Botsman v Bolitho
[2018] VSCA 111
•7 May 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0037
| WENDY DIANE BOTSMAN | Applicant |
| V | |
| LAURENCE JOHN BOLITHO (and others according to the attached Schedule) | Respondents |
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| JUDGES: | WHELAN and NIALL JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 30 April 2018 |
| DATE OF JUDGMENT: | 7 May 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 111 |
| JUDGMENT APPEALED FROM: | Re Banksia Securities Limited (Rec & Mgr Apptd) (in liq) (No 2) [2018] VSC 47 (Croft J) |
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PRACTICE AND PROCEDURE – Application by first respondent for security for costs of application for leave to appeal and appeal – Where evidence that applicant owns real property unencumbered by registered interest – Where proposed grounds of appeal reasonably arguable and may raise issues of general application – Where order for security may stultify appeal – Application refused – Rule 64.38 Supreme Court (General Civil Procedure) Rules 2015.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr C H Withers | -- |
| For the First Respondent | Mr N J O’Bryan SC with Mr M W L Symons | Portfolio Law |
WHELAN JA
NIALL JA:
Introduction
On 10 April 2018, the first respondent, Laurence Bolitho, applied for an order that the applicant, Wendy Botsman, provide security for his costs in respect of her application for leave to appeal and, if leave is granted, the appeal. Leave to appeal is sought from a decision of a judge in the Trial Division to approve the settlement of a group proceeding brought following the collapse of Banksia Securities Limited (‘Banksia’). Mr Bolitho seeks security in the amount of $184,630.60.
Banksia was a non-bank property lender which had failed and, as a result, owed some $663 million to approximately 15,622 debenture holders and had 956 loans outstanding to third party borrowers totalling approximately $527 million. Both Ms Botsman and Mr Bolitho were amongst the debenture holders. The Trust Company (Nominees) Limited (‘Trust Co’) had been appointed by Banksia as trustee and held a fixed and floating charge over the assets of Banksia on trust for the debenture holders.
There are some features of the application for leave to appeal that have some unusual dimensions. It is necessary in order to resolve the present application to refer to the broader context of the litigation and the approval decision.
The settlement approval decision
There were two proceedings before the primary judge which were the subject of an application for approval.
The first proceeding was brought on behalf of debenture holders as a class action in which Mr Bolitho was the lead plaintiff (‘Bolitho group proceeding’). Ms Botsman was a member of the class. Damages and interest was claimed against both Banksia and Trust Co and a number of other defendants, including legal and financial advisers. The Bolitho group proceeding was funded by a litigation funder, BSL Litigation Partners Limited (‘BSLLP’). As at the date of settlement, the claim was for a maximum sum of approximately $222 million.
The second proceeding was brought by Banksia through its special purpose receivers, John Lindholm and Peter McCluskey (‘SPRs’), against Trust Co (‘Banksia proceeding’). The SPRs sought to recover losses alleged to have been suffered by Banksia as a result of Trust Co’s breach of certain duties alleged to have been owed by it to Banksia.
On 4 December 2017, Mr Bolitho, BSLLP, Banksia,[1] the SPRs and Trust Co executed a deed of settlement (‘Settlement Deed’) in settlement of both proceedings. An earlier partial settlement of the claims against the defendants other than Banksia and Trust Co was approved by Robson J.[2]
[1]On 24 June 2014, liquidators of Banksia were appointed for the purposes of winding up Banksia.
[2]Re Banksia Securities Limited (Rec & Mgr Apptd) [2017] VSC 148.
Following settlement, two applications were made to the Court to give effect to the settlement.
The first was an application in the Bolitho group proceeding for approval of the settlement as required by s 33V of the Supreme Court Act 1986.
The second, but related, application was brought by the SPRs seeking relief by way of a judicial direction from the Court pursuant to s 283HB of the Corporations Act 2001 (Cth) or, alternatively, an order under s 37 of the Supreme Court Act that the SPRs:
(a) have the power to settle the claims made against Trust Co in the Banksia proceeding and the Bolitho group proceeding on the terms set out in the Settlement Deed; and
(b) are justified in causing Banksia to settle its claims against Trust Co in the proceedings on the terms set out in the Settlement Deed.
By the time the proceedings settled, there had already been a relatively substantial return to the debenture holders. The SPRs had obtained a return to debenture holders of 82 cents in each dollar of outstanding principal. Taking into account accrued interest, this represented a true return of approximately 76 cents in the dollar. We infer that this amount was realised through the realisation of secured loans under mortgage. There was also a further recovery under the partial settlement.
At the time of settlement, there was $172 million in outstanding principal and accrued interest owing to the debenture holders under the Banksia Trust Deed.
In summary, the Settlement Deed provides that:
(c) Trust Co will pay the settlement sum ($64 million) into a trust account for the solicitors for the plaintiff in the Bolitho group proceeding (Mr Bolitho);
(d) Trust Co will release and discharge Banksia and its creditors from all claims for remuneration or indemnity of any kind under the Banksia Trust Deed;
(e) the plaintiff in the Bolitho group proceeding, Banksia and the SPRs will release Trust Co from the claims made in the proceedings and other possible claims; and
(f) the settlement sum will be distributed as follows:
(i) payment of a funder’s commission of $12.8 million (plus GST) to BSLLP;
(ii) payment of the legal costs and disbursements incurred by BSLLP in the conduct of the group proceeding in the sum of $4.75 million (plus GST) to BSLLP (to the extent to which those legal costs and disbursements are not to be satisfied from the sum of approximately $1,757,000 presently held on trust by BSLLP for group members);
(iii) payment of the sum of $75,000 by way of reimbursement to the plaintiff in the Bolitho group proceeding; and
(iv) thereafter the balance of the settlement sum will be distributed by the solicitors for the plaintiff in the Bolitho group proceeding, with the assistance of BSLLP, to all debenture holders on a pari passu basis.
As already noted, the settlement was reached by way of Settlement Deed dated 4 December 2017. On 7 December 2017, an application for approval was lodged with the Court. On 8 December 2017, a directions hearing was held in which it was directed that notice of the settlement, the application for approval and the date of the hearing of that application be provided to all group members in the Bolitho group proceeding. Provision of notices of objection was ordered to occur on or before 19 January 2018, and the hearing of the application for approval was fixed for 30 January 2018.
Two written objections were received by the Court. It is unclear whether only one of those (being an objection made by a Keith Pitman) was made in accordance with the timetable set by the Court on 8 December 2017. Nevertheless, in his reasons for judgment, his Honour recorded that objections had been received from both Mr Pitman and Ms Botsman.[3]
[3]Re Banksia Securities Limited (Rec & Mgr Apptd) (in liq) (No 2) [2018] VSC 47 [18], [41] (‘Reasons’).
Ms Botsman’s written objection to the proposed settlement was contained in a document prepared by her son, Chris Botsman, a barrister practising in New South Wales. It appears that two versions of the objection were provided, the second of which was provided shortly before the hearing of the application for approval. It contained the following paragraphs:
The timing of the Notice is unfortunate.
The Notice was posted on or about 18 December 2017, a week before Christmas. My mother did not receive the Notice until she returned to Adelaide from holidays in the first week of January 2018. In the first week of January 2018 I was on holiday. I did not return to chambers until the week of 15-19 January 2018. I leave for Europe on Saturday 20 January 2018 and do not return to chambers until Friday 2 February 2018. Consequently, I will not be able to attend the proposed settlement hearing on 30 January 2018.
These facts illustrate a significant problem: the combined limited availability of debenture holders and their lawyers over the holiday season would make it difficult for debenture holders to obtain advice regarding the Notice and would occur in a period in which the motivation of debenture holders to focus on legal disputes was low.
…
6.It is not clear how the commission of $12.8 million has been arrived at. Assuming, conservatively, that the Settlement Sum is being split between the Plaintiff and the Liquidator, then according to the calculations used in the partial settlement, the commission to which the Plaintiff is entitled is $32 million (representing the Plaintiff’s half of the Settlement Sum) x 30 per cent (contractual entitlement) x 55 per cent (representing the proportion of debenture holders who are group members) or $5.28 million. Based on the formula employed in the Partial Settlement, the Plaintiff’s funder is receiving a windfall of $7.52 million (i.e., $12.8 m — $5.28). This arithmetic is concerning for a number of reasons:
a.First there is no transparency around the calculation of the commission;
b. Second, the commission being claimed by the Plaintiff appears to be inconsistent with the Partial Settlement; and
c.Third, the Special Purpose Receiver, who appears to have made most of the running and who is therefore entitled to at least 50 per cent of the Settlement Sum, appears willing to agree to the Plaintiff obtaining a $7.52 million windfall in the interests of getting the settlement through.
…
8.Relatedly, I note that the Notice makes no reference to the views of the Committee. What is the Committee’s view? Has the Committee been furnished with independent advice? Has the Committee been canvassed for its view?
…
14.I object to the timing of the Notice and respectfully submit that the proposed settlement hearing should be deferred;
15.I respectfully submit that a contradictor should be appointed to represent the interests of debenture holders. In circumstances where separate contradictors have been appointed in connection with the Fee Application and the Partial Settlement, it would be incongruous not to appoint a contradictor in relation to a global settlement involving significantly greater sums of money. Especially in the absence of any reference to the views of the body that it [sic] notionally supposed to represent the interests of debenture holders (the Committee), a contradictor is necessary to ensure that the interests of the debenture holders are represented. Since the debenture holders have not been afforded an opportunity to review the terms of the settlement deed, the contradictor should be provided with a copy of the deed. The contradictor should also be asked to consider whether the Plaintiffs [sic] concerns about recovery are justified. Given the elevation [of] Mr O’Callaghan QC to the bench, the obvious candidate to fill the role of contradictor is Mr Collinson QC[4]
[4]Emphasis in original. Citations omitted.
Ms Botsman did not appear at the hearing of the applications for approval.
The evidence before the judge on the approval applications included the following:
(g) an affidavit of Mr Lindholm sworn 9 January 2018 that described the process of settlement;
(h) an affidavit of Peter Trimbos of 4 January 2018 which exhibited a confidential report on costs prepared by Mr Trimbos stating that legal costs incurred by Mr Bolitho of $5,294,770.44 were reasonably incurred and in a fair and reasonable amount; and
(i) written advice from each of senior counsel for Mr Bolitho and from senior counsel for the SPRs on the appropriateness of the settlement.
Confidentiality orders were made in relation to the affidavit of Mr Lindholm, the advices of counsel on the merits of the proceeding, and the confidential report on costs.[5] There was some dispute between the parties on the current application about the extent to which those orders precluded Ms Botsman from inspecting the confidential costs report. It is not necessary for us to resolve that dispute.
[5]See Reasons [10].
His Honour referred to and adopted the relevant principles that had been applied by Robson J on the earlier approval application.[6] The judge concluded that there were three essential factors that favoured approving the proposed settlement.[7]
[6]Ibid [46].
[7]Ibid [52].
The first factor was that his Honour was satisfied that Trust Co contributed everything that was available to it towards the settlement of the claims.[8] In that regard, his Honour noted that the total limit of liability under Trust Co’s professional indemnity insurance policy was $75 million (inclusive of defence costs). Of that, approximately $13 million had been depleted in defending the proceedings and Trust Co otherwise had no material assets available or any source of funds to contribute to the settlement of the proceedings.[9]
[8]Ibid [54]–[56].
[9]Ibid [53].
The second factor accepted by his Honour was that the figure of $64 million fell within a reasonable settlement range. That conclusion was reached having regard to the advice of senior counsel and on the assumption that a judgment against Trust Co of over $170 million could be satisfied. His Honour was satisfied that the settlement sum was reasonable in light of the not insignificant risks in prosecuting Banksia’s claims, the likely delay that would be occasioned by bringing the matter to trial and obtaining judgment, and the risks of a large adverse costs order if unsuccessful.[10]
[10]Ibid [57].
The third factor was that the proceedings were settled following an extended process. In particular, his Honour noted that Mr Bolitho and the SPRs had sought and obtained advice from senior counsel as to the parameters of a reasonable settlement, they had engaged in an extensive negotiation process involving multiple mediations, and the SPRs regularly consulted with, and sought the feedback of, the debenture holder committee (‘the committee’) as to a reasonable settlement figure. The committee had expressed its overall support for the proposed settlement with Trust Co.[11]
[11]Ibid [58].
His Honour concluded that the proposed settlement of the claims against Trust Co was reasonable and represented a good commercial outcome for debenture holders. His Honour stated that his conclusion was reinforced by the following matters:
(j) Trust Co’s insurance and financial position;
(k) the unwillingness of Trust Co’s ultimate parent company, Perpetual Limited, or any of its related entities to indemnify or contribute at all to any judgment against Trust Co;
(l) the extensive and robust negotiations that Mr Bolitho and the SPRs had had in reaching settlement;
(m) the advice of trial counsel as to reasonable settlement parameters;
(n) the demographic of debenture holders and the likely delay of any financial distribution were Banksia to prevail at a full trial; and
(o) the support of the committee.[12]
[12]Ibid [60].
His Honour concluded that the legal costs were reasonably incurred and that it was appropriate for the sum of $5,225,000 to be paid from the settlement sum.[13]
[13]Ibid [63]–[71].
In relation to the litigation funder’s commission, his Honour noted that the funding agreement that had been agreed to by around 55% of the group members provided for a commission of 30% and that the settlement provided for a payment of around $12.8 million,[14] which represented about 20% of the settlement sum. His Honour considered that the commission was reasonable having regard to the very significant risks the funder undertook in funding the litigation.[15] His Honour further noted that the commission was the subject of only one objection filed in accordance with the orders made on 8 December 2018, being the objection from Mr Pitman.[16] In her application for leave to appeal, Ms Botsman contends that the judge failed to have regard to her objection in relation to the commission payment.
[14]Ibid [72]–[79], [87].
[15]Ibid [80]–[84].
[16]Ibid [93].
In the result, the judge approved the settlement. On the SPRs’s application, the judge ordered that the SPRs had power to settle the claims made by Banksia and were justified in causing Banksia to settle its claims against Trust Co in the Banksia proceeding and the Bolitho group proceeding.[17]
[17]Ibid [106].
The orders made by the judge on 30 January 2018 required that a settlement scheme be approved by the Court setting out the procedure for distributing the balance of the settlement sum among the debenture holders. We were informed that an application for approval of the settlement scheme has not yet been heard by the Court.
The proposed grounds of appeal
There are five proposed grounds of appeal. It is not necessary to set them out in full.
The first proposed ground contends that the extent to which evidence and submissions in support of settlement were given on a confidential basis, including the costs report relied on by the funder and evidence filed by Trust Co and Perpetual as to their capacity to contribute to judgment, was so extensive as to be contrary to the principle of open justice.
Proposed ground two contends that there was a denial of procedural fairness in respect of the objections filed by Ms Botsman and Mr Pitman. In this regard, it is alleged that the primary judge failed to properly consider Ms Botsman’s objection and that she was prevented from inspecting evidence in support of settlement. It is also said that Ms Botsman and Mr Pitman were prevented from answering, by evidence and argument, the evidence and submissions deployed in favour of settlement because they were not given access to material information about the settlement. The final matter relied on is the primary judge’s decision not to appoint a contradictor.
Proposed grounds three and four seek to attack the quantum of the settlement sum.
Proposed ground five asserts that the primary judge erred in approving the settlement without having proper regard to the relative contributions to the settlement of the Banksia proceeding and Bolitho group proceeding, which were such that the commission payable to the funder and legal costs in respect of the Bolitho group proceeding were excessive.
Ms Botsman seeks orders granting leave to appeal, allowing the appeal, setting aside the order for approval, and ordering that there be a new hearing of the settlement approval application before a different judge. An order is also sought for the provision of the documents relied on to be made available to any group member wishing to be provided with a copy of them.
Applicable principles on security for costs
Pursuant to r 64.38(2)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’), a party may apply to the Court of Appeal for an order for security for costs of an application or appeal. Rule 64.38(4) provides that the Court may make an order that security be given on such terms as the Court thinks fits.
Rule 64.38(4) confers on the Court a broad discretion to order security, which is to be exercised in light of the facts and circumstances of the particular case.[18] In Australian Dream Homes v Stojanovski, the Court observed that:
The basis for making an order for security for the costs of an appeal lies in identifying a risk, which is unacceptable in all the circumstances, that the respondent to the appeal may be put to the expense of defending the judgment or decision in its favour without the benefit of expecting that, in the usual course, if it is successful in doing so, the unsuccessful appellant will be required to pay the respondent’s costs of the appeal. As already observed, the considerations that may bear on the Court’s discretion to order security are of many kinds, depending on the features of the particular case. It is fundamental to the resolution of any application for security to identify the nature and extent of the risk in question (usually, as here, the risk as to the applicant’s impecuniosity).[19]
[18]See Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd [2017] VSCA 213 [21].
[19]Australian Dream Homes v Stojanovski [2016] VSCA 38 [40].
It is the party seeking security that bears the onus of establishing the impecuniosity of the applicant or other cause that gives rise to the risk which the order for security is intended to ameliorate.
The factors relevant to the exercise of the Court’s discretion to order security have been discussed in a number of cases.[20] They include (among others) the degree of risk that a costs order would not be satisfied; the prospects of success of the appeal; whether the making of an order would be oppressive by stifling a reasonably arguable claim; whether any impecuniosity of the applicant arises out of the conduct complained of; whether there are any aspects of public interest militating against the making of such an order; and whether there are any particular discretionary matters relevant to the application.
[20]See, eg, Maher v Commonwealth Bank of Australia [2008] VSCA 122 [80] (Dodds-Streeton JA); Ribbera v Eagle Fuels Pty Ltd [2014] VSCA 173 [30] (Garde AJA); Trkulja v Dobrijevic [2015] VSCA 281 [43]; Giza v Waybecca Pty Ltd [2016] VSCA 184 [13]; Timbercorp Finance Pty Ltd (in liq) v Tomes [2015] VSCA 322 [16]; Bodycorp Repairers Pty Ltd v Maisano [2017] VSCA 39 [23].
Relevantly, where an applicant alleges that the making of an order for security would stifle or stultify the appeal, it is not sufficient for it to simply rely on its alleged impecuniosity.[21] The mere fact that the applicant is unable to provide security does not necessarily lead to the conclusion that the making of an order for security would stultify the appeal given that there may well be someone else standing behind the applicant who would satisfy any adverse costs order. Further, whether an appeal will be stultified by an order for security is a question of fact that will generally require evidence.[22]
[21]Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 65 ACSR 383, 396 [51] (Basten JA).
[22]Ibid.
The evidence on the current application
Mr Bolitho relied on two affidavits from his solicitor, Anthony Zita. In Mr Zita’s first affidavit sworn 9 April 2018 he deposes to a belief that Ms Botsman resides in South Australia. He produces an extract from the website of the Australian Electoral Commission which records that Wendy Dianne Botsman resides in Harrow Avenue, Magill, a suburb of Adelaide. He then deposes that Ms Botsman appears to own real property in South Australia and produces a title search showing Wendy Dianne Botsman to be the registered proprietor of a property in Harrow Avenue, Magill. There are no registered encumbrances on the title. Mr Zita deposes that he does not know the value of the property, whether it is owned beneficially, whether there are unregistered encumbrances, or whether any proceeds of sale would be available to meet a costs order.
Mr Zita deposes that he had sent a letter to Ms Botsman and to Mr Botsman in which he requested that Ms Botsman provide, among other things, information about her personal financial position and her unencumbered assets. That letter, dated 27 March 2018, was exhibited to one of Mr Zita’s affidavits. Mr Zita deposed that no substantive response had been received from Ms Botsman.
Ms Botsman filed a ‘tender bundle’ of documents on the application for security. That bundle comprised certain affidavit material filed in respect of the settlement approval applications and email correspondence between Mr Zita and Mr Botsman concerning the application for security (including Mr Zita’s letter of 27 March 2018). The email correspondence relates to matters of a procedural nature and does not go to the merits of the application. The correspondence does not contain any substantive response to Mr Zita’s letter concerning Ms Botsman’s financial position.
The submissions of Mr Bolitho
Mr Bolitho made three principal submissions in support of his application for security.
First, he submitted that the application for leave to appeal is likely to be refused or the appeal is unlikely to succeed. In that regard, he submitted that the confidentiality that was ordered by the primary judge was not unusual in settlement proceedings, involved a matter of practice and procedure, and did not raise an issue of importance. It was submitted that Ms Botsman did not at any time seek to access the confidential documents which had been obtained by the other objector (Mr Pitman), with the effect that two of the matters relied on to establish denial of procedural fairness had no prospect of success.
The second matter was that Ms Botsman could not satisfy any adverse costs order. It was submitted that Ms Botsman is ordinarily resident outside Victoria and, although she owns real property in South Australia, it is not known whether she owns the property beneficially, whether there are any unregistered encumbrances, or whether any proceeds of sale would be available to satisfy a cost order. It was submitted that, in the absence of evidence, the Court could not conclude that an order for security would stultify the appeal.
Finally, Mr Bolitho submitted that Ms Botsman’s submission that costs could and should properly be met from the settlement fund proceeded on a false premise because no provision is made in the Settlement Deed for the recovery of costs on an appeal.
The submissions of Ms Botsman
First, Ms Botsman submitted that the proposed appeal raised questions of public interest and important principles of law. She submitted that there were strong prospects of success on the appeal. In particular, she submitted that an objection made by her, as recorded in paragraph 6 of her written objection, was not considered by the Court. She also submitted that the challenge to the process of confidentiality adopted by the primary judge and the approval of fees and a funder’s commission raised important issues deserving of consideration by this Court. It was said that these issues formed an important part of the approval process and were of general importance.
Ms Botsman further submitted that the process of approving settlements involving group proceedings was a protective jurisdiction in which the supervisory function of the Court is intended to protect the interests of all group members. She submitted that her application for leave to appeal was ‘defensive’ and that the timing and content of the application for security were designed to bring the proceedings to an end.
Finally, it was submitted that the application for leave to appeal did not place an economic pressure on the Bolitho interests because the Settlement Deed, on its proper construction, provided for the costs of the Bolitho interests to be paid out of the settlement sum. In the course of oral submissions, it was contended that the costs of the proceeding would in any event be borne by the funder and that this was an appropriate or just outcome in the circumstances having regard to the size of the benefit that the funder had obtained in settlement of the proceedings.
Analysis
Risk of non-recovery of costs
As this Court observed in Stojanovski, security is provided to militate against the risk that an order for costs would remain unsatisfied due to the impecuniosity of the applicant. It falls to the party seeking security to establish the impecuniosity or other cause that gives rise to that risk and to satisfy the court that an order for security is appropriate.
In the present case, we are not satisfied on the evidence that Ms Botsman could not meet an adverse costs order. The evidence establishes that she is the owner of a residential property in South Australia which is unencumbered by any registered interest. We are not satisfied that this property would not be available to meet an adverse costs order. We have no evidence as to the value of the property, but it seems unlikely it would be worth less than the amount of security sought. Mr Bolitho has not satisfied us that either the value of the property or Ms Botsman’s interest in it would be insufficient to meet any costs order that might be made in his favour.
In certain cases, it may be appropriate to infer that an applicant would be unable to meet an adverse costs order from that party’s silence or its refusal to provide details of its financial position when requested by a party seeking security. That inference may be compelling where the evidence discloses that the applicant may wish to hide an insufficiency of assets. However, we would not be prepared to draw that inference here. The evidence establishes that Ms Botsman owns a residential property in her own name. After hearing submissions, it seems more likely that Ms Botsman’s concern is to protect her only valuable asset. In any event, the circumstances here do not warrant the drawing of an inference that Ms Botsman’s silence arises from a concern as to the absence of assets.
Ms Botsman’s counsel did not submit that she could not meet a costs order. Rather, two submissions were made. First, it was submitted that Ms Botsman was not willing to post security and that if she were forced to do so it would bring the application to an end. Second, it was submitted that, in the event that her proceeding fails, she should not be ordered to pay the costs of the other parties but that costs should be paid out of the fund or be paid by the litigation funder from its commission. Counsel for Ms Botsman said there was no ‘impediment’ to her charging her property as security, but that she is unwilling to do so.
If Ms Botsman is proceeding on the assumption that costs will not follow the event and that they will inevitably be ordered to be paid out of the fund or by the litigation funder, that assumption is unwarranted. The question of costs on the application for leave, and, if leave is granted, the appeal, will be a matter in the discretion of the Court hearing that application. It is neither appropriate nor possible at this stage to predict how that discretion will be exercised. That said, costs usually follow the event, and, in the event that Ms Botsman fails in her application, there is a real risk of a costs order being made against her.
Given that the evidence does not permit us to be satisfied that any costs order in favour of Mr Bolitho would remain unsatisfied, it would not be appropriate to order security to guard against that eventuality. In our view, this conclusion is sufficient to dispose of the application. However, we will turn briefly to consider the other matters raised by the parties.
Prospects of success and the broader public interest
In light of the conclusion that we have reached on the risk of non-recovery, it is unnecessary on the current application to essay the prospects of success of the application for leave to appeal. We would note that the grounds of appeal are largely directed to the process by which the Court approved the settlement of the Bolitho group proceeding. Part of that process involved the making of confidentiality orders. An issue on the application for leave will be whether those orders went further than necessary to protect legitimate interests and whether they presented a practical obstacle to the group members being properly informed about the application for approval before the Court made orders approving the settlement. We say nothing about how those issues might be resolved on the application for leave to appeal. It is enough to note that they may raise issues of general application and that the grounds appear to us to be arguable. These factors tell against an order for security.
Whether an order for security would stultify the appeal
Finally, and for completeness, we think it more likely than not that an order for security would bring the proceeding to end on the basis that Ms Botsman is unwilling to provide security. Her counsel submitted that she should not have to risk putting her home up as security. We would simply note that it would not be an order for security that would place her home at risk, but rather any costs order that may be made against her in respect of her application for leave to appeal. The outcome of the present application for security will not alter that risk. In those circumstances, this factor would not, of itself, be a significant factor against ordering security.
Conclusion
For these reasons, the application for security should be refused.
SCHEDULE OF PARTIES
WENDY DIANE BOTSMAN Applicant
and
LAURENCE JOHN BOLITHO First Respondent
BANKSIA SECURITIES LIMITED (ACN 004 736 458) Second Respondent
THE TRUST COMPANY (NOMINEES) LTD (ACN 000 154 441) Third Respondent
RSD CHARTERED ACCOUNTANTS (ABN 60 616 244 309) Fourth Respondent
(formerly known as RICHMOND SINNOTT and DELAHUNTY)
PATRICK JOHN GODFREY Fifth Respondent
NICHOLAS LIVINGSTON CARR Sixth Respondent
PETER WILLIAM KEATING Seventh Respondent
GEOFFREY GRENVILLE SKEWES Eighth Respondent
GEOFFREY S A LIPSHUT Ninth Respondent
MAXWELL BROWN & MOUNTJOY (A PARTNERSHIP) Tenth Respondent
LANTERN LEGAL GROUP PTY LTD T/A HARWOOD ANDREWS Eleventh Respondent
INSURANCE HOUSE PTY LTD (ACN 006 500 072) Twelfth Respondent
THE CHANNEL SYNDICATE 2015 Thirteenth Respondent
THE AMTRUST SYNDICATE 1206 Fourteenth Respondent
CHAUCER SYNDICATES LIMITED Fifteenth Respondent
JOHN ROSS LINDHOLM AND PETER DAMIEN McCLUSKEY IN Sixteenth Respondent
THEIR CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE
RECEIVERS OF BANKSIA SECURITIES LIMITED (RECEIVERS
AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 004 736
458)
BANKSIA SECURITIES LIMITED (RECEIVERS AND MANAGERS Seventeenth Respondent
APPOINTED) (IN LIQUIDATION) (ACN 004 736 458)
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