Plaintiff v Defendant

2 The defendant relies on the affidavit of John Dalzell affirmed 28 November 2017 ('Dalzell Affidavit'). Mr Dalzell is a partner of Dentons Australia Pty Ltd ('Dentons'), the solicitors for the defendant, and has the care and conduct of the proceeding on behalf of the defendant. The Dalzell Affidavit contains a number of exhibits, including at exhibit JD-17 a report from a costs expert, Michael John Dudman of Blackstone Legal Costing, dated 24 November 2017 ('Dudman Report').

3 From the Dalzell Affidavit and the Dudman Report, it is apparent that the defendant seeks security for its costs of defending the proceeding, from the period after mediation and up to and including the first day of trial, in the amount of $234,958.85.

4 The parties had earlier reached an agreement as to the defendant's claim for security for its costs up to and including mediation, which was reflected in orders made by consent by Justice Judd on 21 November 2017, whereby $30,800 was the amount of security then ordered ('Previous Security').

5 The plaintiff concedes that the jurisdiction to award further security for the defendant's costs is enlivened. In those circumstances, it is not necessary for me to canvass such matters.

6 However, the plaintiff disagrees with the amount of security sought, and relies on the affidavit of Damian Thomas Neylon sworn 30 January 2018 ('Neylon Affidavit'), the principal of Neylon Legal Pty Ltd (solicitors for the plaintiff) who has the care and conduct of the proceeding on behalf of the plaintiff. Exhibited to the Neylon Affidavit[2] is a copy of a report dated 24 January 2018 from Mr Peter Trimbos, a costs expert engaged by the plaintiff ('Trimbos Report'). Mr Trimbos estimates the defendant's recoverable costs to be $116,791.25, however the plaintiff submits that this figure should be discounted by 30 per cent to allow for the prospect of the proceeding settling. On this basis, the plaintiff says that the security to be ordered should be in the amount of $81,753.88.

7 Counsel for both parties provided written outlines of their submissions prior to the hearing, which I found helpful. I have taken account of all material provided by the parties, including the oral submissions.

8 These reasons are confined to the issues about which the parties differed and which were the subject of submissions. It is not necessary for me to canvass all of the other issues raised in the written submissions or the applicable principles, save for where the parties differed on those issues or principles.

9 The plaintiff will be ordered to provide security for the defendant's costs, up to and including the first day of trial, in the amount of $153,140.

10 In its statement of claim dated 10 April 2017 ('SOC'), the plaintiff alleges that there was an agreement between it and the defendant, wherein the plaintiff was to provide various services, such as development management and project management, to the defendant in relation to a property in Hollingsworth Road, Marsden Park, New South Wales. The agreement is said to be partly oral, partly written and partly to be implied. The particulars to this allegation refer to 3 oral conversations, 11 documents (including emails, letters, and two different agreements), and 8 bases for the implication. The plaintiff alleges that the defendant breached this alleged contract, and also identifies causes of action based on equitable estoppel, misleading and deceptive conduct, breach of fiduciary duty and restitution. Damages in the order of $5,675,233 are sought by the plaintiff.[3]

11 The defendant filed its defence on 7 July 2017 and filed an amended defence dated 18 December 2017 ('Amended Defence'). The pleadings which were addressed during the course of submissions were the SOC and the Amended Defence.

12 On 4 August 2017, Justice Hargrave dismissed an application by the defendant that the proceeding be transferred to the Supreme Court of New South Wales ('NSW').

13 The defendant denies the existence of the alleged agreement, and also denies the other causes of action. The defendant does, however, admit that a sum is due and payable for limited services provided by the plaintiff between July and October 2016 to be assessed on a quantum meruit basis. I will return to this admission.

(a) The parties attended a mediation on 8 November 2017, which did not resolve the proceeding;

(b) Prior to mediation, the parties had made discovery and had exchanged outlines of lay witnesses (2 for the plaintiff and 7 for the defendant);

(c) Both parties would be obtaining an expert report for trial (in respect of quantum of damages) and would lead expert evidence at trial;

(d) While the defendant's request sought security to the end of the proceeding, and the Dudman Report included a calculation of security for days 2-9 of the trial and taking judgment, the parties agreed that the period for which security should be ordered was from after the mediation up to and including the first day of trial; and

15 As I stated in Raventhorpe Pty Ltd & Ors v Westpac Banking Corporation,[4] the principles applicable to the amount of security and the approach to be taken by the Court in determining the quantum of security are well established.[5] I summarised the principles as follows:[6]

(a) the amount of security is within the Court's discretion;[7]

(b) the amount is that which the Court thinks just, having regard to all of the circumstances;[8]

(c) in ordering security, the Court does not set out to give the defendant a complete and certain indemnity for costs;[9] and

(d) the Court's task is not akin to a taxation of the defendant's probable costs.[10]

16 Both parties referred to and relied on this summary in Raventhorpe.

17 In addition, counsel for the defendant took me to the recent decision of the Court of Appeal in Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd.[11] In that case, Tate and Kyrou JJA summarised the relevant legal principles regarding the quantum of security as follows:

1. In deciding what constitutes 'sufficient security' ..., the court does not seek to provide full protection for the estimated costs of the party seeking security.[12] Rather, having regard to the fact that the order for security is usually made at an early stage of a proceeding and there are many contingencies that will affect the actual costs incurred by that party, the court fixes an amount that it considers adequate in all the circumstances of the case. Those circumstances include the nature of the proceeding, the nature and complexity of the steps that need to be undertaken by the party seeking security, the likely costs in undertaking those steps, the length of the trial, any security already provided, and the possibility that the proceeding may settle.
2. In determining a sufficient amount for security for costs, the court does not undertake precise mathematical calculations.[13] Rather, it adopts a 'broad brush'[14] approach involving 'guesstimates as much as estimates'.[15] However, the broad brush approach does not involve an abstract process. It must have an evidentiary basis. The court must have regard to the evidence adduced by the parties as to quantum - whether in the form of an affidavit by an experienced litigation lawyer or an expert report by a costs consultant - although it is not bound by the parties' estimates. The court may scrutinise the individual items in the parties' estimates, but not to the extent of minute examination akin to a taxation.[16]
3. The amount ultimately fixed by the court must not be so low that it fails to provide any real protection to the party seeking security, or so high that it is oppressive to the party required to provide the security.[17] The amount must be 'just and reasonable' in all the circumstances of the particular case.[18]

18 It is convenient to address each of the areas of dispute, briefly setting out each party's submission and then the reasons for my decision. To summarise the position, I have taken the table at page 19 of the Trimbos Report (which tabulated each of Mr Dudman's and Mr Trimbos' amounts for the items described) and then inserted the figures I have arrived at. Those items marked by an asterix were matters where Mr Trimbos agreed (or substantially agreed) with Mr Dudman's figures. Set out at Schedule 1 of these reasons is my version of this table.

19 The Dudman Report and the Trimbos Report were largely the same on the following matters:

(a) Rates for counsel: $8,421 per day and $842 per hour for senior counsel (being the maximum amount permitted under the Victorian Supreme Court Scale ('the Scale'); and $2,000 per day and $200 per hour for junior counsel (being the actual rates for junior counsel as briefed, which are below the maximum amount permitted under the Scale);

(b) Professional fees for solicitors: Mr Dudman refers to r 63.44 of the Rules, whereby a party can claim costs appropriate to the place where the work was done (the defendant's solicitors are located in NSW), noting that the defendant has an obligation to mitigate costs by appointing town agents to appear and instruct counsel at directions hearings and interlocutory applications. On that basis, the work done by the defendant's NSW solicitors in NSW is assessed by reference to the party/party Costs Assessment Guidelines of NSW ('the Guidelines'), which Mr Dudman annexed to his report; and the latter is calculated by reference to the Scale. Mr Dudman states that under the Guidelines published in 2016, the rates recoverable per hour are:

• Employed solicitor (1-4 years PQE): $200 - $400; and

Mr Dudman states that having regard to this and to the matter, he considers the reasonable rate for the practitioners at Dentons engaged in the matter to be:

Mr Trimbos agrees with this, save that he says that $700 per hour is unreasonable and excessive, and that a reasonable rate for the partner for this matter is $600 per hour;

20 In relation to the rate for the work performed in NSW by the Dentons partner responsible for the matter, Mr Trimbos says that in his experience, the Costs Court takes into account and is influenced by the hourly rates in the Scale when determining what are reasonable rates to allow solicitors practising out of Victoria. He opines that the Costs Court is likely to allow $600 per hour for work undertaken by a partner in NSW.

21 The defendant submits that Mr Dudman's view about the partner rate is to be preferred, as he is a costs consultant based in NSW and is experienced in the approach taken to costs assessments in NSW.

22 In this regard, I prefer the opinion of Mr Trimbos, as it is the Costs Court's approach that is of particular relevance here, since that is where any costs orders would be taxed, and Mr Dudman does not offer any opinion as to what approach the Costs Court is likely to take on this point. Therefore, when calculating the amount of security to be provided, I have used the rate of $600 per hour for work done by the partner in NSW.

23 In terms of the amount of hours to be spent by each lawyer (partner, solicitor or graduate) and by each of senior and junior counsel, both Mr Dudman and Mr Trimbos relied on the estimates given to them by their respective instructors. Presumably, if either of them had vastly different views from their instructors, they would, as experts who had both been briefed with the Victorian Supreme Court Expert Witness Code of Conduct contained in Form 44A to the Rules ('the Code') and who stated they had followed the Code, have said so. Mr Trimbos does state that he relied on the time estimates given by Mr Dalzell to Mr Dudman and on Mr Neylon's corresponding estimates to him. He says that where there is a difference in those estimates he has considered both sets of instructions and applied the estimate he considers to be more reasonable. Notwithstanding this, it leaves the Court in the position of having to assess for itself whether to prefer one expert's opinion over the other (in full or in part) or whether, as set out in Trailer Trash at [64], to scrutinise the individual items in the parties' estimates, since the Court is not bound by them.[19] Below, I have taken the approach of considering each expert's opinion and either preferred one over the other or made my own 'guesstimate' of a reasonable amount, for the reasons stated.

24 The defendant seeks $6,500 security for further and better discovery to be made by the plaintiff. The defendant submits that the plaintiff will be required to make additional discovery, particularly in relation to its quantum meruit claim.

25 The plaintiff says that no security for this item should be ordered. It relies on the Trimbos Report,[20] where Mr Trimbos refers to the Amended Defence containing an admission that the plaintiff is entitled to payment on a quantum meruit basis, which will be subject to quantification. Mr Trimbos says that where the defendant admits this, then if the defendant succeeds in its defence of the other causes of action, it is unlikely to be awarded its costs of the quantum meruit claim. On this basis, Mr Trimbos has not taken these costs into account for his report.

26 The parties made extensive oral and written submissions on this point. The defendant referred to paragraph 32(d) of the Amended Defence, which cross-refers to paragraph 8(i) of the Amended Defence. The defendant submitted that by those paragraphs, its admission in relation to the plaintiff's quantum meruit claim is confined to five discrete services provided by the plaintiff in the period April to October 2016. These are:[21]

(i) made recommendations regarding the appointment of consultants to assist with the Project;

(ii) provided initial instructions to consultants nominated by the defendant;

(iii) liaised with Andrew Mead and Sean Singh of the defendant in relation to preliminary steps to be taken in establishing the Project;

(iv) prepared a project overview memorandum;

(v) attended and chaired the first Project Control Group meetings, being two meetings both held on 4 October 2017 [sic] in the offices of the defendant in Sydney, New South Wales.

27 The defendant submits that its admissions concern a small proportion of the plaintiff's quantum meruit claim, which claim it said was far broader than the admissions. In support of its submission, the defendant referred to the witness outlines filed by the plaintiff. Both parties urged me to review the outlines, particularly that filed in respect of Graham Niel Rushton ('Rushton Outline'). Mr Rushton's outline consists of a 12 page outline along with 9 appendices which run to approximately 60 pages. Those appendices are lists of documents, tasks or activities performed by Mr Rushton. The other outline filed by the plaintiff, in respect of Simon Geoffrey Tobin (the sole director of the plaintiff), runs to 19 pages ('Tobin Outline'). I have read both outlines and perused the appendices to the Rushton Outline. The work described is far more extensive than the above admissions. Further, Mr Rushton estimates that he spent at least 615 hours on the project, and Mr Tobin estimates he spent at least 625 hours on it. While the timeframe referred to by both of them is longer than the April to October 2016 period admitted by the defendant, it is readily apparent that the defendant's admissions relate to a small subset of the plaintiff's quantum meruit claim. In addition, Mr Dalzell states in his affidavit that the quantum meruit claim will be the subject of significant challenge at trial.[22]

28 The plaintiff submits that the defendant has not made any attempt to carve out from the security sought that part of the discovery that is referable to those aspects of the quantum meruit claim that are admitted.

29 In my view, it is clear from the relevant parts of the Amended Defence as extracted at paragraph 26 above, compared with the Rushton Outline (and its appendices) and the Tobin Outline, that the defendant's submission in this regard ought be accepted. The scope of the admissions is much narrower than the claim (as reflected in the Rushton Outline and its appendices), and so an allowance in the security amount for the discovery ought be made.

30 The plaintiff also submits that there has been no formal request from the defendant for it to make additional discovery and no order for such discovery has been made.

31 I do not accept this submission: there does not have to be a formal extant request or an order made for such items to be included in an assessment of what is sufficient security. In my view, given that only a relatively small aspect of the quantum meruit claim is admitted by the defendant (as set out above), further discovery in this regard is highly likely. Further, when one has regard to the Rushton Outline and its appendices, it appears that such discovery is likely to be extensive.

32 The plaintiff has not led any evidence to refute the amount claimed or made any submissions other than to say that no security for this item ought be ordered. In my view, $5,500 should be included in the security for this further and better discovery. To arrive at this amount, I have taken the estimate in the Dudman Report and reduced it by $1,000 due to some of the quantum meruit claim being admitted. This reduction is not scientifically derived, but rather an amount I consider reasonable in the circumstances.

33 The defendant seeks $11,566.50 as security for preparing the Amended Defence.

34 The plaintiff submits that no allowance should be made for the Amended Defence as the costs associated with preparing it were unreasonably incurred. In Mr Neylon's letter of instruction dated 14 December 2017 to Mr Trimbos for the preparation of the latter's report,[23] he states that the 'amendments to the Defence are self-evident, and I consider that they are unlikely to have required one day to be completed by counsel'.[24] No observations are made by Mr Neylon as to the costs in respect of the solicitors. The Trimbos Report then makes no allowance for security for costs as he considers it unlikely that such costs would be allowed by the Costs Court. Mr Trimbos says that he has reviewed the Amended Defence and notes that the plaintiff has not amended its statement of claim. He concludes that:

the amendments to the Defence are not as a result of any conduct, action or inaction by the [p]laintiff. The [d]efendant had all the required information to prepare a Defence in the form of the amended Defence at the time the Defence was prepared and any additional costs to amend the Defence have been unreasonably incurred.[25]

35 In oral submissions, the plaintiff's counsel went through the Amended Defence and identified those items which he submitted were matters which the defendant could have pleaded at the time of preparing its original defence.[26]

36 The defendant submitted that Mr Trimbos' assumption as to the amendments not being a result of any conduct, action or inaction was incorrect. The defendant submitted that the amendments to paragraphs 1.3 and 15(c) of the Amended Defence were only pleaded after certain matters were disclosed to the defendant in an affidavit of Mr Neylon after the defence had been filed and after receipt of the plaintiff's discovery.

37 The defendant also submitted that allowance should be made for senior counsel's time in preparing the Amended Defence, which Mr Trimbos made no allowance for. The defendant says that senior counsel did not settle the original defence and so this was not duplicative.

38 In my view, an allowance should be made for the Amended Defence. I accept the defendant's submission that some aspects of the amendments were not known to it at the time of pleading the original defence. Mr Trimbos appears to have based his conclusion that the amendments were not a result of any conduct of the plaintiff on the fact that the plaintiff had not amended its statement of claim. There is nothing in his instructions from Mr Neylon to form the view that the defendant had all the required information to include the subject of the amendments in the original defence: all Mr Neylon says is that the amendments are self-evident and are unlikely to have required one day of counsel's time.

39 I will reduce the amount for this item: I consider one day for each of senior and junior counsel to be excessive, and so I will allow half a day for senior counsel rather than a full day. The amount for this item will be $7,356.

40 The defendant seeks $11,000 as security for preparing a chronology for the hearing, which are the costs of 10 hours of a solicitor's time, 20 hours of a graduate's time, and one day of junior counsel's time.[27]

41 The plaintiff submits that the amount claimed here is excessive and ought to be reduced. Mr Trimbos, accepting Mr Neylon's instructions in this regard, allows 10 hours for solicitor time (comprising 4 hours for the solicitor and 6 hours for the graduate) and 5 hours for junior counsel.[28]

42 The defendant submits that its estimate is justified and relies on the extent of the appendices to the Rushton Outline to illustrate how lengthy the chronology is likely to be.

43 I prefer the plaintiff's evidence and submission regarding this item, as I agree that the time estimates provided by Mr Dalzell to Mr Dudman and accepted by him are excessive. I was informed by counsel that no trial date has been set and that no pre-trial directions have been made. Therefore, I assume that it is not known at this stage whether the parties may be ordered to prepare a joint chronology. In my view, the amount to be included as security should allow for this possibility. Accordingly, I will include $4,100 as security for this item.

44 The defendant seeks $41,021 as security for the costs of preparing the defendant's expert evidence, which includes $20,000 for the expert's fee. The time estimated for briefing the expert and reviewing their report is 4 hours for the partner, 10 hours for the solicitor, 10 hours for the graduate, 2 days for junior counsel and 1 day for senior counsel. These were Mr Dalzell's instructions to Mr Dudman, which he accepted.[29]

45 The plaintiff accepts the estimate for the expert's fee, but says that the time estimated for briefing the expert and reviewing their report is excessive. Mr Trimbos accepted Mr Neylon's instructions that a total of 10 hours of solicitors' time and limited time for junior counsel should be the basis, and he allowed 2 hours for the partner, 6 hours for the solicitor, 2 hours for the graduate and 5 hours for junior counsel.[30]

46 I agree with the plaintiff that the amount of solicitors' time claimed by the defendant is excessive, however I consider Mr Trimbos to have under-estimated the likely time required by counsel. I do not accept that senior counsel would not be involved with the briefing of the expert and considering their report, and so an allowance for that should be made. I would allow 1.5 days of junior counsel and a half day for senior counsel. This results in an allowance of $31,310.50 for this item (including the expert's fee).

47 The defendant seeks $16,221 as security for the plaintiff's expert evidence,[31] comprised of 2 hours for the partner, 6 hours for the solicitor, 2 days for junior counsel and 1 day for senior counsel. Again, these were Mr Dalzell's instructions to Mr Dudman, which he accepted.[32]

48 The plaintiff says that these estimates are excessive. Mr Trimbos accepted Mr Neylon's instructions that a more reasonable estimate of time is half that allowed by Mr Dudman.[33]

49 I accept the plaintiff's submissions in this regard, as I consider that some of the time estimated by the defendant is more akin to preparation for dealing with the expert's evidence at trial and would therefore be included within the item for trial preparation. I will therefore allow $8,010.50 for this item.

50 The defendant seeks $83,105 as security for its costs of preparing for trial. This is comprised of 15 hours for the partner, 20 hours for the solicitor, 30 hours for the graduate, and 5 days for each of junior and senior counsel.[34] These were the time estimates adopted by Mr Dudman, and which were the upper end of the range for solicitors' time included in Mr Dalzell's instructions. In relation to solicitors' time, Mr Dalzell had estimated 10-15 hours for the partner, 15-20 hours for the solicitor and 20-30 hours for the graduate.[35]

51 The plaintiff submits that the defendant's estimate is excessive. Mr Trimbos accepted Mr Neylon's instructions that a more reasonable estimate of time in relation to the preparation for the hearing is half that allowed by Mr Dudman.[36] The plaintiff submits that the parties exchanged outlines of evidence prior to mediation and so the costs associated with proofing witnesses and preparing the outlines were incurred prior to mediation and fall within the scope of the previous security.

52 The defendant submits that it has seven lay witnesses to prepare for trial, and that although the outlines have already been prepared these are not as comprehensive as statements and the witnesses still have to be prepared for the viva voce evidence. Since the outlines were exchanged shortly prior to mediation, taking the defendant's witnesses through the plaintiff's outlines in any detail did not occur at that time. In addition, cross-examination and submissions will need to be prepared. Other tasks, such as court book preparation, will also need to be undertaken.

53 I accept the defendant's submission that the plaintiff's estimates are too low. The trial is estimated to be of 9 days duration. In that context, and given the number of witnesses and the issues in dispute, I do not consider 5 days for each of senior and junior counsel to be excessive. I do consider Mr Dudman's estimate of the solicitors' time to be too high, and prefer the lower end of Mr Dalzell's range for each of the partner (10 hours), solicitor (15 hours) and graduate (20 hours), as I consider Mr Trimbos' estimate to be unrealistically low. I do not consider the amount of $5,000 in expert fees for preparation to be excessive. I will therefore allow $74,105 for preparation for trial.

54 The parties relied on their written outlines in respect of this item and did not make any oral submissions about it.

55 The defendant seeks $16,551 as security for the first day of trial, whereas the plaintiff says that $14,365 should be included for this item.

56 The areas of difference are these: Mr Dudman has allowed for instructing at trial by one solicitor for 6 hours and for 4 hours of conferring with counsel and attending witnesses,[37] whereas Mr Trimbos would reduce the estimate for conferral to 2 hours;[38] and Mr Dudman has included 2 hours of partner time for him to travel to Victoria for the trial,[39] whereas Mr Trimbos would not allow this.[40]

57 I prefer Mr Trimbos' estimate: 8 hours per day for the solicitor is sufficient, and it is difficult to conceive how the partner's travel time would be allowed if the costs of only one solicitor for instructing and conferral at trial were included. Therefore, $14,365 should be included for the first day of trial.

58 The parties relied on their written outlines in respect of this item and did not make any oral submissions about it.

59 The defendant seeks $16,000 as security for its costs of attendances on the plaintiff, comprised of 5 hours for the partner, 20 hours for the solicitor, 10 hours for the graduate and one day for junior counsel.[41]

60 The plaintiff submits that this is excessive and says that $4,200 should be included, comprised of 3 hours for the partner and 6 hours for the solicitor, with no allowance for counsel. Mr Trimbos states that the defendant's estimate of a total of 35 hours is excessive given the future steps remaining in the proceeding.[42]

61 In my view, the plaintiff's submission is to be preferred, since the future steps identified are all ones which have been included in the calculation of the security to be ordered. I would, however, include an allowance for half a day of junior counsel's time. While the plaintiff's submission that the defendant's counsel will not be required to communicate with the plaintiff's counsel can be accepted, it is unrealistic to think that junior counsel will not be involved in the preparation of any of the correspondence. Therefore, I will allow $5,200 for this item.

62 The parties relied on their written outlines in respect of this item and did not make any oral submissions about it.

63 The defendant seeks $17,684 as security for its costs of attendances on the defendant, comprised of 5 hours for the partner, 20 hours for the solicitor, 10 hours for the graduate, one day for junior counsel and 2 hours for senior counsel.[43]

64 The plaintiff submits that this is excessive. Mr Trimbos has included 5 hours for the partner and 6 hours for the solicitor, with no allowance for counsel. He states that there is no need for counsel to be communicating with the defendant, in particular given that allowances for counsel conferring with the defendant during trial preparation have been made.[44]

65 I accept the plaintiff's submission and Mr Trimbos' opinion in relation to this item. Given the allowance I have made for trial preparation, which is substantially more than that estimated by the plaintiff, I consider the amount of $5,400 to be a reasonable allowance for miscellaneous attendances on the defendant.

66 The parties relied on their written outlines in respect of this item and did not make any oral submissions about it.

67 The defendant sought a loading of 15 per cent on the solicitors' fees calculated according to the Scale, for care, skill and attention. No loading was sought for the solicitors' fees calculated by reference to the Guidelines. The defendant submitted that a loading at the upper end permitted under the Scale was justified on the basis of the complexity of the proceeding.

68 The plaintiff relied on Mr Trimbos' opinion that a loading at the higher end of the range was not warranted and that the Costs Court was likely to allow a loading of 10 per cent.[45]

69 The difference between the parties in this regard is negligible in dollar terms,[46] since the component of solicitors' fees calculated by reference to the Scale is a very small amount of the security sought.

70 I prefer Mr Trimbos' opinion in relation to this item, so the amount of security permitted for the loading will be $554.75.

71 In its written outline, the plaintiff submits that Mr Trimbos' estimate for security, being $116,791.25, should be reduced by 30 per cent to allow for the possibility of settlement prior to trial. This submission was developed further during oral submissions. I have taken it to be a submission that there should be a 30 per cent discount on whatever amount I arrive at.

72 The plaintiff relied on Pathway Investments, where Justice Davies applied a 50 per cent discount on the estimate for future likely costs, stating that:[47]

The Court's power to fix an amount by way of security must be exercised judicially but, as the authorities demonstrate, this may require a broad brush approach and a balancing act between ensuring that adequate and fair protection is provided to the party seeking security and avoiding injustice to the other party. I consider that the amount required to be put up by way of security should be conservatively reached, making due allowance for: (1) the fact that the experts in this case estimated costs on incomplete information; (2) the imprecision in their estimates by reason of the uncertainties; (3) questions about the reliability of some of their assumptions; (4) the margin of difference between them where no significant error in reasoning process has been demonstrated; and (5) the possibility of settlement at a mediation held prior to final preparation for trial.

73 The plaintiff referred to the Civil Procedure Act 2010, particularly the overarching obligations in sections 19, 22 and 24 which require the parties to make attempts to settle the proceeding and to only incur costs which are necessary for the resolution of the dispute and which are reasonable and proportionate, as a justification for the discount. The plaintiff also referred to Farmitalia Carlo Erba v Delta West,[48] where Justice Heerey identified the chance of a case collapsing without coming to trial as one of a non-exhaustive list of factors which may justify a discount.

74 The plaintiff acknowledged that a mediation has already occurred in this proceeding, but maintained that the parties were obliged to continue with efforts at settlement and that the scope of the dispute was narrowed by the defendant's admissions regarding the quantum meruit claim. The plaintiff's counsel submitted that 'everyone knows that most commercial cases settle' and that this justified the discount contended for.

75 The defendant submitted that no discount should be applied, as Mr Trimbos does not apply a discount and 30 per cent is an arbitrary number. The defendant noted that Farmitalia refers to seven factors as justifying a discount, only one of which was the prospect of settlement. The defendant also noted that the discount applied in Farmitalia and in Raventhorpe was 10 per cent. The defendant submitted that ordering costs only up to and including the first day of trial was another factor why there should not be a discount.

76 It is readily apparent, from the extract of Pathway Investments contained in paragraph 72 above and from reviewing that judgment, that the reasons for Justice Davies applying a discount of 50 per cent for future costs involved a number of issues beyond the prospect of settlement. The amount of security sought in that case was very high and the parties' experts in that case were over $10 million apart in their estimates. No mediation had been ordered as yet or had occurred, although it was clear that there would be a mediation at some stage. The security sought included pre-commencement costs and all steps leading up to the date of trial.

77 In my view, some discount for the possibility that the proceeding may settle before trial is appropriate. However, as security for costs in this instance has been staggered by the plaintiff first providing security for the period up to and including mediation and now by the security being up to and including the first day of trial, and with a mediation having already been conducted, any discount for the prospect of settlement should be at the lower end. With a 10 per cent discount on the amount I have calculated, sufficient allowance has been made for the prospect of settlement. This strikes a balance between adequate and fair protection for the defendant and avoiding injustice for the plaintiff.

78 Rounding the resulting figure of $153,139.72, I will order the plaintiff to provide security for the defendant's costs from after mediation up to and including the first day of trial in the amount of $153,140.

79 I will hear from the parties as to the appropriate form of orders and costs.

[1] On the Court's own motion, the application was referred to me for hearing and determination, pursuant to rule 84.04 of the _Supreme Court (General Civil Procedure) Rules 201_5 ('the Rules').

[4] [2017] VSC 362 ('Raventhorpe').

[5] Referring to Oswal v Australia and New Zealand Banking Group Limited (Security for costs - Stage 2) [2016] VSC 119, [7]-[13].

[7] Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 2 All ER 368.

[8] Allstate Life Insurance Co v ANZ Banking Group Ltd (No 19) [1995] FCA 1778; (1995) 134 ALR 187, 197.

[9] Premier Building and Consulting Pty Ltd v Spotless Group Ltd (No 7) [2005] VSC 275.

[11] [2017] VSCA 293 ('Trailer Trash').

[12] Pathway Investments Pty Ltd v National Australia Bank Ltd [2012] VSC 97 [37] ('Pathway Investments').

[13] Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621, 528; Pathway Investments [2012] VSC 97 [37].

[14] Pathway Investments [2012] VSC 97 [37].

[15] Quadrant Constructions Pty Ltd (in liq) v Morgan Smith Barney Australia Pty Ltd [2009] VSC 455 [56] ('Quadrant Constructions').

[16] Quadrant Constructions [2009] VSC 455 [56].

[17] G E Dal Pont, Law of Costs (Lexis Nexis Butterworths Australia, 3rd ed, 2013) [28.33].

[18] Wollongong City Council v FPM Constructions Pty Ltd [2004] NSWSC 523 [50].

[19] Trailer Trash [2017] VSCA 293 [64], set out in paragraph 15 above.

[26] These were paragraphs 3(b), 3(c), 4, 5(ii)(a), (d) and (e), 8(b), 9(c), 15(b), 17(b)(i) and (ii), and 22.

[29] Dudman Report, pp6-7; Dalzell Affidavit Exhibit JD-16, at p4.

[31] For reviewing the evidence, briefing counsel, conference with counsel, and comparing with defendant's expert evidence.

[32] Dudman Report, p7; Dalzell Affidavit Exhibit JD-16, at p4.

[35] Dalzell Affidavit Exhibit JD-16, at p4.

[47] Pathway Investments [2012] VSC 97.

[48] [1994] FCA 950; (1994) 28 IPR 336 ('Farmitalia').