25 Another consideration is whether the application for security has been brought sufficiently promptly. The third and fourth defendants, who are the applicants for security, were joined by order made on 6 April this year. They brought their application for security, after some preliminary inquiries, promptly, by motion filed 12 July. It has not been submitted that they are disqualified by delay from seeking security.
26 On balance, the factors which I have so far considered weigh in favour of making an order for security. However, against that is raised a significant argument that security should not be ordered against one corporate plaintiff, notwithstanding impecuniosity, if there are other natural plaintiffs against whom an order for security would not be made.
27 It is undoubtedly relevant to the exercise of the discretion to order security that there is one or more individual co-plaintiffs against whom an order for security could not or would not be made [Pearson v Naydler [1977] 1 WLR 899; Interwest Ltd v Tricontinental Corporation Ltd & Anor (1991) 5 ACSR 621, 635 (Ormiston J); Fiduciary Ltd & Ors v Morningstar Research Pty Ltd & Ors (2004) 208 ALR 564]. This appears to have originated with cases in which there was a plaintiff outside the jurisdiction (against whom security might be ordered) but also a plaintiff, albeit an impecunious one, within the jurisdiction. The view was taken that the defendant's position should not be improved by the mere circumstance that there was an additional plaintiff. In other words, as the defendant would not have been able to get an order for security against the impecunious plaintiff in the jurisdiction, it should be no better off by reason of the circumstance that a plaintiff outside the jurisdiction was also joined [Sykes v Sykes (1869) LR 4 CP 645; D'Hormusgee & Co v Grey (1882) 10 QBD 13]. The rationale of these cases was examined in this court by Studdert J in Maples v Hughes [2002] NSWSC 617, in the course of which his Honour referred to Harpur v Ariadne Australia Ltd (No 2) [1984] 2 Qd R 523; (1984) 8 ACLR 835, a decision of the Queensland Full Court in which a natural person was joined with three companies as plaintiffs. The leading judgment was given by Connolly J who (at 841) having posed the question "What is the rule when there is more than one plaintiff", proceeded:
The "two plaintiff" cases start with the situation in which one is out of the jurisdiction. Prima facie he ought to be ordered to provide security but his co-plaintiff is within the jurisdiction. In such a case it was considered that there was no ground for ordering security. See Sykes v Sykes (1869) 4 LR CP 645 at 648 per Byles J and Montague Smith J. This principle was held to apply even where the plaintiff within the jurisdiction was insolvent. I take the underlying reason to be that the defendant was really in no worse position than if he had been sued by a single plaintiff resident within the jurisdiction and insolvent. As Brett J remarked at 650, the cases show that, unless there is ground for making an order for security against all the plaintiffs, it cannot be made against any.
28 However, this is not an absolute rule, as appears from the judgment of Plowman J in John Bishop (Caterers) Ltd v The National Union Bank Ltd [1973] 1 All ER 707; see also Fiduciary Ltd v Morning Star Research. Where there is a complete identity between the corporate plaintiff and the individual plaintiff, so that all plaintiffs are suing in relation to one and the same defendant, and all plaintiffs must succeed or fail together, security will not ordinarily be ordered against only one of them [Bishop, 709-710]. But where the various plaintiffs' claims have different elements and aspects, so that they will not all necessarily succeed or fail together, although the existence of individual plaintiffs is a factor that diminishes the defendant's claim to be entitled to security against the corporate plaintiff, it does not extinguish it [Interwest Ltd v Tricontinental]. And where the degree of overlap between the claim of the individual and corporate plaintiffs is comparatively small, such that separate orders for costs might be made in respect of each of the plaintiffs, it is usually appropriate that an order for security be made [Bishop, 716; Fiduciary v Morning Star, 33-36].
29 In the present case, while all the plaintiffs rely on similar facts, they do not sue on the same cause of action. This is particularly so in respect of the Trade Practices claims. Each plaintiff separately has to prove reliance, and each plaintiff separately has to prove that plaintiff's own damages. Importantly, it is only in respect of the Trade Practices claims that liability is asserted against the third and fourth defendants.
30 Particularly on the questions of reliance and damages, the position of the fourth plaintiff Glen 8 differs significantly from those of the other plaintiffs, as I explained in the judgment of 6 April 2006. The individual plaintiffs essentially say that they relied on certain representations or assumptions about the use of Luna Park in purchasing their properties; that those assumptions or representations have been falsified; that the defendants' misleading conduct led to this result; and that as a result they paid more for their units than they were worth.
31 Glen 8, however, says that it relied upon misrepresentations, said to be contained in the relevant development applications, by proceeding with a commercial-to-residential conversion of its property, which it had already purchased; marketing units in it "off the plan"; exchanging contracts for sale of units; and losing the opportunity to consider the impact, on the saleability of the units that overlook Luna Park, of the operation of the amusement rides, and of determining whether to seek amendments to the development consent, or instead to abandon the residential development and proceed with a commercial development, or alternatively to retain existing tenants and proceed with no redevelopment at all. That is quite a different case of reliance and damage from those made by the other plaintiffs. Because of the differences in the cases that they make on reliance, it is quite conceivable that the fourth plaintiff could ultimately fail, and the other plaintiffs ultimately succeed. Accordingly, not only are the cases not entirely interlocked, but there is a substantial possibility of different outcomes for the fourth plaintiff and the individual plaintiffs.
32 Glen 8 submits that any and all of the plaintiffs can only succeed against the third and fourth defendants if they establish "involvement" within Trade Practices Act s 75B; but that does not mean that all the plaintiffs' cases are the same. It simply poses a further obstacle - not necessarily insuperable - to the case against the third and fourth defendants, which does not affect the case against Luna Park or Metro Edgley.
33 The rationale for the rule in Sykes v Sykes to which I have referred does not apply to this case for the further reason that the costs associated with the defence of the fourth plaintiff's case are likely to be much greater, because of the complex nature of its case on reliance and damages, than the costs associated with the defence of the case brought by the individual plaintiffs. This is not a case in which the defendant is no worse off as a result of the joinder of the fourth plaintiff: the costs and complexity of the case are significantly increased by the inclusion amongst the plaintiffs of Glen 8.
34 It is also relevant that the fourth plaintiff is essentially funding the whole litigation, having agreed to indemnify all the individual plaintiffs in respect of costs, except to the extent of a contribution which each of the individual plaintiffs has made. In that way it is Glen 8 that, above the other plaintiffs, is promoting the litigation; yet at the same time is seeking to hide behind the individual plaintiffs to avoid providing security for costs. In Fiduciary v Morning Star, Austin J observed that, in Pearson v Naydler, Megarry V-C had referred, on the exercise of discretion, to the circumstance that the plaintiff company in that case was in truth the only real plaintiff, the case not being one of a plaintiff company which had a natural person as a true co-plaintiff. The role of Glen 8 in this litigation is such that it is much more than a mere co-plaintiff of the natural plaintiff. The present circumstances may be distinguished from cases such as Harpur v Ariadne, in which the natural plaintiff was the prime plaintiff, who was not seeking shelter behind the company, and who should therefore not be in any different position from any other individual plaintiff by reason of joining corporate plaintiffs under his control for the purpose of establishing his own rights.
35 Submissions have been made as to the financial position of the individual plaintiffs, but I do not consider that they are relevant. Even if the individual plaintiffs were impecunious, so long as they are within the jurisdiction, no order for security would be made against them. If circumstances which take the corporate plaintiff outside the rule in Sykes v Sykes were not established, impecuniosity of the individual plaintiffs would not be a reason for making an order against a corporate co-plaintiff. But where the cases do not overlap and there is a potential for different costs orders in respect of different plaintiffs, the fact that the individual plaintiffs may be able to satisfy a costs order against them is no comfort to the position of the defendant who may fail against the individual plaintiffs but succeed against the corporate plaintiff, yet be unable to recover costs against it.
36 For those reasons, as a matter of discretion in my view an order for security should be made, and I come to the question of quantum.
37 The defendants rely on an affidavit of their solicitor, who estimates the costs of the proceedings to total in excess $642,275.
38 Although not exclusively, I generally accept the submissions of Mr Alexis SC as to the quantum of that estimate.
39 I do not accept that costs incurred prior to the application for security should be disregarded, and I would provide for costs incurred from the time of joinder of the third and fourth defendants to date. I accept that 40 hours for interlocutory hearings is excessive, and about half that time would be appropriate.
40 I accept that a rate of $600/hour for a partner solicitor, and $7000/day for senior counsel, is excessive, at least on party/party assessment. I regard the concession by Glen 8 of $430/hour for a partner, and $5000 a day for senior counsel, as generous, and I adopt it.
41 Making those adjustments, but restoring the previous partner solicitor costs from 6 May to June 2006, the claim is about $530,000, but even that I think - for the purposes of an application for security, which is necessarily an imprecise exercise in impression and involves balancing the interests of both parties - is excessive. I take into account that some of the costs which the defendants will incur will be incurred in the defence of the claims of the individual plaintiffs, which are not necessarily the responsibility of the fourth plaintiff. I think an order for about seventy percent of that sum, or $375,000 would be appropriate.
42 The majority of the costs will be incurred in preparation for and conduct of the trial. There is no reason why the whole of the security should be provided long before it is required, to secure costs that will not be incurred for some time. I propose to follow the course adopted by Moffitt J in Pacific Acceptance Corporation Ltd v Forsyth (1970) 92 WN (NSW) 29, by requiring security to be given for the pretrial component now, but for the trial component only when the matter is approaching final hearing.
43 My orders are: