitor. The response of the plaintiff to the defendant's request as to its capacity to pay the defendant's costs was that it "had anticipated that [the defendant] would make a request for security for costs and ... [had] instructions that such security can be provided if necessary.". There is no suggestion that, at any time, the plaintiff, had a belief that it would be able to litigate this claim without having to provide security for costs from a point not long after the claim and statement of claim were served, or any basis for such a belief.

[21] Nevertheless, delay is a discretionary factor against an order for security. For example, considerable costs, effort and court resources may be wasted if any application for security is not brought promptly when the consequence of non-compliance with an order for security is that the proceeding does not continue, or the preparation for or conduct of the hearing of the proceeding may be unnecessarily interfered with.

[22] For its part, the defendant submitted that delay is to be disregarded where there is no suggestion that the plaintiff has taken steps or incurred costs on the basis that it reasonably thought that security would not be pursued. It relied on a statement in one case that there was no evidence that time had expended or costs incurred that would not have been expended or incurred had the plaintiff had earlier notice of the application.[8]

[23] However, there is intermediate appellate court authority in two Australian states that specifically says that a plaintiff is not usually required to prove or adduce evidence that time has been expended or costs incurred which would not have been expended or incurred had the plaintiff had earlier notice.[9]

[24] I recognise that in the cases already mentioned, and others,[10] the outcome of delay on the defendant's part has been that an order for security for costs is only made in respect of future costs, or the application may be dismissed. However, in my view, it is all a matter of discretion.

[25] In my view, for the first period (up to 8 December 2014) there was no delay by the defendant.

[26] As to the second period (from 8 December 2014 until 18 June 2015), in my view, the reasons for delay are only partly explained by the chronology set out above. There was nothing to prevent the defendant from applying for security more promptly or pursuing that question with the solicitors for the plaintiff during the relatively extended period when particulars were requested and early disclosure was made by the defendant to assist in that process. However, all of that occurred in the context that the plaintiff had communicated a preparedness to provide security and at no time withdrew from that position.

[27] As to the third period (from 18 June 2015 until 1 December 2015), in my view, the defendant is not to be treated as having been guilty of much delay. First, the plaintiff's responses on 19 June 2015 and 26 June 2015 were somewhat dissembling, rather than coming straight out and saying that it had changed its mind and intended to resist giving security, at least for past costs. Second, the plaintiff's counter proposal of a trial on a separate question of liability itself caused delay and required response and consideration. Third, the defendant's proposal that the matter be placed on the commercial list led to some period of delay for that to occur. Since that time, the delay in hearing the application was due to the availability of a suitable date for the hearing of the application for security and other applications on the same day.

[28] In those circumstances, in my view, it would not be just to deny all of the defendant's application for security for past costs because of the extent of the defendant's unexplained delay in prosecuting the question of security with the plaintiff's solicitors for the second period. The appropriate response is to reduce the security that would otherwise be ordered for that period to reflect the delay that was unjustified.

[29] Making allowances for the periods taken up by the Christmas vacation, the request for particulars of the inadequately particularised statement of claim and, in my view, the defendant's solicitors sensible and professionally responsible approach in assisting the plaintiffs solicitors' identification of the pre-sale contracts the subject of the plaintiff's claim for loss or damage (which was a good example of a party proceeding in accordance with the overriding philosophy of the UCPR under r 5), in my view, the security that would otherwise be ordered for that period for unexplained delay should still be reduced. The evidence does not permit any proportionate amount. Instead, I have taken this factor into account in forming an overall assessment.

[30] The plaintiff raised a number of disputes about the quantum of the security applied for by the defendant. Some of them were about the methodology employed by the defendant's witnesses in assessing the amount of past and future costs. Others were about the quality of the evidence as to recoverable costs. Still, others were about the extent of the protection a security for costs is intended to provide.

[31] The defendant applied for security for past costs incurred before the proceeding was started.

[32] The plaintiff opposed those costs as not recoverable on assessment and not properly the subject of security.

[33] There are many cases where plaintiffs give notice of their intention to make a claim before starting a proceeding. Pre-proceeding steps are compulsory in some kinds of claims. Notice of an intention to make a claim may be given for other reasons, such as to enable settlement negotiations or to enable the prospective defendant to notify an insurer, or to put the prospective defendant on notice to preserve relevant documents or real evidence.

[34] The professional costs and disbursements of an Australian lawyer for steps taken on behalf of a prospective defendant to prepare for a notified claim, which entails work that will have to be done in defence of the claim, in any event, may be recoverable as costs of the proceeding to be awarded under s 15 of the Civil Proceedings Act 2011 (Qld) and UCPR r 681.

[35] Once it is concluded that there is power to order that the plaintiff pay professional costs and disbursements incurred before a proceeding is started, there is no reason in principle to exclude those costs from an order for security for costs made under UCPR r 671 and s 1335 of the Corporations Act 2001 (Cth).

[36] In Pathway Investments Pty Ltd v National Australia Bank Limited,[11] Davies J said that the power to order security for costs under the Victorian legislation as to costs extended to pre-proceedings costs that are necessary and proper and allowable on taxation. I agree with her Honour's approach. It supports the conclusion I have reached about the scope of the power to make an order for pre-proceeding costs in this Court.

[37] Ordinarily, delay up to the start of a proceeding will not be held against a defendant. It is the plaintiff that determines when a proceeding is started, subject to any statutory restrictions that may apply.

[38] The plaintiff made submissions criticising the methodology of the defendant's evidence filed in support of the application for security. That method began with Mr Moore, a very experienced litigation solicitor with a long history of specialist practice in the area of professional negligence, who swore an affidavit as to the past and future work that would be done in defence of the plaintiff's claim, broken into the hours spent and to be spent in the various tasks at the successive stages of interlocutory steps and preparation for trial of the proceeding.

[39] That evidence was provided to an expert costs assessor, Mr Garrett, who prepared a report as to the likely recoverable costs based on the work described by Mr Moore.

[40] The plaintiff submits that the evidence so prepared is not the best evidence that could be given in support of the application. First, it submitted that the quality or cogency of the proof lies in the hands of the defendant and the capacity of the defendant to adduce evidence as to the actual costs. Second, it submitted that the defendant's methodology and affidavits did not utilise the scale items or rates for the calculation of the costs which would be recoverable in making the assessment.

[41] At times, particularly in relation to past costs, the plaintiff's submissions tended to elide the difference between evidence required for an application for security for costs and evidence required upon an assessment of costs.

[42] A starting point is that a costs assessor appointed to assess an order for costs will have a costs statement prepared under r 705 of the UCPR and, usually, the file or most of the file of the solicitors. The evidence for an order for security for costs does not have to be prepared and is not usually prepared in that way.

[43] The principles applicable on an application for security were recently discussed in DIF III Global Co-Investment Fund L P v BBLP LLC[12] referring to Pathway Investments. In both those cases, the evidence was presented using the same methodology as the defendant's affidavits in the present case. In both cases, that methodology was accepted. In my view, I too should accept it. The task is to set a sum that is "sufficient" under s 1335 of the Corporations Act 2001 (Cth) or "appropriate" under r 670 of the UCPR. And:

"...the amount need not be determined with mathematical precision and the process does not require a full assessment of costs, but by its nature requires a 'broad brush' assessment."[13]

[44] There is a discernible trend in the cases to discount the amount sought. Doing so guards against the risk of over-estimation. It also reflects the idea that the proceeding may end short of the costs of all the steps for which security is sought. However, the latter consideration can be met by staged orders for security, although that may involve the parties in further applications and costs of those applications at a later stage. As well, to focus on the risk of over-estimation distracts from the risk of under-estimation. Courts are not necessarily well placed to intuitively assess that the risk of one is greater than the risk of the other.

[45] There are, of course, other discretionary factors that may be engaged indirectly when the question is the sufficient or appropriate amount. One question is whether a particular amount would prevent the plaintiff from being able to proceed because it cannot provide that amount. An associated consideration is whether the plaintiff's impecuniosity was caused by the defendant. But when these or other potential discounting questions are not raised, in my view, there is no reason to start from an assumption or predilection that the amount of security should not be an amount "sufficient" or "appropriate" to pay the assessed costs. Where there is a range of amounts, there is no reason to opt for the bottom of the range, per se. It is a matter for the exercise of discretionary judgment.

[46] In the present case, the plaintiff relied upon its status as trustee company with limited resources as a factor to reduce the security that would otherwise be ordered. In the circumstances of the plaintiff's incorporation as previously described, I do not regard that as a factor of significance in this case. It is not suggested that the plaintiff's limited resources were caused by the defendant.

[47] The plaintiff also relied upon what was described as a "strong prima facie case for negligence" against the defendant. I accept that the strength or weakness of a claim is a discretionary factor. Usually, "the court should proceed on the basis that the claim is both bona fide and has reasonable prospects... [and] should not go into the merits of the claim in detail unless it can be demonstrated that there is a high degree of probability of success or failure".[14]

[48] The plaintiff made no particular submission as to the basis for its submission as to the strength of the claim, beyond relying upon the decision of Bossichix Pty Ltd v Martinek Holdings Pty Ltd.[15] However, although the decision in that case is no doubt important, the answer to the question of liability in a professional negligence case against a legal practitioner is not foreclosed because of an appellate court decision as to the law. As well, it must be remembered that the plaintiff's claim is for damages. Ultimate success will not be established by a finding that the defendant failed to exercise reasonable care in the preparation of the pre-sale contracts. Additional findings of causation and quantification of loss will be required, where the cause of action for damages is for negligence or misleading and deceptive conduct.

[49] Turning to the particular items and amounts of costs for which the defendant seeks security, the plaintiff made a series of specific and some overall points.

[50] One item pressed in submissions was in the first period for preparing a detailed advice to the client, requiring 140.2 hours of time, assessed by the plaintiff's witness Mr Robinson in an amount of $37,896. Mr Robinson is also an expert costs assessor. A second group of items were the costs incurred "many years before the proceedings were commenced". These were pressed by reference to the general contentions as to methodology and capacity for proof previously mentioned. However, Mr Robinson made these and many more individual points in his affidavit, culminating in a table of comparison between his opinion and his view of the effect of Mr Moore's and Mr Garrett's opinions summarised in the table below:

Examining statement of claim and drafting request for particulars and documents

Drawing list of documents and reviewing boxes of client documents

[51] By reference to these points, the plaintiff submitted that the court should discount the amounts applied for by the defendant by 40 per cent for any costs that would otherwise be secured by an order. However, Mr Robinson's opinions dealt with only $434,211.75 of Mr Garrett's estimate of costs to the first day of trial of $888,372.48.

[52] I do not propose to deal with each item. A broad brush approach does not require that. Parties should not be encouraged to devote extensive resources (including court resources) to questions of security for costs. It should not be forgotten that an order for security is not a final assessment of anything about the amount of the costs that may be payable but a provision against a contingent amount that depends on a number of things that are not amenable to precise prediction.

[53] However, it does not seem to me that much flows in this case from the long period between when some of the costs were incurred and when the proceeding was started. The plaintiff's predecessor trustee gave notice of the claim against the defendant in 2009 in an amount substantially more than the ultimate claim. It was obviously appropriate and proper for the defendant and its solicitors to take the prospective claim seriously and to start preparing for it then. That is not affected by the plaintiff's predecessor's delay from 2009 until 2014 when the proceeding was ultimately started.

[54] Similarly, as previously stated, I do not consider that it is incumbent upon a defendant to present evidence on a security for costs application as though it were preparing a costs statement for past costs, or supplementing the statement with evidence as if for a final costs assessment. In my view, the failure to do so does not present a reason to heavily discount the evidence that is presented.

[55] Third, while I accept that Mr Robinson's response is informed by a limited amount of information, by definition his opinions as to past costs reject as recoverable amounts paid for actual work carried out by the defendant's solicitors without being informed in detail as to what was done. He may be right at the end of the day. But he may not.

[56] I do not consider that it is appropriate to apply a reduction of 40 per cent across the board to the defendant's evidence by reason of Mr Robinson's opinions. Again, it is not to be forgotten that, in general, Mr Moore's statement of the hours of professional time spent on various tasks are of those recoverable as standard costs in his opinion and that Mr Garrett's opinion is as to the estimated standard costs where it is not practicable for the present purposes to adopt a scale methodology. Mr Robinson's method has been to approach a number of particular items and to make reductions for those items base on his views as to the approach on assessment if the relevant hours were attributed to particular scale items for solicitor's costs and outlays for barristers' fees.

[57] For past costs, Mr Garrett's opinion of professional costs is as follows:

[58] The amount of $236,866.80 is broken down by periods that do not precisely correspond to the first, second or third periods but which give some insight as to the relative amounts as follows:

[59] Mr Garrett has allowed for disbursements for counsel's fees, experts and other outlays to date in the sum of $71,963.93. The total of past costs on the standard basis in his opinion is, therefore, $368,830.73.

[60] Taking into account both that there should be a reduction for delay during the second period and some of Mr Robinson's points as to the extent of recoverability of some of the items, in my view, the amount of security for all past costs should be $250,000.

[61] For future costs, Mr Garrett's opinion breaks the amounts of standard recoverable costs and disbursements into the predicted stages of the proceeding, up to the first day of trial, as follows:

[62] Although the parties may have contemplated additional stages, it seems to me that security should be ordered now up to the end of the mediation stage. The later costs, care and consideration and the costs of this application for security for costs[16] should be deducted from the amounts of Mr Garrett's opinion. Allowing for some further uncertainties, in my view, the amount of security for future costs up to that point should be $200,000.

[63] The amounts of security which will be ordered are substantial. And if the case proceeds past mediation, there are very substantial additional amounts that may be the subject of future application for security. I have given some consideration to reducing the current amounts in the light of that consideration. But, as a matter of principle, the starting point is that the amounts of the costs that will actually be incurred by the defendant will substantially exceed the amounts of the standard recoverable costs. And since Bruce Pie and Sons v RH Mainwaring, English & Peldan,[17] this court has not accepted any general reduction or rule of thumb as to the reduction of the amount of the costs that the evidence supports as recoverable.

[64] The result is that the plaintiff should give security for the defendant's future costs up to the end of the mediation stage as previously set out in the further sum of $250,000.

[65] The total amount of security for past and future costs of the application up to that point should be $450,000.

[66] I will hear the parties on the questions of costs.

[1] Particulars given by letter from Levitt Robinson Solicitors to Thynne + Macartney dated 21 August 2015.

[2] See letter from Levitt Robinson Solicitors to Thynne + Macartney dated 30 June 2015.

[3] The statement of claim did not claim any amount, in breach of UCPR r 155(1). Also, the statement of claim did not contain particulars of the pre-sale contracts as a result of which the plaintiff alleges that the trustee suffered loss or damage as summarised above. That was significant because the parties spent some time identifying the relevant documents and contracts effectively by a voluntary process of early disclosure given by the defendant.

[4] The defendant's solicitor swore that they went to considerable trouble to meet the plaintiff's request for copies of contracts. They had to seek all of the client files still held by the defendant and then sort through the boxes of material to extract contracts, scan them and provide what they could locate so the particulars could be provided concerning the 21 re-negotiated contracts claim.

[5] (1974) 1 ACLR 301.

[6] [2007] QSC 262, [27]-[31].

[7] Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301, 309.

[8] Silverstone Holdings Pty Ltd v American Home Assurance Co [2003] WASC 139, [26].

[9] Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105, 122 [57]; Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176, [23], per Neunes JA.

[10] For example, Felsink Pty Ltd v City of Maribyrnong & Anor [2007] VSC 49, [25]; Major v Woodside Energy Ltd [No 5] [2009] WASC 357; re Beechworth Land Estates Pty Ltd (admin apptd) (No 3) [2015] NSWSC 733; (2015) 106 ACSR 495, 516-518, [111]-[119].

[11] [2012] VSC 97.

[12] [2015] VSC 484.

[13] [2015] VSC 484, [141].

[14] ACN 006 577 162 Pty Ltd (formerly Harrop Engineering Australia Pty Ltd) & Ors v Beauville Pty Ltd [2014] VSC 298, [8], referring to KP Kable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189, 197 and Porzelack KB v Porzelack (UK) Ltd [1987] 1 All ER 1074, 1077.

[15] [2009] QCA 154.

[16] It would be inappropriate to order that the plaintiff give security for those costs if they are dealt with by an order made after the hearing of the application in such a way that there would be no purpose in giving security. For example, the defendant might be ordered to pay the costs of the application. Alternatively, the plaintiff might be ordered to do so in a way that they would be presently payable and no order for security would be required.

[17] [1985] 1 Qd R 401.