Plaintiffs v Defendants

1 This proceeding arises from the acquisition by BBRX Five LLC, a Delaware limited liability company, of a portfolio of 5,482 rail cars located in the United States on 21 December 2007. It was commenced by generally indorsed writ filed on 19 December 2013 i.e. shortly before the expiration of the limitation period. The plaintiffs also commenced proceedings arising from the same facts in the Supreme Court of the State of New York on the same day. The writ in this proceeding was not served until October and November of 2014 i.e. close to the end of its period for validity. A statement of claim was served on 24 December 2014, although not filed until 1 April 2015. Defences have now been filed by the fifteen active defendants.

2 The first plaintiff is a Delaware limited partnership pleaded in the statement of claim to have been established as a vehicle for investment in transactions originated and promoted by Babcock & Brown, which is described as a global investment and advisory firm and defined as 'B & B Group'[1]. The second plaintiff is a Cayman Islands company, pleaded in the statement of claim to be the General Partner of the first plaintiff. The plaintiffs allege that Rail Syndicate Two Limited ('Rail Syndicate Two'), a subsidiary of the first plaintiff, was an investor in the transaction whereby the railway portfolio was acquired. Rail Syndicate Two was registered in the Cayman Islands and is now de-registered. The plaintiffs allege that Rail Syndicate Two and the first plaintiff suffered loss caused by the conduct of the defendants. The damages sought exceed US $23m.

3 There are seventeen defendants, fifteen of whom have filed appearances and defences. In the statement of claim they are defined as falling into the following groups. The 'Promoter Defendants' are defined in the statement of claim as the first, second, third, fourth and seventeenth defendants.[2] All are Delaware limited liability companies. They are pleaded to have been the promoters of the investment. The rail cars were to be acquired by the second defendant, through a corporate structure. The statement of claim pleads that the second defendant became insolvent and was de-registered on 30 December 2011.[3] I was informed that the seventeenth defendant is also now de-registered. Neither the second nor the seventeenth defendants have entered appearances. The sixteenth defendant is an Australian company, and is pleaded to be the ultimate holding company of the first defendant and 'the principal global operating and asset owning entity in the B & B Group'.[4] In previous orders made by me I have identified the first, third, fourth and sixteenth defendants as the 'B & B Defendants', and I will continue to use that description for them in these reasons.

4 The statement of claim defines the fifth, sixth, seventh, eighth and ninth defendants, who are all individuals, as the 'Executive Defendants'. I have also used, and will continue to use, that description for them. They are all pleaded to have held various senior positions in the promoter companies.[5] The statement of claim defines the tenth defendant, which is an Australian company, as the 'Manager', and pleads that it was the manager of the first plaintiff for the purpose of management and investment of its assets. The statement of claim defines the eleventh to fifteenth defendants, who are all individuals, as the 'Investment Committee Defendants' and pleads that they formed the Investment Committee of the Manager. With the exception of the twelfth defendant, Mr Green, they are jointly represented. I have called these defendants, and will continue to do so, the 'Manager and Balance of the Investment Committee'. I identify Mr Green by his name.

5 These reasons concern applications for security for costs sought by these four groups of defendants as against the plaintiffs in respect of the first tranche of security.[6] The parties have agreed to security in tranches. The Executive Defendants and the Manager and Balance of the Investment Committee seek security for their costs in the sum of $75,000 and $70,000 respectively up to and including the close of pleadings.[7] The B & B Defendants seek the sum of $325,000 by way of security for their costs. In their original summons this was expressed to be by way of security up to and including the close of pleadings.[8] I granted those defendants leave to amend the summons to seek that sum by way of security up to and including the filing of their defence only.[9] Mr Green seeks the sum of $111,902.50, being by way of security for his costs up to and including discovery.[10]

6 The plaintiffs do not dispute that they should provide security. The disputes between them and the defendants concern two matters - the form of that security and, in respect of the B & B defendants only, the amount of the security.

7 I heard the parties on these issues on two distinct days. On 20 May 2015 I heard the parties on the question of form. On 3 August 2015 I heard the dispute between the plaintiffs and the B & B Defendants in relation to quantum.

8 In relation to form, the plaintiffs propose that security be provided in the form of a deed of indemnity to be provided by AmTrust Europe Limited ('AmTrust'), an insurance company registered in England and Wales. Each of the groups of defendants identified above contend that that form of security is not appropriate, and seek that security be provided by the conventional means of payment into Court or guarantee from, in the case of the Executive Defendants and the Manager and Balance of the Investment Committee, an Australian bank, or, in the case of the B & B Defendants and Mr Green, from an Australian authorised deposit-taking institution, in each case in favour of the relevant defendants or defendants.

9 At the conclusion of the hearing on the 20 May 2015, quantum remained in dispute as between both the B & B defendants and the plaintiffs, and Mr Green and the plaintiffs. Subsequently the Court was informed that quantum was agreed as between Mr Green and the plaintiffs. I heard the plaintiffs and the B & B Defendants on 3 August 2015 in relation to quantum. The B & B Defendants seek the sum of $325,000 by way of security for costs up to and including the filing of their defence. The plaintiffs principally propose a sum in the range $84,000- $109,200. In the alternative, they submit the security should not exceed the 'high 100s or low 200s'.

10 For the reasons detailed below, I have concluded that security for costs should be provided for this tranche in the form of cash or a guarantee from an Australian bank or Australian authorised deposit-taking institution, and not by the proposed deed of indemnity. I find that the appropriate sum by way of security for the B & B Defendants to the filing of their defence is $253,990.

11 It is necessary to have some understanding of the nature of the claims made by the plaintiffs and the issues in the proceeding to assess the quantum of the security sought by the B & B Defendants, which is considerably larger than the security sought by the other defendants, which has been agreed.

12 I have drawn the following summary of the plaintiff's contentions from the statement of claim, the summary given by counsel for the plaintiffs in written and oral submissions, and the summary in the affidavit of Juliana Warner, solicitor for the B & B Defendants, sworn on 23 March 2015[11] in support of the summons.

13 The funding package for the acquisition of the rail cars was to be in the order of US $386m, the bulk of which (US $332m) was to be by way of debt from the ANZ bank. The plaintiffs allege that the first plaintiff advanced the sum of US $25m to its wholly owned subsidiary Rail Syndicate Two on 21 December 2007 by way of investment in the acquisition of the rail cars. The plaintiffs allege that the first plaintiff eventually lost all of its investment after secured lenders foreclosed on the rail cars and sold them for less than the total amounts owed.

14 The plaintiffs allege that the Executive Defendants wrongly represented to the Manager that the investment met their necessary requirements for investment. They also allege significant misrepresentation by omission as against these defendants, being a failure to advise the Manager of certain matters, in particular the circumstances surrounding a collateralisation obligation in an interest rate swap and the term of a loan by another investor, Everest Capital Ltd ('the Everest loan'). [12] The plaintiffs plead that these misrepresentations were also made by the Executive Defendants as agents for the Promoter Defendants (which include the first, third and fourth defendants, who in these reasons are part of the B & B Defendants).[13]

15 The plaintiffs allege breach of the fiduciary duty of utmost candour and honesty owed to the first plaintiff by each of the Promoter Defendants and the Executive Defendants, by reason of their misleading representations.[14] The plaintiffs allege further, or in the alternative, as against each of the Promoter Defendants and the Executive Defendants a breach of the fiduciary duty said to be owed by them to the first plaintiff not to allow a position of conflict to arise as between their duties to the first plaintiff and their own interests or duties to others.[15] The plaintiffs further allege specific breaches of fiduciary duty as against the sixth and seventh defendants, Mr Stone and Mr Sullivan, and plead that each of the Promoter Defendants and the other Executive Defendants were knowingly involved in and knowingly assisted in these breaches.[16]

16 As against the Manager and the Investment Committee, including Mr Green who is separately represented from the Manager and Balance of the Investment Committee, the plaintiffs allege that they made misleading representations to the second plaintiff to the effect that the investment was advisable and would be profitable. The plaintiffs also allege that the Manager and the Investment Committee failed to carry out due diligence and approved the investment when they should have known certain matters that made it inadvisable.[17]

17 The claims against the Executive Defendants and the Promoter Defendants arising from the claimed misrepresentations or omissions are also cast in various other causes of action,[18] as are the claims against the Manager and the Investment Committee.[19]

18 The plaintiff alleges against the sixteenth defendant ('BBIPL') that it knowingly benefited from the breaches of fiduciary duty by the first, third, fourth and seventeenth defendants.[20]

19 In his oral submissions, senior counsel for the plaintiffs said that in simple terms a large part of the case turned on the allegation that the relevant defendants did not disclose the additional liabilities that had been taken on by way of the collateralisation obligations and the Everest loan to the plaintiffs.[21]

20 Defences have now been filed by all active defendants. I will not attempt to analyse them to identify the issues arising on the pleadings. For the purpose of these applications, and for the reasons I discuss later, I accept the characterisation of the defence filed by the B & B Defendants given by their solicitor, Ms Warner in her second affidavit. She describes that defence as including 'a detailed positive factual case countering the plaintiffs' assertions about the disputed transaction, a defensive estoppel case asserting that the first plaintiff was not an investor in the disputed transaction, and a defensive counterclaim alleging misleading and deceptive conduct on the part of the plaintiffs, as well as breach of contract'. She says that none of these elements are as yet present in any detail in any other defendant's defence.[22]

21 Security for costs is sought by the defendants pursuant to r 62.02 of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules'), s 1335 of the Corporations Act 2001 (Cth) and the inherent jurisdiction of the Court. In an application for security for costs, the defendant or defendants who apply must show both that the jurisdiction of the Court to order security is enlivened, and that an order should be made in the discretion of the Court.

22 The plaintiffs do not dispute that security for costs should be provided. It follows that there is no dispute that the jurisdiction of the Court is enlivened. I consider it helpful, however, in the determination of the dispute as to form in particular to identify the specific jurisdictional foundation for the order.

23 The defendants rely on sub rules 62.02(1) (a), (b), (c) and (f) of the Rules to enliven the jurisdiction of the Court to grant security.

24 Sub rule (1)(a) applies where the plaintiff is ordinarily resident out of Victoria. Neither of the plaintiffs is registered in Australia or has a registered office in Australia. The plaintiffs accept this as the jurisdictional foundation for the ordering of security for costs.[23]

25 Sub rule (1)(b) applies where a plaintiff is a corporation and there is reason to believe that it has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so. Searches conducted by the defendants show that neither of the plaintiffs has any real property in Australia or a registered interest in any property in Australia. The plaintiffs do not deny this assertion. Accordingly, this jurisdictional foundation is also enlivened.

26 Sub rule (1)(c) applies where a proceeding by the plaintiff in another court for the same claim is pending. I was informed at a directions hearing in the proceeding on 8 April 2015 that the New York proceeding has now been discontinued. This jurisdictional ground accordingly falls away.

27 Sub rule (1)(f) applies where the Court may require security under an Act. Accordingly, that sub rule picks up the power to order security for costs pursuant to s 1335(1) of the Corporations Act. That power is enlivened if there is 'credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence'. In Livingspring Pty Ltd v Kliger Partners[24] ('Livingspring') the Court of Appeal held that although the wording of r 62.02(1)(b) and s 1335(1) are not identical, the same principles apply to both. In that case, the judge at first instance had detailed evidence before him as to the financial position of the plaintiff and concluded that the jurisdictional threshold of s 1335(1) was met, because the assets of the plaintiff only marginally exceeded its liabilities on the most favourable view to it, and the accounting information was less than reliable. The Court of Appeal held that that conclusion was well open to him.[25]

28 In this case, there is no evidence before the Court as to the financial position of the plaintiffs, save that they have no assets in Australia. The plaintiffs have not provided any evidence of their financial position to the defendants, despite request to do so, and have not placed any such evidence before the Court, in particular in relation to assets or resources outside Australia. The B & B Defendants submit that in the absence of evidence that the plaintiffs would be able to meet an adverse costs order from other financial resources the Court may, and here should, infer that the plaintiffs do not have that capacity.[26] The plaintiffs have not addressed the question of impecuniosity in any way, by evidence or by submission. I consider the inference that they would be unable to meet an adverse costs order from their own financial resources to be clearly open, and given the absence of submission or evidence on the point by the plaintiffs, to be appropriate. I conclude that this jurisdictional ground is also enlivened.

29 It follows that the defendants have shown pursuant to r 62.02(1) (a) and (b) that the Court has power to order the plaintiffs to provide security for costs because they are ordinarily resident outside Victoria, indeed Australia, and have no assets in Victoria, indeed in Australia. I also conclude pursuant to s 1335(1) of the Corporations Act that there is reason to believe that the plaintiffs will be unable to pay the costs of any of the defendants if a defendant or defendants is or are successful in his, her or their defence. The jurisdiction under r 62.02(1)(f) is thus also enlivened.

30 Once the jurisdiction to order security for costs is enlivened, r 62.02 of the Rules and s 1335(1) of the Corporations Act confer a discretion on the Court whether or not to do so. The plaintiffs do not dispute that security for costs should be provided. The issue between all the defendant groups and the plaintiffs in relation to security is not whether security should be provided, but the form in which it is to be provided. The Rules do not stipulate any particular form of security. Rule 62.03 provides that '(w)here an order is made requiring the plaintiff to give security for costs, security shall be given in the manner and at the time the Court directs'. This rule confers a discretion as to the form of security.

31 The conventional form of security is either payment into Court, or a bank guarantee. That is what the defendants seek in this proceeding. The plaintiffs propose that security be given progressively as required to the various defendants by deeds of indemnity to be provided by an insurer based in the United Kingdom, coupled with an order for a bank guarantee in a sum sufficient to cover the costs of enforcement of the deeds, should the insurer not comply with a deed.

32 There is limited authority specifically on the exercise of discretion in relation to form. Most of the cases to which I have been taken turn on whether or not security for costs should be ordered, in the exercise of the Court's discretion, once the jurisdiction is enlivened. The plaintiffs rely on these cases as relevant to the discretion on form as well. In reply, the defendants dispute that the authorities should be read in that way.[27]

33 I discuss the authorities to which the parties have referred me below. My conclusion is that the same principles that have been identified as relevant to the exercise of the discretion to order security at all, also apply to the exercise of the discretion as to form. I can so no reason in principle for applying a different test to the two discretions. Further, particularly in the cases where the issue before the court was whether an undertaking to pay costs or secure property that was offered on behalf of the plaintiff meant that cash security in the jurisdiction was not required, courts have not drawn any bright line between consideration as to whether or not security should be ordered, and consideration as to whether security in the form offered should be accepted. The two issues frequently overlap.

34 Before discussing the cases in detail, I note that I have not been directed to any authority that gives specific consideration to the nature or enforceability of a bank guarantee. Further, there is no evidence before me as to the usual or required form of such a guarantee, and the differences, if any, between enforcement of a bank guarantee and enforcement of the proposed deed of indemnity in this case, leaving aside the necessity of overseas enforcement in the case of the deed, if it is not honoured. In the course of argument I asked for a description of a bank guarantee, and counsel for the B & B Defendants supplied the following description, obtained from a banking partner within her instructing solicitor's firm, which the plaintiffs accepted as accurate:

A bank guarantee is a written undertaking by a bank in favour of a nominated beneficiary, at the request of the bank's customer, to make payment of an amount up to a sum specified in that bank guarantee and in accordance with its terms. A mechanism by which claims are made against the guarantee is as follows. Claims are made by the beneficiary on the bank directly, and without reference to, or having regard to, the financial position of the bank's customer. That is, the beneficiary relies on the credit worthiness of the bank, and not the customer, to satisfy the claim.

If the bank is required to make a payment under the guarantee, it is entitled to be reimbursed by its customer, for the amount of the payment and the related costs. The bank separately agrees with the customer the terms on which it is willing to provide to the bank (sic) a guarantee, such as price and security, and that will vary from case to case.[28]

35 It seems to me that the reference to 'bank' in the second last line was probably an error, and was intended to be to 'beneficiary'. With this correction, I will adopt this description.

36 After the conclusion of argument, I suggested to the parties that the Court obtain from the office of the Senior Master information as to the usual form of a bank guarantee and the usual practice in relation to provision of security by bank guarantee and payment out of that security. This was on the basis that an opportunity would be given to the parties for further submissions in the light of that information. The plaintiffs queried the usefulness of an enquiry as to the 'usual form' of a bank guarantee and the 'usual practice' for payment out pursuant to such a guarantee, and foreshadowed the need for possible further evidence. In the light of those responses, I did not consider it appropriate to pursue that enquiry and did not do so.

37 I start my consideration of the cases where the plaintiffs began, with the recent Court of Appeal decision Yara Australia Pty Ltd v Oswal[29] ('Owal'). In that case, the appellants, who were the defendants, had obtained orders for security for costs from an associate judge against the individual respondents/plaintiffs. The plaintiffs were not resident in Australia. It was not in dispute that enforcement of orders against them in their country of residence, the United Arab Emirates, would be difficult. The plaintiffs sought damages arising from the sale of their shares in an Australian company at the instance of the ANZ bank and its receivers to purchasers including Yara Australia Pty Ltd. Neither of the plaintiffs had any unencumbered assets in Australia in their own names. The proceeds of sale of the shares were held in escrow accounts, apparently in Australia, from which the defendants could be reimbursed their costs of the proceedings (provided sufficient funds remained) and the plaintiffs could call on the balance.[30]

38 The orders for security for costs were overturned on appeal to a judge. The judge held that the escrow accounts already provided sufficient security for the costs of the defendants.[31] The Court of Appeal upheld that conclusion and refused leave to appeal.

39 One of the issues before the Court of Appeal was whether it was necessary that the defendants be able to call on the escrow accounts immediately. In holding that that was not necessary, Redlich JA made the following statement (citations omitted), on which the plaintiffs rely:

The form of a fund or asset will be immaterial so long as it is adequate to achieve its object as a security. The court has an unfettered discretion under r 62.03(1) as to what form of security may be acceptable. The degree of likelihood of the respondent being unable to pay the costs, along with all the circumstances, actual and possible, may be taken into account in the exercise of discretion.[32]

40 In my view, it is clear that in the context, this statement explicitly relates to the form of the proposed security, and holds that all relevant circumstances should be considered in assessing its adequacy. In that case, Redlich JA considered it relevant that costs are usually assessed some considerable time after the adverse costs order is made, giving the unsuccessful party time to liquidate assets to meet the costs order. For that reason, he rejected the proposition that the plaintiff must have liquid assets available at the time of the application for security for costs.[33] In the immediately following paragraph, Redlich JA expressed this conclusion on form, as relating to the discretion to refuse or grant security. This demonstrates that the same test applies to both questions, given their practical overlap.

41 The lead judgment writer in Oswal was Priest JA. He set out the relevant principles as follows:

The principles that may be derived from these cases seem to me to be:

• first, the purpose of ordering security against a plaintiff ordinarily resident out of Victoria - and with no assets within it - is so that a successful defendant will have a fund in Victoria against which it can readily enforce an order for costs;

• secondly, to make or refuse an order for security is a discretionary judgment;

• thirdly, since such a judgment is discretionary, the court must weigh all relevant circumstances;

• fourthly, the weight of any one circumstance must depend not only on its own persuasiveness, but must be considered against the impact other circumstances might have against it;

• fifthly, a circumstance of great weight, but not necessarily decisive, is that the plaintiff is resident out of Victoria and has no assets within it;

• sixthly, the weight of that circumstance may be outweighed by the plaintiff being able to point to other countervailing circumstances; an

• seventhly, the ultimate question must always be - how is justice best served in the particular circumstances of the case?

42 A question could arise, as to whether the statement of purpose in the first principle there stated informs the consideration of all other circumstances. If this were the case, it is difficult to see how security for costs could ever be refused or limited where there is no fund in Victoria against which an order for costs may be enforced. In my view, this is not the proper reading of the judgment. Firstly, this is apparent on the face of the statement of principles alone. The fact of overseas residence and absence of assets in the jurisdiction that appears in the first dot point (purpose) appears again in the fifth dot point, and is there described as 'a circumstance of great weight, but not necessarily decisive'.

43 Secondly, Priest JA drew his statement of principles from two influential decisions, that of McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co and anor,[34] ('Chellaram') and that of Gummow J in Energy Drilling Inc v Petroz N.L. and ors[35] ('Energy Drilling'). In Chellaram McHugh J held that all the circumstances of the case must be considered in the exercise of a court's discretion to order security for costs, but noted that the absence from the jurisdiction of a party and the absence of assets in the jurisdiction have been seen as 'a circumstance of great weight' in consideration of security for costs. He added that the practice has been to order security in that situation, 'unless that party can point to other circumstances which overcome the weight of (that) circumstance'. In his reliance on that portion of the judgment of McHugh J, Priest JA emphasised in particular the statements that all circumstances must be considered, but security may be ordered unless the party who is absent from the jurisdiction can point to other countervailing circumstances.

44 Chellaram also illustrates the overlap between the question as to whether to order security, and questions of form. In that case, McHugh J after reviewing the facts held that security should be ordered. In that regard, he took into account the fact that the director of the appellant had offered an undertaking to pay the costs of the respondent, if successful. He also considered this same matter in relation to form, which turned on whether the court should accept that undertaking as sufficient. As I discuss further below, he concluded that it was not sufficient, because not readily enforceable.

45 In Energy Drilling, Gummow J articulated the purpose of an order for security for costs in a case where the moving party is ordinarily resident outside the jurisdiction as being :

to ensure that a successful respondent will have a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement.[36]

46 He added that the absence from the jurisdiction did not necessarily require security for costs, however, 'the question being how justice will best be served in the particular case'.[37] In his judgment in Oswal, Priest JA quotes this entire extract, but emphasises this latter portion.

47 It follows in my view, that Oswal stands for the proposition that notwithstanding that the purpose of security for costs in the case of an overseas plaintiff is to provide a fund within the jurisdiction, all relevant circumstances must be considered in determining both whether to order such security, and its form. The ultimate question for the court in relation to both issues is- how is justice best served in the particular circumstances of the case?

48 This analysis is consistent with the statement of principles by Meagher JA of the New South Wales Court of Appeal in Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard)[38] ('Mothership Music'), to the effect that countervailing considerations that might outweigh the weight to be given to absence from the jurisdiction and no assets in the jurisdiction include whether the party has assets in a foreign jurisdiction in which a costs order could be enforced, and the complexity and costs of such enforcement.[39]

49 In Oswal, the plaintiffs resided outside Australia, but there existed in Australia a fund on which the defendants could call to meet their costs. The purpose of security in such a case, the first principle as distilled by Priest JA, was already met. There was accordingly no need for any further security. In this case, although the plaintiffs agree that security should be provided, they do not agree to the conventional means of doing so, by creation of a fund within Australia or bank guarantee by an Australian bank. They propose a form of security which depends on enforcement overseas, if not voluntarily complied with, as no assets in Australia are put forward to support it.

Costs of overseas enforcement as sufficient security

50 The plaintiffs rely on authority to the effect that if a plaintiff resident outside Australia has sufficient assets in its home jurisdiction to meet a costs order and there are arrangements for the enforcement of Australian judgments in that jurisdiction, then security may not be required, or may be limited to the additional costs of enforcing the costs order in that foreign jurisdiction. In reliance on these cases, the plaintiffs propose that they provide security for costs in addition to the proposed Deeds of Indemnity in a sum sufficient to cover enforcement of a costs judgment in the United Kingdom.

51 In Berry v Innovia Security Pty Ltd [40]('Berry v Innovia'), Buchanan J of the Federal Court held that the overseas individual plaintiff had shown that that he had sufficient assets in the United Kingdom, in the form of an unencumbered legal and beneficial interest in certain real estate, to satisfy a costs order against him. On that basis, and on the proferring of an undertaking by that plaintiff to give ample notice of any sale or proposed encumbrance of that interest and to pay into court any security for costs then required, the Court refused to order security for costs other than an amount sufficient to register any costs judgment in the United Kingdom for enforcement.

52 Buchanan J expressly adopted in this regard the approach taken by Jagot J in the earlier Federal Court case at first instance, Maxim's Caterers Limited v Magnona Pty Ltd (No 1)[41] ('Maxim's'). The plaintiff in that case was resident outside Australia (in Hong Kong) and had no assets in Australia. It had, however, substantial assets in Hong Kong, including fixed assets. The plaintiff opposed any security for costs being required, on the basis that enforcement of an Australian order for costs against it in Hong Kong was a straightforward matter of registration of the judgment. In the alternative, it proposed security only in the amount estimated as the costs of enforcement in Hong Kong. It also offered an undertaking not to seek security for costs in Hong Kong should an application to register a judgment for costs against it be there made. On that undertaking, Jagot J ordered payment into an Australian owned bank of security in the sum of $15,000 only, being an amount conceded to be sufficient for enforcement in Hong Kong. A similar undertaking was proffered in Berry v Innovia.

53 The plaintiffs have also referred me to two decisions of the New South Wales Court of Appeal in support of their proposition that security in addition to the proposed Deed of Indemnity should be limited to the costs of enforcement in the United Kingdom. The relevant aspect of Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd (in liq)[42] ('Dense Medium') concerned an appeal from an order of a trial judge increasing an amount for security for costs. The plaintiff was a substantial South African company. The original order for security had been by consent in a sum that was then agreed to be sufficient to enforce any New South Wales judgment for costs against the plaintiff in South Africa. The trial judge increased it substantially. The Court of Appeal declined to interfere, on evidence that enforcement in South Africa may be complex. Importantly for the plaintiffs in this case, the Court in Dense Medium accepted that limitation of security to the costs of overseas enforcement was the appropriate approach. Young JA, with whom Campbell and Whealy JJA agreed, noted (citing Maxim's amongst other cases) that:

There are a series of cases which suggest that ordinarily, and that is a word that must not be forgotten, where one has an application for security for costs based on the fact that the applicant is outside New South Wales, the security for costs that ought to be ordered is the additional costs of realising the costs order in a foreign country as opposed to Australia.[43]

54 Mothership Music, a decision of Meagher JA of the New South Wales Court of Appeal noted earlier, concerned an appeal against the entry of a default judgment in the District Court of New South Wales. The appellant, Flo Rida, was resident in Florida. There was no evidence that the overseas plaintiff had net assets in Florida, or elsewhere, against which an order for costs could be enforced. On that basis, Meagher JA of the New South Wales Court of Appeal noted that it was not necessary to consider if security sufficient to cover the costs of enforcement in the overseas jurisdiction would be sufficient. His analysis affirms, however, that in an appropriate case security for costs to be provided by an overseas plaintiff may be confined to the additional costs of enforcement overseas. Meagher JA ordered security for costs to be provided in his estimate of the likely party/party costs of the appeal.

55 These cases demonstrate that where a foreign plaintiff itself has assets sufficient to meet a likely costs order in a foreign jurisdiction, in which an Australian judgment may be enforced, sufficient security for costs may be the costs of enforcement in that jurisdiction.

56 There is, however, in this case an additional intervening factor. The foreign plaintiffs here do not assert that they themselves have sufficient foreign assets or financial resources to meet a costs order, or to offer as security. As noted, they provide no information about their own financial position. They propose security by way of deed from an overseas insurer, which they assert has more than sufficient assets to meet any costs order, and cash security sufficient to enforce that deed if required.

57 Of the cases put before me, Chellaram is the only instance I have been able to identify in which the court appears to have given serious consideration to accepting security from a third party who is, like the moving party, absent from the jurisdiction but said to have sufficient assets. In Chellaram, discussed earlier, McHugh J gave serious consideration to whether acceptance of an undertaking by the director of an insolvent Hong Kong corporate appellant to pay the costs of an appeal to the High Court, if unsuccessful, was a sufficient alternative to security for costs in conventional form. He concluded that it was not sufficient, because an undertaking, as opposed to a judgment, could not be enforced in Hong Kong. This reasoning is consistent with the plaintiffs' proposition that a form of security to be provided by a third party that is enforceable in the overseas jurisdiction, if coupled with the costs of that enforcement, is sufficient.

58 Security from an insurer was considered by Mandie J in Nylex Corporation Pty Ltd v Basell Australia Pty Ltd[44] ('Nylex'). In that case, the plaintiff was an Australian company that had gone into administration and receivership. The plaintiff first disputed that the jurisdictional pre-condition of impecuniosity had been proved. Mandie J found that it was proved.[45]

59 In the alternative, the plaintiff next asserted that as the proceeding was 'largely' a subrogated claim brought in the name of the plaintiff by its insurers, those insurers would be liable to indemnify the plaintiff for the costs of the action, including any adverse costs order, and so there was no need for an order for security for costs. Mandie J also rejected this proposition. He noted that the plaintiff had not provided evidence of the relevant insurance policy or policies or evidence of the extent to which the action was a subrogated action, and so might lead to a right of indemnity in the plaintiff as against its insurers. Further, he held that the proceeds of any such indemnity would have to be paid into the pool available to all creditors of the plaintiff, and so would not be directly available to the defendant.[46] Mandie J also noted that the possibility of the defendant seeking an order for costs directly against the non-party insurer could not be (and was not) relied upon as sufficient answer to the application.[47]

60 In the further alternative to an order for security, the plaintiff proffered an undertaking by its insurers to pay any of the defendant's costs that the plaintiff was ordered to pay. Although it is not entirely clear from the judgment, it appears that the insurers in question may have been or included insurers without a presence in Australia. Mandie J did not accept that this undertaking provided sufficient security. He rejected it for three reasons.

61 First, he held that the affidavits sworn by the solicitor for the plaintiffs to which were exhibited documentation showing on its face insurers with substantial financial resources were insufficient to prove those resources. This was because the material was not verified by any person with personal knowledge of the financial statements contained within it. The material was hearsay. [48]

62 Secondly, and more significantly in his view, the proposed undertaking was to be given by a person, David Lloyd, who was said to be authorised to give it on behalf of a syndicate of insurers, which syndicate in turn was said to be authorised to give the undertaking by the various underwriter insurers. Each of them individually was only liable proportionately.[49]

63 Thirdly, Mandie J noted that there was no evidence that the insurers would have any difficulty in obtaining a guarantee from an Australian bank, and the only apparent prejudice to them by ordering that form of security would be the bank charges incurred in obtaining such a guarantee. The defendant offered to abide any order of the Court in relation to those charges if the plaintiff eventually succeeded in the proceeding, or it was otherwise appropriate to reimburse the plaintiff or its insurers for those charges.[50]

64 The plaintiff also relies on the judgment of Mr Justice Clarke in Versloot Dredging BV v HDI Gerling Industrie Vesicherung AG[51] ('Versloot') , a case in the English High Court of Justice. The judgment concerns an application to vary an order previously made that security for costs be provided by way of 'first class' London bank guarantee, to permit it to be provided by way of a deed of indemnity in favour of the defendant from an insurer. The defendant opposed the substitution of the deed for the bank guarantee on the basis that it was inferior security. Mr Justice Clarke held that::

There is no magic in the provision of security from a first-class London bank. The essential question for the court in deciding on what form of security is acceptable is whether what is proposed does indeed provide real security. This it may do if it amounts to a promise which would in all likelihood be honoured, given by an entity with the wherewithal to pay and against whom enforcement can readily be obtained; in short, if given by a truly creditworthy entity.[52]

65 He held that he was satisfied on the evidence before him that the entity offering the deed of indemnity, QBE Insurance (Europe) Limited ('QBE'), was a reputable and creditworthy insurance company, present in London, and that the security constituted by the deed was equal to or better than many first-class London banks.[53] In particular, he noted that QBE had been established in London since 1904 and had many regional offices throughout the United Kingdom. In terms of credit rating, he noted that it rated better than all but one of the defendants in the case. Further, he placed reliance on evidence, apparently from QBE itself, that litigating parties in the English courts have accepted indemnities from it over the last few years, and their reliability and creditworthiness had never before been challenged.[54]

66 In reaching his conclusion, Mr Justice Clarke referred to other English authority which apparently also demonstrates that After the Event ('ATE') insurance or a deed of indemnity from an ATE insurer can be acceptable security. Those cases have not been placed before me, but for the purposes of these applications, I accept that in the English courts it is acceptable for security to be provided by way of deed of indemnity from an insurer, at least where that insurer has assets in England. In Versloot, of course, the insurer in question was present and had assets in the jurisdiction in which the security was sought. That is not the position in relation to the deed of indemnity proposed in this case.

67 From this review of the authorities on which the parties relied, I conclude the following by way of relevant legal principle in relation to form of security, where the plaintiff is not ordinarily resident in Victoria.

68 First, the purpose of security for costs to be provided by an overseas plaintiff is to provide a fund in Victoria against which a successful defendant may readily enforce an order for costs. If such a fund already exists, then security for costs may not be required. All relevant circumstances must be considered in the exercise of the discretion as to whether or not to order security for costs. Ordinarily, and in the absence of countervailing considerations, the fact that the moving party is resident out of the jurisdiction and has no assets in Australia, is to be given significant weight when considering whether to order security. Countervailing considerations include whether the moving party has assets in an overseas jurisdiction, against which a costs judgment may be enforced, and the cost and complexity of such enforcement. Where there are sufficient assets overseas, against which a costs judgment may be enforced, it may be appropriate to limit security to the costs of enforcement overseas.

69 Nylex stands for the proposition that where third party security is proposed, then at least in Victoria, direct evidence may be required as to the reliability and creditworthiness of that security. Any difficulty that the plaintiff would face in providing direct security by way of cash or bank guarantee may also be relevant.

70 The ultimate test is, as expressed by Priest JA in Oswal, how justice is best served in the particular circumstances of this case. The plaintiffs rely on the expression of the ultimate test by Buchanan J in Berry v Innovia, being whether the defendants will be 'unreasonably disadvantaged' by the proposed security.[55] It seems that this has informed their submission that the question is whether the form of security that they propose is sufficient. I do not consider that to be the correct formulation of the question for the Court. If there is difference between ultimate tests, as formulated in Oswal and in Berry v Innovia, I am bound to apply, and in any event consider more correct, the test articulated by the Court of Appeal of this state.

71 The evidence in relation to the proposed deeds of indemnity is given on information and belief by Mr Gregory Whyte, solicitor for the plaintiffs. This poses an immediate difficulty for the plaintiffs, given the approach taken by Mandie J in Nylex, that evidence as to the creditworthiness of proposed third party security be direct evidence. At the commencement of the hearing, counsel for the plaintiffs sought an adjournment to obtain such direct evidence, on the basis that the legal advisers for the plaintiffs were not aware of Nylex until receipt of the submissions from the defendants. The adjournment was opposed. Without ruling on the merits of the application, I suggested to the parties that the hearing proceed on the basis that, if I was otherwise minded to allow security in the form proposed by the plaintiffs, it would be a condition of that security that direct evidence be provided from an appropriately authorised officer of AmTrust to the same effect as that currently provided by Mr Whyte. All parties initially agreed with that suggestion, and I so ruled. [56] The ruling was initially confined to evidence as to the financial standing of AmTrust, but was later clarified to apply to the whole of the evidence to which Mr Whyte deposes on information and belief.

72 Senior counsel for the plaintiffs subsequently sought that the ruling be amended so as to allow that direct evidence to be filed prior to judgment being delivered, as opposed to after if the plaintiffs were successful on form. That amendment was opposed, and I refused it. In short, I was concerned to avoid the receipt of further evidence prior to judgment, that might necessitate a further hearing, given that full argument had already been put. [57]

73 Exhibited to Mr Whyte's first affidavit are what he describes as the form of the proposed deeds of indemnity. They have the following features:

1. There are two documents, each marked 'Draft' and neither executed by AmTrust. At the time Mr Whyte's affidavit was sworn, only two summonses were listed for hearing- those filed by the Executive Defendants and the B & B Defendants. One of the draft deeds is expressed to be between AmTrust Europe Limited and the individuals who are the Executive Defendants. The other is expressed to be between AmTrust Europe Limited and the defendants who are the B & B Defendants. In each case the collective defendants are defined as 'the Defendant'.

2. The recitals recite that the Claimant (the plaintiffs) has issued this proceeding; that the Claimant has requested AmTrust to indemnify the Defendant in the sum of AUD $75,000; and that in order to meet this liability AmTrust has agreed to indemnify the Defendant in accordance with the deed.

3. Operative term 2 expresses an unconditional and irrevocable undertaking on the part of AmTrust to pay to the Defendant 'any sum or sums which the Claimant is liable to pay in respect of the Defendant's costs'. It provides that AmTrust's total liability shall not exceed the sum of AUD $75,000 plus simple interest from the date of demand.

4. Operative terms 4 and 5 provide that AmTrust is deemed to be a 'Principal Debtor', not merely a surety, and that its liability is not affected by 'any act or thing or means whatsoever', including fraud or misrepresentation by the Claimant or lack of substance in the claim.

5. There are additional implementation provisions, including a provision preventing assignment by AmTrust and that the deed is to governed by Victoria law and subject to the exclusive jurisdiction of the Victorian courts.

74 Mr Whyte deposes on information and belief that AmTrust is an insurance company registered in England and Wales since 1975 and authorised and regulated by certain regulatory and prudential bodies in those jurisdictions and in Europe. He deposes that its principal activity is the underwriting of general insurance business in the United Kingdom and other European countries, a significant portion of which is the underwriting of legal expense risks. Since 2007 it is a wholly owned subsidiary of AmTrust Financial Services Inc. That company in turn is described as a multinational insurance holding company, based in New York, United States of America.

75 Mr Whyte exhibits financial strength ratings for AmTrust, and various financial documents which he deposes show, amongst other matters, very substantial assets, a net profit in excess of 35m English pounds for the year ended 31 December 2014 and cash at hand and at bank in excess of 35m English pounds for that year. He also exhibits a market release issued by AmTrust Financial Services Inc which reports very substantial assets.

76 Mr Whyte also deposes on the basis of what he has been told by Mr Simon Warr, underwriting manager of AmTrust, that AmTrust first issued a deed of indemnity in favour of a litigant in Australia in relation to security for costs in 2013, and has issued other 'instruments' in favour of litigants in Australia as a form of security for costs in three or four matters since that time. Mr Whyte deposes that confidentiality obligations prevent Mr Warr disclosing further details. I note that not only are no identifying details provided, no details are given at all as to the nature of these instruments- for example, the amounts involved, the nature of the litigation, the jurisdictions concerned, whether the instruments have been called on, and, if so, whether they were honoured on demand, or any enforcement was required.

77 In relation to the last point, Mr Whyte deposes that he is informed by Mr Warr that '(o)n no occasion has AmTrust ever failed to honour a deed of indemnity it has issued in favour of a defendant.'

78 If enforcement of a deed of indemnity in the form the plaintiffs propose was required, it is common ground that AmTrust has no assets in Australia, and so enforcement would be required in the United Kingdom. The plaintiffs' case in relation to enforcement is, based on the information given by Mr Marr, that it will simply not be required, because AmTrust would honour the deed. To address the possibility of enforcement being required in the United Kingdom, the plaintiffs rely on two affidavits of Kasra Nouroozi Shambayati, a solicitor with Mishcon de Reya, solicitors in London. Mr Shambayati deposes to his experience as a solicitor in England and Wales and sets out the registration process for enforcement of a Victorian judgment in the United Kingdom. That process is pursuant to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK). Mr Shambayati concludes with his estimate of the costs the defendants may incur if required to register a judgment in the Victorian Supreme Court in the United Kingdom. His estimate is modest- in between three and five thousand English pounds, before recovery.

79 The B & B Defendants took objection to Mr Shambayati's affidavit, on the basis that he purports to give expert evidence, but did not depose to having read the code of conduct for expert witnesses and agreeing to be bound by it, nor to having made all necessary enquiries. His second affidavit seeks to address these matters, but the defendants contend that it does not do so because it does not indicate that he read the guidelines before swearing his first affidavit.

80 These defendants also take objection to Mr Shambayati's evidence on the basis that his firm acts for the plaintiffs in connection with these proceedings, a fact which is not disclosed in either of his affidavits.

81 These objections, or at least the first, were initially put as going to admissibility. Counsel for the B & B Defendants pressed them at hearing only as to weight.

82 The objections are open to the defendants, but I do not consider that they diminish the overall thrust of Mr Shambayati's evidence, which is that there is a procedure for registration of a Victorian judgment in the United Kingdom which is relatively straightforward and cost efficient. The procedure is a reciprocal one, and there is a corresponding procedure in Victoria with which this Court is familiar. Counsel for the plaintiffs informs the Court that it is the New York office of Mishcon de Reya that acts for the plaintiffs, not the London office, where Mr Shambayati is located. In any event, as noted, the thrust of his evidence, except as to likely costs, is to identify a procedure that is ascertainable from the legislation itself and other publicly available material. The B & B Defendants also rely on his elaboration of the process to some extent, to show that there are a number of steps involved.[58]

83 In relation to costs, the plaintiffs propose that they provide a bank guarantee to cover any overseas enforcement expenses, which in argument was treated as being $20,000, per defendant group.

84 The case against the plaintiffs' proposed form of security was made by counsel for the B & B Defendants and for the Executive Defendants, each of whom made written and oral submissions. The Manager and Balance of the Investment Committee and Mr Green adopted these submissions. For those reasons I will generally express the objections as being made by the defendants collectively, although in practice they were made by counsel for the B & B Defendants, and the Executive Defendants, largely to the same effect, but with some differences of emphasis as between them.

Substitution of one foreign entity for another

85 The B & B Defendants submit that the proposed form of security is inappropriate, because it substitutes one foreign entity, with no assets in the jurisdiction (AmTrust) for another (the plaintiffs), when the very reason for security is that the plaintiffs are overseas companies with no assets in Victoria, indeed in Australia.

86 There is a certain conceptual appeal to this objection, but in my view it is an overstatement to say that the proposal is as a consequence fundamentally conceptually flawed. The Court has a discretion to order security for costs in the case of an overseas plaintiff, and it is plain from my review of the authorities that the Court may properly consider that security within the jurisdiction is not necessary if there are sufficient assets overseas, or limit that security to the costs of enforcement overseas.

87 True it is that the cases that support this proposition in their result all involve assets held by the plaintiff him or itself, not assets held by a third party. Chellaram, however, suggests that third party overseas security may in some circumstances be sufficient, and I can see no basis for rejecting it in principle. Particular third party security may be rejected, as it was in Chellaram, in that case for reasons to do with the enforceability of the security. It may also be rejected for lack of creditworthiness. In this case there was some challenge by the defendants in respect of the creditworthiness of AmTrust on the basis that there was no, or no sufficient, disclosure of its liabilities, but it may be that on closer scrutiny this challenge would not be pursued .[59]

88 It is not necessary for me to reach any finding as to the creditworthiness of AmTrust as I have found for the defendants for other reasons. There does, however, appear to be force to the submission by counsel for the plaintiff that, assuming the financial position of AmTrust is verified by an appropriate person on direct evidence, then its net assets are far superior to that of most plaintiffs. Further, the proposed security, by way of obligation under deed, is more readily enforceable, including overseas, than enforcement over property, which was considered sufficient security in Berry v Innovia, for example.[60]

89 The Executive Defendants express the concern that a third party is proposed to be introduced into the provision of security in a slightly different way. Their objection is that security by way of deed of indemnity would require the defendants to enter into what they describe as a contractual arrangement with that third party.

90 I do not think that this is strictly correct. I accept the submission of counsel for the plaintiffs that the proposed deed does not require any consideration to flow from the defendants, and so is not contractual in nature. There remains, however, uncertainty as to whether it requires bilateral execution. As currently proposed, it is drafted in inter partes terms, which would ordinarily suggest bilateral execution, but does not contain an execution clause for the defendants. Counsel for the plaintiffs could not clarify whether or not the defendants would be required to execute it. His only instructions on this point as at the hearing were that this was the standard AmTrust form.[61] If the defendants are required to execute it, the submission that the security would require them to enter into an arrangement against their wishes with a third party has some force.

91 The plaintiffs submit that the deed is a one way obligation on AmTrust to pay, and in that sense is identical to a bank guarantee.[62] If execution of the deed by the defendants is not required, then I accept that there is legal similarity between the two. A bank guarantee in favour of a defendant as beneficiary imposes a unilateral obligation, as would the deed. The party being afforded the security is not required to enter into any arrangement with the bank. The only arrangement required is as between the party giving the security, and its bank which is to give the guarantee.

92 The difference is that a bank guarantee from an Australian bank is the form of security that the defendants seek. It is a familiar form of security, from a known entity, and one based in Australia. The plaintiffs seek to impose a form of security on the defendants against their wishes. The entity offering the security has been selected by the plaintiffs, on the basis of a relationship or arrangement that is not disclosed to the defendants, and is presumably not a conventional one of banker and customer. Further, the proposed deed is in terms that the defendants have not themselves negotiated. The plaintiffs say that if the terms of the draft deed were not considered satisfactory, then the defendants have had time to request changes.[63] That may be so, but the defendants would presumably not have been able to negotiate directly with AmTrust. In these circumstances their resistance to this form of security is not unreasonable, although on analysis its legal form may not differ in essentials from a bank guarantee.

93 The defendants rely on the fact that there is no previous curial support for the plaintiffs' proposal in Australia. Indeed, no party could identify any previous case in Australia where the issue had been litigated.

94 The absence of previous curial consideration does not necessarily mean that a deed of indemnity has never before been accepted in Australia. It does suggest, however, that if not accepted, the issue has not been pressed. On the other hand, I do not consider that there is any real weight that can be given to the evidence given by Mr Whyte on information and belief of previous use in Australia. That information is so general and lacking in any informative detail as to be meaningless, even if put on direct evidence.

95 I accept that the absence of previous curial support, or even consideration, is a reason for caution in the exercise of discretion. It is not, however, reason in itself to reject the proposal, if it otherwise affords appropriate security in accordance with the underlying principles enunciated in authority.

96 The defendants submit that in a number of respects the plaintiffs' proposal would impose extra cost and complexity if the deed required enforcement. This is undeniable. The plaintiffs respond that it is highly unlikely that enforcement would be required, and that, given that improbability, their proposed solutions are sufficient.

97 As an initial matter, it appears to be conceded by the plaintiffs that if AmTrust did not honour a deed, then a fresh proceeding would be required to obtain a judgment on it. Mr Shambayati assumes this in his affidavit,[64] and counsel for the B & B Defendants agreed with that proposition in argument.[65] Counsel for the plaintiffs submits that it is very unlikely that enforcement of the deed would be necessary, but if it was necessary then he too assumes a fresh proceeding, but submits that summary judgment would be given in such a proceeding.[66] The parties do not appear to have contemplated the possibility of an order for costs in this proceeding as against AmTrust. Accordingly, I express no view as to whether or not that would be possible.

98 It is then conceded that that judgment would need to be registered in the United Kingdom. Undeniably, this introduces extra cost and delay, although as noted, I consider that the process is likely to be relatively straightforward. The plaintiffs propose to address this element of extra cost by a bank guarantee, which I understood to be in the sum of $20,000 per group of defendants.[67]

99 The defendants, who addressed first, notes that the plaintiffs had not offered an undertaking not to seek security for costs in the United Kingdom, should enforcement proceedings there be necessary. Undertakings to this effect have been considered significant in previous cases. In his submissions, counsel for the plaintiff indicated that he now had instructions that the plaintiffs would accept that if security was permitted by way of a deed of indemnity, it be conditional on the deed including a paragraph to the effect that AmTrust would not seek security for costs in any enforcement proceedings in the United Kingdom.[68]

100 The B & B Defendants expressed concern that the proposed deed would require them to pursue costs from both AmTrust and the plaintiffs, potentially in three different jurisdictions. I have assumed that this submission arose from the expressed limitation in the draft deed to $75,000 and so falls away if the deed is in the full amount ordered by the Court.

101 The proposed bank guarantee to cover the costs of enforcement overseas, and a condition that AmTrust not seek security for costs in enforcement proceedings, may sufficiently address the extra costs introduced by the proposed deed. They do not address the extra time and complexity of overseas enforcement, however. That remains a potential prejudice to the defendants. I do not think that the evidence is sufficient, even if it comes directly from AmTrust, to conclude that enforcement is so unlikely to be necessary that this potential prejudice can be discounted. Mr Whyte deposes on information and belief that AmTrust has never dishonoured a deed of indemnity. There is, however, no evidence as to the number of occasions on which it has honoured indemnities or the extent of those indemnities. The defendants, and the Court, are left to assume that these occasions have been many, and in large sum.

102 It is helpful to contrast enforcement of the proposed deed with a demand made on a bank guarantee. The thrust of the description proferred by counsel for the B & B Defendants, and accepted by the plaintiffs, is that payment pursuant to a bank guarantee is usually made on demand, without the necessity for any court proceeding. It is of course the plaintiffs' case that the same would apply in relation to the proposed deed, but as noted, the evidence on this point is slim. Further, litigation lawyers in Australia have had experience with bank guarantees, and accept their reliability on the basis of that experience, and the known financial standing of the institutions giving them. Even on the plaintiffs' best case, there is no such widespread experience to generate confidence in relation to deeds of indemnity, and no broad knowledge of the financial standing of the institution proposed to give them.

103 If payment was not made on request pursuant to a bank guarantee, then presumably proceedings would be required. If the guarantee was given by an Australian bank, however, enforcement action would only need to be taken in Australia, against assets in Australia. I conclude that in respect of potential enforcement, bank guarantee by an Australian bank is the superior form of security.

104 The next few objections that I will consider are all aspects of uncertainty as to what AmTrust has agreed to provide. This uncertainty arises first from the limited information that the plaintiffs have chosen to provide to the defendants, and to the Court, even assuming that that information can be put on direct evidence from AmTrust. It also arises from the fact that the plaintiffs have sought to bolster their case in the running, for example in relation to inclusion of a term binding AmTrust not to seek security for costs in any overseas enforcement of the deed.

105 The defendants have reasonably raised a number of issues of uncertainty in relation to the plaintiffs' proposal. Given the number and nature of these issues, I do not accept the contention of the plaintiffs[69] that the Court can appropriately deal with them on the basis of inference from Mr Whyte's affidavit or a conditional order.

106 The first aspect of uncertainty is as to the amount of security that AmTrust will provide. The proposed deeds are expressed to be confined to $75,000 in the case of each set of defendants. The B & B Defendants seek considerably more than this sum. Counsel for the plaintiffs says that this is a non-issue, and that the intention is that if this form of security is accepted, the deed would be in the sum found by the Court to be appropriate.

107 If that was the intention, then it should have been made explicit in the plaintiffs' evidence. Mr Whyte does not refer to the issue of the amount at all in his affidavits. It may be, for example, that the agreement reached between AmTrust and the plaintiffs contains a financial upper limit for security. The defendants, and the Court, are left wondering.

108 Further, there is no direct evidence directly from an authorised representative of AmTrust that this is the intention, or indeed that AmTrust agrees to pay even $75,000. Direct evidence of agreement as to $75,000 would form part of the further evidence to be supplied as a condition of security by way of deed. Direct evidence of agreement as to a higher amount would fall outside the bounds of this permitted further evidence, because it would go beyond Mr Whyte's affidavit.

109 On the other hand, if the form of security that the plaintiffs propose is otherwise considered acceptable, then that security will be in the sum the Court orders, and the proceeding will be stayed until it is provided. For this reason alone, I do not consider the limitation expressed in the draft deeds to be a compelling reason standing alone for rejecting that form of security. The inadequacy of the evidence does demonstrate, however, that the plaintiffs have not properly grappled with the type of evidence required to demonstrate the sufficiency of their proposed form of security.

110 The defendants also object to the proposed deeds on the basis that they are expressed to be 'draft' and are not executed. Counsel for the B & B Defendants compares these proposed deeds in that regard with the executed deed of indemnity that was the subject of Versloot. Of course, in Versloot, the amount of security had already been set, whereas here it has not. This could be the explanation for the deeds being expressed as 'draft' and not being executed. If that is the explanation, however, again it should have been made explicit in the plaintiffs' evidence. It has not been.

111 The consequence is that the defendants, and the Court, are asked to assume that AmTrust would make to them a completed offer by way of executed deed, in the sum awarded by the Court, with no evidence even on information and belief that this is what AmTrust agrees to do, let alone direct evidence.

112 As I have indicated, considerable uncertainty as to the nature of the plaintiffs' proposal arises from the absence of direct evidence from AmTrust. Further, Nylex is authority for the proposition that there should be direct evidence from the proposed third party provider of security as to its financial standing. No such direct evidence is before the Court. The hearing proceeded on the basis that direct evidence as to the matters to which Mr Whyte deposes would be a condition of security by way of deed, but his affidavit is so deficient that gaps in the evidence would remain.

No knowledge of relationship between AmTrust and the plaintiffs

113 One of those gaps is any evidence as to the relationship between AmTrust and the plaintiffs. The defendants submit that evidence as to the nature of this relationship is critical. The plaintiffs submit that the terms of the deed make the relationship between the plaintiffs and AmTrust irrelevant in relation to the obligation of AmTrust to pay costs to the defendants.[70]

114 In my view, the nature of the relationship between AmTrust and the plaintiffs retains some relevance. The proposed form of deed expresses the obligation of AmTrust to the defendants as that of a principal, not a mere surety, and immune from attack on the basis of misrepresentation to AmTrust by the plaintiffs or lack of merit in the claim. The proposed form of deed may then be better security than the proposed indemnity offered by insurers in Nylex, because the indemnity offered by an executed deed in a nominated sum does not appear to be conditional on satisfaction of an underlying contract or arrangement with the plaintiffs. I accept the submission of the plaintiffs in this regard.[71]

115 However, there are some aspects of the underlying arrangement that may conceivably impact on the provision of security in the future, and that is significant given that what is agreed is the provision of security in tranches. Both the plaintiffs and the defendants agree that the determination of form in this application, and the arrangements made to give effect to it, potentially determine the arrangements for future tranches. It is particularly important then that the proposal and the arrangements proposed to give effect to it be clear and certain, not just as to the current tranche, but also as to future tranches.

116 As indicated, there is uncertainty on the evidence even as to the proposal for the first tranche, and there is no evidence to give certainty as to future tranches. Mr Whyte gives evidence on information and belief that a significant portion of AmTrust's business is to underwrite legal expense risks[72], but he gives no evidence at all as to the likely willingness of AmTrust to provide further tranches of security in this proceeding. The defendants, and the Court, are asked to assume that further security as agreed or ordered would be provided by AmTrust.

117 The facts that it is accepted that further security will be required, and that there are multiple defendants, in my view, are further factors tending against the plaintiffs' proposal.

118 First, there is no evidence from the plaintiffs as to how it is proposed that further security that is agreed or ordered will be provided, and in particular whether that is intended to be by way of further deeds or variation of the one deed. Counsel for the plaintiffs suggests that the appropriate mechanism would be by way of variation, so that enforcement, if required, would be on one deed per group of defendants, not multiple deeds. He could put this only as his assumption, however.[73] There is no evidence, and perhaps not even clear instructions, and so the defendants, and the Court, are left to speculate in this regard. [74]

119 Next, the ultimate amount of security for costs required is likely to be very large, if the matter progresses. It is now unusual in this Court for any costs awarded in interlocutory applications to be taxable before the determination of a proceeding as a whole.[75] Accordingly, if security were to continue to be provided by way of deed of indemnity from AmTrust, potentially the defendants would be required to trust that security offered until the conclusion of the proceeding, without the ability to test it before costs have risen considerably.

120 The fact that future security may be required does not appear to have been raised as an objection in Versloot, where the security to be given by deed was the first tranche of security only. However, that case concerned a single defendant, a more well -known product and a local provider. None of those factors here apply.

No evidence that the plaintiffs cannot obtain a bank guarantee

121 The final objection taken by the defendants, is that there is no evidence that the plaintiffs cannot obtain a bank guarantee in the required sums, and, to the contrary, they offer to do so in relation to the costs of enforcement. Indeed, the defendants submit that the fact that the plaintiffs appear to have the backing of such a substantial insurer would suggest that they would have no difficulty in obtaining a local bank guarantee.

122 The plaintiffs respond that they did not consider it incumbent on them to provide explanation as to why they prefer security by means of the deed, rather than by bank guarantee. Counsel for the plaintiffs submits that the Court could infer that there are advantages to the plaintiffs in the means of security they propose, but acknowledges that there is no evidence of disadvantage. In putting this response, counsel for the plaintiffs frames the question the Court is required to determine as being whether the security proposed is adequate, taking into account whether there is any unreasonable disadvantage to the defendants. Counsel further submits that this is the test as propounded by Redlich JA in Oswal. [76]

123 In my view, counsel's formulation is not the correct formulation of the question the Court must determine, and nor does Redlich JA express it in these terms. In the quote on which counsel relies, Redlich JA merely states that the form of security is in the discretion of the court. He does not posit any test for the exercise of that discretion. The test in Oswal was formulated by Priest JA, with whom Macaulay AJA agreed. Priest JA stated that the ultimate issue for the Court is what justice requires. A consideration of what justice requires in the circumstances of the case involves consideration of the interests of both the plaintiffs and the defendants.

124 I accept the plaintiffs' submission that the Court should not commence its consideration with a predisposition in favour of a bank guarantee,[77] being the defendants' proposal. But nor should it commence its consideration with the plaintiffs' proposal, and ask if it is sufficient, as might be suggested by the test advanced by the plaintiffs.

125 The absence of evidence that the party giving security could not obtain a bank guarantee, or any evidence of prejudice occasioned by requiring a bank guarantee, was regarded as important in Nylex. That is a decision of a trial judge of this Court, and so, to the extent it is applicable, binding on me. I consider that in this regard, Nylex does apply, and so a relevant consideration is that there is no evidence before me that the plaintiffs could not obtain a bank guarantee, or of prejudice to them in doing so.

126 Bank guarantee from an Australian bank or financial institution acceptable to the Senior Master has been to date the conventional means of affording security in any substantial sum, and so has the benefit to the defendants of being a known procedure and product, from a known and trusted source. The security offered by the plaintiffs does not have these advantages, and in the event it is not honoured on demand, has the disadvantage to the defendants that it would require overseas enforcement. The Court is invited to infer that the proposed form of security has advantages to the plaintiffs, but there is no evidence of any disadvantage to them if the conventional means of a bank guarantee was required.

127 The parties did not address me specifically in relation to onus. The cases considered by Priest JA and which he summarises in his statement of principles speak of the plaintiff pointing to circumstances that tend against the weight to be given to the plaintiff being absent from Victoria and having no assets within it. This is similar to the approach taken by Buchanan J in Berry v Innovia, where he held that there was a practical onus on an overseas plaintiff. Nevertheless, I have approached this question of form on the basis that it is for the defendants to show that the proposed form of security offered by the plaintiffs is inferior to the form of security they propose. I have done so having regard to Livingspring, which held that the onus remains throughout on the defendants in an application for security for costs, notwithstanding that the plaintiff necessarily must have carriage of some discretionary matters.[78]

128 Applying the ultimate test as articulated in Oswal, I consider that the defendants have shown that in the circumstances of this case, and on the evidence before me (even assuming that the matters to which Mr Whyte deposes can be put on direct evidence) security by way of deed of indemnity from AmTrust is not how justice is currently best served. The interests of justice require in my view cash deposit or bank guarantee.

129 I do not hold that security by way of a deed of indemnity from a third party insurer can never be appropriate. Nor do I find that there is any reason to doubt the financial standing of AmTrust, assuming direct evidence is given by an appropriately authorised person to the same effect as Mr Whyte's evidence on information and belief on that point. Given that financial standing, however, there is no explanation given why bank guarantee, which would deal with all the defendants' objections, cannot be given for the full amount of security, and not just the costs of enforcement overseas.

130 Further, I consider that the defendants have identified a number of practical issues with the proposed security, and have shown that those issues are not currently satisfactorily addressed.

131 For these reasons, I will require security for the first tranche to be given by way of deposit into Court, or by way of guarantee from an agreed Australian bank or other authorised deposit-taking institution.

Quantum of security for the costs of the B & B Defendants

132 The B & B Defendants seek security in the sum of $325,000 up to and including the filing of their defence. In opposition, the plaintiffs principally contend that the Court should accept the report of their costs consultant and accept her range of $84,000- $109,200, as appropriate. In the plaintiffs' alternative submission, which starts with the application of further discounts to the figures given by the expert for the B & B Defendants, not their own costs consultant, the plaintiffs submit that the sum set should not exceed the 'high 100s or low 200s'. They put this range on the basis that the maximum sum sought by any other group of defendants was $106,638, sought by the Executive Defendants, who then agreed to the sum of $75,000 for security to the close of pleadings. The plaintiffs submit that the appropriate sum could not exceed more than twice what the Executive Defendants sought, given the overlap in the plaintiffs' claims against the Promoter Defendants (the remaining ones of whom are included in the B & B Defendants) and the Executive Defendants.

133 The B & B Defendants rely on evidence from their solicitor, Ms Warner, in two affidavits, and a report from a solicitor and costs consultant, Ms Valerie Higinbotham dated 12 May 2015. In her first affidavit, sworn 23 March 2015, Ms Warner deposed to the steps she considered necessary prior to the filing of the defence and their anticipated cost. Some of those steps had been taken by that time, but not all. At that stage, the B & B Defendants sought security to the close of pleadings. Ms Warner estimated the solicitor/client legal costs of the B & B Defendants to the close of pleadings or the filing of defences (she used those phrases interchangeably) in this first affidavit as approximately $596,531 exclusive of GST.[79] She estimated the anticipated legal costs up to and including trial to be in the order of $2.7 m.[80]

134 The B & B Defendants filed their defence on 6 May 2015. In her second affidavit, sworn on 11 May 2015, Ms Warner updated her account of the work in fact done, and in her view reasonably and necessarily done, in the preparation of the defence and the cost of that work. The actual cost was $578,350 (exclusive of GST)[81] and so slightly less than her estimate of $596,531.

135 Ms Higinbotham's report is directed to the recoverability of these costs on taxation, assuming the actual costs incurred to be $578,350. The solicitors for the B & B Defendants are in New South Wales, and so the costs are recoverable in Victoria pursuant to r 63.44 of the Rules, which provides that 'so far as is practicable, (the costs) shall, if allowed, be allowed in an amount appropriate to the place where the work was done'. The usual basis of taxation in Victoria is on a standard basis. The equivalent basis in New South Wales is the ordinary basis. Assuming that costs ordered in favour of the B & B Defendants would be taxable on the standard basis, the effect of rule 63.44 is that the measure of recoverability will be the measure that would be applied in a party/party costs assessment in New South Wales on the ordinary basis. The plaintiffs take no issue with the fact that the solicitors for the B & B Defendants are based in New South Wales.

136 In opposition, the plaintiffs rely on the opinion of Ms Lydia Fogl, a New South Wales solicitor and cost lawyer, which opinion is expressed in her affidavit sworn 28 April 2015. That evidence is supplemented by a supplementary affidavit of Ms Fogl confirming that she had read the Expert Witness Code of Conduct prior to the preparation of her affidavit and by an affidavit of Mr Whyte sworn 15 May 2015 evidencing the supply to the solicitors for the B & B Defendants of Ms Fogl's complete curriculum vitae.

137 Although the plaintiffs are the respondents to the application, Ms Fogl reported first of the two experts. She was supplied by the solicitors for the plaintiffs with the following material: the application and first affidavit of Ms Warner, but not Ms Warner's second affidavit as to actual costs incurred; the summons filed by the Executive Defendants and affidavit in support and correspondence between the solicitors for the plaintiff and various defendants relating to security for costs; and the writ and statement of claim, but not the defence filed by the B & B Defendants. She bases her opinion on the work streams and associated costs considered necessary by Ms Warner in her first affidavit, and evaluates them in turn. She states that she has taken into account in this evaluation the hourly rates likely to be allowed for solicitors at different levels of seniority and counsel (both of which she considers to be less than the actual rates charged); the size of a reasonable legal team (which is smaller than the team considered necessary by Ms Warner); what she describes as 'the potential for over-estimation' in Ms Warner's description of the work streams and associated costs; the amounts to be provided for security for costs as agreed with other defendants; certain costs she considers insufficiently explained in Ms Warner's first affidavit; and her own experience as a solicitor and costs lawyer.[82] On the basis of these matters, Ms Fogl concludes that the allowances likely to be made on taxation for each of the work streams identified by Ms Warner are very much less than Ms Warner's estimates of costs to be incurred, in some cases dramatically so. She arrives at a range of $120,000-$ 156,000 as recoverable costs. She then discounts this by a further 30%, on the basis that in her experience a further discount to this extent is usually applied by a court considering the amount to order for security for costs.[83] This then results in the range $84,000 - $109,200 which is the range of security that the plaintiffs principally propose.

138 Ms Higinbotham was supplied by the solicitors for the B & B Defendants with the writ, statement of claim and defence; summons by the B & B Defendants and both affidavits of Ms Warner; and the affidavit of Ms Fogl. She was not given the whole of the solicitors' file, and nor was she supplied with any material relating to the amount sought by other defendants, or their defences, other than what Ms Warner says about those matters. Ms Higinbotham concludes, by contrast with Ms Fogl, that the total costs actually incurred in preparing the defence which a costs assessor in New South Wales would likely find to be fair and reasonable on the ordinary basis is $338,653.86. If a different discounting method is applied (global, rather than task specific) she concludes that the sum would be slightly higher, at $348,500.[84] Ms Higinbotham does not then apply any further discount to arrive at a figure that a court would likely award by way of an order for security for costs.

139 The parties were not in complete agreement as to the principles to apply, although both relied on passages in the judgment of Davies J in Pathway Investments Pty Ltd and anor v National Australia Bank Limited ('Pathway Investments')[85]. That judgment concerned an application for security for costs by the defendant to a class action in the sum of $11m for costs incurred to date and to be incurred to the trial. The plaintiffs, who were supported by a litigation funder, did not dispute that some security should be given, but disputed the amount. The defendant relied on the evidence of a costs consultant, a Ms Harris, that the recoverable party/party costs, in the event a costs order was made in favour of the defendant, would be $13,430,446. The defendant applied a 15% discount to this figure, to arrive at the amount sought by way of security. The amount sought of $11m represented approximately 50% of the defendant's actual and estimated costs to trial, and approximately 2% of the total damages sought in the class action, which were in the region of $450m.[86]

140 The plaintiffs contended, amongst other matters not here relevant, that the evidence was insufficient for the Court to fix any amount for security for costs. They relied on the fact that the instructions to Ms Harris as to the work done to date, and to be done, were provided in an affidavit of the partner from the defendant's solicitors, and not by way of provision of the file and, in respect of work done to date, time and cost ledgers. The plaintiffs had retained two costs consultants. The first, a Mr Matters, was of the view that no estimate of costs could be given on the basis of the solicitor's affidavit alone. The second, a Mr Linsdell, agreed that the affidavit did not provide sufficient detail to give a precise estimate, but did attempt to give a broad estimate. His broad estimate was $3,763,841 i.e. the expert cost consultants were almost $10m apart.[87]

141 Davies J held that the Court in exercising its discretion is not required to give the party seeking security full protection for its estimated party/party costs or the amount that that party seeks. She noted in particular that the task required of the Court by s 1335 of the Corporations Act 2001 (Cth) is to set a sum that is 'sufficient'. Further, she held that that amount need not be determined with mathematical precision and that the process does not require a full assessment of costs, but by its nature requires a 'broad brush' assessment.[88]

142 On the evidence before her, which included cross examination of the partner and of Ms Harris, Davies J concluded that neither of the two experts could be shown to be more precise than the other. She rejected, however, the plaintiffs' contention that there was no sufficient information before the Court on the basis of which quantum could be set, noting that a precise estimate of future costs is not required. Davies J critically appraised the competing estimates. She concluded that there were factors that suggested Mr Linsdell may have understated the likely recoverable costs, and factors that suggested Ms Harris may have overestimated them.[89]

143 Davies J identified these factors, but did not detail how they each impacted on the estimates given. It is apparent, however, from examination of the result, compared with the security sought, that Her Honour broadly accepted the estimates given by Ms Harris in respect of post-commencement costs,[90] and then applied a discount to them. In respect of costs incurred since commencement of the litigation[91], Her Honour applied a 20% discount to Ms Harris' estimate of work done to date, and a 50% discount to her estimate of future likely costs. It appears that the large discount for future costs was to take into account the possibility of settlement at mediation.[92] The total amount of security ordered was in excess of $6m.

144 The plaintiffs rely on the statements by Davies J that full protection need not be afforded, and that the Court is not bound to give what is sought. They submit that the critical task before the Court is to identify the 'risk of overestimation', and that that risk is to be borne by the applicant, here the defendants. In support of that identification of the task, they also rely on a statement by Basten JA in Pioneer Park Pty Ltd (in liq) and Ors v ANZ Banking Group Ltd[93] ('Pioneer Park'). In that case, there was uncontested evidence that the likely party/party costs of the applicants for security, who were respondents to an appeal, were in the range of $150,000 to $180,000. Basten JA noted that 'it seems likely that a party and party assessment would be at the bottom, rather than at the top of that range'. He added that

Further, it is usual to fix an amount by way of security which is below the applicant's estimation, so as not to impose an undue burden on the corporate appellant or plaintiff and so that the applicant will bear the risk of over-estimation.[94]

145 On the basis of these matters, Basten JA (with whom Tobias and McColl JJA agreed) held that 'the interests of justice would be best served' by an order for security in the sum of $100,000.

146 The B & B defendants say that it is a misstatement of the applicable principles to say that the task is to identify the risk of over-estimation, and ensure that that risk rests with the applicant for security. They submit that Pioneer Park is distinguishable as it concerned the question of possible oppression of a smaller corporate plaintiff by a large corporate defendant by means of the setting of a large sum for security for costs, and that issue does not here arise.[95]

147 I accept that the question of possible oppression arose in Pioneer Park, but I do not read the reference by Basten JA to the risk of over-estimation, and that it should be borne by the applicant, as relating to oppression. He dealt with that issue elsewhere in his judgment.[96] His reference to the risk of over-estimation arose expressly in the portion of his judgment dealing with the appropriate amount. Nor do I read that reference, however, as intended to comprehensively express the task of the court on an application for security for costs. To the extent Basten JA sought to express an overall principle, I consider that he expressed it in his reference to the 'interests of justice'. Configuring the test as being to identify the risk of over-estimation, and ensure that the B & B Defendants bear it, removes the other element of critical appraisal to which Davies J in Pathway Investments referred, being the risk of under-estimation by the party opposing security. In my view, the interests of justice require that both risks must be considered.

148 Accordingly, I do not accept the proposition of the plaintiffs that the task before the Court is solely to identify the risk of over-estimation and ensure that it is borne by the defendants. I will evaluate the evidence having regard to both the risk of over-estimation by the B & B Defendants, and under-estimation by the plaintiffs.

149 Both parties put very detailed submissions to me on particular categories of work. Iwill not set out all those detailed submissions in these reasons. Their respective submissions were broadly as follows.

150 The B & B Defendants rely on the fact that they have taken a similar approach to that of the defendant's solicitors in Pathway Investments (also Freehills in Sydney) by way of instructing their costs consultant i.e. detailed affidavit from the responsible partner identifying the work to be done (Ms Warner's first affidavit) and now done (her second). They submit that this approach was accepted by Davies J in Pathway Investments, and that Ms Warner has given cogent and consistent evidence as to the work required and costs first estimated, and then incurred. The B & B Defendants urge me to prefer the evidence of their expert, Ms Higinbotham, to that of Ms Fogl, as to the recoverability of those costs. They submit that Ms Fogl's evidence is of lesser weight for a number of reasons including that :

• she does not identify the extent of her experience in large commercial litigation;

• the hourly rates she says are appropriate for solicitor and counsel are those applicable to personal injury;

• a number of her conclusions lack identified foundation;

• the instructions given to her required her to assume that each of the defendants were required to carry out similar tasks, when Ms Warner deposes that that was not the case;

• Ms Fogl was not provided with the defence filed by the B & B Defendants, and no further report from her is in evidence after viewing Ms Warner's second affidavit; and

• that to the extent she questions the assertions on oath by Ms Warner as to the work required and the absence of duplication, these matters should have been put to Ms Warner in cross examination.

151 The plaintiffs do not say in this case, as was submitted in Pathway Investments, that there is no material on the basis of which the Court can set an appropriate amount, and nor do they criticise the expertise of Ms Higinbotham. Indeed, in their alternative submission, they rely on it. The plaintiffs submit that the expertise of both experts is beyond question. As noted above, they identify, in my view wrongly, the task as being to identify the risk of over-estimation, and submit that the simplest way to ensure that it is the B & B Defendants who bear this risk is to adopt Ms Fogl's report. In the alternative, they say that the Court could attempt itself to quantify the risk. In this regard, they submit that the Court should first modify Ms Higinbotham's figures by adopting discounts at the top of the ranges she identifies, being 20% for hourly rates and a global 40% discount. This would lead, on counsel's calculations, to a figure of $269,358. They then submit that this amount should be further discounted by 20-40% having regard to the factors identified by Davies J in Pathway Investments relating to the risk of over-estimation, and to the disparity between the amount sought by the B & B Defendants and the amounts agreed with the other defendants.

152 In relation to the factors identified in Pathway Investments, the plaintiffs submit that the solicitors for the B & B Defendants provided insufficient material to Ms Higinbotham, in particular they did not give her their file. The plaintiffs here also say that Ms Fogl's view that there was likely to have been duplication in the work done should be accepted, notwithstanding that Ms Warner says there was not. In this regard, they rely on the statement by Davies J in Pathway Investments that notwithstanding evidence under cross-examination by the responsible partner that he had eliminated charges for duplication of effort, 'duplication cannot be discounted'.[97] The plaintiffs next submit that Ms Fogl's evidence as to likely allowable hourly rates should be accepted, as should her discounting having regard to what would be regarded as an acceptably sized legal team. They submit that it was not necessary to put these contentions to Ms Warner in cross-examination for the following reasons. First, cross-examination is not usual in an interlocutory application. Next, it is self-evident that access to the file would have given more information. Finally, their submission is not that Ms Warner's evidence should not be accepted (as her evidence relates to the work done), but that the issue is whether or not the costs so incurred are recoverable.

153 In broad terms, and with one significant exception, I accept the submission by the B & B Defendants that the evidence of Ms Warner and Ms Higinbotham should be preferred to that of Ms Fogl. I do so without making any findings about the respective expertise of the experts. It is not necessary to do so, and I think such findings are more fairly made after an enquiry in cross examination. I reach my conclusion because I consider that the weight to be afforded to Ms Fogl's report and the plaintiffs' case in opposition to the quantum sought are limited by three matters, as follows.

154 First, the only account of the work required to be done on a solicitor/own client basis, and in fact done, on which both experts rely is that given by Ms Warner, of the solicitors for the B & B Defendants. There is no competing evidence from the solicitor for the plaintiffs, who one assumes is equally familiar as Ms Warner at least with the history of the proceeding and the issues as identified in the pleadings, although perhaps not with the internal dynamics of the defendants or their solicitors, and the number of documents required to be reviewed. Ms Warner's account of the nature of the tasks required to prepare the defence is accordingly unopposed by direct evidence from any person equally familiar with the proceeding, and nor was it challenged by cross examination.

155 Further, Ms Warner's account of the work she considered required to be done, and the work that was in fact done, in her two affidavits is detailed, plausible and consistent. Her estimate of the future likely costs, both as to individual tasks and as to the overall, in her first affidavit has been shown by her second affidavit, which documents the work once completed, to be highly accurate. Where the actual costs differ from her estimate she gives a plausible explanation. Her account of the work required is in my view not inconsistent with the complexity of the case, as shown not just by the statement of claim, but also by the defence and counterclaim filed by the B & B Defendants. For these reasons, I accept Ms Warner's account of the tasks required on a solicitor/own client basis.

156 Indeed, counsel for the plaintiffs did not quarrel with the necessity of any of the tasks Ms Warner identifies. For example, although counsel for the plaintiffs described the list of legal issues identified for examination by Ms Warner as a 'shopping list', in answer to my question whether the plaintiffs said any did not properly arise, he said they did not so submit. Counsel said that what the plaintiffs query is the extent of the work done, in that case legal analysis, and the potential overlapping of the various work streams identified by Ms Warner. In this regard they rely on challenge to the recoverability of the costs incurred made by their cost consultant Ms Fogl.

157 Ms Fogl challenges the reasonableness and so recoverability of the costs incurred in a number of respects. For example, Ms Fogl suggests that the size of the legal team employed for the B & B Defendants gives rise to the likelihood of duplication; that there is a potential for overestimation given the discrepancies between Ms Warner's first estimates and some actual costs incurred, such as those in relation to document retrieval and review; and that some of the work streams identified necessarily involve overlap.[98] I accept the submission by the plaintiffs that the issue before the Court is the likely recoverability of actual costs, and that the better evidence on this point is that of the experts, not the solicitor for the defendants. However, in my view, the challenges that Ms Fogl makes are largely, and necessarily, speculation on her part, in the absence of a factual foundation for them elicited by competing evidence from direct knowledge or cross-examination of Ms Warner.

158 Further, Ms Warner deposes on oath, from her direct knowledge of the work undertaken, that there has not been duplication of effort or task. If it was to be suggested, as Ms Fogl does, that this is incorrect, then in my view that should in fairness have been put to Ms Warner in cross examination. The view of Davies J in Pathway Investments that the risk of duplication in the case before her could not be ignored was after she had had the benefit of hearing from the relevant partner under cross-examination.

159 The second reason for my conclusion, is that the weight that can be placed on Ms Fogl's report is limited because she was not given all relevant information. She completed her report before the defence was filed, and before Ms Warner's second affidavit, but no supplementary report from her informed by these two very significant documents is in evidence. Accordingly, the Court is asked to accept that her report is reliable when she did not have the benefit of knowing the defence and counterclaim mounted by the B & B Defendants, and did not have the benefit of learning from Ms Warner's second affidavit the extent to which her first estimates were borne out. For example, Ms Fogl opines that the actual costs incurred for a chronology before filing of the defence, estimated at $30,000 in Ms Warner's first affidavit, were excessive. She gives a range for a recoverable amount, which at the higher end is $8,600. [100] Ms Warner deposes in her second affidavit that the actual costs incurred were substantially less than she had previously estimated, at $12,056, for reasons that she gives.[101] This is substantially closer to the recoverable estimate given by Ms Fogl.

160 The plaintiffs contend that Ms Higinbotham's report should be questioned because she did not have access to the entire file. Certainly, if this were a taxation of costs that would be very significant. It is not, however, and for the broad brush approach that is required to estimate the proper amount for security, I consider that Ms Higinbotham was given sufficient information in relation to the work done by the solicitors for the B & B Defendants, as she had before her both the statement of claim and defence and counterclaim, and a detailed account, unchallenged by any competing evidence, from Ms Warner of the work done.

161 Thirdly, I consider Ms Higinbotham's evaluation of what is likely recoverable from the actual costs incurred by the B & B Defendants to be more persuasive than that of Ms Fogl because of the more detailed and exposed nature of her reasoning. Both experts express an opinion on likely recoverable hourly rates. For reasons I will set out shortly, I prefer Ms Higinbotham's evidence. Both also seek to evaluate the reasonableness of the extent of the work done, and identify the discounts that would be applied to the actual costs incurred. They each undertake this task by reference to the categories of work done as identified by Ms Warner, and arrive at a likely recoverable range for each category of work. Ms Fogl does so by noting all the factors she has taken into account (some of which, as discussed above lack factual foundation in the evidence) and then arriving at a final figure. Ms Higinbotham does so by applying two discounts to each item of work, the first being for hourly rate, the second being for reasonableness of the task, and so arrives at a likely recoverable figure for each item of work. The discounts differ according to the type of work involved, and who did it. True it is that she does not elaborate the reasons for the particular discounts in each case, but nevertheless I consider her reasoning better exposed and so more plausible than that of Ms Fogl.

162 The one matter to which I consider insufficient attention has been paid by the B & B Defendants, and in respect of which I prefer the plaintiffs' case, is that of comparison to the amounts of security agreed with the other defendants. The amounts agreed by the other groups of defendants for security to the close of pleadings do not exceed $75,000. The plaintiffs submit that the B & B Defendants seek a grossly disproportionate amount relative to the other defendants. The only information that the B & B Defendants provided to Ms Higinbotham in this regard was Ms Warner's affidavits, which set out work done for the other defendants by the B & B Defendants, and express Ms Warner's view as the comparative complexity of their defences. Ms Higinbotham expresses no view in relation to these matters in her report, and does not identify comparison with the work done by the other defendants as a potential discounting factor in the determination of what was reasonable.

163 By contrast, the plaintiffs briefed Ms Fogl as to these amounts, including providing her with a copy of the summons and affidavit in support filed by the Executive Defendants, and she took the disparity between the amounts agreed with the other defendants, and the amount sought by the B & B Defendants, into account as a factor reducing likely recoverability of the actual costs incurred in her report. As noted, it is difficult to identify to what extent this factor influenced the recoverable range on which she settled. Further, Ms Fogl necessarily did so only on a relatively uninformed basis, because she was not provided with any of the defences, nor Ms Warner's summary in her second affidavit of how they differed. For these reasons, I do not place weight on Ms Fogl's conclusions in relation to comparison with other defendants.

164 I do, however, accept the submission by counsel for the plaintiffs that analysis of the statement of claim shows that it is the conduct of the Executive Defendants, who were senior executives in the Promoter Defendants, which broadly is pleaded to give rise to the case against the Promoter Defendants. The Promoter Defendants still in existence are included within the B & B Defendants. The Executive Defendants, or subsets of them, are pleaded to be liable for loss arising from false representations by omission, made by them to the Manager, who in turn made representations to the plaintiffs. These representations are also said to have been made by the Executive Defendants as agents for the Promoter Defendants.[102] Counsel for the plaintiffs submits, and I accept, that this gives comparison to the amount of security sought and then agreed by the Executive Defendants some relevance. The Executive Defendants initially sought $106,638 to the close of pleadings, and agreed a figure of $75,000.

165 Counsel for the plaintiffs also submits that there is a broader case pleaded against the Manager and Investment Committee, including positive false representations,[103] and yet the solicitors for the Manager and Balance of the Investment Committee sought only a sum of $80,000 to the close of pleadings by way of security for their costs.

166 As against these matters, the B & B Defendants include the ultimate holding company, the sixteenth defendant. I accept the submission by counsel for the B & B Defendants that, as a consequence, the B & B Defendants must understand and consider the claims made against all defendants for whom they may be held ultimately responsible, and how those claims relate to each other. This adds a level of complexity to the defence by the B & B Defendants that is unlikely to exist in relation to the defences by individuals.

167 In response to the asserted relevance of the more limited amounts of security agreed by other defendants, Ms Warner has provided in her second affidavit an explanation as to why the amount sought by the B & B Defendants is so much greater than that agreed by the other defendants. She says that this arises first because the other defendants, who are by and large former employees of the Babcock & Brown group, no longer have access to any relevant documents and have asked the B & B Defendants to undertake the task of identifying those documents and providing them to the other defendants. The B & B Defendants have done so. The task of identifying the relevant documents has first involved uploading potentially relevant hard copy documents to an existing electronic repository, resulting in an electronic repository containing 851,000 documents. Three levels of review were then conducted of this electronic repository to refine the identification of the documents necessary for the preparation of the defence.[104]

168 It is also submitted for the B & B Defendants, and not disputed, that they have taken the lead for all defendants on some other matters, being a request for further and better particulars of the statement of claim, and, in addition to the Executive Defendants, the running of the dispute in relation to the form of security.

169 Ms Warner also deposes in her second affidavit that the defence and counterclaim filed by the B & B Defendants is 'significantly more comprehensive than that filed by any of the other defendants' and explains in general terms the basis for this statement.[105] Counsel for the plaintiffs seeks to challenge this analysis by reference to an aspect of the defence filed by the B & B Defendants, which he submits turns on a single document. Even if this is correct, and on that I express no view, the fact that the ultimate defence mounted may in proof require limited documentation does not necessarily mean that work in arriving at that conclusion was similarly limited. Further, unlike Ms Warner, counsel for the plaintiffs makes no comparison to the other defences filed.

170 These comments are not to suggest that this application is the occasion for a detailed examination of the respective parties' cases. That exercise could be disproportionate in terms of time and so cost to the issues before me. Even from superficial examination the defence and counterclaim filed by the B & B Defendants is on its face a complex document. Its operative part is 63 pages long. The operative part of the statement of claim is 43 pages long. The Executive Defendants have filed individual defences, in the range of 22-31 pages in length. In the absence of evidence challenging Ms Warner's conclusion based on informed comparison of the various defences, or detailed comparison of the defences in argument, and on the basis of the superficial examination of the pleadings by length alone, I accept Ms Warner's evidence that the defence filed by the B & B Defendants is more complex than that filed by any other defendant, including the Executive Defendants.

171 Ms Warner adds that to the extent the defence required response to allegations of misleading and deceptive conduct by omission, that task is significantly more complicated for a corporate defendant, such as the B & B Defendants, than for the other defendants who are natural persons. Response from a corporate defendant in relation to an allegation of omission requires identification of all potential relevant employees and officers of the corporate entity, enquiry of them and examination of documents produced by them. Again, this proposition is not challenged, and is in fact self-evident.[106]

172 I consider that Ms Warner's explanations and the submissions by counsel for the B & B Defendants plausibly account for some at least of the disparity between what the various defendant groups have considered acceptable security. As noted, I accept that some of the disparity is likely to reflect the more extensive defence and defensive counterclaim than that filed by any other defendant. I am not persuaded, however, that the identified factors necessarily provide complete explanation. Document retrieval is only one of the categories of work required. Other categories of work, for example, factual and legal analysis, and preparation of a defence were required by all defendants. Further, answering a case of misleading conduct by omission does involve identifying all relevant employees, but I accept that the most likely candidates are the Executive Defendants themselves.

173 It seems to me possible that some of the disparity may reflect what is considered an appropriate amount of work by the respective solicitors and their clients. This in turn could be influenced by different strategic approaches, all of which may fall within a range of what would be considered reasonable on taxation. For example, some defendants may reasonably prefer to delay very intensive consideration of their position until later in the pre-trial stage, or even at trial. Counsel for the plaintiffs accepted, for example, that the Manager's defence, at least in so far as it relies on omissions, may ultimately depend a successful defence to the omission claim by the B & B Defendants. I cannot exclude, however, the possibility that some of the disparity may arise from solicitor/client factors specific to the B & B Defendants and their solicitors, which would not be recoverable on a party/party taxation.

174 For these reasons, I will give some weight to the disparity between the amount sought by the B & B Defendants and that agreed with the other defendants, but will do so by way of broad brush discount rather than attempting any detailed analysis of their respective cases.

175 I will now consider some specific areas of dispute.

176 Ms Warner deposes as to the billable rates included in her calculation of actual costs. These include senior counsel at $900 per hour; junior counsel at $410 per hour; partner at $810 per hour; senior associate at $545 per hour; and solicitor in the range $288-$423 per hour.[107] Ms Higinbotham has applied a discount of 15% to the solicitor rates, being the midpoint of the range of 10%-20% discount she considers would apply on taxation, but otherwise accepts these hourly rates. She does not consider that the rates for counsel would be disturbed on taxation.[108]

177 Ms Fogl, by contrast, expresses the view that the hourly rates charged by the solicitors for the defendants and their counsel would only be allowed at much lower rates. Specifically, she says that the allowable rate for a partner would be in the range $450-$550; for a senior associate in the range $350-$400 per hour; for a solicitor $220-$320 per hour; for senior counsel (at New South Wales rates) in the range $500-$600 per hour and for junior counsel (at New South Wales rates) in the range $ 300-$400 per hour.[109] If Ms Fogl is correct, then that could account for a very substantial amount of the difference between the two estimates of recoverable costs.

178 Ms Higinbotham, who had the advantage of reading Ms Fogl's report, comments that while she has seen rates in this range being allowed, this occurs in personal injury and similar claims, and not in large commercial matters of complexity. [110]

179 There is no challenge to the description of this proceeding as a large commercial matter of complexity, and indeed counsel for the plaintiffs described it as complex on a number of occasions at the first hearing on quantum. Ms Higinbotham was not cross-examined. She has provided an explanation for the difference in the hourly rates identified by Ms Fogl. It is not challenged by any other evidence in response to that explanation. I consider the explanation plausible, and I accept her evidence as to hourly rates in preference to that of Ms Fogl.

Work found not to be reasonable on a party/party basis

180 Ms Higinbotham allows for the fact that a costs assessor may not be satisfied that all the work identified by Ms Warner was reasonable on a party/party basis in two ways. She says that a global discount of 30% is likely to be the outcome.[111] She also applies discounts to specific categories of work, which she says provides a more reliable calculation. She discounts counsel fees by 15%[112] and solicitor time by discounts ranging from 20% to 50% depending on the nature of the task. As noted earlier, I accept the submission by the plaintiffs that Ms Higinbotham does not elaborate her reasons for the different discounts she applies. She does, however, set out a detailed calculation of the dual discounts she applies to the solicitors' costs identified by Ms Warner, first as to hourly rate, and then as to task. As a result of the application of task specific discounts, she arrives at a recoverable figure of $338,653.86.[113] As a result of a global discount of 30%, she arrives at a recoverable figure of $ 348,500.[114]

181 Ms Fogl expresses the view that the legal team deposed to by Ms Warner was larger than would be considered reasonable, and that this gives rise to the likelihood of duplication. I accept the submission of the B & B Defendants that Ms Higinbotham has taken duplication into account in her report by the discounts she has applied. I also accept their submission that Ms Fogl's conclusions in respect of the work streams and associated costs as identified by Ms Warner are expressed without sufficient foundation, or challenge to Ms Warner's evidence under cross-examination.

182 Accordingly, in relation to what would be considered reasonable work, I prefer the evidence of Ms Higinbotham than that of Ms Fogl.

183 If I was disposed to otherwise prefer Ms Higinbotham's evidence to that of Ms Fogl, counsel for the plaintiffs put an alternative submission which was advanced for the first time in argument. This submission had two elements, the first of which adopted Ms Higinbotham's approach, but discounted hourly rates at the high end of the range she identifies, not at the mid-point, and then applied a further discount of the figure then arrived at by 40% rather than 30%. Counsel provides a figure arrived at after that dual discounting. He does not provide a figure arrived at solely after discount of the hourly rates at the high end, or any document evidencing his calculations. The second element of this alternative submission by the plaintiffs is a further discount, having regard to the amount sought by the other defendants and the over-estimation factors identified in Pathways Investments. Counsel for the plaintiffs does not give a final figure after both elements are applied, but suggests a range in the 'high 100s to low 200s'.

184 Thus the plaintiffs have not calculated any final figure, or precise range, which would be arrived at as a result of this alternative submission. Even in respect of its identified aspects, the approach requires a detailed recalculation, with concomitant possibility of error, yet it has not been made available to the solicitors for the B & B Defendants for their consideration. It was not elaborated in the plaintiffs' written submissions and was not the subject of any documented calculation handed up in court. Further, it has not been the subject of any expert evidence, either from the plaintiffs' own expert or on further consideration by Ms Higinbotham.

185 The B & B Defendants submit that for these reasons, I should discount the alternative approach put forward by the plaintiffs entirely. I agree that it is not viable as a whole. However, I do think that further discount to reflect the high end of possible discount to the hourly rates is appropriate. I will take it into account in the further discount I will now discuss.

186 Ms Higinbotham confines her report to the likely recoverable costs. Ms Fogl undertakes the further task of arriving at a sum she opines is appropriate for security, by discounting the amount she considers would be allowed on taxation by a further 30%. The defendants challenge this approach on the basis that no authority for this approach is cited. This is a misconceived attack. In cases where the security is sought for future costs, it is indeed the practice to apply a discount for contingencies, including the possibility of settlement. The judgments in both Pathway Investments and Pioneer Park are examples. The discount applied to future costs in Pathway Investments was 50%. In Pioneer Park the discount applied was a further third applied to the bottom of the range of recoverable costs.

187 The security here sought is for costs already incurred, and so a discount for possible settlement or other future contingency would be inappropriate. Davies J in Pathway Investments applied a discount to security for past costs, as well, however, although in the lesser degree of 20%. It would appear that she settled on that discount having regard to both the risk of over-estimation, and the risk of under-estimation. Given the disparity in that case between the experts, a discount of 20% favoured the applicant defendant.

188 In my view, a further discount should be applied in this case to the amount likely to recoverable on Ms Higinbotham's report, notwithstanding that the costs have already been incurred. This is to take into account a number of factors. First, the fact that the discounts Ms Higinbotham has applied to the hourly rates are at the midpoint, not low end of the range. Next, that the reasons for the specific discounts she has applied to the different tasks are not elaborated, and the fact that her estimates are necessarily limited by the information she has been supplied. The account that Ms Warner gives of the work done, and how it was done, is detailed, but it is not as detailed as an examination of the file at a taxation with accompanying ledgers would provide. There remains a possibility that, on the more detailed examination of the work done that a taxation would afford, some of the tasks undertaken would be found to be not allowable because of duplication, even allowing for the discounts already applied by Ms Higinbotham.

189 The final reason for a further discount is to make allowance for the possibility that some of the disparity with the security agreed with the other defendants arises from client/lawyer factors that are specific to the B & B Defendants and not recoverable on a party/party basis.

190 In Pathway Investments, the discount applied for past costs was 20%. Having regard to the further factor here of disparity with the other defendants, I consider a further 5% is warranted.

191 I will apply this discount of 25% to the figure for recoverable costs that Ms Higinbotham considers more accurate, being $338,653.86. This results in a sum in round terms of $253,990 to be provided by way of security for the costs of the B & B Defendants to the filing and service of their defence.

192 I will ask the parties to prepare orders to give effect to these reasons. Ideally those orders would provide for guarantee to be given by the same type of Australian financial institution in each case, and would make agreed provision for the costs arising from these applications and a future date for directions before Robson J.

193 If these matters cannot be agreed, I will hear the parties further.

DIF III GLOBAL CO-INVESTMENT FUND, L.P. (formerly [Babcock & Brown DIF III Global Co-Investment Fund, L.P.])

BABCOCK & BROWN INTERNATIONAL PTY LTD (ACN 108 617 483)

BABCOCK & BROWN INTERNATIONAL PTY LTD (ACN 108 617 483)

DIF III GLOBAL CO-INVESTMENT FUND, L.P. (formerly [Babcock & Brown DIF III Global Co-Investment Fund, L.P.])

[1] Statement of claim at [1] and [3].

[2] Statement of claim at [17]-[23].

[5] Statement of claim at [24]-[29].

[7] Summonses filed 10 March 2015 and 18 May 2015 respectively. On 20 May 2015, I granted leave to The Manager and Balance of the Investment Committee to amend their summons to seek this sum only to the filing of their defences, subject to objection by the plaintiffs. After objection by the plaintiffs, those defendants did not pursue that amendment.

[9] Amended summons filed 20 May 2015, pursuant to leave granted that day.

[10] Summons filed 18 May 2015 and affidavit of Alex David Linden sworn 18 May 2015.

[14] Statement of claim at [86]-[87].

[15] Statement of claim at [89]-[92].

[16] Statement of claim at [93]-98].

[17] Statement of claim [79] and following.

[18] Statement of claim at [68], [70], [67]-[75], [119]-[128].

[19] Statement of claim at [112], [114]-[116].

[22] Affidavit of Juliana Warner sworn 11 May 2015, at [15].

[23] Plaintiffs' Outline of Submissions In Relation to Security for Costs ('Plaintiffs' Written Submissions') at [34].

[24] (2008) 20 VR 377; [2008] VSCA 93.

[26] First, Third, Fourth and Sixteenth Defendants' Submissions on Security for Costs ('B & B Defendants' written submissions') at [21].

[29] [2013] VSCA 156.

[30] This account is drawn from the summary of the facts given by Priest JA, with whom Redlich JA and Macaulay AJA agreed, in Oswal, at [50]-[51].

[31] Oswal, at [58], [64]-[68].

[34] [1991] HCA 36; (1991) 102 ALR 321.

[38] [2012] NSWCA 344.

[40] [2012] FCA 357.

[41] [2010] FCA 450.

[42] [2011] NSWCA 84.

[43] Dense Medium per Young JA at [32].

[44] [2009] VSC 97.

[51] Delivered 4 February 2013, in case no 2011/1465.

[55] Berry v Innovia, at [34]. T 109.15-17; T 110.6-8.

[59] T 140.26; T 148.18. Compare T 151.1-17.

[62] T 109.2-3; T 108.29- T 109.10 for the fuller submissions.

[64] Affidavit of Kasra Nouroozi Shambayati sworn 20 April 2015 at [7].

[72] Affidavit of Gregory Whyte sworn 24 April 2015 at [5].

[81] Affidavit of Juliana Warner, sworn 11 May 2015, at [20].

[82] Affidavit of Lydia Fogl sworn 28 April 2015 at [13],[25]-[27],[28]-[30],[31],[32],[33]-[34]and[35].

[83] Affidavit of Lydia Fogl sworn 28 April 2015 at [51] and [52]-[53].

[84] Expert Report of Valerie Higinbotham dated 12 May 2015 at [10],[37],[41].

[85] [2012] VSC 97.

[87] Pathway Investments at [39] and [41].

[89] Pathway Investments at [43]-[45].

[90] Included in the security sought was $1,627,442 for party/party pre-commencement costs.

[91] Some security for pre-commencement costs was also allowed, but at a much larger discount.

[92] Pathway Investments at [54] and [55].

[93] [2007] NSWCA 344.

[95] In this regard, they rely on the discussion of Pioneer Park by McColl JA in Odyssey Financial Management Pty Ltd v QBE Insurance (Australia) Limited [2012] NSWCA 113, at [17].

[96] Pioneer Park at [55]-[56], [63].

[98]99 Affidavit of Lydia Fogl sworn 28 April 2015 at [29], [31].

[100] Affidavit of Lydia Fogl sworn 28 April 2015 at [37.7].

[101] Affidavit of Juliana Warner sworn 11 May 2015 at [20] and [21].

[102] Statement of claim at [67], [68], and [75].

[104] Affidavit of Juliana Warner sworn 23 March 2015, at [54]-[59].

[105] Affidavit of Juliana Warner sworn 11 May 2015 at [15] and [17]-[19].

[106] Affidavit of Juliana Warner sworn 11 May 2015 at [16].

[107] Affidavit of Juliana Warner sworn 23 March 2015 at [68].

[108] Report of Valerie Higinbotham dated 12 May 2015 at [22.1-5].

[109] Affidavit of Lydia Fogl sworn 28 April 2015 at [25]-[27].

[110] Report of Valerie Higinbotham dated 12 May 2015 at [23].

[111] Report of Valerie Higinbotham dated 12 May 2015 at [30].

[112] Report of Valerie Higinbotham dated 12 May 2015 at [32]-[36].

[113] Report of Valerie Higinbotham dated 12 May 2015 at [37].

[114] Report of Valerie Higinbotham dated 12 May 2015 at [41].