(1) The third and fourth defendants had incurred costs to date in excess of $150,000 in relation to these and other (said to be related) proceedings; and
(2) The third and fourth defendants would incur at least $100,000 in costs from the date (4 September 2007) his affidavit was sworn.
48 Mr Geary gave a brief break-up of future costs. The total of the amounts, excluding GST, was in fact $118,000. Mr Geary did not indicate how this was related to his estimate of $100,000, nor did he say whether his estimates (however one looks at them) reflect solicitor and client or party and party costs.
49 Mr Lindsay submitted that there should be no order for security. He relied on:
(1) Alleged delay in bringing the application.
(2) The proposition that any order for security would stifle the litigation.
(3) The proposition that the defendants were the cause of the plaintiffs' impecuniosity.
(4) Mr Rusiti's acceptance of the proposition that the Court could order him to pay any costs ordered to be paid by the plaintiffs, notwithstanding his relatively limited involvement (in his own right) in the prayers for relief.
(5) The defendants' failure to seek any order for security, or other relief or condition, when they either consented to or did not oppose the making of orders under s237.
50 All but the first of those submissions are relevant also to the fifth and sixth defendants' application for security for costs.
51 Mr Lindsay submitted further that the Court was in no position to undertake any examination of the merits of the plaintiffs' case.
52 As to delay: there are three answers. The first is that the plaintiffs must have been aware of the third and fourth defendants' attitude. Mr Dawson pointed to correspondence in November 2006 when, in relation to a not dissimilar claim then sought to be mounted by Orara as a cross-claimant in earlier proceedings, the (now) third and fourth defendants had notified their intention to seek security if not satisfied of Orara's solvency.
53 The second answer is that delay is not of itself dispositive. On a proper analysis, I think, the authorities make it plain that delay is not to be looked at in the abstract. What is important is whether, assuming that delay has been shown, such delay causes actual prejudice to the party against whom the order is sought. Even if prejudice is not shown, the application need not fail. But unless prejudice is shown, the significance of delay as a dispositive factor disappears. See the decision of Hunter J in Hughes Bros Pty Ltd v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (7 November 1995, unreported; BC 95079079).
54 In this case, there is no evidence of actual prejudice. Nor, having regard to the plaintiffs' failure to adduce evidence on the topic, am I prepared to infer prejudice on some general basis.
55 The third, and related, answer is that the amount for which security is sought is for costs to be incurred after the application for security was made.
56 As to stifling the litigation: the plaintiffs adduced no evidence to show that they had no prospect of putting up or obtaining security. A plaintiff who wishes to submit that an order for security would stifle the litigation bears the onus of showing that this is so. See Austin J in Fiduciary Limited v Morningstar Research Pty Ltd (2004) 208 ALR 564 at 582 [78] and Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 at [66]. In this case, the plaintiffs have not discharged that onus.
57 As to the cause of the plaintiffs' impecuniosity: once again, it is the plaintiffs' onus. See Needham J in MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97 at 100 and Austin J in Fiduciary at 585 [88] and 587 [100]. Again, the plaintiffs have not discharged that onus.
58 As to Mr Rusiti's position: it is correct to say that, as a general rule, security for costs will not be ordered against an impecunious individual plaintiff. See Bowen LJ in Cowell v Taylor (1885) 31 Ch D 34 at 38.
59 It may be that this general rule should be extended for the benefit of an impecunious corporate plaintiff where there is an impecunious individual co-plaintiff, on the ground that to stay the corporate plaintiff's action would be pointless if the individual plaintiff's action, for substantially the same relief, would continue in any event.
60 In this case, Mr Rusiti has made it perfectly clear that his acceptance of the power of the Court to make orders for costs against him does not extend to a present offer to accept liability for all costs orders made in favour of the defendants.
61 The principal (although not the only) part that Mr Rusiti plays in the litigation as presently constituted is as a vehicle by which, through the s237 order, the claims of Soho are pressed in the statutory derivative action. Austin J held, in another "Fiduciary" decision, that the fact that a company's claims were asserted by an individual through a statutory derivative action did not convert them into claims by that individual; they remain claims of the corporation. See Fiduciary Ltd v Morningstar Research Pty Ltd (2005) 53 ACSR 732 at 744 [53]. I agree.
62 The fifth point is based on s242, and the failure to invoke it at the time the s237 orders were made. Section 242 relevantly empowers the Court "at any time [to] make any orders it considers appropriate about the costs of" parties to proceedings brought under s237, and to require indemnification for costs. That power is not exercised only for the benefit of those other parties. Its fundamental purpose is to protect all the creditors of the corporation. See the decisions of Barrett J in Carpenter v Pioneer Park Pty Ltd (in liq) (2004) 51 ACSR 299 at 311 [38]-[39] and Roach v Winnote Pty Ltd [2006] NSWSC 231 at [25]-[29]. Protection of those other parties is in a sense collateral to this fundamental purpose.
63 I do not know why an order under s242 was not sought or made when leave was granted under s237. But the wording of s242 makes it plain that an appropriate order may be made "at any time". In my view, the underlying policy requires that an order should now be made attaching to the grant of leave a condition that Mr Rusiti and Orara indemnify Soho for all costs payable by it as a plaintiff and any costs orders that may be made against it.
64 That does not mean that an order for security should not be made. In the circumstances of this case, I think that the discretionary considerations clearly favour the making of an order that the plaintiffs give security for the third and fourth defendants' costs of the proceedings.
65 I should make it plain that Mr Lindsay's opposition to the provision of security was put at the level of principle. He did not (for example) submit that if security were to be ordered, it should be ordered as against some only of the plaintiffs. Nor did he put submissions as to the amounts sought, or as to the manner, form and timing of any security ordered to be given.
66 Whilst there was no issue as to the amount for which the third and fourth defendants seek security, the estimate was based on the present formulation of the plaintiffs' claim. That claim is to be reformulated. The reformulation may affect the estimate of costs. Thus, the third and fourth defendants should have a reservation of liberty to apply to seek any increase in the amount of security if that is necessitated by the reformulation of the plaintiffs' claim.
67 The parties did not address the timing of the provision of security. Mr Geary's evidence is that some $67,000 will be incurred in preparation for hearing and for the hearing. In my view, bearing in mind that security is sought in the total amount of $100,000 as against an estimate of costs of $118,000, the appropriate course is to order the plaintiffs to provide security by instalments as follows: