In the matter of Bailey Roberts Group Pty Ltd

[2023] NSWSC 1147

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Bailey Roberts Group Pty Ltd [2023] NSWSC 1147

Hearing dates:

21 August 2023

Date of orders:

22 September 2023

Decision date:

22 September 2023

Jurisdiction:

Equity - Corporations List

Before:

Williams J

Decision:

See below at [82]

Catchwords:

COSTS — Security for costs — where corporate plaintiff accepts that there is reason to believe that it will be unable to pay the defendants costs of the proceedings if it is ultimately ordered to do so — factors relevant to the exercise of the discretion in relation to security for costs — where security previously ordered in favour of two defendants — whether those defendants demonstrated material change in circumstances warranting order for further security — whether order for security would be “oppressive” in the circumstances of the case — where inappropriate to conduct a trial or make findings in relation to the substantive matters in dispute in order to determine whether an order for security would be “oppressive” — where order for security would not stultify proceedings

Legislation Cited:

Corporations Act 2001 (Cth), ss 233, 237, 286, 436A, 471B, 1335

Cases Cited:

Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44

Broadway Plaza Investments v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2019] NSWSC 1082

Carrano Investment Holding Pty Ltd v Siennamia Investments Pty Ltd [2022] NSWCA 262

Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; (2014) 32 ACLC 14-010; [2014] NSWCA 65

In the matter of Bailey Roberts Group Pty Ltd (in liq) [2023] NSWSC 492

Misrachi v The Public Guardian [2019] NSWCA 67

Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 65 ACSR 383; (2007) 25 ACLC 1,707; (2007) 2 BFRA 753; [2007] NSWCA 344

Rad Drill Services Pty Ltd v Warrego Energy EP469 Pty Ltd [2021] NSWSC 214

Re Felan’s Fisheries Pty Ltd [2016] NSWSC 1351

Statewide Developments Realty Pty Ltd v The Owners Corporation, SP 77457 [2013] NSWSC 1750

The Owners - Strata Plan 64415 v Serman [2017] NSWSC 806

Treloar Constructions Pty Ltd v McMillan [2016] NSWCA 302

Texts Cited:

N/A

Category:

Procedural rulings

Parties:

2021/238607

Financialstrategy.com.au Pty Ltd (ACN 003 718 947) (Plaintiff/Respondent)
Bailey Roberts Group Pty Ltd (ACN 096 205 604) (in liquidation) (First Defendant/Applicant for Security)
Bailey Financial Management Pty Limited (ACN 124 172 489) (Second Defendant/Applicant for Security)
LAT Wealth Holdings Pty Limited (ACN 132 833 704) (Third Defendant/Applicant for Security)
Bailey Wealth Management Pty Ltd (ACN 655 744 620) (Fourth Defendant/Applicant for Security)
Fumar Pty Ltd (ACN 658 067 175) (Fifth Defendant/ Applicant for Security)
Sustain Holdings Pty Ltd (ACN 657 587 490) (Sixth Defendant/Applicant for Security)

2023/163417

Financialstrategy.com.au Pty Ltd (ACN 003 718 947) (Plaintiff/Respondent)
Mr Ian Bailey (First Defendant/Applicant for Security)
Mr Leith Thomas (Second Defendant/Applicant for Security)

Representation:

Counsel:

2021/238607
Dr S H Hartford-Davis (Plaintiff/Respondent)
Mr R D Turnbull (Second, Third, Fourth, Fifth, and Sixth Defendants/Applicants for Security)

2023/163417
Dr S H Hartford-Davis (Plaintiff/Respondent)
Mr E Hyde (First Defendant/Applicant for Security)
Mr R D Turnbull (Second Defendant/Applicant for Security)

Solicitors:

2021/238607
HWL Ebsworth (Plaintiff/Respondent)
Watson Webb (Second, Third, Fourth, Fifth, and Sixth Defendants/Applicants for Security)

2023/163417
HWL Ebsworth (Plaintiff/Respondent)
Addisons (First Defendant/Applicant for Security)
Watson Webb (Second Defendant/Applicant for Security)

File Number(s):

2021/238607 and 2023/163417

Publication restriction:

N/A

Judgment

Introduction and background to the applications for security for costs

1. These reasons for judgment concern three applications for security for costs in two related proceedings.

2. Both proceedings arise out of the conduct of the business of Bailey Roberts Group Pty Ltd (BRG), which is now in liquidation.

3. The following aspects of the history of the proceedings, and the events giving rise to them, are relevant to the determination of the security for costs applications.

4. BRG operated a financial services business—including financial planning services, advisory services in relation to self-managed superannuation funds, and asset management services—under an Australian Financial Services Licence (AFSL).

5. BRG appointed various Corporate Authorised Representatives (CARs) and Authorised Representatives (ARs) to provide financial services under its AFSL.

6. The CARs included:

1. Financialstrategy.com.au Pty Ltd (Strategy), which owns 40 per cent of the shares in BRG. Strategy is a company associated with Mr Michael Roberts, who was a director of BRG at all material times until about 1 October 2020. Mr and Mrs Roberts are the shareholders of Strategy, and the beneficiaries of the trust of which that company is the trustee. It was common ground between the parties that Mr and Mrs Roberts are the persons who stand to benefit from any success Strategy may have as the plaintiff in each of the two proceedings in which the present applications for security for costs are made;

2. Bailey Financial Management Pty Ltd (BFM), which owned 40 per cent of the shares in BRG until about February or March 2022. BFM is a company associated with Mr Ian Bailey, who was, and remains, a director of BRG; and

3. LAT Wealth Holdings Pty Ltd (LAT), which owned 20 per cent of the shares in BRG until about February or March 2022. LAT is a company associated with Mr Leith Thomas, who was a director of BRG at all material times until about 6 September 2022.

7. In 2021, Strategy commenced proceedings against BRG (the first defendant), BFM (the second defendant), LAT (the third defendant), Mr Bailey (the fourth defendant), and Mr Thomas (the fifth defendant). Strategy alleged that the affairs of BRG had been conducted in a manner that was oppressive to, unfairly prejudicial to, or unfairly discriminatory against, Strategy. Strategy sought orders under s 233 of the Corporations Act 2001 (Cth) that its shares in BRG be purchased by BFM, LAT, Mr Bailey, and/or Mr Thomas or, alternatively, orders requiring Mr Bailey and Mr Thomas to pay compensation to Strategy. Strategy also alleged that BRG had wrongfully suspended Strategy’s status as a CAR and had hindered or prevented Strategy from advising clients of BRG. Strategy claimed to have suffered loss and damage in the vicinity of approximately $1.18 million, being the estimated value of the relevant client book. It is convenient to refer to these proceedings as the 2021 proceedings. ^[1]

   1. Proceedings 2021/238607.

8. On 10 November 2021, an order was made by consent dismissing the 2021 proceedings against Mr Bailey and Mr Roberts. Rees J heard and determined an application for security for the costs of the remaining defendants, being BFM and LAT. Her Honour ordered Strategy to provide a charge over its shares in BRG as security for those defendants’ costs in the amount of $146,737 up to mediation, and in the further amount of $120,190 if the matter was not resolved at mediation, in addition to providing an undertaking not to further encumber its shares in BRG until the conclusion of the 2021 proceedings. Her Honour was satisfied that Strategy’s shares in BRG had a value greater than the amount of security sought by the defendants, and that the charge was therefore sufficient security for the defendants’ costs.

9. In about February and March 2022, BFM transferred its shares in BRG to two other companies associated with Mr Bailey—Bailey Wealth Management Pty Ltd (BWM) and Fumar Pty Ltd (Fumar). At about the same time, LAT transferred its shares in BRG to another company associated with Mr Thomas—Sustain Holdings Pty Ltd (Sustain Holdings). It is common ground that BFM, BWM, and Fumar are the corporate alter egos of Mr Bailey, and that LAT and Sustain Holdings are the corporate alter egos of Mr Roberts.

10. On 11 April 2022, leave was granted to Strategy to file an amended originating process and points of claim, which had the effect of joining BWM, Fumar, and Sustain Holdings to the 2021 proceedings as the fourth, fifth, and sixth defendants (respectively). The amended points of claim pleaded facts relating to the transfer of shares in BRG from BFM to BWM and Fumar, and from LAT to Sustain Holdings. Those transferees were included in the entities said to have benefited from the alleged oppressive conduct at the expense of Strategy. The amendments did not expand upon the scope of the factual matters on which Strategy’s claims were based.

11. In August 2022, all parties informed the Court that the 2021 proceedings were ready for hearing, including that all lay and expert evidence had been served. The 2021 proceedings were therefore listed for hearing in November 2022.

12. In September 2022, Mr Thomas resigned as a director of BRG.

13. On 24 October 2022, BRG went into voluntary administration pursuant to s 436A of the Corporations Act, and Mr Timothy Cook of Balance Insolvency was appointed as administrator. That resulted in the vacation of the November 2022 hearing dates in the 2021 proceedings. The second to sixth defendants—BFM, LAT, BWM, Fumar, and Sustain Holdings—appointed new solicitors to act for them in the 2021 proceedings at about this time.

14. The information in the administrator’s second report to creditors dated 18 November 2022 included that:

1. the directors and shareholders of BRG had been in negotiations concerning the future of the company since about 2017 “as a result of each of them at some point or another having a desire to leave the Company and what can be categorised as a deterioration of the relationship between the parties”, and that these negotiations had included how a split of the business might occur;

2. the negotiations had not resulted in any agreement, and the parties subsequently became involved in a dispute which had resulted in the commencement of the 2021 proceedings;

3. the administrator’s opinion at the time of the report was that BRG had not complied with s 286 of the Corporations Act because the company’s records lacked information or documentation explaining certain transactions, and those transactions were critical to assessing and understanding the financial performance and affairs of the company;

4. BRG recorded increasing profits during the 2018, 2019, and 2020 financial years, but recorded a loss in the 2021 financial year and, based on the management accounts, an even bigger loss in the 2022 financial year;

5. the administrator commented that BRG’s trading performance appeared to have deteriorated from about August 2020 as a result of the dispute and subsequent legal proceedings;

6. BRG’s net assets had increased significantly year on year in the 2018, 2019, and 2020 financial years, before declining in the 2021 and 2022 financial years and being reduced to almost nothing as at the date of the administrator’s appointment on 24 October 2022;

7. the administrator commented that:

“The balance sheet seems to correlate with the Director’s advice that the Company was involved in a winding down of its affairs prior to the appointment arising out the inability of the Company’s shareholders to come to an agreement concerning the restructuring of the business.”

8. the administrator further commented that further investigation was required of various matters concerning BRG’s financial position, including the sale of its commission rights on or about 20 June 2022 and whether the sale reflected the value of those rights; and

9. the director—Mr Bailey—had stated in his questionnaire that:

“The failure was due to a legal system that allows a trust with no assets to litigate a vexatious claim. The company had no option other than to defend the claim. On application for a defence bond the court applied shares in the company owned by the plaintiff as a bond? It became apparent that even though the company was advised the case was favourable, a win by the company would result in a significant financial loss as the plaintiff had no financial resources. It was decided that the best use of the remaining financial assets should be applied to staff and creditors.”

15. Mr Cook recommended that creditors resolve to place BRG into liquidation. That resolution was passed, and Mr Cook was appointed as liquidator, at the second meeting of creditors on 28 November 2022.

16. On 5 January 2023, Strategy filed an application in the 2021 proceedings seeking leave under s 471B of the Corporations Act to continue those proceedings against BRG in liquidation. That leave was granted by an order made on 14 March 2023.

17. On 27 January 2023, Strategy commenced fresh proceedings against Mr Bailey and Mr Thomas, which included a claim for leave under s 237 of the Corporations Act to bring claims on behalf of BRG against Mr Bailey and Mr Thomas in respect of the alleged diversion of BRG’s business to third parties (the derivative proceedings). ^[2]

    2. Proceedings 2023/28210.

18. In his report to creditors dated 28 February 2023, the liquidator advised that his investigations into potentially voidable transactions and potential breaches of directors’ duties were continuing, and that he had not yet formed a final view about whether BRG had contravened s 286 of the Corporations Act.

19. The liquidator’s solicitors wrote to the solicitors for Mr Bailey, BFM, BWM, Fumar, Mr Thomas, LAT and Sustain Holdings on 3 March 2023, stating that the liquidator’s investigations had revealed, inter alia, that Mr Bailey, Mr Thomas, and their respective companies had caused BRG to incur approximately $444,000 in legal costs in connection with the 2021 proceedings as at 1 November 2022. The letter stated:

“Whilst a small proportion of these costs may have been attributable to the Company as a named defendant to the legal proceedings, a company joined to an oppression claim usually occurs as a matter of formality in order for the purposes of [sic] seeking relief that binds shareholder defendants. Accordingly, the Company itself stood to benefit little from bearing the costs of the legal proceedings and, for example, expending costs defending the actions of certain shareholders. Rather, the Company funds were used primarily for the benefit of protecting the interests of BFM and LAT Wealth (and subsequent shareholders) … It is a clear an [sic] obvious breach of your clients’ directors duties to use company funds for the primary benefit of defending the actions of shareholders (particularly to the exclusion of a 40% shareholder in BRF).

When it became apparent that your clients were unlikely to be able to compromise their dispute with Roberts and BRF on terms favourable to them, your clients took active steps to wind down the affairs of the Company and/or divert assets and revenue away from the Company …”

20. It is not necessary for present purposes to refer to the details set out in the letter of the allegations that Mr Bailey and Mr Roberts and their respective companies had taken steps to divert assets and revenue away from BRG.

21. The letter concluded with an offer to compromise all claims made by BRG and the liquidator against Mr Bailey, BFM, BWM, Fumar, Mr Thomas, LAT, and Sustain Holdings for $500,000.

22. The solicitors acting for Mr Bailey, BFM, BWM, Fumar, Mr Thomas, LAT, and Sustain Holdings wrote a detailed response to the liquidator’s solicitors on 9 March 2023. In relation to the costs of the 2021 proceedings, the response stated that BRG had incurred legal costs totalling $161,703 during the period from September 2020 until March 2021, prior to the commencement of the proceedings. The response stated that the 2021 proceedings were a claim by Strategy or Mr Roberts against BRG for breach of contract, “disguised as a shareholder oppression claim”. BRG had incurred costs totalling $254,380 in relation to the 2021 proceedings since they were commenced, of which Mr Bailey and Mr Thomas and their respective companies had each reimbursed 15.35 per cent of those costs (30.7 per cent in total) such that BRG was bearing a share of the costs of the 2021 proceedings that had been allocated to the breach of contract claim concerning the suspension of Strategy’s CAR or AR status. The response did not explain how that allocation of costs between different claims in the 2021 proceedings had been determined. Mr Bailey, BFM, BWM, Fumar, Mr Thomas, LAT, and Sustain Holdings denied the liquidator’s allegations that assets and revenue had been diverted away from BRG.

23. On 4 April 2023, a Deed of Settlement was entered into between BRG and the liquidator (referred to as the “Liquidator Parties”), and Mr Bailey and Mr Thomas and their respective companies on the other hand (referred to as the “Director Parties”), pursuant to which the Director Parties agreed to pay the sum of $100,000 to the Liquidator Parties in settlement of all claims against them relating to directly or indirectly to BRG or the 2023 proceedings.

24. On 10 May 2023, Black J dismissed Strategy’s application in the derivative proceedings for leave under s 237 of the Corporations Act to bring claims on behalf of BRG against Mr Bailey and Mr Thomas, in circumstances where those claims had been settled by the liquidator on behalf of BRG pursuant to the Deed of Settlement entered into after the commencement of the derivative proceedings. ^[3] That marked the end of the derivative proceedings.

    3. In the matter of Bailey Roberts Group Pty Ltd (in liq) [2023] NSWSC 492.

25. On 22 May 2023, Strategy commenced further proceedings against Mr Bailey and Mr Thomas claiming compensation in respect of the allegedly oppressive conduct of the affairs of BRG (the 2023 proceedings).

26. On 29 May 2023, Strategy further amended its originating process and points of claim in the 2021 proceedings. The second to sixth defendants filed points of defence to the further amended points of claim on 3 July 2023.

27. On 4 and 5 July 2023, Mr Bailey and Mr Thomas each filed points of defence in the 2023 proceedings.

28. HWL Ebsworth are the solicitors on the record for Strategy in the 2021 and 2023 proceedings.

29. Watson Webb are the solicitors on the record for the second to sixth defendants in the 2021 proceedings (BFM, BWM, Fumar, LAT and Sustain Holdings), and for Mr Thomas in the 2023 proceedings.

30. Addisons are the solicitors on the record for Mr Bailey in the 2023 proceedings.

31. On the basis of the most recent iteration of the pleadings, the 2021 proceedings involve allegations by Strategy that:

1. from about December 2006, BRG provided financial services to clients through CARs, on terms that each CAR provided the financial services to clients, each CAR paid BRG for support services, and the servicing rights to clients belonged to the CAR rather than to BRG;

2. each of BRG’s shareholders—Strategy, BFM, and LAT—was a CAR;

3. Strategy and BRG entered into an Authorised Representative Agreement on 1 December 2006 (the Agreement) on terms which included that:

1. BRG was entitled to brokerage payable in relation to all financial products and services distributed and provided to clients, and that BRG would remunerate Strategy in accordance with a specified commission scale;

2. BRG would provide day to day practical support to Strategy, including by permitting Strategy to access and use BRG’s client and investment systems, known as “Minerva” and “Pluto”;

3. the Agreement could be terminated in writing by either BRG or Strategy on 90 days’ prior written notice to the other; and

4. BRG acknowledged that, on termination, it had no continuing proprietary interest in clients serviced by Strategy, it would not seek to hinder or prevent those clients from being advised by another authorised representative or by an authorised representative of another Australian Financial Services Licensee after termination, and that it would make available to that adviser all files and records to which those clients were entitled;

4. there were negotiations between Strategy, BFM, and LAT during August and September 2020 for the separation of their respective business interests, in circumstances where the relationship between Mr Roberts, Mr Bailey and Mr Thomas had broken down;

5. Mr Bailey and/or Mr Thomas caused BRG to suspend Mr Roberts’ and Strategy’s access to the “Minerva” and “Pluto” systems on or about 1 September 2020, in breach of the Agreement;

6. Mr Bailey and/or Mr Thomas caused BRG to suspend Mr Roberts’ access to his BRG email account on or about 5 September 2020, in breach of the Agreement;

7. on or about 9 September 2020, BRG gave notice terminating the Agreement, relying on its express right to do so on 90 days’ notice in writing;

8. during the period from about 13 September 2020 until 4 December 2020, BRG purported to suspend Strategy’s right to act as a CAR, and wrote to Strategy’s clients stating that Mr Roberts was no longer authorised to act as their financial adviser and that BRG had appointed a new, interim financial adviser for those clients, in breach of the Agreement;

9. when the termination of the Agreement took effect on 4 December 2020, Mr Bailey and Mr Thomas caused BRG to write to Strategy’s clients stating that it had terminated Strategy’s and Mr Roberts’ authorisation as an adviser, and offering clients the options of either continuing with BRG—“a known team and known service”—or confirming in writing their intention to terminate their agreement with BRG, thereby asserting a continuing interest in clients serviced by Strategy in breach of the Agreement;

10. Strategy has suffered loss by reason of the breaches of the Agreement, including the loss of 29 clients to BRG with a value of approximately $1.18 million when sold as a “client book”, and expenses incurred as a result of being locked out of the “Minerva” and “Pluto” systems;

11. in further breach of the Agreement, BRG failed to pay commission owing to Strategy in the total sum of $60,692; and

12. since September 2020, the affairs of BRG have been conducted in a manner that is oppressive to, unfairly prejudicial to, and unfairly discriminatory against Strategy, and unfairly beneficial to BRG, BFM, BWM, Fumar, LAT, and Sustain Holdings (at the expense of Strategy), by denying Strategy’s access to the “Minerva” and “Pluto” systems, denying Mr Roberts’ access to his BRG email account, denying Strategy access to records relating to clients serviced by Strategy, suspending Strategy as a CAR, causing BRG to breach the Agreement in the manner alleged above, and exerting illegitimate pressure both on Mr Roberts to resign as a director of BRG and on Strategy to surrender its clients and shares for nominal consideration.

32. Strategy claims:

1. an order pursuant to s 233 of the Corporations Act requiring BRG to provide Strategy with access to the “Minerva” and “Pluto” systems, all information and files of clients serviced by Strategy in its role as CAR, details and contact information for those clients, and all of Mr Roberts’ emails;

2. an order pursuant to s 233 of the Corporations Act for Strategy’s shares in BRG to be purchased by BFM, BWM, Fumar, LAT, and/or Sustain Holdings at fair value;

3. an order pursuant to s 233 of the Corporations Act requiring BFM, BWM, Fumar, LAT, and/or Sustain to pay compensation to Strategy;

4. an order requiring BRG to pay Strategy the sum of $60,692 as a debt;

5. damages; and

6. interest and costs.

33. All of those allegations and claims for relief were pleaded in the amended originating process and amended points of claim filed in April 2022, save that the further amended points of claim filed on 29 May 2023 introduced a more detailed description of BRG’s business model of providing financial services through CARs than had previously been pleaded in the points of claim and amended points of claim. In all other respects, the amendments made by the further amended originating process and further amended points of claim reduced the scope of Strategy’s allegations and claims.

34. In the 2023 proceedings Strategy alleges that the affairs of BRG have been conducted in a manner that is oppressive to, unfairly prejudicial to, and unfairly discriminatory against Strategy in two further respects, namely:

1. by Mr Bailey and Mr Thomas causing BRG’s funds to be used to defend Strategy’s claims in the 2021 proceedings in the period from 20 August 2021, for the benefit of the majority shareholders of BRG; and

2. by Mr Bailey and Mr Thomas causing the business of BRG to be transferred to Sustain Capital Pty Ltd (Sustain Capital) and/or to Australian Financial Freedom Pty Ltd (AFF) in the period from about at least October 2022, thereby rendering BRG insolvent and causing it to enter into voluntary administration so as to make any judgment or costs order against BRG “nugatory”.

35. Strategy alleges that Mr Thomas and Mr Jackson Tidswell are the directors of Sustain Capital and AFF, that Mr Thomas and Mr Tidswell are also the ultimate owners of Sustain Capital, and that AFF has an AFSL. Mr Thomas admits that he and Mr Tidswell are the directors of both companies and that AFF has an AFSL. Mr Thomas does not admit that he and Mr Tidswell are the ultimate owners of Sustain Capital, however, and says that the shares in Sustain Capital are owned by AFF and Tidswell Business Pty Ltd in equal shares, but that neither of those shareholders have a beneficial interest in the shares.

36. In relation to the second aspect of the alleged oppression, Strategy pleads that:

1. Mr Bailey intended that BRG’s affairs should be wound down, and that BRG’s assets and undertaking should be transferred for no consideration to a third party, in order that BRG and/or its majority shareholders might avoid the costs of defending the 2021 proceedings;

2. prior to the appointment of the administrator on 24 October 2022, Mr Bailey and/or Mr Thomas caused BRG to wind down its affairs, including by terminating its authorised representative agreements, selling its plant and equipment, selling its commission rights on or about 20 June 2022, and selling certain other assets; and

3. Mr Bailey and/or Mr Thomas planned to—and did—effect a transfer of the business of clients from BRG to Sustain Capital and/or AFF.

37. Mr Bailey denies that he intended that BRG’s affairs should be wound down, and its assets and undertaking transferred, in order for BRG and/or its majority shareholders to avoid the costs of defending the 2021 proceedings. In their separate points of defence, Mr Bailey and Mr Thomas do not admit that they caused BRG to wind down its affairs prior to the appointment of the administrator.

38. In response to the allegation that Mr Bailey and/or Mr Thomas planned to, and did, effect a transfer of the business of clients from BRG to Sustain Capital and/or AFF, Mr Bailey pleads that he does not know what business is carried on by Sustain Capital and denies the allegation. Mr Bailey and Mr Thomas both deny that Mr Bailey is the Investment Committee Chairman of Sustain Capital, although Mr Wallman gave evidence that the website for Sustain Capital named Mr Bailey as its Investment Committee Chairman as at 31 October 2022. Mr Thomas admits that Sustain Capital is now carrying on business using other previous employees of BRG—namely Mr Thomas himself, who is the Chief Executive Officer and Portfolio Manager of Sustain Capital, Mr Tidswell, who is an Investment Analyst of Sustain Capital, Ms Suzy Dimitrevski, who is the Practice Manager of Sustain Capital, and Mr Nilesh Chauhan, who is the Head of Portfolio Administration of Sustain Capital. Mr Thomas pleads that, to the extent that the alleged conduct of Mr Bailey and Mr Thomas causing BRG to wind down its affairs prior to the appointment of the administrator was wrongful, any loss caused thereby (which Mr Thomas denies) was a loss to BRG that is not recoverable by Strategy. Mr Thomas denies the alleged conduct.

39. Strategy claims:

1. an order pursuant to s 233 of the Corporations Act requiring Mr Bailey and Mr Thomas to cause BRG to provide Strategy with access to the “Minerva” and “Pluto” systems, all information and files of clients serviced by Strategy in its role as CAR, details and contact information for those clients, and all of Mr Roberts’ emails;

2. an order pursuant to s 233 of the Corporations Act requiring Mr Bailey and Mr Thomas to pay compensation to Strategy; and

3. interest and costs.

The applications for security for costs

40. The sixth to second defendants in the 2021 proceedings—BFM, BWM, Fumar, LAT, and Sustain Holdings—seek an order for security for their costs of defending those proceedings in the sum of $133,392, to be paid in three tranches with a first tranche of $50,000 payable within 28 days after the making of the order for security (the 2021 proceedings application). ^[4] The 2021 proceedings application was supported by affidavits of Mr Robert Webb sworn on 31 July 2023 and 17 August 2023.

    4. Interlocutory process filed in the 2021 proceedings on 31 July 2023, as amended by supplementary note of counsel for those defendants dated 22 August 2023.

41. Mr Thomas seeks an order for security for his costs of defending the 2023 proceedings in the sum of $155,753, to be paid in three tranches with a first tranche of $50,000 payable within 28 days after the making of the order for security (the Thomas application). ^[5] The Thomas application was supported by a further affidavit of Mr Webb sworn on 31 July 2023, and by Mr Webb’s affidavit sworn on 17 August 2023 referred to above.

    5. Interlocutory process filed in the 2023 proceedings on 31 July 2023, as amended by supplementary note of counsel for Mr Thomas dated 22 August 2023.

42. Mr Bailey seeks an order for security for his costs of defending the 2023 proceedings in the sum of $243,291, to be paid within 14 days after the making of the order for security (the Bailey application). The Bailey application was supported by affidavits sworn by Mr Martin O’Connor of Addisons on 12 July 2023 and 17 August 2023.

43. Strategy relied on an affidavit of Mr Neil Wallman of HWL Ebsworth affirmed on 11 August 2023, and an affidavit of Mr Edward Green of HWL Ebsworth affirmed on 21 August 2023.

Consideration and determination

44. Strategy accepts that there is reason to believe that it will be unable to meet any costs order that may be made against it in the 2021 proceedings and/or the 2023 proceedings. The Court therefore has jurisdiction under s 1335 of the Corporations Act and/or r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) to order security for the defendants’ costs in each of the proceedings. Whilst the legal burden of proof in relation to the ultimate exercise of the security for costs discretion remains on the defendants/applicants, Strategy’s acceptance that the jurisdiction is enlivened means that it bears an evidential burden of showing that security should either be refused or ordered in a lesser amount than that sought by the defendants. ^[6]

    6. Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; (2014) 32 ACLC 14-010; [2014] NSWCA 65 at [18]-[20] (Macfarlan JA, Ward JA—as her Honour the President of the Court of Appeal then was—and Tobias AJA agreeing).

45. Strategy submitted that the Court should not exercise its discretion to order security for costs for four reasons that, in substance, draw on the considerations in UCPR sub-rr 42.21(1A)(c), (d), (f), (h), (k), and (l).

46. First, Strategy submitted that it would be “oppressive” to order security for costs, “having regard to the history and context of the litigation – specifically the conduct of the Defendants in deliberately destroying the value of security previously provided to them” by the conduct of Mr Bailey and Mr Thomas that is the subject of the 2023 proceedings.

47. Second, Strategy submitted that the total quantum of security sought—now $532,436—is “absurd for a case of this kind and scale”. Strategy submitted that the two proceedings overlap, and that the 2023 proceeding “turns on narrow issues”.

48. Third, Strategy submitted that, if security were ordered in the quantum sought, it would stultify the litigation in circumstances where the impecuniosity of Strategy is caused entirely by the defendants’ conduct. Strategy submitted that the Court should not order more security than Strategy (and Mr and Mrs Roberts, who stand behind Strategy) can afford to pay.

49. Given that Strategy has accepted that there is reason to believe that it will be unable to pay the costs of the 2021 proceedings and 2023 proceedings if it is unsuccessful, Strategy bears an evidentiary onus in relation to stultification. ^[7]

    7. Treloar Constructions Pty Ltd v McMillan [2016] NSWCA 302 at [15] (Beazley ACJ, as Her Excellency the Governor then was).

50. Fourth, Strategy submitted that security should not be ordered in the 2021 proceedings because the defendants are guilty of delay in propounding their applications.

51. In relation to Strategy’s first submission referred to above, counsel for Strategy was pressed to articulate the sense in which it was submitted that an order for security would be “oppressive”. Counsel was ultimately unable to articulate the sense in which Strategy contends that an order for security would be relevantly “oppressive”, other than in the sense that Strategy submits that the order is sought by the defendants merely to deny the impecunious plaintiff the right to litigate its claims in the 2021 proceedings and in the 2023 proceedings. ^[8] In this case, that submission raised the same issues as Strategy’s third submission—whether an order for security would stultify the litigation.

    8. Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 65 ACSR 383; (2007) 25 ACLC 1,707; (2007) 2 BFRA 753; [2007] NSWCA 344 at [55]-[56] (Basten JA); see also Rad Drill Services Pty Ltd v Warrego Energy EP469 Pty Ltd [2021] NSWSC 214 at [28]-[31] (Kunc J).

52. The remainder of the “oppression” submission invited the Court to make findings of fact that would effectively determine the 2021 proceedings and the 2023 proceedings in favour of Strategy—including finding that Mr Bailey and Mr Thomas and their respective companies had deliberately destroyed the value of the security ordered by Rees J in November 2021 in the 2021 proceedings.

53. In my opinion, it is neither necessary nor appropriate to make findings of fact for the purpose of determining these applications for security for costs that would, in effect, determine the substantive issues in dispute in the proceedings.

54. Insofar as the 2021 proceedings application is propounded by BFM and LAT, the application is, in substance, an application to vary the security for costs order made by Rees J in November 2021 by ordering Strategy to provide additional security by way of money paid into court. No occasion for a variation of her Honour’s order arises in the absence of evidence of a material change in circumstances in the period since November 2021. ^[9]

    9. See Misrachi v The Public Guardian [2019] NSWCA 67 at [25] (Bell P, as his Honour the Chief Justice then was, and Emmett AJA), and the authorities there referred to, including Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46 (McLelland J, as his Honour then was).

55. Strategy’s shares in BRG had some value when the earlier order for security was made, but no longer have any value due to the winding up of BRG. Counsel for the second to sixth defendants in the 2021 proceedings submitted that this was a material change in circumstances affecting BFM and LAT, in whose favour the earlier order for security was made. It was submitted that BFM and LAT were not responsible for the deterioration in the value of the BRG shares because, after transferring their BRG shares to BWM, Fumar, and Sustain Holdings, BFM and LAT “ceased to be able to control who the directors were and what the directors did”.

56. That submission lacks substance in light of the concession made by counsel for BFM, BWM, Fumar, LAT, Sustain, and Mr Thomas, and also by counsel for Mr Bailey, that BFM and LAT and the entities to which each of them transferred their shares in BRG are the corporate alter egos of Mr Bailey and Mr Thomas (respectively). On the basis of the pleadings in the 2023 proceedings, and the administrators’ report referred to at [14] above, Strategy has a reasonably arguable case that its shares in BRG have been rendered worthless by reason of Mr Bailey and Mr Thomas causing BRG’s business to be transferred to Sustain Capital and/or to AFF after November 2021, resulting in BRG entering into external administration with no assets of any material value. For those reasons, BFM and LAT have failed to demonstrate a material change in circumstances that would warrant the Court exercising its discretion in the 2021 proceedings application to make an additional order for security in their favour. Whilst there was no evidence adduced on the hearing of the security for costs applications that would support a finding that Strategy has a better than reasonably arguable case, the existence of a reasonably arguable case together with the relationships between Mr Bailey and BFM, and between Mr Thomas and LAT, is sufficient to conclude that BFM and LAT have failed to demonstrate a relevant material change in circumstances since the November 2021 security order.

57. I now turn to Strategy’s second submission referred to at [47] above.

58. In relation to the 2021 proceedings application, the application is for security for costs that the second to sixth defendants claim to have incurred after November 2022, and for further costs that they claim they will continue to incur up to the final hearing. Strategy submitted that the evidence does not establish that the second to sixth defendants have incurred material costs after November 2022, or that they will do so in the future, in circumstances where the 2021 proceedings were ready for final hearing in August 2022 and where the scope of the issues in dispute in the 2021 proceedings has narrowed rather than expanded since then.

59. I accept that submission. Whilst the transfer of BFM and LAT’s shares in BRG to the other entities controlled by Mr Bailey and Mr Thomas resulted in the joinder of those entities as the fourth to sixth defendants to the 2021 proceedings, this did not materially expand the scope of the matters in dispute in those proceedings. ^[10] The evidence adduced on the hearing of the security applications did not establish any reason to think that the defence of the 2021 proceedings on behalf of BWM, Fumar, and Sustain Holdings has resulted—or is likely to result in—the incurring of costs that materially exceed those costs incurred by BFM and LAT. All of those defendants have common legal representation, and were ready to proceed to final hearing in August 2022. Mr Webb’s 31 July 2023 affidavit listed tasks that had been undertaken since November 2022, and that he considers will need to be undertaken in the future, in order for BFM, BWM, Fumar, LAT, and Sustain Holdings to defend the 2021 proceedings. However, Mr Webb offered no evidence explaining why any of those tasks had been necessary after November 2022, or why they will be necessary in the future, in circumstances where the Court was informed that the proceedings were ready for final hearing in August 2022. For example, Mr Webb’s evidence did not explain why it would be necessary for paralegals and solicitors to spend 60 hours, junior counsel to spend 10 hours, and senior counsel to spend four hours, preparing four lay witness affidavits in circumstances where orders were made on 10 November 2021 requiring BFM and LAT to serve their lay evidence by December 2021, and where orders were made on 11 April 2022 requiring BWM, Fumar, and Sustain Holdings to serve any lay evidence by 26 April 2022. Assertions made by counsel from the Bar table are not evidence. For those reasons, I am not persuaded that any order for security should made in favour of the second to sixth defendants in the 2021 proceedings for any stage of work prior to final preparation for, and appearance at, the final hearing.

    10. See [10] above.

44. It is self-evident that some work will need to be done in final preparation for the hearing, and that a solicitor and counsel will need to appear at the hearing. All parties proceeded on the basis that the 2021 and 2023 proceedings would be heard together and that the hearing would be likely to take four days. In a supplementary submissions made with leave after the conclusion of the hearing on 21 August 2023, counsel appearing for the second to sixth defendants in the 2021 proceedings quantified their estimated costs of preparing for, and appearing at, that four day hearing—after allowing for the extent to which those costs will also be for the benefit of Mr Thomas in the 2023 proceedings, and after reducing the estimated solicitors’ costs by 75 per cent and the estimated counsel fees by 90 per cent to reflect the likely outcome of any future assessment—as $51,750. Thus, that sum represents the security sought by BFM, BWM, Fumar, LAT, and Sustain Holdings in respect of their costs of preparing for, and appearing at, the final hearing. For the reasons I have explained above, the orders made on 10 November 2021 have already provided security for those costs in favour of BFM and LAT, and I am not persuaded that the Court should now exercise its discretion to provide further security in favour of those defendants. Subject to considering Strategy’s third and fourth submissions, an order for security in favour of BWM, Fumar, and Sustain Holdings in respect of their costs of final preparation for, and appearance at, the final hearing, should be made in the sum of $31,050, representing a three-fifths share of the total security of $51,750 sought in respect of the second to sixth defendants’ collective costs of final preparation and appearance at the hearing.

45. Limiting any security to be ordered in respect of the 2021 proceedings application to costs of final preparation and appearance at the final hearing eliminates any prejudice that Strategy might have otherwise suffered by reason of the defendants’ delay in making that application. That disposes of Strategy’s fourth submission referred to at [50] above.

46. Insofar as Strategy’s second submission relates to the Thomas application and the Bailey application, Strategy submitted that the quantum of security sought is inflated by a “duplication” of costs as a result of Mr Thomas and Mr Bailey having separate legal representation in the 2023 proceedings. Strategy submitted that, whilst it is open for Mr Thomas and Mr Bailey to choose to be separately represented, there is no conflict of interest or other reason which necessitates their separate representation, and Strategy should not be burdened by an order requiring it to pay security in an amount that reflects the costs that will be duplicated by reason of such separate representation.

47. I reject Strategy’s submission that there is no realistic possibility of conflict between the interests of Mr Bailey and Mr Thomas in the 2023 proceedings, and therefore no demonstrated necessity for Mr Bailey to be represented separately from Mr Thomas in the 2023 proceedings. In my opinion, the potential for the interests of Mr Bailey and Mr Thomas to come into conflict in their defence of the 2023 proceedings is demonstrated by the pleadings, which I have summarised at [34]-[38] above. In particular, the allegations referred to at [36](1) above are pleaded against Mr Bailey only, Mr Thomas was not a director of BRG during the whole of the period in which the alleged conduct referred to at [36](2) above is said to have occurred, and only Mr Thomas has an interest in, or association with, the entities to which BRG’s business was allegedly transferred as referred to at [36](3) above. Referring to these and other matters, Mr O’Connor has given evidence that he has formed the view that it is reasonable and appropriate for Mr Bailey to have separate legal representation in the 2023 proceedings.

48. As counsel for Mr Bailey submitted, the fact that Mr Bailey’s corporate interests—BFM, BWM, and Fumar—are represented in the 2021 proceedings by the same solicitors who are representing Mr Thomas’ corporate interests is not relevant. I reject Strategy’s submission to the contrary. The relevant potential for conflict arises from the allegations made against Mr Bailey and Mr Thomas personally in the 2023 proceedings. Whilst the 2021 proceedings and the 2023 proceedings have arisen from the same commercial relationships, each proceeding raises different issues for determination, as demonstrated at [31]-[39] above.

49. As counsel for Mr Bailey sensibly accepted, if it later becomes apparent with the benefit of hindsight that it was not reasonably necessary for Mr Bailey and Mr Thomas to be separately represented, then that may be relevant in any assessment of the costs of the 2023 proceedings. However, that does not alter the fact that the separate legal representation appears to be reasonable based on the matters presently known to the Court, and there is no reason why that separate representation should deprive Mr Bailey and Mr Thomas of orders for security for their costs. Nor is there any reason why the amount of such security should be reduced on account of Mr Bailey and Mr Thomas having separate legal representation.

50. As Strategy submitted, an order for security is not intended to be a full indemnity for costs recoverable from the unsuccessful party. Rather, the order is intended to provide sufficient security, which is quantified by adopting a broad-brush without undertaking a detailed costs assessment. ^[11]

    11. Carrano Investment Holding Pty Ltd v Siennamia Investments Pty Ltd [2022] NSWCA 262 at [24] (Gleeson JA, Basten and Griffiths AJJA agreeing); Broadway Plaza Investments v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2019] NSWSC 1082 at [206] (Ward CJ in Eq, as her Honour the President of the Court of Appeal then was) and the authorities there referred to.

51. Paragraph 31 of Mr O’Connor’s affidavit sworn on 12 July 2023 calculates the sum of $243,291 sought by Mr Bailey as security for his costs of defending the 2023 proceedings as comprising:

1. the sum of $135,507 for solicitors’ fees likely to be recoverable on a party/party basis on assessment, being 65 per cent of total estimated solicitors’ fees of $208,472; plus

2. the sum of $101,574 for counsel’s fees likely to be recoverable on a party/party basis on assessment, being 90 per cent of total estimated counsel fees of $112,860; plus

3. disbursements in the amount of $6,840.

68. A more detailed breakdown of these figures is provided in a schedule exhibited to Mr O’Connor’s affidavit.

69. The amounts above include GST on the basis of Mr O’Connor’s understanding that Mr Bailey will not be entitled to claim input tax credits in respect of GST paid on his legal fees in these proceedings. Counsel for Strategy did not take issue with the inclusion of GST in the calculations.

70. The 65 per cent and 90 per cent discounts appropriately reflect the fact that an order for security is not intended to provide a complete indemnity.

71. Mr Webb’s evidence of Mr Thomas’ estimated costs of defending the 2023 proceedings is broken down in a somewhat more detailed way into work categories, and an estimate of the time and costs for solicitors (which is, in turn, broken down into paralegal, solicitor, special counsel, and partner rates) and senior and junior counsel for each of those work categories. Mr Webb has then discounted solicitor’s costs by 75 per cent and counsel’s fees by 90 per cent to reflect the fact that an order for security is not intended to provide a complete indemnity. The 75 per cent discount is appropriate, in my opinion, taking into account the lower rates applied in Mr Webb’s calculation of solicitor’s costs compared to Mr O’Connor’s calculation of solicitor’s costs for Mr Bailey. The resulting discounted total costs in respect of which security is sought on behalf of Mr Thomas is $155,753. ^[12]

    12. Being the discounted amount of $207,503 in paragraph 38 of Mr Webb’s 31 July 2023 affidavit sworn in the 2023 proceedings, less a further reduction of $51,750 notified in a supplementary note of counsel for Mr Thomas dated 22 August 2023 to eliminate unintended double counting between Mr Thomas’ costs in the 2023 proceedings and the costs of the second to sixth defendants in the 2021 proceedings.

72. Putting to one side Strategy’s complaints about separate legal representation for Mr Bailey and Mr Thomas that I have addressed above, Strategy’s remaining criticisms of Mr O’Connor’s estimate of Mr Bailey’s costs of the 2023 proceeding, and of Mr Webb’s estimate of Mr Thomas’ costs of the 2023 proceedings, were limited to:

1. Strategy’s contention that the costs of these applications for security for costs should not be included in any security for costs order, but should be the subject of an order for costs following the determination of these applications; and

2. Strategy’s contention that any security for costs order in favour of Mr Thomas should not include an amount of security for the costs of senior counsel, because senior counsel has not yet been briefed to appear for Mr Thomas and this aspect of Mr Webb’s estimate is therefore “hypothetical”.

73. I accept the first contention, which concerns the Bailey application only. ^[13] That results in reductions of $12,217 (being 65 per cent of the $18,796 total solicitor costs that Mr O’Connor’s calculations attribute to the security for costs application) plus $11,160 (being 90 percent of the $12,400 total counsel fees that Mr O’Connor’s calculations attribute to the security for costs application) from the amount of security to be ordered in respect of the Bailey application.

    13. Re Felan’s Fisheries Pty Ltd [2016] NSWSC 1351 at [47] (Black J).

74. I reject the second contention. There was no challenge to Mr Webb’s evidence that he intends to brief senior counsel to appear for Mr Thomas. Counsel for Strategy did not submit that the rate of $8,000 per day for senior counsel incorporated in Mr Webb’s estimates was outside the reasonable range. The senior counsel component of Mr Webb’s estimates is not hypothetical. Applicants for security for costs are not required to brief the entirety of their counsel team from the outset of the proceedings in order to include estimated counsel’s fees in an application for security for costs.

75. I reject Strategy’s submission that the total amount of security sought in the three applications is “absurd”. For the reasons I have already explained, the second and third defendants in the 2021 proceedings have not established an entitlement to any further security, and the fourth to sixth defendants have established a case for an order in a relatively small sum only. The total amount of security that is the subject of three applications is otherwise a product of the nature of the proceedings and the amounts that represent sufficient security for the costs of Mr Bailey and Mr Thomas in the 2023 proceedings, in circumstances where their separate representation appears to be appropriate and so does not appear to involve duplication of costs that should result in any discounting of the amount of security sought.

76. For all of the reasons above, it is my opinion that the appropriate exercise of the discretion in this case is to order Strategy to provide the following security in the total amount of $406,717:

1. $31,050 for the costs of the fourth to sixth defendants in the 2021 proceedings—BWM, Fumar, and Sustain Holdings;

2. $219,914 for the costs of Mr Bailey in the 2023 proceedings; and

3. $155,753 for the costs of Mr Thomas in the 2023 proceedings.

77. With commendable candour, counsel for Strategy informed the Court that orders for security for costs in a total sum of $250,000 would not stultify the 2021 and 2023 proceedings, and conceded that there was no evidence to the effect that orders for security for costs in a total sum of between $400,000 and $500,000 would stultify the proceedings. Indeed, the evidence establishes that:

1. Mr and Mrs Roberts own real property—their primary place of residence—in which they have net equity of $1,242,000;

2. Mr and Mrs Roberts also have cash at hand in the amount of $100,000; and

3. Mr Roberts has access to funding for these proceedings in the amount of USD$300,000 (being equivalent to approximately AUD$460,000) ^[14] by way of a promissory note under which he has not yet drawn down any funds.

   14. At the exchange rates current as at the date of the hearing of the applications for security for costs.

78. The total value of the assets and sources of funds referred to above is $2,022,000.

79. For those reasons, Strategy has not discharged its evidentiary onus of demonstrating that the proposed security orders requiring Strategy to provide security in amounts totalling $406,717 would stultify the 2021 and 2023 proceedings.

80. As counsel for Strategy correctly accepted, it follows that the question of whether the defendants’ alleged conduct that is the subject of the proceedings has caused Strategy to become impecunious is not material to the exercise of the discretion to order security for costs in this case. ^[15]

    15. Statewide Developments Realty Pty Ltd v The Owners Corporation, SP 77457 [2013] NSWSC 1750 at [23] (White J, as his Honour then was); The Owners - Strata Plan 64415 v Serman [2017] NSWSC 806 at [175] (Walton J).

81. The 2023 proceedings have only recently been commenced. Points of defence have been filed, but directions are yet to be made for the service of evidence. All parties consider that the 2021 proceedings and 2023 proceedings should be heard together. As that hearing is likely to be some way into the future, I consider that is appropriate that Strategy provide the security for the costs of Mr Bailey and Mr Thomas in the 2023 proceedings in three tranches payable at times similar to the tranches proposed by Mr Thomas, with each tranche to be for approximately one third of the total amount of security ordered in favour of each defendant. As the security to be provided for the costs of the fourth to sixth defendants in the 2021 proceedings pertains to the final hearing only, the whole of that security should be payable 28 days before the first day of that final hearing. There will also be an order that the proceedings be stayed in the event that Strategy fails to comply with those orders.

Conclusion and orders

82. For all of the foregoing reasons, the orders of the Court are:

Proceeding 238607 of 2021

1. Order pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) and/or s 1335 of the Corporations Act 2001 (Cth) that the plaintiff provide security for the costs of the fourth to sixth defendants in the sum of $31,050 by payment of that sum into Court on or before the date that is 28 days before the first day of the final hearing of the proceedings.

2. Order that, in the event that the plaintiff fails to comply with order 1, the proceedings against the fourth to sixth defendants be stayed until the security is provided in accordance with order 1.

3. Reserve the question of the costs of the interlocutory process filed on 31 July 2023.

4. Order that the interlocutory process filed on 31 July 2023 is otherwise dismissed.

Proceeding 163417 of 2023

1. Order pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) and/or s 1335 of the Corporations Act 2001 (Cth) that the plaintiff provide security for the costs of the first defendant in the sum of $219,914, to be provided by way of payment into Court in the following tranches:

1. $75,000 to be paid within 28 days after the date of this order;

2. $75,000 to be paid within six months after the date of this order; and

3. $69,914 to be paid on or before the date that is 28 days before the first day of the final hearing of the proceedings.

2. Order that, in the event that the plaintiff fails to comply with order 1, the proceedings against the first defendant be stayed until the security is provided in accordance with order 1.

3. Reserve the question of the costs of the interlocutory process filed on 12 July 2023.

4. Order pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) and/or s 1335 of the Corporations Act 2001 (Cth) that the plaintiff provide security for the costs of the second defendant in the sum of $155,753, to be provided by way of payment into Court in the following tranches:

1. $50,000 to be paid within 28 days after the date of this order;

2. $55,753 to be paid within six months after the date of this order; and

3. $50,000 to be paid on or before the date that is 28 days before the first day of the final hearing of the proceedings.

5. Order that, in the event that the plaintiff fails to comply with order 4, the proceedings against the second defendant be stayed until the security is provided in accordance with order 4.

6. Reserve the question of the costs of the interlocutory process filed on 31 July 2023.

83. My preliminary view is that costs should follow the event, with Strategy being ordered to pay the second to sixth defendants’ costs of the 2021 proceedings application and to pay the costs of the Bailey application and the Thomas application in the 2023 proceedings. However, I will hear the parties in relation to the costs of the applications in the event that any party wishes to contend for different costs orders.

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Endnotes

Decision last updated: 22 September 2023