ReAc's Annual Report for 2002
28 The 2002 Accounts, which were prepared for the year ended 31 December 2002, disclose that in February 2000 ReAc announced that as a result of significant losses incurred in 1999, it was no longer in compliance with the minimum solvency requirements of the Insurance Act 1973 (Cth).
29 As a result of this position and "the economic entity's diminished capital base", the Directors decided to cease all underwriting and to place ReAc into a self-managed run-off.
30 The Chairman's report dated 13 March 2003 states that in view of capital available to ReAc, the run-off has been conducted along lines similar to liquidation.
31 The 2002 Accounts show that ReAc's financial position improved in comparison to the year ended 31 December 2001. It made a consolidated operating profit of slightly over $1m, it had almost $100m of consolidated current assets over consolidated current liabilities and it had consolidated net assets of $37m.
32 The improved profit performance appears to have come about as a result of successful dealing with ReAc's reinsurance book, in particular by the commutation of some of ReAc's outstanding claims.
33 However, the Chairman's report acknowledges that the opportunities to commute other remaining liabilities are becoming increasingly scarce.
34 The commutation of claims has eroded the amount of cash available as at balance date. The figure of $18m at 31 December 2002 was nearly $21m less than the amount recorded for cash at the close of the previous year. Total investments were down by approximately $88m.
35 Although the amount of outstanding claims were reduced substantially, as a result of commutations, the total of outstanding claims was recorded at $190m. The stated net asset position of $37m was arrived at after allowing for the figure of $190m of outstanding claims.
36 The notes to the accounts state that the ultimate claims liabilities will vary as a result of subsequent information and may result in significant adjustments to the amounts provided as at 31 December 2002.
37 Moreover, the directors recognise that ReAc remains vulnerable to the impact of material adverse developments but they consider there are reasonable grounds to believe that it will be able to pay its debts as and when they fall due.
38 Note 1.7 to the 2002 Accounts is important. It states that the provision for outstanding claims is based on advice from external actuaries and is consistent with Prudential Standard GPS 210. The standard requires a "75% confidence level" in the amount of the reserves.
39 The outstanding claims provisions have been determined after separate consideration of the classes of business underwritten by ReAc. This consists of film business and non-film business.
40 As to the outstanding claims provision for film business, note 1.7 states:-
"It is not possible or appropriate to apply statistical probabilities of adequacy to the purported outstanding film indemnity claims liabilities where the final outcome is dependant on the result of current and future litigation. The economic entity is engaged in three arbitrations and six legal actions including actions in relation to film indemnity business. While the economic entity is confident of its position in these actions, these actions and the ultimate claim costs are by their very nature inherently uncertain. The Directors have established reserves for purported film indemnity claims based on the current information available to them and legal opinion of the likely outcomes, which in the opinion of the external actuary equates to at least a 75% confidence level."
41 There is further disclosure of the difficulty of quantifying ReAc's exposure to liabilities on its film business in note 26. This note refers to the avoidance by ReAc and Monde Re of other film contracts and their joinder to proceedings in London and New York in respect of some of the contracts.
42 The note also refers to the present proceedings in which ReAc and Monde Re seek damages and other relief in respect of the avoided contracts.
43 Note 26 concludes as follows:-
"Due to the complexity of the contracts and the uncertainty of the litigation it is not possible to quantify the potential exposure with precision. However, based on the information currently available the directors believe that the existing provisions are adequate to meet any exposure.
Whilst confident of the position taken by ReAc and Monegasque de Reassurances s.a.m., the Directors acknowledge that the outcome of the litigation is uncertain and could influence the outcome of the run-off".
44 The directors' report includes a statement that further information about likely developments in ReAc's operations and the results of the operations in future years has not been included in the report because "disclosure of the information would be likely to result in unreasonable prejudice to the entity."
45 The Auditor's report states that, without qualification of the opinion that the accounts give a true and fair view and comply with legal and accounting standards,
"… there are inherent uncertainties as to the amounts provided for outstanding claims and related reinsurance recoveries as set out in note 1 to the financial report.
The Company and the Consolidated Entity's ultimate outstanding claims liability and related reinsurance recoveries may vary as a result of subsequent information and events and may result in material adjustments to the amounts provided."
There is credible testimony
46 On present estimates I expect that final judgment in these proceedings will be given in late 2004 or early 2005.
47 It appears from paragraph 120 of the Statement of Claim that claims have been made against ReAc and Monde Re in respect of film policies which ReAc and Monde Re seek to avoid in amounts of approximately $US34m. At present exchange rates this is equivalent to approximately $A54m. If ReAc and Monde Re are unsuccessful in these proceedings, they will be required to pay that amount to their reinsureds. In the ordinary course, they would also have to pay the costs of the proceedings.
48 The amount of $54m is of course $17m more than the amount of the net assets disclosed the 2002 Accounts. But the underlying premise in the submissions of ReAc and Monde Re is that the accounts contain adequate provision for this liability because the reserves have been established to a 75% confidence level to the satisfaction of the external auditors.
49 The 2002 Accounts do not disclose the amount of the provision for film liabilities. Apparently this is not required by the applicable accounting standards but it was open to ReAc and Monde Re to call evidence of the amount which has been provided.
50 The authorities to which I referred at [21] indicate that the question of whether there is credible testimony is not to be determined as a matter of inference from the failure of the company to call evidence. However, for reasons to which I will refer below, it seems to me that I am entitled to take into account ReAc's failure to call evidence as to the amount of the provision.
51 Nevertheless, in my opinion there is credible testimony in the notes and disclosures in the 2002 Accounts which constitutes credible evidence of a rational belief that ReAc will be unable to pay quite apart from an inference arising from its failure to call evidence.
52 It is well established that the accounts of a company may constituted credible testimony: see Beach at 206 and FFE at [15]. It is true that the accounts of ReAc show positive net assets. But it is clear from a reading of the accounts that the stated net asset position is dependent upon the opinions of lawyers and actuaries as to what is the appropriate provision for outstanding claims.
53 As senior counsel for Chase, Mr Finch SC, submitted, the balance sheets of insurance companies are unlike those of other companies because a significant part of the liabilities consists of figures which do not reflect the verifiable liabilities of the company. They can only ever be an estimate of the liabilities.
54 It does not follow from this that every insurer or reinsurer which institutes proceedings is at risk of an order for security. Two things distinguish ReAc's position from that of most insurers and reinsurers. First, it is in run-off and has no income apart from policies written before the run-off commenced.
55 Second, and more importantly, it appears from the passages in the accounts to which I referred at [40] and [43] that the success of the run-off depends upon the outcome of nine complex pieces of litigation. The directors' acknowledgment that the results of the litigation are uncertain and could influence the outcome of the run-off seems to me to mean that if ReAc and Monde Re fail there is a real risk that it will be unable to pay the costs if judgment goes against it.
56 The accounts do not indicate at which point, that is to say whether it is after a loss in one or two or more actions, that the run-off will be unsuccessful. But, in my opinion, the directors' acknowledgment is cogent evidence of a rational belief that ReAc will be unable to pay the costs if judgment goes against it in late 2004 or early 2005.
57 Mr Gleeson submitted that the effect of the establishment of reserves which in the opinion of the external actuary equates to a 75% confidence level indicates that there is only a 25% chance that the reserves will be insufficient. I do not accept, at least in relation to the film business, that this is the effect of the actuary's opinion.
58 It is plain from the passage at [40] that the reserves which the directors have established for film business and the actuary's opinion thereon depend upon the information currently available and on legal opinion as to the likely outcome of the litigation. The note quite properly acknowledges that the outcome of the proceedings and the ultimate costs "are by their very nature inherently uncertain".
59 In my view a 75% confidence level based on the opinion of lawyers as to the results of the litigation does not mean that there is only a 25% chance that the reserves are insufficient. It seems to me to be clear that it means no more than there is a 25% chance provided the opinions of the lawyers, on issues which are inherently uncertain, are correct.
60 As I have said, this is credible evidence of a rational belief required by s 1335. It establishes a prima facie foundation for an order for security.
61 The position therefore seems to me to be analogous to that with which Jordan CJ dealt in Churchills v Pilcher. ReAc which is in possession of the information as to what reserves have been established thought it prudent to offer no evidence. In those circumstances, I am entitled to draw from the failure to call evidence any inference which I can reasonably justify.
62 The inference which I draw is that evidence as to the amount of the reserves would not have assisted ReAc and Monde Re. In my view, this reinforces the strength of the prima facie case which I have found that there is credible evidence of a rational belief that ReAc and Monde Re will be unable to pay the costs if they are unsuccessful.
63 Nor have ReAc and Monde Re sought to lead evidence of their current financial position. This stance has been taken notwithstanding the auditor's statement that there are inherent uncertainties in the provisions and that outstanding claims liabilities may vary as a result of future information and may result in material adjustment.
64 It is true as Mr Gleeson submitted that this statement was made without qualification to the opinion that the accounts give a true and fair view. But for the purposes of determining whether there is a rational belief of the type contemplated by s 1335, I am left with no evidence of the current position on a matter which the auditor considers may result in material adjustments.
65 On this issue, in relation to the outstanding claims for both film and non-film business, I am entitled to draw the inference that evidence from ReAc and Monde Re would not have assisted.
The exercise of the discretion conferred by s 1335
66 There was a debate in the English authorities as to whether the discretion is unlimited; see FFE at [20]. In Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301, Street CJ said at 305 that the discretion could properly be regarded as ordinarily exercisable to protect a defendant sued by an impecunious company but if the Court takes the view that the protection should not be afforded it has an unlimited and unrestricted discretion to give effect to that view. I proceed upon that basis.
67 In Equity Access Ltd v Westpac Banking Corporation & Ors [1989] ATPR 40-972at 50,635 Hill J identified six matters which may be included for consideration, although of course the exercise of the discretion is not limited to them; see also Deangrove v Buckby [2002] FCA 1544 at [5] per Sackville J.
68 The matters to which ReAc and Monde Re referred were the quantum of risk that the applicant cannot satisfy a costs order and whether there are any aspects of public interest which weigh in the balance.
69 A further matter identified by Hill J is whether there are any discretionary considerations particular to the case.
70 Here ReAc and Monde Re submit that they are, in substance, respondents and therefore ought not to be ordered to provide security. They also rely upon what they say is the very real possibility that there may be cross-claims arising out of the same factual matrix as the claims made in the proceedings.
71 The quantum of the risk that ReAc cannot satisfy a costs order is a matter to which I can refer in determining the amount of security: see Charlwood Industries Pty Limited v Cubitt [1995] (unreported FCA, Gummow J, 15 March 1995); Beach at 205.
72 I will deal separately with the other three matters namely public interest, whether ReAc and Monde Re are in substance respondents and the possibility of cross-claims.
Public Interest
73 ReAc and Monde Re submitted that I ought not to exercise my discretion because the proceedings are brought under sections 82 and 87 of the Trade Practices Act 1974 (Cth). They relied on what Lee J said about this question in Warren Mitchell at 7.
74 However, it seems to me that I ought to give no weight to this factor because the claims do not relate to members of the public generally but arise solely from the commercial relationships and commercial dealings of the parties; see Everest Colonial Pty Ltd v Ice Creameries of Australia Pty Ltd (unreported FCA, Goldberg J, 27 March 1997) at 33; Greenfields Coal Co Ltd v Mineral Resources Corporation and Ors (unreported FCA, Goldberg J, 28 November 1997) at 18.
Whether ReAc and Monde Re are in substance respondents
75 ReAc and Monde Re relied upon the well known authority of the High Court in Willey v Synan (1935) 54 CLR 175 (Latham CJ, Dixon and Rich JJ).
76 There, a member of the crew of a ship claimed ownership of some coins which he had found on board. Customs officers took possession of the coins and when the crew member claimed them the Collector of Customs gave notice under s 207 of the Customs Act 1901 (Cth) requiring the plaintiff to commence an action for their recovery.
77 Latham CJ said (at 180) that the Collector of Customs really initiated the legal process by giving the statutory notice the effect of which was that the plaintiff would lose any rights to the coins unless he initiated legal proceedings.
78 Dixon J (with whom Rich J agreed) said at 185 that the notice was a statutory substitute for judicial proceedings by the Crown against the goods. The effect of the notice was to cast the onus of taking proceedings on the supposed owner.
79 In Farmitalia Carlo Erba SrL v Delta West Pty Limited (unreported FCA, Heerey J, 4 March 1993) his Honour dealt with a similar submission to that which has been put by ReAc and Monde Re. His Honour held at [16] that the respondent's conduct was not comparable to the notice given by the Collector of Customs in Willey v Synan. The same view applies to the facts of the present case.
80 It cannot be said that any step taken by the respondents in these proceedings cast the onus on ReAc and Monde Re to bring these proceedings or to have their claims extinguished.
81 It is true that HIH and AIG, as the reinsureds of ReAc and Monde Re, have made claims for indemnity under the policies referred to in the Statement of Claim. However, it was open to ReAc to await the outcome of the UK proceedings or to prosecute appeal rights in respect of the US litigation.
82 In any event, the question of whether the proceedings are in truth defensive is merely a factor to be taken into account. It seems to me that the position was correctly stated in the decision of Zeeman J in Weily's Quarries v Devine Shipping Pty Ltd (1994) 14 ACSR 186. As his Honour said in the following passage at 189:-
"The general proposition that security ought not to be ordered where the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt self help procedures is no more than that, a general proposition. It ought not to be elevated to being a rule of law. In many cases of that nature it could be considered oppressive to require security and that in itself may be sufficient to refuse to make an order. In other such cases, to require security, if not oppressive, would be quite inappropriate by reference to the justice of the case. I refer to the discussion in Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 73 ALR 289; 11 ACLR 616 at 624-9 and in Interwest Ltd v Tricontinental Corporation Ltd (supra) at ACLC 1228-30."
83 In my view, there is nothing in the justice of the case which persuades me that I ought not to order security. Nor can it be said that an order would be oppressive. ReAc and Monde Re seek to have their rights determined in this Court in relation to a large number of policies rather than to abide the outcome of overseas litigation. They obtain a legitimate forensic advantage by suing here but the price they must pay in light of ReAc's financial position is an order for security for costs.
Cross-Claims
84 Although defences have been filed I have, at the request of the respondents, deferred giving directions for filing cross-claims.
85 Nevertheless, Mr Gleeson submitted that it is likely that cross-claims will be filed by Heath, Chase and other respondents. He submitted that there is good reason to believe that the cross-claims will not be limited to claims for contribution or indemnity between the respondents but will include claims against ReAc and Monde Re for indemnity under the reinsurance policies.
86 In Concrete Constructions Pty Ltd v Dalma Formwork Pty Ltd (Administrator Appointed) [1999] NSWCA 16 the New South Wales Court of Appeal (Mason P, Handley JA and Sheppard AJA) dismissed an application for leave to appeal from a decision of Rolfe J in which his Honour refused to order security. His Honour was of the view that because of the pendency of claims and cross-claims arising out of the same factual matrix, the proper exercise of the discretion was that security should not be ordered.
87 Sheppard AJA (with whom Mason P and Handley JA agreed) set out at [15] the following passage from the judgment of Rolfe J:-
"In circumstances where the claim and the cross-claim arise out of the same, or essentially the same, factual matrix this, in my opinion, is a very important consideration. It has been frequently and consistently said by Judges sitting in this Division that an order for security will not generally be made in such circumstances, in the exercise of the Court's discretion. It would, in my view, be quite wrong to preclude a party from litigating matters by way of a defence to a cross-claim merely because that party has been the initial institutor of the proceedings."
88 Sheppard AJA agreed at [24] with the remarks of Rolfe J. He said that the fact that a claim and cross-claim arise out of the same, or essentially the same, factual matrix is a very important consideration.
89 In my view the present proceedings are not analogous with the situation which arose in Concrete Constructions. It is true that HIH and AIG may cross-claim for recovery under the policies. But ReAc and Monde Re have joined as parties Heath and Chase with whom they have no contractual relationship.
90 Heath as the broker would not ordinarily have a claim to recover under policies of reinsurance placed by it; cf Eslea Holdings Ltd (formerly IPEC Holdings Ltd) v Butts (1986) 6 NSWLR 175. Nor would Chase be likely to be in a position to plead a claim to recover the proceeds of policies to which it was not a party.
91 In any event, the pendency or possibility, of cross-claims is, as Sheppard AJA said, merely a consideration in the exercise of the discretion, albeit an important one.
92 Here, it seems to me that the considerations to which I referred on the question of whether ReAc and Monde Re are in substance respondents are equally applicable to this issue. They wish to have their rights under the policies determined without awaiting the outcome of proceedings in other jurisdictions. In my view, it is appropriate that a condition be imposed that they should provide security for costs.
Quantum
93 It is well established that in ordering security for costs the Court does not give a full indemnity; see Brundza v Robbie & Co (1952) 88 CLR 171 at 175 (Fullagar J).
94 In my view the effect of this principle is that the Court has a discretion to fix such amount as it thinks fit in all the circumstances of the case. The amount will not exceed the estimate of party and party costs but it may be less; see Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 134 ALR 187 at 200 (Lindgren J).
95 In Allstate, his Honour referred at 200 to a Canadian authority, Crowthers v Simpson Sears Ltd; Attorney-General (Alberta), Intervenor (1988) 51 DLR (4th) 529, in which it was said that the security is "but a drop in the total bucket of litigation expenses". Here the bucket is a large one but the amount ordered for security, though substantial, will be a comparatively small part of it.
96 As Lindgren J observed in Allstate at 201, the approach which the Court takes to the determination of the amount is to apply a "broad brush".
97 Moreover, as French J said in Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 515, the process of estimation embodies to a considerable extent, reliance upon the "feel" of the case after considering relevant factors.
98 Heath and Chase relied on evidence from very experienced litigation solicitors to support the amounts claimed. They also called evidence from very experienced costs consultants but their evidence did not address the question of whether the items claimed by the solicitors were necessary or proper, which is the test for allowing costs on a taxation under Order 62 rule 19 of the Federal Court Rules.
99 In my view the amounts claimed by the solicitors must be substantially reduced. I accept most of Mr Gleeson's submissions on this issue. However, this is not to criticise the solicitors for their costs estimates. My overall impression is that in view of the early stage of the proceedings and the difficulties in projecting the costs of a large matter, they erred on the side of caution. Thus they claimed for expenses amounts which, having regard to the principles to which I referred, ought not be allowed in assessing the security.
100 In assessing the amounts I do not think it is necessary for me to descend into the minutiae of the claims. In light of the remarks of Lindgren J and French J I think it is appropriate to say that I do not sit as a taxing officer to determine the amounts. However, I will refer to some of the matters canvassed in the evidence in order to give an indication of how I have arrived at the quantum.
101 Heath's claim for pre-trial costs was $2.65m. I will set out below a number of the items which must be deducted from the amount.
102 Item 28 of Heath's claim was for an amount of $205,000 for general correspondence. This claim was for correspondence, including counsel's fees, over and above all of the individual items of costs set out in great detail in the schedule. In my view this claim involves unnecessary duplication and should not be allowed.
103 Heath claimed in items 12, 17 and 18 amounts totalling $325,000 for preparation of lay witness statements. In view of the overlap between the Phoenix proceedings in the UK and these proceedings, it is likely that the bulk of the lay affidavits will follow statements given in the overseas proceedings. In my opinion, a proper amount to allow is in the order of $150,000 and I would therefore reduce the claim by $175,000.
104 Item 14 of Heath's claim is for ŁGB60,000 and $US150,000 for experts in the fields of UK broking, UK underwriting, film marketing and exploitation and film accounting and documentation. There are no issues of English insurance law or practice in these proceedings. In my view, it is therefore appropriate to reduce the claim by at least the amount of ŁGB60,000 for the proposed costs of UK broking and underwriting experts. Converting them to $A, the reduction is for an amount of $150,000.
105 Heath claimed $370,000 in items 2 and 4 for inspection of the Phoenix discovery documents. The process of inspecting the documents has not yet commenced. However, I am satisfied on the evidence which I have heard from the solicitors for both Heath and Chase that there are likely to be substantial costs savings in this area.
106 Moreover, Mr Price, who is the solicitor for ReAc and Monde Re, has undertaken a considered overview of the documents which have been discovered and the effect of his evidence in that there is likely to be a substantial reduction in the work necessary to be carried out.
107 In my view, on the basis of Mr Price's evidence, which I accept, it is appropriate to allow an amount of no more than $200,000 for inspection of the Phoenix documents.
108 Heath has claimed an amount of $1,112,000 for discovery and inspection of the non-Phoenix documents in items 9 and 11 (as amended) in the schedule.
109 As a result of amendments to the Statement of Claim, the case which ReAc and Monde Re seek to make out on this issue is narrow. Discovery is by leave. I am satisfied on the basis of Mr Price's evidence that there is very substantial scope for reduction in the work involved.
110 It seems to me that an appropriate figure to allow is in the order of $400,000. I will therefore reduce the claim by $710,000.
111 The total of the reductions to which I have referred is $1,400,000. This would reduce Heath's claim for pre-trial costs to approximately $1.25m. In my view there is scope for other savings.
112 Nevertheless, adopting the "broad brush" and "general feel" approach to which Lindgren J and French J referred, my overall impression is that a fair amount to award is $1,250,000. Mr Gleeson conceded on the issue of quantum that this was a reasonable amount.
113 Heath claimed $800,000 for the costs of the trial on the basis of a 15 week estimate. Mr Gleeson submitted that if a 7 to 8 week hearing were assumed an appropriate sum would be $400,000.
114 I will not make an order at this stage for security for the trial because it is too early to determine with accuracy how long it will take. However, if the trial is to take 7 - 8 weeks, I will order $400,000 security at an appropriate stage. If the trial is to take more or less than that then the amount can be adjusted accordingly.
115 There is similar scope for reduction in Chase's claim. The total amount claimed was $2.8m plus approximately $US375,000 and ŁGB80,000. Converting the foreign currency amounts to Australian dollars the total amount would be in the order of $3.55m ($2.8m plus $750,000).
116 Chase claimed in item 31 $256,500 for general correspondence. This was the same amount that was claimed by Heath. For reasons set out above I do not propose to allow this item.
117 In item 18 Chase claimed $118,400 for investigations in relation to the soundness of the PML/ICE reports. However, Chase's defence does not contain a positive assertion that the PML/ICE reports were reasonable. This claim must therefore be disallowed.
118 Chase's claim for the costs of foreign lawyers must be substantially reduced. First, Ms Ashe's evidence was that, assuming those costs are recoverable, they would be reduced by half. However, costs of foreign lawyers will only be recoverable if they would be allowed in the jurisdiction in which the work is carried out. That is not the case in the USA. Accordingly, I would not allow anything for the costs of the US attorneys and I would reduce the amount for the English lawyers by half.
119 The net effect of this is that the costs of the overseas lawyers would be reduced by $712,500.
120 Chase claimed $421,000 for the costs of preparation of lay witness statements in items 16, 19 and 20. For reasons stated when dealing with Heath's claim, the amount I allow is $150,000. The claim is therefore reduced by $271,000.
121 Chase made the same claim as Heath for experts namely $US150,000 and ŁGB60,000; see item 21. For the same reason as with Heath, I will not allow ŁGB60,000 (ie $150,000 for UK experts. There is scope for further reduction in this item than I have allowed for Heath. This is because I doubt whether Chase will call experts in relation to the film financing category in light of the fact that it has not pleaded that there was a reasonable basis for the PML/ICE reports. Accordingly, I would not allow more than a small fraction of the $US150,000 for film finance experts. In my view $US50,000 is reasonable. This reduces the claim by approximately $A190,000.
122 In items 3 and 5 Chase claims $325,000 for inspection of Phoenix discovery documents. As stated in relation to Heath, the appropriate amount is no more than $200,000. This claim must therefore be reduced by $125,000.
123 Chase claims $567,000 in items 9 and 11 for non-Phoenix discovery. I said in relation to Heath that the appropriate amount was $400,000. It is likely to be less for Chase because it is not asserting the reasonableness of the PML/ICE reports. I would therefore allow $200,000 which has the effect of reducing this claim by $367,000.
124 Chase included in its claim for disbursements in item 33 an amount of $200,000 for leasing of external premises for 18 months. In my view this is an "unusual expense" for the purpose of Order 62 rule 19(c) of the FederalCourt Rules. It ought therefore not be allowed.
125 The total of these reductions is $2,203,000 which would reduce Chase's claim for pre-trial costs to just over $1.3m.
126 As I said in relation to Heath, there is scope for other reductions. However, it seems to me that the appropriate course is to award the same amount for pre-trial costs for both Heath and Chase. For reasons referred to above, the amount of security for costs to be given by the applicants will be $1.25m.
Orders
127 It follows that I propose to order ReAc and Monde Re to provide security for costs for each of Heath and Chase for pre-trial costs and expenses in the amount of $1.25m.
128 ReAc and Monde Re vigorously opposed an order that they provide security. It was therefore necessary for Heath and Chase to pursue their notices of motion. They should therefore have a costs order in their favour.
129 However, much of the hearing time was occupied with the issue of quantum on which ReAc and Monde Re were successful. In the exercise of my discretion, I think the appropriate order for costs is that ReAc and Monde Re pay 50% of Heath and Chase's costs of their motions.
I certify that the preceding one hundred and twenty nine (129) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.