Agmine P/L v Matpro Plastics P/L

[1993] FCA 466

4-Lb I 9 9 3

JUDGMENT No. ........ ........ .. I ........ ....

IN THE FEDERAIJ COURT OF AUSTRALIA )	NO. QG 96 of 1991
QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	1

BETWEEN: AGMINE PTY. LTD.

Applicant

AND :  MATPRO PLASTICS PTY. LTD. (IN LIOUIDATIONL

First Respondent

AND:  REX THIELE

Second Respondent

AND :  CHARLES WALTER LAYCOCK

Third Respondent

AND :  JAMES RONALD McKINNON

Fourth Respondent

JUDGE MAKING ORDER:
DATE OF ORDER:

WHERE MADE:

further order of the court.

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security for the second ;espondentrs costs up to and including the first day of the trial in an amount of $58,000.00 in a form acceptable to the Registrar.

2.        The applicant shall, by 16 July, 1993, provide security for the third and fourth respondents' costs up to and including the first day of trial in an amount of $22,000.00, in a form acceptable to the Registrar.

3.        In the event that security in accordance with order

1 is not provided by 16 July, 1993, the action is

stayed as against the second respondent until

4.        In the event that security in accordance with order

4 is not provided by 16 July, 1993, the action is

stayed as against the third and fourth respondents
until further order of the court.

5.        The applicant has liberty to apply to vary orders 1 and 2 in the event that the liquidator takes over the conduct of this action from the receiver.

6.        The applicant pay the costs of the second, third and fourth respondents of this application for security, to be taxed.

NOTE:  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )	No. QG 96 of 1991
DUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	)

BETWEEN: AGMINE PTY. LTD.

Applicant

AND:  MATPRO PLASTICS PTY. LTD. (IN LIOUIDATIONL

First Respondent

AND:  REX THIELE

Second Respondent

AND:  CHARLES WALTER LAYCOCK

Third Respondent

AND:  JAMES RONALD McKINNON

Fourth Respondent

Coram:  Drummond J

Place: Brisbane

Date:  30 June, 1993

REASONS FOR JUDGMENT

The second respondent and the third and fourth that the applicant provide security for their costs of the	respondents, who are separately represented, apply for orders	action. The applicant was wound up on Monday last, 25 June
1993. The evidence indicates that it has long been in
financial difficulties.
It is the receiver appointed by Mr. Sakzewski, a director of the applicant, who is conducting the action for the benefit of Mr. Sakzewski as grantee of the security under which the receiver was appointed. It was pointed out that if the receivership produces an excess of moneys secured to Mr. Sakzewski, the liquidator of the applicant will benefit, but neither Mr. Sakzewski nor his receiver, who both swore affidavits, gave any evidence touching on whether this is a possibility. There was, in particular, no evidence as to what assets of the applicant additional to this right of action are available to the receiver. Mr. Sakzewski's security is also not in evidence.
I infer from the evidence as to the applicant's financial position, including the fact that it has now been wound up, and from what the receiver says in paragraphs 3 and
4 of his affidavit, that it is Mr. Sakzewski who is funding
the receiver in pursuing the present action. I infer that it is Mr. Sakzewski, in his capacity as the only secured creditor of the applicant, who will benefit from this action if it is successful and that it is unlikely that, even if the action is successful, the liquidator will benefit.

In Bell Wholesale Co. Ltd. v Gates Export Corp.

(1984) 2 F.C.R. 1 at 4, it was said:

"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 (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the parties seeking security to raise the matter; it is an essential part of a case of a

company seeking to resist an order for security on the ground that the granting of 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."

The receiver says that the action will be stifled if an order for security, apparently any order at all, is made. He says he does not have access to any funds from which to provide security and Mr. Sakzewski has told him that he is not in a position to provide security. If Mr. Sakzewski is prepared to fund the receiver in running the action, it is not readily believable that any order for security, no matter how small the amount may be, will stifle the action. Yet that is what the receiver unequivocally asserts.

I refer to this because it highlights the way the applicant's response to the demands for security has been formulated. That response consists of assertions by the receiver and by Mr. Sakzewski, without any evidence that demonstrates the reliability of those assertions. Mr.

Sakzewski, as the person who will benefit from the action,	simply says: "I have no capacity to provide security in the
sums sought in the applications." The second respondent seeks in his application security in such amounts as the court thinks fit. The third and fourth respondents' application is not as clear as that, but the amount ordered by way of security, if the circumstances call for such an order, is always in the court's discretion.

While Mr. Sakzewski has, in terms of the

Wholesale decision, sufficiently raised as an issue whether he can provide security for the second to fourth respondents' costs, he has not attempted to prove the facts necessary to demonstrate that. In other words, the applicant has failed to discharge the burden of showing such impecuniosity on the part of Mr. Sakzewski: Brian E. Fencott Ptv. Ltd. v Eretta Ptv. Ltd. (1987) 16 F.C.R. 497 at 511.

There is no evidence as to Mr. Sakzewski's assets; no evidence as to his capacity to put up some form of security; I am not given any reason why he is apparently not prepared to put up a personal guarantee, which, irrespective of Mr. Sakzewski's personal worth, would be of some relevance in the circumstances of this application. I am in the position of simply having no information about Mr. Sakzewski's personal financial position. He could have been expected to have put such information before the court if it were likely to demonstrate that he too, is in financially straitened

circumstances. I do not therefore regard what the receiver	and Mr. Sakzewski assert about the action being stifled as
sufficient to preclude an order being made that the applicant provide security for the second to fourth respondents' costs.
The first respondent is in liquidation. The third and fourth respondents are directors of the first respondent. The second respondent was the first respondent's consultant accountant. In the further amended statement of claim, the applicant alleges that the second respondent participated in the management of the first respondent and was involved in negotiating a sale agreement out of which the action arises. Under this agreement, made in late August 1989, the applicant was to acquire certain of the first respondent's plant in exchange for an allotment of shares in the applicant. For its part, the applicant allotted the shares to the first respondent, as was required by the agreement.
The applicant now claims damages from the various respondents. Claims against all respondents are made by the applicant in fraud, in negligence and in respect of conduct contravening S. 52 of the Trade Practices Act 1974. The applicant also alleges that the first respondent breached the sale agreement: firstly, by failing to deliver certain of the items of plant sold ($324,000.00 is claimed here as damages) and, secondly, by delivering certain other items of plant that have not been first put into good order as required by the agreement. While the total amount claimed under this second
of a multitude of small charges which are particularised. Mr. head is not set out in the applicant's pleading, it is made up
Keen, who has sworn an affidavit on behalf of the second respondent, says that the two claims total approximately $541,000.00. The same amounts as are claimed against the first respondent by way of damages for breach of contract are also claimed under the Trade Practices Act, in fraud and in negligence against the second to fourth respondents. Each respondent is alleged to have misrepresented to the applicant in the pre-contractual negotiations that the first respondent would have the financial capacity to carry out certain repair work on the plant it was to transfer to the applicant which the first respondent was obliged to do under the agreement. These misrepresentations are said to have caused the applicant to enter into the agreement on 31 August, 1989.
In his defence, the second respondent denies the essential allegations against him with respect to the making of the representations and the claim in negligence. He is not, of course, concerned with the applicant's claim for damages for breach of contract, which is only made against the first respondent. The second respondent also alleges that, prior to the making of a sale agreement, the applicant became well aware of the first respondent's poor financial position and, in particular, of its inability to fund the work on the plant that it ultimately agreed to sell to the applicant, which is the subject of the applicant's claims in respect of the pre-contractual misleading conduct and in negligence. The
applicant's awareness of this in great detail. He refers to second respondent pleads the facts he relies on to show the
many communications with representatives of the applicant. The applicant's only response to these very detailed allegations is to either deny or not admit them.
Much the same answer as that set up by the second respondent to the claims by the applicant based on the contractual misrepresentations and in negligence is also set
up by the third and fourth respondents. Their defence has provoked the same brief response, with the applicant denying or not admitting the relevant allegations.
It is submitted by the second, third and fourth respondents that this is a case in which it can be said with some certainty that the applicant's claims against them do not have strong prospects of success. There is, I think, substance in this submission insofar as it relates to the applicant's claims based on the plant sold not being in good order are concerned, given, firstly, that the core of the case against these three respondents is the allegation that they misrepresented to the applicant before contract that the first respondent would have the financial capacity to put the plant into good order before delivering it to the applicant; secondly, the detailed allegations in the defences of these three respondents concerning the knowledge of the first respondent's incapacity to fund the repair work which the applicant had before it contracted with the first respondent;
produced in the applicant's replies to these defences. and, thirdly, the response these detailed allegations have
Counsel for the applicant responds to the submission as to the weakness of the applicant's case against the three respondents here concerned, by referring to the particulars in paragraph 9 of the further amended statement of claim to show that there is a real basis for the claim that the applicant was induced to contract with the first respondent because of representations as to its financial capacity. These particulars include three of the letters, exhibits "B", "C" and "D" , to Mr. Sakzewski's affidavit, which are also relied on by the second, third and fourth respondents in their defences. I note that exhibit "E" to Mr. Sakzewski's affidavit, a letter dated 4 July, 1989, contains what appears to be an unequivocal statement by the third respondent that the second, third and fourth respondents would themselves provide the funds needed to bring all the equipment required for the joint venture then proposed, but which appears never to have proceeded, up to a good working standard. I also note what W. Sakzewski has sworn to in paragraph 1 of his affidavit.
Ordinarily this material would be sufficient to show that, so far as the application now before me is concerned, this is another of those common cases in which the court is not in a position to form any reliable view as to the strength or weakness of the applicant's claims in the action. However,
'the defences refer, in great detail, to discussions between the applicant and the second to fourth respondents after 4
July, 1989, but before the contract was made, in which it was repeatedly explained to the applicant, among other things, that the only funds that the first respondent had available to spend on plant repairs were a bank facility under which, as at the start of July 1989, $75,000.00 was available. By 25 July, 1989, $31,000.00 of this facility had been drawn down for repairs. See, particularly, paragraphs 12(z), (af), (aj),

(ak), (al) and (aq) in the third to fourth respondents' defence. The second respondent's defence contains similar allegations. As I have said, in reply the applicant merely denies or does not admit these allegations. Moreover, I was not referred by the applicant to any other evidence, apart from what is to be inferred from its denials to these particular allegations, that might suggest that it has a good answer to them.

Although the applicant claims not only against the first respondent, but also against the second, third and fourth respondents, in respect of the failure of the first respondent to deliver all the items of plant agreed to be transferred by the first respondent to the applicant, it is not clear from the further amended statement of claim or from any material now before me, how the applicant links its losses so caused with the pre-contractual statements allegedly made by the second, third and fourth respondents, concerning the first respondent's financial capacity to put the plant into

good order, which are said to have induced the applicant to

conclude the sale agreement. The case the applicant here

seeks to make out against the second, third and fourth respondents seems to be that, as a result of the pre- contractual misrepresentations and negligence for which they are responsible, the applicant entered into the sale agreement and, for that reason, those respondents are liable to make good, not only the losses the applicant suffered due to the first respondent's failure to put the plant into good order, but also other losses the applicant, as a result of having entered the agreement, has suffered due to non-delivery by the first respondent of certain of the plant. These losses are not, on the material before me, said to be connected in any other way with the misrepresentations and negligent conduct alleged by the applicant against the second to the fourth respondents. No submissions were advanced by any party on this aspect of the applicant's claim against these three respondents.

AS to the applicant's claim in fraud against the second to the fourth respondents, the three respondents each plead that the formulation of the claim does not disclose a cause of action and should be struck out. Gould v Vaaaelas (1983) 157 C.L.R. 215 is authority for the proposition that, in an appropriate case, a defrauded purchaser can recover losses in addition to the difference between the true value of the property at the date of the sale and what he paid for it. However, the additional losses must result directly from the

the second to fourth respondents with respect to the losses	fraud: see pages 221-2. The case in fraud alleged against
suffered by the applicant due to non-delivery of plant appears to be one in which losses flowed to the applicant because the applicant entered into the contract, which it was in turn induced to make because of the misrepresentations of those three respondents. It thus appears to be a case that concerns losses resulting only indirectly from the misconduct alleged against those respondents.

As to the applicant's claim under S. 82 of the Trade Practices Act with respect to the losses due to non-delivery, it is not immediately apparent that losses are recoverable where those losses are connected with the conduct complained of only because the sale agreement induced by that conduct became the setting in which the applicant suffered the losses. The same causation problems seems to me to arise with respect to the applicant's claim in negligence to recover these particular losses from the second to the fourth respondents.

I think it is proper to place weight on what appears in the applicant's pleadings, when read with the defences, in assessing the quality of the claims which the applicant makes against the second to fourth respondents, both in respect of the failure to put the plant into repair and in respect of non-delivery of plant. The action has had a tortuous history and it has taken the applicant a long while to formulate the case now appearing, in considerable detail, in its further amended statement of claim and in its replies to the defences.

that the applicant's claims against the second to the fourth	I think that it is appropriate to conclude from this material
respondents are not, on the evidence, particularly strong ones. This tells in favour of the claimants for security.
The applicant also submitted that its entry into the agreement, said to be wrongly caused by the conduct of these three respondents, was one of the causes of its insolvency. Mr. Sakzewski says that a significant factor in the applicant's impecuniosity was having to pay about $248,000.00 to rectify the first respondent's breaches of the sale agreement. This includes an unquantified, but no doubt large, sum in respect of the repairs to the plant delivered which Mr. Sakzewski says the applicant had to make because of the first respondent's failure to do so. However, Mr. Keen, the solicitor for the second respondent, makes out a substantial case that the applicant has always, in its relatively short life, been in financial difficulty. His evidence is unchallenged.
I accept that the conduct of the respondents, which is the subject of the applicant's claims, contributed to its insolvency. However, given that the applicant has long been impecunious and that no attempt was made by the applicant to identify the impact on its fortunes of the conduct of the respondents, I am not prepared to treat this as sufficient to outweigh the considerations that point to an order for security in favour of the three respondents.
Counsel for the applicant submits that the action will proceed against the first respondent even if the action is stifled as against the second to fourth respondents because orders for security are made. This is in accordance with the receiver's assertion. I am not prepared to accept that there is a real prospect that, if the applicant should truly be precluded by a security order from continuing any action against the second to fourth respondents, the receiver will pursue an action in which only damages are claimed by the applicant against the first respondent, a company now in liquidation, just because the receiver so asserts. The absence of any explanation at all for such a prima facie unusual assertion, either by the receiver or by Mr. Sakzewski, upon whom the receiver will have to rely to fund such an action, suggests that it is made merely to provide an evidentiary foundation for the submission put on behalf of the applicant that security should not be ordered, because that will not put an end to the entire action.
But even if the receiver were to choose to pursue the action only against the first respondent, and not to continue proceedings against the second to fourth respondents in the face of a security order in favour of the second to fourth respondents, those respondents, as beneficiaries of security orders, will not be exposed to the risk of having unsatisfiable costs orders against the applicant if the action proceeds against them and their defences are successful. That
costs. I do not think that respondents otherwise entitled to is the very object of the jurisdiction to order security for
security should be deprived of that protection for themselves merely because the issues as between the applicant and those respondents will still be litigated as between the applicant and another respondent, who does not seek security for its costs.
The applicant relied upon an unreported decision of Pincus J, Mainbanner Ptv. Ltd. v Dadincroft Ptv. Ltd. (Federal Court, 4 October, 1988). I do not think it provides any support for the applicant's submission that a factor which I should take into account in declining to order security is that, even if security is ordered against the second to the fourth respondents and the action for that reason stops as against them, it will nevertheless continue against the first respondent.
In Mainbanner, natural persons along with a company were applicants. As I read the judgment, the natural persons had one claim against the respondents that overlapped the claim of the corporate applicant, and another separate, but related, claim which the natural applicants were pursuing on their own account. It appears that it was because the order for security that his Honour apparently had in mind would probably stifle the claim in which all three applicants were interested, but leave the natural applicants free to pursue
their own separate claim, and because the claims were connected that his Honour declined to order security so as to
prevent the court being faced with "a truncated suit which cannot be properly handled by the Court".
However, I have difficulty in identifying just what was there decided. His Honour seems, at one point, to have been prepared to order security, at least with respect to the claim in which all three applicants were involved, against the company and the natural applicants, notwithstanding authority to which he referred suggesting that in such a situation no order for security should be made against anyone as the respondent had a natural applicant to look to for all the costs he would incur in defending the overlapping claims by the company and the natural person. His Honour, applying his initial approach, could have easily ordered security against the natural applicants with respect to all their claims as used as against the company yet, for reasons that I find some difficulty in identifying, he declined to do that.
It was next submitted that no order should be made against a company which, like the applicant, was in liquidation because that would fetter the discretion of the liquidator with respect to the adoption of the litigation. I was referred to S~eil v Commoditv Brokers Australia Ptv. Ltd. (1983) 8 A.C.L.R. 410, a decision of the Full Court of South Australia. The essence of the decision, so far as is presently relevant, appears from the headnote:

remember that the instant claim was really being	"It was relevant in the exercise of discretion to
brought by the liquidator who was an officer of the court and had available to him information which reasonably suggested to him that the applicant owed a substantial sum to the respondent. The liquidator's duty was to take reasonable steps to recover what he could for creditors and shareholders. Moreover, he had a duty to the court.
It would be unjust and inequitable to impose on the respondent the burden of providing security for the appellant's costs. For the easy victory which an order for security would produce would cause greater hardship than would the possibility that the appellant would not be able to collect costs ordered
in his favour. "

That sort of consideration has, I think, no relevance to this case, where it is the receiver for a secured creditor who, with assistance from that creditor, is maintaining the action for the benefit of the creditor rather than the liquidator, and where there is no evidence to suggest that the liquidator will ever be in the position of having to decide whether to adopt the action. It may be appropriate, however, to give the applicant liberty to apply to vary any order for security in the event that the liquidator takes over the conduct of the action in place of the receiver or is in a position where he has to consider whether he should take over conduct of the action in place of the receiver.

It is also submitted on behalf of the applicant that
the instructions for the second respondent's defence come from

the second respondent's professional indemnity insurer. In

Remm Construction (SA) Ptv. Ltd. v Allco Newsteel Ptv. Ltd. (1992) 57 S.A.S.R. 180, the Chief Justice, with whom Prior J

agreed, said at 186:

"I can see no reason to treat an action against a defendant who is insured against liability differently from one in which the defendant has no such insurance. In weighing the factors affecting the provision of security for costs, the ability of a defendant to absorb the costs, if he is unable to recover them from the plaintiff, is a relevant consideration. Any insurance cover would be relevant in assessing that factor. That, to my mind, is the only relevance which the existence of insurance cover can have, whether such insurance has been taken out of the defendant's own volition or, as contended here, in compliance with a term of the contract with the plaintiff."

It had been argued that, for the court below to have treated the evidence of the defendant's insurance against liability in that way, was an error of principle and that the existence of such insurance should ordinarily require a refusal of security. The Chief Justice clearly rejected that approach.

I proceed on the basis that because the second respondent has professional indemnity insurance, even if security is not ordered, he will not personally be out of pocket, in the sense of having outlaid costs in his defence that are irrecoverable from the applicant, if he succeeds in the action. Against that, he has presumably had to purchase any such protection by paying for that insurance. I am not prepared to hold that the fact that the second respondent appears to have purchased insurance against the particular

the right to require his insurer to conduct his defence, is a	liability with respect to which he is sued, and purchased also
matter sufficient to justify denial of security in a case such as this, where there are several factors that favour the grant of security.
The applicant submitted that this case is unusual in that the second respondent and the third and fourth respondents are separately represented and that such should be taken into account in deciding whether security should be ordered and, if so, in what amount. This factor is of little relevance, in my view, to either issue, since it was conceded by the applicant that there are prospects of the applicant succeeding against one or other of these three respondents, but not against all of them, and since the case is not one in which all three respondents will necessarily be liable for every representation that may be found to be made by each.
The question of delay on the part of these three respondents in applying for security also requires consideration. The action was commenced on 12 July, 1991. The applications for security were only filed earlier this month. The applicant has incurred a lot of expense in getting the action to the point it has now reached, namely the close of pleadings and the completion of partial discovery and inspection. Ordinarily, such delay in filing application for security against that sort of background would be good grounds for denying any security. However, the applicant has had
great difficulty in formulating the claim now made in the further amended statement of claim. What I have referred to
as the tortuous history of the litigation is summarised in Mr. Keen's affidavit. The respondents have been put to much expense with respect to the pleadings, the particulars and discovery, that they would have escaped if the applicant had taken the trouble to formulate its claims with some clarity at an early stage of the action when it should have done so.
Moreover, in May 1992, long prior to the applicant delivering what I take to be its final statement of claim, the second respondent wrote to the applicant calling on the applicant to provide security for his costs. By June 1992 the second respondent had an offer from the applicant to provide substantial security for his costs to the extent of $45,000.00. The security was to be in the form of personal guarantees and cash from Mr. Sakzewski, Mr. Carrington and Mr. Black, the shareholders in the applicant's parent company. This offer was in respect of the second respondent's costs from May 1992, when the matter of security was raised, up to the commencement of the trial. I conclude from this offer, from the terms of the deed with respect to security submitted by the second respondent to the applicant's solicitors shortly thereafter and from the subsequent events set out in Mr. Keen's affidavit, that Mr. Sakzewski and the two other shareholders in the applicant's parent company agreed with the second respondent to provide security to the extent of $45,000.00. They then appear to have changed their minds.
However, it was not until shortly before the applications for security were filed that it became clear to the second
respondent from the conduct of the applicant and the three shareholders I have mentioned, that they would not make good their offer of June 1992. There is no explanation in the applicant's material for the change of mind on the part of those prepared to support it prior to about April last. In April last Mr. Sakzewski appointed the receiver, to whom I have already referred, such that it now appears that only he will benefit from the action. But there is a long period of time before the receiver was appointed in respect of which the change in the position of those supporting the applicant is unexplained. As I say, no light is thrown upon the question of why there was this change of mind on the part of the three shareholders I have mentioned. There is also no explanation from Mr. Sakzewski as to why he could not, at the very least, still provide the guarantee for $15,000.00 that he was willing to provide in 1992.
I think the second respondent should have security for his costs from May 1992, when he raised the matter with the applicant, up to and including the first day of trial. It is common ground that the parties all want liability to be determined in advance of quantum. Although no order for the trial of liability as a separate issue has yet been made, it may well be appropriate for that course to be followed. However, I do think that the order for security should include an order for security for the first day of a trial limited to
the issue of liability.
It is not possible, on the material before me, to reach any precise estimate of what the second respondent's recoverable party and party costs from May 1992 to the first day of the trial are likely to be. I reject Mr. Perrott's estimate as far too conservative. Mr. Keen does not give sufficient detail to enable a precise estimate to be made, but I propose to rely essentially on what he says. Doing the best I can, and having regard to the course of the litigation since May 1992, I think the second respondent should have security for $58,000.00, made up as follows:
(1) Costs to date

Costs to date as per $

paragraph 74 of

Mr. Keen's affidavit 58,000.00

Less costs incurred to May

1992 (see exhibit "RDK3") 23,000.00 32,000.00

(2) Costs from now to start of trial

Estimated costs to start of

trial as per paragraphs 75 and 76 of Mr. Keen's

af f idavit 22,000.00

Less costs claimed by Mr.

Keen in respect of

interrogatories 2,000.00

Less costs of immediate pre-

trial preparation as per

paragraph 78 of Mr. Keen's

af f idavit 10,000.00 10,000.00

(3) Costs of immediate pre-trial

preparation as per

paragraph 78 of Mr. Keen's

af fidavit

(4) Costs of first day of trial

I assume that the work which Mr. Keen refers to in paragraph 79 of his affidavit will be taken up in the work he refers to in paragraph 75(e) and (f) and so I make no allowance for the costs claimed in paragraph 79.

The third and fourth respondents are also entitled to an order for security, but they have only recently shown an interest in the matter. I therefore think they should have security only from the filing of the application on their behalf in June to the first day of the trial, for $22,000.00, made up as follows: firstly, costs of remaining interlocutory steps, say $6,000.00; secondly, costs of the immediate pre- trial preparation, say $10,000.00; thirdly, costs of the first day of the trial, say $6,000.00, giving a total of $22,000.00.

The order of the court will be that the applicant shall, by 16 July, 1993, provide security for the second respondent's costs up to and including the first day of the trial in an amount of $58,000.00 in a form acceptable to the Registrar, and that the applicant shall, by the same date, provide security for the third and fourth respondents' costs up to and including the first day of trial in an amount of $22,000.00, also in a form acceptable to the Registrar.

I will give the applicant liberty to apply to vary these orders in the event that the liquidator has under consideration taking over the conduct of this action from the receiver.

I propose to order that the applicant pay the costs of the second, third and fourth respondents of this application for security, to be taxed.

I certify that the preceding 22
pages are a true copy of the
reasons for judgment herein of the

Honourable Mr. Justice Drummond.

Associate:

Date :  30 June, 1993

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