Strata Consolidated v Bradshaw

Court of Appeal (NSW)|1999-10-29|Before: Hunter J, Mr P

CITATION : Strata Consolidated v Bradshaw [2000] NSWCA 114 FILE NUMBER(S) : CA 40324/98 29 October 1999 HEARING DATE(S) : 26 November 1999 2 December 1999 JUDGMENT DATE : 5 May 2000

Strata Consolidated (Australia) Pty Limited (1st appellant/opponent) ATA Wholesalers Pty Limited (2nd appellant/opponent) Adtech Corporation (3rd appellant/opponent) Edward John Bradshaw (1st repondent/claimant) Takello Pty Limited (2nd respondent/claimant) Ian Ronald Ney (3rd respondent/claimant) Tartandi Pty Limited (4th respondent/claimant) Procus Australia Pty Limited (5th respondent/claimant) PARTIES : Procus West Pty Limited (6th respondent/claimant) Selmet Pty Limited (7th respondent/claimant) Sipro Pty Limited (8th respondent/claimant) Siska Pty Limited (9th respondent/claimant) Patrick Maguire (10th respondent/claimant) Warren Binney (11th respondent/claimant) Ross Patterson (12th respondent/claimant) John Shanahan (13th respondent/claimant) So Your Self A Favour Co Pty Limited (14th respondent/claimant) JUDGMENT OF : Registrar Jupp

LOWER COURT JURISDICTION : Supreme Court LOWER COURT 50304/94 FILE NUMBER(S) : LOWER COURT Hunter J JUDICIAL OFFICER :

Mr P McEwen SC for 1st & 2nd respondents/claimants COUNSEL : Mr P Gray for 3rd to 14th respondents/claimants Mr PM Biscoe QC with Mr SJ Motbey for the appellant/repondents Brook Worthington (1st & 2nd respondents/claimants) SOLICITORS : Stephen Blanks & Associates (3rd to 14th respondents/claimants) J Biady & Associates (appellants/opponents) CATCHWORDS : Security for Costs - Entitlement to an order for security for costs in the Court of Appeal in repect of costs incurred in Court below LEGISLATION CITED : Supreme Court Rules Part 51 rule 16, Part 53 Corporations Law - section 1335 Uptown Sydney Development Corporation Pty Ltd V BNZ (1993)11 ACLC 862 CASES CITED: Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association (Sup Ct of Tasmania unreported) Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR DECISION : Security for costs of the appeal ordered - $90,000 in respect of the costs of the 1st & 2nd respondents; $55,000 in respect of the costs of the 3rd to 14th respondents; appeal stayed till security provided; 80% of the costs of 1st & 2nd respondents motion to be their costs in the appeal; 50% of the costs of the 3rd to 14th respondents motion to be their costs in the appeal; Listed for call-over 7 June 2000.'

5 May 2000 STRATA CONSOLIDATED (AUSTRALIA) PTY LTD & ORS v BRADSHAW & ORS

1 REGISTRAR: On 23 June 1999 the 1st and 2nd respondents filed a motion seeking security for costs of the appeal in the sum of $114,575. The motion also sought security for costs of the proceedings in the Court below in the sum of $285,000. At the hearing of the motion it was indicated that security for costs of the lower Court proceedings was no longer being pursued. 2 On 31 May 1999 the 3rd to 14th respondents also filed a motion seeking security for costs. This motion sought security for costs of the appeal in the sum of $75,000 and of the proceedings in the Court below in the sum of $220,000. What was actually pursued was a further amended notice of motion ( a copy of which has been supplied but which is undated), which sought security for the costs of the appeal in the sum of $75,000 and for $925,000 for the costs of the proceedings below. 3 Both motions were originally fixed for hearing on 29 October 1999, however substantive hearing of the motions could not proceed on that day. The motions were then listed for hearing on 26 November 1999. On that day the motions were further listed part heard to 2 December 1999. Judgment was reserved. Subsequently the parties have provided written submissions. 4 The appeal was commenced by a notice of appeal without appointment filed on 20 May 1998. A notice of appeal with appointment was filed 20 August 1998. A notice of cross-appeal by the 3rd, 5th, 7th and 8-11th respondents was filed on 3 June 1998. An amended notice of appeal with appointment was filed on 28 April 1999. 5 The appeal is from proceedings heard in what was then the Commercial Division. The appellants were the plaintiffs in the original proceedings. The original summons was filed on 12 December 1994. The substantive hearing occurred during 1996 before Hunter J. He published his initial findings in a lengthy judgment (315 pages) on 27 November 1998 with subsequent orders and findings on 24 April 1998, 8 February 1999 and 23 February 1999. 6 It is clear that there is an intense antagonism between the appellants and the respondents. Unfortunately this antagonism between the parties has also been reflected by a level of antagonism between the legal representatives. There is even now no agreement between the parties as to what the actual case was all about or what the trial judge found. 7 The appellants/plaintiffs were 3 related companies involved in the distribution and sale of welding alloys and other related products. In the Commercial Division proceedings the Strata corporations asserted that one or other of the defendants, acting alone or in concert, or by aiding and abetting illegal acts, acted against the interests of the Strata corporations. The allegations included the passing off of products, inducing breach of contract; fraud, injurious falsehood, breach of fiduciary duties, conspiracy and breaches of the Corporations Law, Fair Trading Act and the Trade Practices Act 8 The 3 principle characters in the events that were the subject of the proceedings were Gamal Biady, Edward Bradshaw and Ian Ney. Gamal Biady was the Chief Executive Officer of the Strata companies and the principal shareholder through his various family companies. Edward Bradshaw was a director and marketing manager of Strata. Tarkello Pty Limited was owned by Bradshaw and had a number of shares in Strata. Ian Ney was the company secretary, financial controller and a director of Strata up till about May 1992. Tartandi Pty Limited was owned by Ney and it held a number of shares in Strata. 9 Biady and Ney fell out in early 1992 and Ney left Strata. In late 1992 and the 1st half of 1993 the Procus companies (essentially the 5th to 8th respondents) emerged as a direct competitor of Strata. Many of Strata's agents defected to Procus. The Procus companies had been established by Ney in concert with Patrick Maguire & Warren Binney. What was a major issue was the extent to which Bradshaw was involved in the establishment of Procus. During the proceedings Bradshaw and Tarkello were separately represented from the rest of the defendants by Brook Worhthington, solicitor. The 3rd to 14th defendants/respondents who are collectively referred to as either the "Ney" or "Procus" defendants were represented by Stephen Blanks & Associates, Solicitors. 10 The findings of Hunter J were many and complex. Various transactions and classes of transactions were considered separately. None of the major parties can be said to have been victorious on all issues. Bradshaw and Ney were found to have acted in breach of their fiduciary duty and duty as directors pursuant to section 232 of the Corporations Law, in respect of certain "agency" activities. An account of profits resulting from those breaches was ordered. The outcome of that accounting process was that no amount was payable to Strata. Procus was found to have passed off its goods as Strata's, and engaged in misleading and deceptive conduct in contravention of section 52 of the Trade Practice Act. Ney, Binney, Maguire and Ross Patterson were also found to have contravened section 52. Damages were awarded in respect of this in the sum of $230,000. Bradshaw was not found to have been an accomplice to the passing off. 11 The question of costs was dealt with by Hunter J in the judgment delivered on 23 February 1999. Instead of attempting to determine costs orders for each party in respect of each issue Hunter J adopted a "global approach". He ordered that Strata pay Bradshaw & Tarkello 90% of their costs, and that the "Ney" defendants have 40% of their costs. The percentage of costs awarded to the Ney defendants was intended to reflect a net success rate for Strata of 25 to 30% and for the Ney defendants collectively of 70 to 75%. Although Hunter J stayed enforcement of the costs orders he did not stay the assessment of those costs. 12 Two matters that are not contested and that are relevant: · The appellant companies are impecunious and have ceased trading; · Security for costs of the proceedings in the Commercial Division was sought and required on 4 occasions. In each case the application for security was unopposed except as to quantum. The security ordered was provided. $20,437.95 has been released but $254,562.05 remains in Court. 13 Jurisdictional Issues: Court of Appeal Costs: Each of the 2 sets of claimants has submitted that the Court has jurisdiction to order security for Court of Appeal costs from the following sources: · Part 51 rule 16 of the Supreme Court Rules - this rule provides:

16 (1) Where a notice of appeal with appointment has been filed under rule 6, the Court of Appeal may, in special circumstances, order that such security as the Court of Appeal thinks fit be given for the costs of the appeal. (2) Subject to subrule (1), no security for the costs of an appeal to the Court of Appeal shall be required. (3) Subrules (1) and (2) do not affect the powers of the Court under Part 53 Division 1 (which relates to security for costs). · Part 53 of the Supreme Court Rules - the relevant rules provide:

1 In this Division - (a) references to a plaintiff extend to any person who makes a claim for relief in any proceedings; and (b) references to a defendant extend to any person against whom a claim for relief is made in any proceedings.

2 (1) Where, in any proceedings, it appears to the Court on the application of a defendant - (a) that a plaintiff is ordinarily resident outside the State; (b) that a plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that that plaintiff will be unable to pay the costs of the defendant if ordered to do so; (c) subject to subrule (2), that the address of a plaintiff is not stated or is mis-stated in his originating process; (d) that a plaintiff has changed his address after the commencement of the proceedings with a view to avoiding the consequences of the proceedings; or (e) that there is reason to believe that a plaintiff being a body corporate will be unable to pay the costs of the defendant if ordered to do so, the Court may order that plaintiff to give such security as the Court thinks fit for the costs of the defendant of and incidental to the proceedings and that the proceedings be stayed until the security is given. (2) The Court shall not order a plaintiff to give security by reason only of subrule (1)(c) if it appears to the Court that the failure to state his address or the misstatement of his address was made without intention to deceive.

Part 51 rule 3 is also relevant in construing this rule. It states:

3 (1) The provisions of Parts other than this Part apply, so far as applicable, to proceedings in the Court of Appeal. (2) For the purposes of subrule (1): (a) a person who commences proceedings in the Court of Appeal, as appellant or otherwise, shall be a plaintiff; (b) a person against whom proceedings are commenced in the Court of Appeal, as respondent to an appeal or otherwise, shall be a defendant; and (c) a notice of appeal shall be an originating process. · Section1335 of the Corporations Law. This rule states:

(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by 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, require sufficient security to be given for those costs and stay all proceedings until the security is given.

(2) The costs of any proceeding before a court under this Law shall be borne by such party to the proceeding as the court , in its discretion, directs. · The inherent jurisdiction of the Court. 14 The opponents have conceded that the Court has jurisdiction pursuant to Part 51 rule 16, although they have submitted that the Court as a matter of discretion should not make an order pursuant to that power. For reasons which I will expound upon later I have determined that security for costs should be ordered pursuant to this rule in respect of the appeal proceedings. The opponents have submitted that the other sources of jurisdiction either are not applicable to Court of Appeal proceedings or should not be exercised by the registrar. To a certain extent I am not required to determine these issues however I make the observations in the following paragraphs. 15 The extent to which Part 51 rule 16 and Part 53 rule 2 co-exist and can be read together is a matter which is open to conjecture. Certainly Part 53 applies to certain proceedings which do not fall within the specific criteria provided for by rule 16 ie that a notice of appeal with appointment has been filed. Part 53 applies for applications for leave to appeal and for summonses seeking prerogative relief. The question however is if a notice of appeal with appointment has been filed do special circumstances have to be established or may security be ordered if any of the criteria in Part 53 rule 2 have been met. It appears to me that the question may be academic in most cases, and this may be why I have not been able to find a case determining it. In the circumstances of most cases most of the criteria in Part 53 rule 2 could constitute a special circumstance which would invoke Part 51 rule 16 in any event. I am inclined to the view that Part 51 rule 16(3) should be read broadly so that Part 51 and Part 53 can be read together so that the effect of Part 53 is to broaden the jurisdiction to make an order for security even if special circumstances do not exist. 16 The question of whether section 1335 of the Corporations Law applies to proceedings in the Court of Appeal is more problematic. The opponents have submitted that the judgment of Kirby P, as he then was, in Uptown Sydney Development Corporation Pty Ltd V BNZ (1993)11 ACLC 862, requires me to find that section 1335 does not apply to Court of Appeal proceedings. The basis of Kirby P's reasoning was the use of the words "plaintiff", "defendant" and "defence" in section 1335. He reasoned that the use of these words meant that section 1335 had to be restricted to first instance proceedings. The Ney claimants have referred a later contrary authority, Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association (Supreme Court of Tasmania, unreported, Evans J, 17 July 1998) which expressly declined to follow Uptown Sydney. Evans J states: "Whilst the views of Kirby P on whether the section applies to an appellant must be given very considerable weight, he expressly refrained from deciding the question. For me, the question has been decided in other authorities. In J & M O'Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (1983) 7 ACLR 790, Bowen CJ considered whether a section in the same terms as s1353(1) of the Corporations Law exposed an appellant corporation to an order for security for costs. He concludes that the section was remedial, the word "plaintiff" should be given a wide meaning and that it included an appellant." 17 Evans J also refers to other cases which justify a broad construction of what constitutes a "plaintiff" including Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 in which the NSW Court of Appeal in a security for costs application against a defendant/cross-claimant corporation determined that the word "plaintiff" (in a section in the same term as s1335 of the Corporations Law) should not be given a restricted or technical meaning and that the defendant/cross-claimant was covered by the section. 18 I note that Kirby P in Uptown Development stated that: "Although I am inclined to think that s1335(1) of the Corporations Law is inapplicable to appeals I refrain from resolving that question finally…"

Under those circumstances I do not feel obliged to follow Kirby P's obiter opinion, and if required I would follow the decision of Evans J. It follows that even if special circumstances did not exist in this case the Court of Appeal would have jurisdiction pursuant to section 1335 of the Corporations Law to make an order for security for costs based on the admitted impecuniosity of the corporate appellants. 19 So far as the inherent power of the Court to order security for costs is concerned I suspect that it was only to be relied upon by the claimants if I was to determine that there were no special circumstances under Part 51 rule 16 and that there was no other statutory or regulatory jurisdiction to ground the application. In those circumstances, if I had felt that in all the circumstances of the case an order for security for costs was justified I would have referred the matter to the Court to consider whether that inherent jurisdiction should be exercised. I accept the opponents submission that the registrar's power to determine security for costs applications is constrained by legislation and the rules. 20 Jurisdictional Issues: Costs of the proceedings in the Court below: The 3rd to 14th respondents also submitted that the Court of Appeal had jurisdiction to make an order, to in effect, increase the security already granted in respect of the costs incurred in defending the proceedings in the Court below. I am not aware of, and the 3rd to 14th respondents have not been able to direct me to any cases where an order in those terms has been made by an appellate Court. The same jurisdictional bases that apply to costs in the Court of Appeal are argued as also applying to costs already incurred in the Court below. 21 Part 51 rule 16(1) is, in my view, not applicable. That rule specifically talks about "costs of the appeal". In my opinion it would be to take too broad a brush to say that "costs of the appeal" can include costs already incurred in the Court below. 22 Part 53 may, in my view, give the Court of Appeal jurisdiction to award security for costs already incurred in the Court below. This is a very broad construction of Part 53, but the rules within that Part are not expressly limited to apply to costs yet to be incurred in the current proceedings. As a matter of practice however this is not a jurisdiction that an appellate Court would normally exercise. The whole notion of "security for costs" is security for prospective costs rather than for costs which have already incurred. In most cases there is no need to secure costs already incurred. A party entitled to those costs is entitled to have them taxed or assessed, and subject to an order staying the enforcement of the costs order, is entitled to seek to recover those costs. It may well be that if the party liable to pay the costs applies to stay the order that it will only be granted if security is provided. That is not however the application that is being made here. 23 Section 1335 of the Corporations Law can also be construed as giving jurisdiction to order security for costs already incurred. In many cases in first instance proceedings the amount being secured by an order will cover costs already incurred as well as prospective costs. On the face of it I cannot see why Section 1335 has to be construed as being limited to the current proceedings. Again, for the same reasons as the preceding paragraph, this is not a jurisdiction that would normally be exercised by an appellate Court. 24 My earlier comments regarding the inherent jurisdiction of the Court and my power to exercise it also apply in respect of the costs in the Court below. 25 Discretion: Costs of the Appeal: The following issues have been raised as relevant in determining whether an order for security for costs of the appeal is appropriate in this case: · whether the appeal is bona fide and has reasonable prospects of success; · the fact that the appellants are impecunious and divested themselves of their assets and ceased to trade prior to commencing these proceedings; · the fact that the appellants have spent money on their own costs in the Court below; · the fact that the appellants appear to be able to find resources to fund their own costs of the appeal; · the admitted non-disclosure and alleged misleading of the Court in respect of the appellants' actual resources at the time an anton-pillar order was made. 26 The corollary argument that has been put is that it would be an abuse of process for the appeal to be allowed to proceed without security for costs being provided. 27 It is not practical or realistic for me to assess the prospects of this appeal. The complexity of the judgment is reflected by the size of the amended notice of appeal which has 142 separate grounds of appeal. This does not appear to be a patently hopeless appeal. Although the appellants may have an uphill battle to upset the detailed findings against them, particularly the findings as to the evidence of Mr Biady, the findings were not all one way and not all the findings rely on the believability of the various witnesses. Although there has been an assertion that the appeal may constitute an abuse of process there is no evidence that the appeal is being brought for an ulterior purpose. Although the antagonism between the parties may have clouded their judgments, I cannot say that the principals behind the appellants have not been advised that they have reasonable prospects of success, and that they have an honest belief that will succeed. 28 The impecuniosity of the appellants is not in dispute. Impecuniosity can be a special circumstance which justifies an order for security (Kennedy v McGeechan (1978)1 NSWLR 314). In practice orders for security for costs are not normally made simply because an appellant is impecunious. To do so would be to frustrate many genuine appeals. Security will however often be ordered where an insolvent sues as a nominal plaintiff for the benefit of someone else. In the case of corporations Part 53 rule (2)(e) and Section 1335 of the Corporations Law are special provisions acknowledging the reality that litigation brought on behalf of corporations is usually for the benefit of the shareholders. It is not disputed that the appellant corporations have divested themselves of their assets. It is also clear that somebody behind the appellants, probably Mr Gamal Biady, expects to obtain some benefit if the appeal is successful. This is a special circumstance which may justify an order for security. 29 The Court will be reluctant to order security for costs if it may frustrate the appeal. The stakeholders behind an impecunious appellant may be just as impecunious. There is however evidence to the contrary in this case. The appellant corporations were made impecunious as the result of a deliberate decision by their directors that the assets should be vested in other corporations. Although the appellants legal representatives have argued that the financial deterioration of the appellants resulted from the actions of the respondents, the findings of Hunter J do not support this argument. It is also apparent from the evidence that the legal representatives for the appellants are being financed from some source, either other corporations which have succeeded the appellants or from Mr Biady directly. It appears to me that in these circumstances the onus falls on the appellants to establish that security could not be provided and that as a result an order staying the appeal until security could be provided would frustrate the appeal. No argument or evidence that this would occur was put. I agree with Sheppard, Morling and Neaves JJ in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR at 4: " In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful …are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resists an order for security on the ground that the granting of the security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts." 30 It was submitted by both sets of claimants that the non-disclosure that assets had been transferred from the appellant corporations prior to applying for an Anton Pillar order in December 1994 was a matter that was also relevant in the exercise of my discretion. The evidence relating to this issue was objected to as irrelevant. That material was admitted provisionally subject to relevance. Although Hunter J was later aware that the assets had been divested he did not make any findings that this divesture was done improperly or other than in the ordinary course of business. Mr Gray (counsel for the Ney claimants) cross-examined Mr James Biady at some length on this issue. I am concerned that the Court was mislead, either deliberately or inadvertently both when the Anton Pillar order was applied for, and later on an application for security for costs before Giles J. I am not able to determine on the evidence lead before me that there was a deliberate intention to mislead the Court on either occasion. Although I have allowed this evidence to be admitted it has not been critical in the exercise of my discretion and has at best been of peripheral relevance. I would have made an order for security for costs without this evidence. The critical issue is the current impecuniosity of the appellants. 31 The appellants have noted the delay in applying for security for costs as a matter which I should also take into account in the exercise of my discretion. An application for security for costs should be made at an early stage of an appeal. The main reason being that the appellant should be aware of any such application at an early stage of the proceedings before significant costs have been incurred. Delay of itself will not normally however weigh against an order for security for costs unless the appellant can demonstrate some prejudice as a result of the delay. It is not apparent to me that the appellants would have decided not to proceed with the appeal if an application for security for costs had been made at an earlier stage. To the contrary, it appears to me that the appellants are committed to proceeding with this appeal in any event. There is no doubt that these are complex proceedings and the appeal has become more complex after the amended notice of appeal was filed in April 1999. This was no doubt one of the matters that the respondents had to take into account before deciding to file their motions for security. It is one thing to balance the potential loss of unsecured costs defending a normal appeal, but another issue if the appeal becomes a long appeal. Under the circumstances of this case I do not find the delay in applying for security to be sufficient to weigh against making the orders sought.

32 Discretion: Costs below: Although I have previously determined that I have jurisdiction to make an order securing costs already incurred in the Court below I now determine that it would be inappropriate for the Court of Appeal to make an order securing those costs in this case. 33 This is a novel application. Without some prior case law which establish the matters the Court should consider on such an application, I am not persuaded that the circumstances of this case warrant the Court of Appeal making a special order for increasing security for costs of the Court below, to maintain justice between the parties. 34 I am not however saying that it may not be possible for the respondents to apply elsewhere to increase the level of security that they already have. As I mentioned earlier, no order has been made staying the assessment of the costs in the Court below. The most appropriate method for the respondents to obtain security for costs of the proceedings below is to firstly have the costs assessed. Once that has been done they can apply to the trial judge to either lift the stay on the enforcement of the costs order or to require that security be provided as a condition of the stay continuing. It appears to me that this is a matter that should be considered by the trial Judge, who has already made an order staying the costs order, rather than by an appellate Court. If my broad construction of Part 53 and Section 1335 is correct, there does not appear to be any restriction in applying to the trial judge or a Judge in the Division for further orders requiring security for costs already incurred if the amounts previously secured are inadequate. 35 The delay in applying to increase the security for the costs below is a matter that must also be taken into account in the exercise of my discretion. Although I have said that the delay in so far as it related to the costs of the appeal was not significant, the delay in respect of the costs below is significant and has not been explained. 36 Quantum: Court of Appeal: The Ney claimants: The claim of the Ney claimants is set out in the affidavits of Steven Blanks sworn 28 May 1999. The estimated costs of the appeal are set out in paragraph 26 and are as follows:

(a) Reviewing appeal books, approximately 200 volumes at an average of 1 hour of solicitor time per volume @ $185 per hour $37,000.00

(b) Preparation of the appeal, 50 hours of solicitor time at an average $185 per hour $9,250.00

$75,500.00 37 I am not satisfied that 200 hours should be allowed to review the appeal books. The estimate of 200 volumes of appeal books was an overestimate, as admitted by Mr Blanks on cross-examination. In fact there will be about 60 volumes. I also note that there is some dispute as to the hourly rate that will be charged by the solicitor. The fee agreement produced to the Court was for $180 per hour for Mr Blanks and $120 for an employed solicitor. In cross-examination Mr Blanks asserted that this agreement had been revised to $220 per hour himself and $140 for an employed solicitor, thus the average $185. No costs agreement was produced to the Court to establish this agreement. By my calculations I have arrived at a figure of about $46,600. This may however be an underestimate. I note that the appellants in their submissions (at paragraph 84) suggested that security (if any) for the costs of the appeal should be assessed at $50,000. I propose to adopt that figure. I have also added $5,000 to reflect the costs of this application which the Ney claimants will be able to recover from the appellants if they are ultimately successful on the appeal. See paragraphs 42 and 43 below. The total amount of the security to be provided in respect of the Ney claimants will thus be $55,000. 38 Quantum: Court of Appeal: The Bradshaw claimants: The Bradshaw claimants claim in respect of the costs of the appeal is set out in paragraph 4 of the affidavit of Brook Worthington sworn 22 June 1999. They are:

(a) Reviewing appeal books, approximately 200 volumes at an average of 1 hour of solicitor time per volume @ $185 per hour $37,000.00

(b) Preparation of the appeal, 35 hours of solicitor time at an average $185 per hour $6,475.00

39 It is noted that the Bradshaw claimants are represented by senior counsel who charges a higher fee than that charged by the Ney claimants counsel. This is the main reason for the discrepancy between the two claims. It is also noted that the Ney claimants place more reliance on their solicitors to prepare their case, while the Bradshaw claimants place more reliance on their counsel to do the preparatory work. On the same basis as the allowance for reviewing the appeal books was reduced for the Ney claimants it should also be reduced for the Bradshaw claimants (from $37,000 to $11,100). I have also discounted the time allowed for counsels preparation from 10 days to 8 days. The figure that I have arrived at is $80,675. To this figure I have added $10,000 to reflect the costs of this motion which the Bradshaw claimants may recover from the appellants if they are ultimately successful on the appeal. See paragraphs 42 and 43 below. I have rounded the amount down to $90,000. 40 The appellants have submitted that no allowance should be made for the two sets of respondents to be separately represented. After the conclusion of the matter Hunter J considered that it was reasonable for the Bradshaw parties to be separately represented. Although there is no apparent antagonism between the Bradshaw and the Ney interests they do not coincide. I am not prepared to say that they should be jointly represented or disallow security for costs on that basis. 41 Quantum: Costs below: As I have declined to order security for costs in respect of the proceedings below it is not necessary for me to consider in full the argument put by the Ney claimants as to what amount of security should be allowed. Mr Blanks' earlier affidavit (28 May 1999) sought $220,000. This was subsequently increased to $925,000. This increase was based on an assumption that the cross-appeal would succeed ($365,000) and also includes an amount payable to the Bradshaw parties. In my view neither of these heads properly forms part of a security for costs application by the Ney claimants. I also note that upon cross-examination Mr Blanks' assessment of his clients costs proved to be overstated and unreliable and some discount of his figures would be appropriate if security for these costs is still going to be pursued. As I have indicated earlier the problem is solved if the actual liability for costs is properly assessed. I am not critical of Mr Blanks and am not suggesting that he has deliberately overstated his assessment. Security for costs claims are typically ambit claims which the applicants expect the Court to cut back, however overestimates also antagonise the other side when they may be willing to consider providing security for costs if they thought the amount being claimed was reasonable. 42 Costs of the Application: The Bradshaw claimants have been largely successful on their motion as argued. I am mindful that their motion as argued was limited to the costs of the appeal, but this was only indicated to the Court and the appellants at a late stage. If this change of heart had been communicated at an earlier stage maybe the motion might have settled, or at least taken less time. Most of the time hearing the motions was however spent in relation to the Ney parties' claim. The Ney claimants have been less successful. They continued to claim security for costs of the proceedings below and in this respect they have been completely unsuccessful. A large proportion of the time spent in hearing the motions was occupied by the argument and evidence relating to the costs of the Court below. 43 It appears to me that costs orders made on a successful security for costs application should be dependent on the outcome of the appeal. The costs orders that I will make are that 80% of the Bradshaw claimants costs of their motion become part of their costs of the appeal and that 50% of the Ney claimants costs of their motion become part of their costs of the appeal. 44 Orders: The appellants are to provide security for costs of the appeal in a form as agreed between the parties, or as settled by the current Registrar of the Court of Appeal in the sum of $90,000.00 in respect of the appeal as it is against the 1st and 2nd respondents, and in the sum of $55,000 in respect of the appeal as it is against the 3rd to 14th respondents. The appeal is stayed until that security has been provided. The matter has been placed in the listing call-over at 2.30pm on Wednesday 7 June 2000 to allocate a hearing date. If security has not been provided by that date the Registrar may specify a date by which the security must be provided failing which the appeal will be dismissed for want of prosecution. 80% of the 1st and 2nd respondent's costs of their motion to be their costs in the appeal; 50% of the 3rd to 14th respondent's costs of their motion to be their costs in the appeal.

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Judgment (24 paragraphs)

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