Microcorp Pty Ltd v Terran Computers Pty Ltd
[1992] FCA 458
•26 JUNE 1992
Re: MICROCORP PTY. LTD.
And: TERRAN COMPUTERS PTY. LTD. and OTHERS
No. V G258 of 1991
FED No. 458
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)
CATCHWORDS
Practice and Procedure - Security for costs - powers to so order - nature of the powers - Federal Court of Australia Act 1976, s56 - Federal Court Rules, O28 r3 - Corporations Law, s1335
Federal Court of Australia Act 1976, s56
Corporations Law, s1335
HEARING
MELBOURNE
#DATE 26:6:1992
Applicant's Counsel: Mr A.C. Archibald QC with Mr J.D. Mattin
Applicant's Solicitors: Roth Warren
Respondents' Counsel: Dr J. Emmerson QC with Mr C.D. Golvan
Respondents' Solicitors: Coltmans
ORDER
THE COURT ORDERS THAT:
1. The Applicant give security for the payment of the Respondents'
costs that may be awarded against it in the sum of $150,000.00; such security to be in a manner to be agreed upon between the parties and in the absence of agreement, in a manner to be determined by the court.
2. The proceeding be stayed until the security has been provided in
accordance with order 1 hereof.
3. The Applicant pay the Respondents' costs of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
By motion, notice of which is dated 9 April 1992, the respondents are seeking an order that the applicant provide security for their costs of the preparation for trial and for the trial on the issue of liability.
The applicant is suing the respondents for damages, said to amount to millions of dollars, arising out of or in connection with an agreement, and variations thereto, concerning the design, manufacture and production of a computer system by the first respondent. The other respondents are directors and officers of the first respondent. The applicant's causes of action include claims based upon contraventions of the Trade Practices Act 1974, breach of contract and of warranties and negligence. The trial on the issue of liability involves complex questions of fact and of law. Evidence by experts on technical matters will be given. Counsel for the applicant say that the anticipated length of hearing on this issue will be 7 days. Counsel for the respondents say 15 days. In any event, the respondents' costs of preparation for trial and for the trial will be substantial, estimated to be in the order of $150,000. It is said that the costs of each group of parties to date exceed $70,000. By order made on 19 December 1991 the Court, constituted by Heerey J, refused a motion by the respondents to provide security for costs.
Subsections 56(1) and (5) of the Federal Court of Australia Act 1976 provide:
"56(1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him.
(2) ...
(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security." Order 28 r3(1)(b) of the Federal Court Rules provides: "3(1) Where, in any proceeding, it appears to the Court on the application of a respondent:
(a) ...
(b) that an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so;"
(c) ...
the Court may order that applicant to give such security as the Court thinks fit for the costs of the respondent of and incidental to the proceeding."
Rule 6 of O28 provides that O28 does not affect the provisions of any Act, State or Commonwealth, under which the Court may require security for costs to be given.
Since 27 June 1991, subsection 1335(1) of the Corporations Law has provided:
"Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."
Before it was amended by Act No 110 of 1991, Sch2, the words "under this Law" appeared after the words "other legal proceeding". In that form, it was held that the section did not apply directly to an action or legal proceeding not brought under the Corporations Law; see Jodast Pty Ltd v A and J Blattner Pty Ltd (1991) 104 ALR 248. Since 27 June 1991, the statutory provisions of the Corporations Law have been similar to the earlier provisions of the Companies Codes, namely s533(1). Those provisions had been applied indirectly by the Federal Court in deciding applications for security against an applicant which was incorporated. The Federal Court of Australia is, by definition, a court under the Corporations Law. Thus, the power conferred by s1335(1) of the Corporations Law is now conferred directly upon the Federal Court.
It should be noted that s1335 of the Corporations Law applies only where the plaintiff is a corporation. That section has no application where the plaintiff is not a corporation. There is no similar limitation under O28 r3(1)(b). That paragraph can apply where the applicant is a natural person. As a general rule, a court will not order an impecunious applicant, being a natural person, to give security for costs, but that general principle should have no application if the impecunious natural person is suing, not for his own benefit, but for the benefit of some other person. Presumably, the person who will benefit if the applicant succeeds, should incur the risk of being liable for the respondent's costs if the application fails. The principle behind s1335 of the Corporations Law is similar. The corporation is a legal person but must act at the direction of other persons, corporate or natural. If there is reason to believe that an applicant, being a corporation, will be unable to pay the costs of the respondent if ordered to do so, those persons, whether natural or not, who will receive the benefit of the claim, if successful, should incur the risk of being liable to pay the respondent's costs if the claim fails. This principle has been expressed in graphic language in a number of authorities. Irrespective of whether the Court is exercising the power conferred by s1335 of the Corporations Act or O28 r3(1)(b) the initial question to consider is whether there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so. A finding to that effect, however, does not mean that an order must be made.
The exercise of the discretion conferred upon the Court by O28 r3(1)(b) and the exercise of the similar, but different, discretion conferred upon the Court by s1335(1) of the Corporations Law are dependent upon the existence of the condition precedent prescribed in the Rule and the section respectively. In each case, once the discretion to make the order for security arises, the power conferred upon the Court is unfettered but the power must be exercised judicially. Nevertheless, the fact that the condition precedent has been satisfied, is, of itself, a factor to have regard to in the exercise of the discretion.
The discretion to make an order for security conferred by s56 of the Federal Court Act is a separate and distinct power to those conferred by O28 r3(1)(b) and s1335(1) of the Corporations Law respectively. In Jet Corporation of Australia Pty Ltd v Petres Pty Ltd (1983) 50 ALR 722, at pp 731-2, in discussing the relationship between s56 of the Federal Court Act and O28 r3 of the Federal Court Rules, I suggested that the Rule "appears to impose limitations or restrictions on the unfettered discretion conferred by s56(1) of the Federal Court Act." That suggestion has not prevailed; see Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at p 3. The power conferred by s56(1) of the Federal Court Act is unfettered but that power must be exercised judicially. In the exercise of this unfettered discretion, as a general rule, a court will not order an impecunious applicant, being a natural person, to give security for costs. Nevertheless, in the exercise of the power conferred by s56(1), the establishment of facts which would have been sufficient to satisfy the condition precedent specified in O28 r3(1)(b) or in s1335(1) of the Corporations Law, would constitute a factor to have regard to in the exercise of the discretion.
A reference to what was said by French J in Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 suggests there has been a multiplicity of views expressed with respect to fetters to be imposed on the unfettered discretions conferred by provisions similar to s56 of the Federal Court Act, O28 r3(1)(b) and s1335(1) of the Corporations Law. I do not consider it necessary to add to that multiplicity of views. I do not find it helpful to consider myself bound by expressions of opinion which tend to fetter an unfettered discretion. The authorities are helpful as indicating matters to be considered in the exercise of the discretion, but of necessity, each case depends upon its own particular facts. Accordingly, I turn to the facts of this motion for security.
A number of affidavits were read. A number of the affidavits had documents annexed as exhibits. One deponent was cross-examined. For the respondents, the following affidavits were read: three by Anthony Brooke Watson, solicitor for the respondents, sworn 16 April 1992, 14 November 1991 (wrongly dated 14 December 1991) and 23 March 1992 respectively, by Peter Simon Lustig, solicitor for the respondent, sworn 27 November 1991 and by Philip Robert Hempel, the 3rd respondent, sworn 15 April 1992. For the applicant, the following affidavits were read: by Declan Patrick Manly, solicitor for the applicant, sworn 22 April 1992, two by Guiseppe De Simone, a director of the applicant, sworn 22 and 23 April 1992 respectively and by Robert Bryce Menzies, solicitor for the applicant sworn 22 April 1992. Mr De Simone was cross-examined. In addition the Court was referred to the amended statement of claim.
On 19 December 1991, the Court constituted by Heerey J, refused a motion by the respondents that the applicant give security for costs. Essentially, the Court there found, on the material then before it, that it was "not satisfied that the applicant is impecunious or impoverished". His Honour, in relation to the applicant, said:
"As I have said, it continues to trade and meets its liabilities as they fall due and is therefore not insolvent, but in any event, insofar as the applicant company is not in as good a position as it would like to be, the evidence does indicate sufficiently for the purposes of an application of this nature that the applicant is significantly worse off because of the conduct complained of."
Much more material has been put before the Court in support of the present motion. This includes the accounts of the applicant for the nine months ended 31 March 1992 as well as more detail of the related companies of the applicant and the activities of the applicant. On the facts of this case, the length of time from when the application was issued and the present time cannot be used as a factor adverse to the respondents in exercising the discretion in relation to the ordering of security. Security has been an issue of continuing conflict between the parties.
During this continuing conflict, the solicitors for the parties engaged in correspondence wherein the solicitors for the respondents suggested that a related company called "Microhelp" should be added as an applicant. This suggestion was based on allegations that the correspondence and negotiations leading up to and constituting the agreement of 14 February 1989 and the variation thereto of 22 September 1989 was between "Microhelp" and the first respondent and that "Microhelp" should be a party. It appears the existence of the agreement and variation alleged between the applicant and the first respondent is being disputed as not being between those parties. Despite delivering an amended statement of claim, the applicant has not added "Microhelp" as an applicant. Despite all this, I am satisfied that the claim by the applicant is genuine and bona fide. The Court is unable to form any opinion on the likelihood of the applicant being successful in its claims.
It appears that Guiseppe De Simone and his brother, Serafino De Simone, are the controlling minds of a group of companies in which they directly or indirectly have a controlling interest. One direct line of the group of companies so controlled is through De Simone Consulting Pty Ltd, which, at least for some period, used the tradename "Microhelp". Microhelp owned and controlled two companies, Metrocomp Pty Ltd and Microcorp Pty Ltd, the latter company being the applicant in these proceedings. Microcorp, to some extent, used the name Microbee Technology Centres, but, apparently, that business is not very active at present. An exhibit before the Court consists of a chart depicting the De Simone group of companies. There may be some small errors in detail, but, for present purposes, the chart constitutes a helpful guide to the structure of the companies. A copy of the chart is annexed to these reasons.
The applicant, hereafter called "Microcorp", was incorporated in October 1988. It has an issued capital of $12. Initially the De Simone brothers each held 6 shares. It is now a wholly owned subsidiary of the parent company, hereafter called "Microhelp". The De Simone brothers control the whole group of the De Simone companies, and from the oral evidence given by Mr Guiseppe De Simone, it appears he and his brother use the companies under their control as pawns in a game of chess to be moved and removed at the will of the De Simone brothers to suit their best interests. Thus Metrocomp Pty Ltd is owned directly by Microhelp which is owned by the De Simone brothers. Metrocomp is the company set up as the financing vehicle for the whole group of companies. There seems little doubt that if the circumstances warranted it, the De Simone brothers could, at any time, eliminate any company in the group. This does not mean, however, that on the evidence I am satisfied that if Microcorp was ordered to pay the respondents' costs of the proceeding, the De Simone brothers would force Microcorp into liquidation. The comment is made to highlight the absolute control the De Simone brothers exercise over Microcorp and the other companies in the group. In this context it is interesting to note that nowhere in the evidence given by an officier on behalf of Microcorp or by Mr Guiseppe De Simone is there a recent categorical statement to the effect that Microcorp "can and does meet its debts as they fall due, and that I have no reason to believe that this will not be the case in the foreseeable future", c/f Biltoft Holdings Pty Ltd v Casselan Pty Ltd (1990) 8 ACLC 579 at 581. There is evidence that Microcorp was involved earlier this year in a Supreme Court action known as the Samsung action. In settlement of that action Microcorp was required to pay $83,667.85. It did not have the ability to pay that amount but the debt was satisfied by a loan to Microcorp by an intercompany loan from another company in the De Simone group. This illustrates the inability of Microcorp to pay large unusual debts except with assistance from the De Simone brothers. As against this, it was contended by counsel for Microcorp that this illustrated the intention of the De Simone brothers to keep Microcorp in existence. There is no suggestion that Microcorp would be unable to prosecute its claim if security for costs is ordered.
The listed records of Microcorp suggests that its principal activity was to be investment in real estate and equities. In fact, it appears to have been brought into existence to manufacture and sell computers and computer systems and in particular a "NEC V40" based computer system, which was, inter alia, to provide compatibility with an IBM PCXT running EGA graphics, and a Microbee 256TC running premium graphics, which was to be known as "640TC"; (the Microbee computer). The De Simone group of companies planned to market the Microbee computer through outlets Australia wide to schools, education institutions and other places. To do this Microbee Technology Centres were to be utilized as well as the Smartshop System. The basis of the claims being made against the respondents relate to the design, manufacture and production by the first respondent of the Microbee computer. Microcorp is alleging that as a result of various breaches by the respondents, it has suffered damages as high as $7m. In the events which have happened, Microcorp has never manufactured and sold Microbee computers. Its present business essentially is selling other computers and related items.
The financial statements of Microcorp for the year ended June 1991 and for the 9 months ending March 1992 are in evidence. The former were in evidence before Heerey J when he refused to make an order for security. I do not find it necessary to make detailed reference to the contents of the statements. They show a deterioration in the financial position of Microcorp. The 1991 balance sheet shows accumulated losses of $197,747.16, a current year loss of $372,455.84 which, after deducting the $12 issued capital, show accumulated losses of $570,211, described as "Total Proprietorship". As at 31 March 1992, this amount had increased to a loss of $891,052.27, now described as "Total Shareholders Funds". In 1991, the total current assets were $928,030.97 which in March 1992 had dropped to $711,630.48. Of this latter sum $429,034.74 is stated to be "Stock Control - Manufacturing" and represents "work in progress and components which were originally purchased for the Matilda Project and some original components which were purchased from the receivers of Microbee Systems Ltd by Microcorp on 23 January 1989 predominantly being a range of generic components". Most of the items relate to goods purchased after 1 May 1990 as a result of implementation of the agreement the subject of this application. Unless they are used in manufacturing they are unsaleable. Thus, the value given to them in the records is excessive. Total fixed assets had increased from $76,381.11 to $101,007.34 but this is represented by an item "Shares - AMD Investment - $ 26,036.23" and negative items "Plant and Equipment - $600" and "Disposal of Assets - $810". Current Liabilities had reduced from $285,604.67 to $112,838.23. This resulted mainly from a reduction of trade creditors from $186,842.05 to $19,182.99. In each year current liabilities included an item $83,667.85 being the liability under the Samsung action.
A most important item in each set of documents is identified as "Non-Current Liabilities". Essentially these are loans from other companies in the De Simone group of companies. In 1991 these were stated as totalling $1,289,018.41. In March 1992 the loans had increased to $1,593.051.86. The latter figure is difficult to follow. The accounts show loans from Metrocomp, $1,289,018.41, Microhelp $254,604,19 and Powertech International $58,430.50. In addition an item appears "Loan - Microbee Systems Ltd - $9,001.24". These figures do not add up. In any event, it is clear Microcorp relies heavily on loans provided at the direction of the De Simone brothers. It is noted that since March 1992 the item under current liabilities, $83,667.85, being the liability in the Samsung action, has been transferred from current liabilities to loans, non-current liabilities. It is noted that Microcorp does not pay interest on loans from related companies. This affects the profitability of Microcorp. In 1991, the net loss was $372,455.84 and at March 1992 the net loss was $320,841.27.
There is evidence before the Court that Microcorp is now limited to selling computer type goods. There is a proposed joint venture arrangement between Microcorp and another company to exploit a new product. The proposal is conditional on finance being made available. In my opinion, the Court cannot give any real weight to that proposal. It is speculative. Likewise, on the facts of this case, it is difficult to see that the bad financial position of Microcorp results from the actions of the respondents arising out of the subject matter of the proceedings. Microcorp never was profitable. It never had substantial assets. Its present position results from the failure of the speculative venture which has not proceeded.
In the present case, Microcorp has refused to join Microhelp as a party and despite requests, the De Simone brothers have failed to ensure the respondents' costs will be met if they are successful in their defence.
The submission of counsel for the respondents neatly summarizes the position:
"So we say that your Honour should properly take into account all the matters that I submitted in opening, they are trading at a loss, they never having traded at a profit, the substantial deficit in shareholders' funds, the rapid fall in turnover, the recent change in the nature of the business, the unprofitable nature of the business as thus changed and, above all, the fact that we are being left ultimately at the mercy of the two persons who control the group and who are ultimately the ones who benefit if the application succeeds and who have shown no disposition in any of the steps that we have suggested which would protect us to give us that protection. They have refused to give undertakings. The parent company of the applicant has refused to give an undertaking. The parent company of the applicant with whom, as your Honour has been told, most of the negotiations took place, has refused to be joined. There is every sign that the applicant company is being distanced from any secure, as distinct from discretionary, source of funds. Now, your Honour has seen Mr De Simone in the witness box and is in a position to assess his disposition towards my client and in our submission it is fair to say that it is not a disposition favourable to providing the applicant with funds which will enable it to meet costs awarded in favour of my client.
So we say that all these are matters to be taken into account and as a matter of methodology what the court is called upon to do is to weigh these matters generally rather than according to a predetermined path of steps."
I turn to consider first, the exercise of the discretion conferred by s56 of the Federal Court of Australia Act. This discretion is unfettered. In the exercise of this discretion I do not need to make a finding that there is reason to believe that Microcorp will be unable to pay the costs of the respondents if successful in their defence. Microcorp is a company limited by shares. I have regard to its financial position and history as set out in these reasons. I have regard to the place it occupies in the De Simone group of companies and the way the De Simone brothers have the power, and in fact, exercise that power to manipulate the affairs of each company in the group including Microcorp. I accept the force of the submissions of counsel for the respondents set out earlier in these reasons.
On behalf of Microcorp I have regard to the delay in moving for security, the fact that Microcorp's financial position may have been affected by the conduct of the respondents, to the fact that Microcorp is trading, even though at a loss, the fact of the payment by the De Simone brothers of the liability in the Samsung action as illustrating their intention to support Microcorp, and the proposed joint venture activities. It is clear that any order for security will not frustrate the claim by Microcorp.
I approach the exercise of discretion on the basis that normally, a plaintiff should not be required to give security for costs. The courts of law are established to enable persons claiming legal rights to have those rights determined according to law. A barrier to their so doing, whether by prohibitive fees charged by the State or the necessity to give security for costs should not be erected unless good cause is shown. In the present case, it is my opinion, having regard to the particular facts of this case and for the reasons given, that an order should be made.
I turn to consider whether an order should be made under subsection 1335(1) of the Corporations Law. Before the discretion can be exercised the Court must be satisfied that it appears by creditable evidence that there is reason to believe that Microcorp will be unable to pay the costs of the respondents if successful in their defence. On the particular facts before the Court, I am so satisfied.
There is no doubt that upon a winding up, the assets of Microcorp are far less than its liabilities, but this, by itself, is not sufficient to satisfy the requirements of the section; see Biltoft Holdings Pty Ltd v Casselan Pty Ltd, above. Nevertheless, in the present case the respondents claim that to date their legal costs amount to some $70,000, the same amount as the legal costs of Microcorp. The respondents claim that their anticipated costs of preparation for trial and for the trial are of the order of $150,000. On that basis, the costs of the respondents, if successful, would be of the order of $220,000. In addition, Microcorp would be required to pay its own legal expenses. From the material before the Court, it is apparent that, without help by way of loan, Microcorp would be unable to pay the costs of the respondents if successful in their defence. The evidence given on behalf of Microcorp does not dispute that. The fact that Microcorp may have some value arising from the evidence of its tax losses does not, as was asserted by counsel for the applicant, assist its case in opposing the giving of security. What is suggested is that if the joint venture does succeed, it might be able, at some time, to pay the costs and that in any event, it could rely upon the De Simone brothers to provide that money. On the facts of this case, that is not sufficient to prevent the finding I have made.
The condition precedent prescribed by s1335(1) of the Corporations Act having been satisfied, I turn to consider the exercise of the discretion conferred by that section. I proceed to that task without any predisposition one way or the other. I have regard to the finding made and give weight to that factor. I have regard to all the other matters referred to in these reasons when considering the exercise of the discretion under s56 of the Federal Court Act, but in this regard, there is no need to have regard to the fact that normally a plaintiff should not be required to give security. The satisfaction of the condition precedent overcomes that presumption with the result that no predisposition one way or another should apply. For the reasons so given, in my opinion, in the exercise of the discretion conferred by s1335(1) of the Corporations Law, security should be ordered.
Having made these findings, I do not find it necessary to consider the exercise of discretion under O28 r3(1)(b) of the Federal Court Rules.
It remains to consider what order should be made and the amount of security to be given. This is not a case where the Court should direct an amount to be paid into court. The parties have agreed that if an order is to be made, the order should be in the form of ordering security for an amount in a manner to be agreed upon between the parties and in the absence of agreement, in a manner to be determined by the Court. I propose to do that. Accordingly I turn to consider the amount of security to be given.
In determining this question, the Court must make an estimation of what are the reasonable costs on a party and party basis likely to be incurred by the respondents. Here the security sought is for their costs of preparation for trial and for the trial on the issue of liability. The costs do not include costs relating to the trial on the issue of the amount of damages if the applicant succeeds on liability. Nevertheless it must be kept in mind that Mr Guiseppe De Simone said that the damages claimed amount to about $7,000,000. The solicitor for the respondents gave evidence that the reasonable anticipated costs will exceed $150,000. The issues involved are complex and involve highly technical matters. Senior counsel have been briefed by the opposing parties. It is anticipated that senior counsel will be briefed for the trial. It is anticipated that the trial on liability will take at least three weeks, ie 15 sitting days, and the anticipated costs for counsel and solicitors for the period of the trial will be $8,500 per day. The respondents propose calling 14 witnesses, three of whom are expert. The applicants, in all likelihood, will call a large number of witnesses. The respondents' solicitors have received an initial quote for the preparation of expert witnesses' statements and the giving of evidence at trial of $15,000. In all the circumstances, Mr Watson, considers the estimate of $150,000 to be conservative particularly having regard to the fact that considerable additional work will need to be done in preparing the matter for trial.
The applicant disputes these figures. Mr Menzies considers that the trial on liability will take approximately 7 days and that the costs of counsel and solicitors would be $6,000 per day. On that estimation, the legal costs for the trial on the issue of liability could be $42,000. Mr Menzies claims the sum of $15,000 for expert witnesses is excessive and a more realistic figure would be $8,500. In addition a further $2,000 should be allowed, making a total amount of $52,500.
Conflicts of this kind are difficult to resolve. From experience, length of trials generally are underestimated. The Court has no knowledge of the level of fees of solicitors or of barristers. In all the circumstances, this is a case where I should accept the opinion of the solicitor for the respondents. He knows much more about the respondents' case than the solicitor for the applicant. Already, each group of parties has incurred costs of $70,000 and one would expect the hearing of this case to be more expensive than the interlocutory matters. Accepting a compromise figure between those suggested by the two solicitors may be an easy way out, but is not logically satisfying. I am fortified in coming to this conclusion by the fact that the form of the security will not require the payment of money.
Accordingly, I determine the amount of security to be given at $150,000.
It remains to consider the form of order to be made, including an order for costs. Subsection 56(2) of the Federal Court Act provides that the security be given "at such time and in such manner and form, as the Court" directs. Subsection (4) provides that if security "is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding ... be dismissed". The section makes no specific provision for the making of an order that the proceeding be stayed where security has been ordered but not complied with. However, the Court may, in my opinion, order that if the applicant fails to comply with the order to provide security, the proceeding be stayed; c/f O28 r5 and s1335(1) of the Corporations Law. Section 56 of the Federal Court Act makes no specific provision relating to costs but s43 confers a general power on the Court to award costs. In this latter respect, see s1335(2) of the Corporations Law which is as follows: "The cost of any proceeding before a court under this Law shall be borne by such party to the proceeding as the court, it its discretion, directs."
This is not a case where the Court should initially make an order that if the applicant does not provide the security as ordered, the application be dismissed. Accordingly it is proposed that the order should be in the form that the proceeding be stayed until security is provided. This order does not prevent the respondents from seeking an order that the proceeding be dismissed if the security is not provided within a reasonable time.
The respondents have succeeded on the motion. Opportunities were given to the applicant to give security without the need for an order. In all the circumstances, this is a case where the respondents should be entitled to their costs of the motion. Attention is directed to O62 r3 of the Federal Court Rules. I can see no reason why the general rule should not apply.
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