Phillips Oysters P/L v National Australia Bank Ltd

Re: PHILLIPS OYSTERS PTY LIMITED and B.G. PHILLIPS PTY LIMITED
And: NATIONAL AUSTRALIA BANK LIMITED; ARTHUR WILLIAM BUTTERELL and ALAN EDWARD
LEWIS
No. G3035 of 1992
FED No. 824
Number of pages - 24
Corporations Law - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Corporations Law - Ability of directors to bring an action in name of company where receiver and manager has been appointed - requirement of indemnity from directors.

Practice and Procedure - Striking out statement of claim - abuse of process - security for costs.

Corporations Law: s. 1335

Federal Court of Australia Act (Cth) 1976: s. 56

Federal Court Rules: O. 11 r. 16; O. 20 r. 2; O. 28 r. 5(1)(b).

HEARING

SYDNEY #DATE 13:11:1992

Counsel for the Applicants : P. Strickland

Solicitors for the Applicants: Dupree Moore and Associates

Counsel for the First
Respondent : D.L. Williams

Solicitors for the First
Respondent : Dibbs Crowther and Osborne

Counsel for the Second
Respondent : J.E. Thomson

Solicitors for the Second
Respondent : Dunhill Madden Butler

Counsel for the Third
Respondent : F. Gleeson

Solicitors for the Third
Respondent : Coudert Bros.

ORDER

The Court orders that:

1. Insofar as the proceeding is brought by the first applicant it be dismissed against the respondents;

2. (a) security be provided by the second applicant against any costs

which it may be ordered to pay any of the respondents in this proceeding, whether on a party and party, solicitor and client or indemnity basis;

(b) the security be provided in the form of a deed of indemnity or bond executed by a major bank or insurance company carrying on business in Australia and that the same be lodged with the Court in a form satisfactory to the Registrar and that a copy thereof be served on the solicitor for each of the three respondents on the same day as the same is lodged with the Court;

(c) the said security be provided within 21 days of the making of this order;

(d) if the said security is not provided within the time and in the form limited in this order, the proceeding shall thereupon stand dismissed so far as the second applicant is concerned; and

3. The proceeding stand over to a date to be fixed (after the expiration of the said period of 21 days for the provision of security by the second applicant), so that, if the proceeding has not been dismissed by the self-executing order provided above in relation to the second applicant, further directions may be given for the future conduct of the proceeding including orders to be made in relation to the subpoenas that have been issued by the applicants and that are the subject of challenge involved in the notices of motion presently before the Court and the question of joinder of the directors of the applicants as respondents.

4. The applicants pay the costs of the respondents of the motions.

5. Liberty to apply be reserved to any party on three days' notice.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

LOCKHART J. There are motions before the Court by each of the three respondents to the proceeding which seek in essence the same relief (the precise relief sought differs slightly as between the respondents). Broadly speaking, the motions seek the following orders:-

1. that the proceeding be stayed as against the first applicant until its directors indemnify the first applicant in respect of any liability which it may incur pursuant to any order which may be made in this proceeding to pay the costs of any of the respondents;

2. that such indemnity be secured, but not over assets of the first applicant;

3. that the second applicant provide appropriate security for the costs of each of the respondents to meet any liability which the second applicant may incur pursuant to any order which may be made in this proceeding to pay the costs of any of the respondents;

4. that until such security is provided, the proceeding be dismissed or stayed as against the second applicant;

5. that subpoenas issued at the request of the applicants and directed to each of the respondents be set aside; and

6. that Barry Graham Phillips and Patricia Ann Phillips (the directors of the applicants) be joined as respondents to the proceeding pursuant to O. 71 r. 10(4).

The second respondent initially sought an additional order that the first applicant be wound up; but it was agreed that this motion should be deferred pending the resolution of the questions mentioned above, especially as a separate proceeding has been instituted by or on behalf of the second respondent seeking the winding up of the first applicant.
It was also agreed by the parties that the motions to set aside the subpoenas directed to each respondent be deferred pending the resolution of the primary questions mentioned earlier.
The motions for dismissal or stay of the proceeding and for orders for security for costs are brought because receivers and managers have been appointed to the first applicant by the first respondent and by the Commonwealth Development Bank of Australia (the first respondent having appointed the second respondent and the Commonwealth Development Bank having appointed the third respondent). It is contended by the respondents that the proceeding has not been brought for the benefit of the first applicant, but for the benefit of its directors (Mr and Mrs Phillips); that the proceeding was commenced without power in circumstances where it could directly impinge on the property the subject of the securities held by the two banks which are being administered by their respective receivers and managers; and that no indemnity is held as against the liability of the first applicant to satisfy any order for costs that may be made against it in favour of any of the respondents. Receivers and managers have not been appointed to the second applicant or to any of its assets; but, as the second applicant is insolvent (so is the first applicant) the orders for security for costs to be provided by the second applicant are sought by each respondent.
The first and second respondents also seek an order dismissing or staying the proceeding as against both applicants and orders striking out the amended statement of claim on the ground that no reasonable cause of action is disclosed by the amended statement of claim.
Many affidavits have been filed in the proceeding which have been relied upon by the respondents in support of their respective motions.
I shall summarize the material allegations made in the amended statement of claim. The applicants have had ample opportunity to plead their case correctly and they have amended their statement of claim more than once. Indeed, the present form which it takes (and which I shall describe as the amended statement of claim) did not emerge until it was filed on 28 April 1992 after the hearing of the motions had commenced.
The material allegations in the amended statement of claim are as follows:-

. the first applicant at all material times carried on the business of oyster farming (para. 2)

. the second applicant owns land known as Lot 101 Frederick Drive, Oyster Cove, via Williamstown, New South Wales ("the land") (para. 4)

. the second applicant mortgaged the land to the first respondent by mortgage dated 16 August 1984 ("the second applicant's mortgage") (para. 5)

. the second applicant guaranteed certain loans made by the first respondent to the first applicant by deed of guarantee dated 19 October 1988 ("the guarantee") (para. 6)

. on 11 September 1989 in exercise of the powers conferred by a deed of debenture dated 16 August 1984 from the first applicant to the first respondent, the first respondent appointed the second respondent as receiver and manager of the oyster stock owned by the first applicant (para. 6A)

. on 11 September 1989 in exercise of the powers conferred by a mortgage dated 16 August 1984 over property owned by the first applicant ("the first applicant's mortgage") the first respondent appointed the second respondent as receiver and manager of the first applicant's property charged by the first applicant's mortgage (para. 7)

. on 27 March 1990 the first respondent demanded payment from the second applicant of $1,151,713.51 in respect of monies allegedly owed by the first applicant to the first respondent ("the demand") (para. 8);

. on 6 June 1990, in exercise of the powers conferred by an equitable mortgage dated 7 April 1987 over the whole of the first applicant's property and assets, the Commonwealth Development Bank of Australia appointed the third respondent as receiver and manager of those assets including the oyster stock (para. 9) . at all material times the first respondent intervened in or interfered with or gave directions to the second respondent in relation to the administration of the assets of the first respondent (para. 9A). Particulars are given with respect to the allegations in paragraph 9A, namely:-

- the first respondent directed the second respondent not to hessian the oyster stock;

- the second respondent complied with that direction and failed to hessian the oyster stock by September - early October 1990, thereby causing some of the oyster stock to die from heatkill;

- the first respondent directed the second respondent to arrange for the sale of the first applicant's plant and equipment by auction prior to the sale of the oyster stock, thereby ensuring that the oyster stock could not be properly maintained. On or about 15 August 1990 the majority of the first applicant's plant and equipment was sold at auction by auctioneers appointed by the second respondent; - the first respondent intervened or interfered with the conduct of the receivership of the second respondent in that as a result of the first respondent's dispute with the Commonwealth Development Bank in relation to the ownership of the oyster stock, the second respondent was prevented from placing some or all of the oyster stock on the market immediately after the cessation of business of the first applicant . in the premises the second respondent acted as the agent of the first respondent (para. 9B).

. the first respondent by its agent, the second respondent, was guilty of wilful default and neglect in the management of the assets of the first applicant (para. 10) (the particulars given to support this allegation are those given with respect to para. 13 to which I shall refer later)

. further, or in the alternative, the first respondent owed to the applicants a duty by its agent, the second respondent, to act in good faith or alternatively was under a duty to take reasonable care to obtain the best price for the assets of the first applicant including the oyster stock as was reasonably obtainable in the circumstances (para. 11)

. in breach of the duty referred to in para. 10 the first respondent by its agent, the second respondent, acted male fide or in the alternative, failed to take reasonable care to obtain the best price for the assets of the first applicant including the oyster stock as was reasonably obtainable in the circumstances (para. 12) (the particulars to support paragraph 12 are those in support of para. 13).

. the second and third respondents as principals in their own right were guilty of wilful default and neglect in the management of the assets of the first applicant (para. 13). (Particulars (a) to (j) inclusive are given to support this allegation. I need not enumerate them. In essence they assert a failure to sell a certain quantity of bags of oysters at Georges River by September 1990 thereby causing the oysters to perish due to the winter cold and lose value; arranging the sale of the first applicant's plant and equipment by auction before the sale of the oyster stock thereby ensuring that the oyster stock could not be properly maintained; failing to ensure that the oysters were properly fixed on oyster racks or trays; failing to move the oyster stock when required and advised to do so by the directors of the first applicant; failing to hessian the oyster stock or to degigase it or to thin it out or to take down oyster sticks at the first applicant's Port Stephens catching leases and failing to heed advice of the directors of the first applicant who had expertise in managing and taking care of the oysters stock; finally, failing to place all the oyster stock on the market immediately after the cessation of business of the first applicant) . in the alternative to the allegations in paragraph 13, the second and third respondents breached their duty owed to the applicants to act in good faith or alternatively breached their duty to take reasonable care to obtain the best price for the assets of the first applicant (para. 14) (the particulars to support this paragraph are the same as those that support paragraph 13) . in the circumstances the first applicant received substantially less money in reduction of the money secured by the first applicant's mortgage (para. 15)

. the first applicant did not have sufficient funds to repay the loans made by the first respondent thereby causing the first respondent to make the demand against the second applicant (para. 16)

. by reason of these matters the applicants suffered loss and damage (para. 17).

. the second and third respondents failed to exercise reasonable care and diligence in the exercise of their powers and discharge of their duties as officers of the first applicant (para. 18) (again, the particulars to support paragraph 13 are relied on) . the second and third respondents contravened s. 229(2) of the Companies (New South Wales) Code and s. 232(4) of the Corporations Law and are accordingly liable for the payment of a debt due to the first applicant in an amount equal to the loss or damage suffered by the first applicant as a result of the alleged contravention (para. 19)

. the second and third respondents have not faithfully performed their duties, or, in the alternative, have not observed a requirement of the Companies (New South Wales) Code or the Corporations Law to exercise at all times a reasonable degree of care and diligence in exercise of their powers in the discharge of their duties (para. 20) (again the particulars to support para. 13 are relied on)

The applicants claim against the respondents:

. damages for breach of duty;

interest pursuant to s. 51A of the Federal Court of Australia Act 1976;

. further or other relief;

. costs (para. 21);

The first applicant claims against the second and third respondents:-

. a right to recover compensation pursuant to s. 229(7) of the Companies (New South Wales) Code and s. 232(8) of the Corporations Law;

. an inquiry as to whether the second and third respondents have faithfully performed their duties as receivers or observed certain statutory requirements under the Corporations Law or the Companies (New South Wales) Code (para. 22).

The second applicant claims against the second and third respondents contribution and indemnity in respect of moneys payable by the second applicant to the first respondent pursuant to the guarantee (para. 23).
There is a substantial body of affidavit evidence including evidence relating to the financial position of the applicants and Mr and Mrs Phillips, also other companies controlled by them and which are related to the applicants. The evidence also concerns the merits of the allegations made by the applicants in the amended statement of claim.
The first issue to which I shall turn is whether the proceeding should be dismissed or stayed as against the first applicant until Mr and Mrs Phillips indemnify it (the indemnity to be secured) in respect of any liability which it may incur pursuant to any order which may be made to pay the costs of any of the respondents to this proceeding.
For the purposes of considering the present issue I shall state the relevant facts. On 16 August 1984 the first applicant entered into a deed of mortgage with the first respondent (registered dealing number 49890) whereby it charged in essence all its property to the first respondent. Also on 16 August 1984 the first applicant entered into a mortgage with the first respondent whereby it charged in favour of the first respondent certain land owned by the first applicant (registered dealing number V324790). Also on 16 August 1984 the second applicant entered into a mortgage in favour of the first respondent (registered dealing number V338725) over the land.
On 7 April 1987 the first applicant mortgaged its property to the Commonwealth Development Bank.
On 19 October 1988 the second applicant guaranteed to the first respondent repayment of the debts due to the first respondent by the first applicant.
On 11 September 1989 the first respondent appointed the second respondent receiver and manager of the assets charged to it by the first applicant under the mortgage debenture 49890 and under mortgage V324790. It is plain that the second respondent as receiver and manager of the first applicant is the agent of the first applicant (clause 14 of the mortgage debenture 49890 and clause 9(h) of the mortgage V324790).
On 15 November 1989 the first respondent served a demand dated 10 November 1989 upon the second applicant pursuant to the terms of the guarantee dated 19 October 1988.
On 29 March 1990 the first respondent made demand upon the second applicant under mortgage V338725 to pay to it pursuant to the mortgage $1,151,713.51 plus interest.
On 6 June 1990 the Commonwealth Development Bank appointed the third respondent as receiver and manager of the property of the first applicant.
On 20 April 1991 the first respondent served a notice under s. 57(2)(b) of the Real Property Act 1900 (NSW) upon the second applicant with respect to the land.
On 20 March 1992 the first respondent obtained judgment in the Supreme Court of New South Wales for possession of the land. Execution was stayed pending the final disposition of the proceeding in this Court.
The evidence is undisputed that this proceeding was commenced by Mr and Mrs Phillips in the names of the applicants. They are the directors of the applicants and they effectively control them.
The first applicant is insolvent. Upon a winding up there will be no money available for distribution to unsecured creditors. The estimated deficiency is $5,202,504.
The second applicant is insolvent. If one ignores the liability of the second applicant to the first respondent there is nevertheless a substantial deficiency; but if one takes that liability into account the deficiency is very large.
Mr Phillips has sworn that neither he nor his wife has funds available to pay money into court as security for costs and no assets to indemnify the applicants with funds to continue this litigation.

It is not disputed that the causes of action alleged by the first applicant are property of the first applicant and the subject matter of the charges to the first respondent and the Commonwealth Development Bank. The causes of action are therefore part of the property subject to the rights of the second and third respondents as the receivers and managers appointed by the first respondent and the Commonwealth Development Bank. Both receivers are entitled to bring proceedings based on those causes of action.
Upon the appointment of a receiver, the directors of the company do not necessarily cease to have power to bring proceedings in the name of the company. The exercise of this power is subject to the qualification that it does not impinge prejudicially upon the position of the secured creditor by threatening or imperilling the property the subject of the charge: Newhart Developments Limited v Co-Operative Commercial Bank Limited (1978) 1 QB 814. If the directors of the company do not provide a satisfactory indemnity (which in appropriate cases should be secured), the conduct of proceedings in the name of the company by its directors may result in an order for costs being made against the company, thereby depleting its assets and imperilling the property the subject of the charge and interfering with the performance by the receiver of his duties or the exercise of his powers: Newhart at 819; Tudor Grange Holdings Limited v Citibank NA (1991) BCLC 1009; Hawkesbury Development Co Limited v Landmark Finance Pty Limited (1970) 92 WN(NSW) 199 at 210. See also NEC Information Systems Australia Pty Limited v Lockhart, Brownie J., 8 June 1990, unreported; Charmae Investments Pty Limited v Australia and New Zealand Banking Group Limited (1991) ATPR 41-063 at 52,004; Town and Country Sport Resorts (Holdings) Pty Limited v Partnership Pacific Limited, O'Loughlin J., 19 July 1991, unreported.
Where a receiver has been appointed by a secured creditor under a charge over the assets of a company and the receiver has power to conduct proceedings on behalf of the company, and the directors of the company cause proceedings to be instituted in the name of the company without providing to the company an indemnity against its liability to satisfy any order for costs which may be made against it in the proceeding, the property the subject of the charge is imperilled, and this leads to the conclusion either that the directors have no power to commence the proceedings in the absence of such indemnity or the consent of the secured creditor or the receiver (Tudor Grange Holdings at 1018-1019) or that the Court in its discretion will order that the proceedings be dismissed or stayed: Newhart.
Newhart was a case where the company in whose name the proceedings had been brought by the directors had been indemnified by outside sources against all liability, not only for its own costs, but also for costs which the company might be ordered to pay to the other party. Hence, the bringing of proceedings by the directors in the company's name could not in those circumstances prejudice the property for which the receiver was responsible. In Newhart the receiver was in an invidious position in deciding whether or not to take proceedings because he was being invited to sue those who had appointed him. The second of those considerations would apply in the present case but not the first.
In Tudor Grange, Browne-Wilkinson V.C. doubted the correctness of Newhart because the Vice-Chancellor was of the opinion that once a receiver and manager has been appointed by the secured creditor, the directors cease to have the power to sue in the company's name. Whether that view correctly represents the law in Australia need not be decided in this case, because on either approach (i.e. Browne-Wilkinson V.C.'s approach or the view that it is not a question of the directors' power to sue in the company's name but for the Court in the exercise of its discretion to dismiss or stay the proceeding) the result of this case would be the same.
If the proceedings were instituted without power of the directors to do so, the question arises whether they should be dismissed or stayed. Logically dismissal would be the result, because to stay the proceeding would be to keep on foot (albeit that further proceedings in the matter would be stayed) something which should never have been instituted in the first place.
Alternatively, if it were a matter for the discretion of the court then I have no doubt that this is a proper case for dismissing the proceeding and I propose to approach the case on this footing.
The action of Mr and Mrs Phillips in commencing these proceedings in the name of the company without providing any indemnity to the company against its potential liability for costs of the respondents and in the absence of the consent of the respondents necessarily imperilled or threatened the property the subject of the charges to the first respondent and the Commonwealth Development Bank.
As mentioned earlier, the first applicant is hopelessly insolvent and it is plain that neither Mr nor Mrs Phillips has any assets available to answer any indemnity which he or she may give to the first applicant to meet any order for costs in favour of any respondent against the first applicant. Also, I am not persuaded on the material before the Court on the hearing of these motions that this is a case where the impecuniosity of the first applicant has been brought about in large measure by the conduct of the respondents. Hence, it is not a case where the order of dismissed or stay would unjustly stifle the proceeding.
I am of the opinion that, insofar as the proceeding is brought by the first applicant, it should be dismissed against all respondents. I should add that the motion before the Court is pursuant to Order 20 rule 2; and, for the reasons I have given, the proceeding is an abuse of the process of the Court and should be dismissed insofar as it involves the first applicant.
I turn to the next question whether security for costs should be ordered against the second applicant. As mentioned earlier, there is no receiver or receiver and manager appointed to the second applicant, so the point discussed above with respect to the first applicant does not arise. The second applicant is admittedly insolvent. By their own admission Mr and Mrs Phillips are unable to furnish funds for the second applicant to meet the costs of the respondents and they have no prospect of doing so. In my opinion the respondents are entitled to an order for security for costs in these circumstances pursuant to either s. 1335 of the Corporations Law or s. 56 of the Federal Court of Australia Act 1976. I repeat what I said earlier that I am not persuaded that this is a case where, in the exercise of the Court's discretion, it would not order security on the basis that to do so would stifle the action.
As it is clear that Mr and Mrs Phillips cannot find funds to enable the second applicant to provide security for costs (there certainly are no assets of the second applicant itself which are available for this purpose) and as the first respondent has obtained an order from the Supreme Court for an order for possession of the land which is stayed pending the determination of this proceeding, it is in my view an appropriate case to order that the proceeding be dismissed insofar as it involves the second applicant. However s. 56(4) of the Federal Court of Australia Act 1976 empowers the Court or a Judge to order that the proceeding be dismissed "if security, or further security, is not given in accordance with an order under this section". Thus the power to dismiss under s. 56 is posited upon the assumption that an order for security has been made and not complied with. Yet it would be an exercise in futility for the Court to make an order in this case for the provision of appropriate and adequate security by the second applicant where the evidence establishes that it is insolvent and cannot provide security.
Order 28 r. 5(1)(b) empowers the Court to order that, "if the applicant fails to comply with an order to provide security within the time limited in the order, the proceeding be thereafter stayed or dismissed". I propose to invoke that power.
The orders which I propose to make are that:

(a) security be provided by the second applicant against any costs which it may be ordered to pay any of the respondents in this proceeding, whether on a party and party, solicitor and client or indemnity basis;

(b) the security be provided in the form of a deed of indemnity or bond executed by a major bank or insurance company carrying on business in Australia and that the same be lodged with the Court in a form satisfactory to the Registrar and that a copy thereof be served on the solicitor for each of the three respondents on the same day as the same is lodged with the Court;

(2) the said security be provided within 21 days of the making of this order;

(d) if the said security is not provided within the time and in the form limited in this order, the proceeding shall thereupon stand dismissed so far as the second applicant is concerned; and

I turn now to the question whether the amended statement of claim discloses a reasonable cause of action (O. 11 r. 16).
An order striking out a statement of claim or dismissing a proceeding summarily on the ground that no reasonable cause of action is disclosed involves establishing that the plaintiff's case is so untenable that it cannot possible succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Salemi v Minister for Immigration and Ethnic Affairs (1976) 137 CLR 388 and Mutual Life and Citizens' Assurance Co Limited v Evatt (1970) 122 CLR 628.
The case for the applicants does not appear to me to be a particularly strong one on the facts; but I would be loathe to shut the applicants out from having their day in court on the final hearing if they were otherwise entitled to exercise that right. The issues involved include the following:

. Whether the second respondent or the first respondent should have continued to expend monies on the "oyster farming" activities upon the appointment of the second respondent or perhaps at an earlier time;

. Whether the second respondent has a duty to sell the assets, charged by the securities in favour of the first respondent, at any particular time;

. Whether the second respondent owes duties as receiver to the applicants or either of them;

. Whether the second respondent owes a duty to the first applicant to exercise reasonable care and skill in the exercise of his powers and the discharge of his duties;

. Whether the second respondent owes a duty of care to both applicants or either of them to obtain the best possible price for the sale of the assets of the first respondent which the circumstances allow or not to sell those assets at an undervalue or to ensure that no unnecessary loss falls upon the first applicant;

. Whether any duty is owed by a receiver appointed by a secured creditor to a person with no proprietary interest in the secured property (such as the second applicant);

Some of these questions were considered by me in Johnson v AGC (Advances) Limited, 21 May 1992, unreported, where I reviewed the relevant authorities concerning the question whether a mortgagee in possession owes a duty to the mortgagor or a guarantor to use reasonable care to obtain the best possible price in the circumstances. Since giving judgment in Johnson, other judgments have been published which bear upon this question including Clyde Industries Limited v Dittes, Cole J., 5 June 1992, unreported; Benson v Commonwealth Bank of Australia, Burchett J., 2 September 1992, unreported; Emerson v Custom Credit Corporation Limited, Supreme Court of Queensland, Court of Appeal, 22 June 1992, unreported.
It is in my view inappropriate to determine questions of principle of such importance on an application to strike out an amended statement of claim and I decline to do so, especially as the resolution of the questions of fact on the final hearing may render the questions of law academic in that they may never arise.
It is not necessary to deal with the motions relating to the joinder of the directors of the applicants as respondents to the proceedings. This will only become relevant if the directors of the applicants can, in fact, provide a satisfactory indemnity. In the event that such an indemnity is provided then this aspect of the motions will need to be further considered.
In the result, the Court makes the following orders:-

1. that insofar as the proceeding is brought by the first applicant it be dismissed against the respondents;

2(a) security be provided by the second applicant against any costs which it may be ordered to pay any of the respondents in this proceeding, whether on a party and party, solicitor and client or indemnity basis;

(b) the security be provided in the form of a deed of indemnity or bond executed by a major bank or insurance company carrying on business in Australia and that the same be lodged with the Court in a form satisfactory to the Registrar and that a copy thereof be served on the solicitor for each of the three respondents on the same day as the same is lodged with the Court;

(c) the said security be provided within 21 days of the making of this order;

(d) if the said security is not provided within the time and in the form limited in this order, the proceeding shall thereupon stand dismissed so far as the second applicant is concerned; and

3. That the proceeding stand over to a date to be fixed (after the expiration of the said period of 21 days for the provision of security by the second applicant), so that, if the proceeding has not been dismissed by the self-executing order provided above in relation to the second applicant, further directions may be given for the future conduct of the proceeding including orders to be made in relation to the subpoenas that have been issued by the applicants and that are the subject of challenge involved in the notices of motion presently before the Court and the question of joinder of the directors of the applicants as respondents.

4. That the applicants pay the costs of the respondents of the motions.

5. Liberty to apply be reserved to any party on three days' notice.

[1992] FCA 824

13 NOVEMBER 1992