Aerospace Developments Limited v Altitude Aerospace Interiors Limited

Case

[2013] NZHC 1337

6 June 2013

No judgment structure available for this case.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-2676 [2013] NZHC 1337

BETWEEN  AEROSPACE DEVELOPMENTS LIMITED

Plaintiff

ANDALTITUDE AEROSPACE INTERIORS LIMITED

Defendant

Hearing:                   28 May 2013

Appearances:           C R Carruthers QC and L C A Farmer for plaintiff

N S Gedye QC for defendant

Judgment:                6 June 2013

JUDGMENT NO.2 OF ALLAN J

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 4.00 pm on Thursday 6 June 2013.

Solicitors/counsel :

Meredith Connell, Auckland

Nathan Gedye, Auckland

AEROSPACE DEVELOPMENTS LIMITED v ALTITUDE AEROSPACE INTERIORS LIMITED [2013] NZHC 1337 [6 June 2013]

Introduction

[1]      In a judgment delivered on 17 October 2012, I made an order directing the plaintiff to provide security for costs in favour of the defendant in the sum of

$20,000.1   I also made certain timetable orders by consent.

[2]      The order was intended to relate to costs arising in the early stages of the proceeding.  I expressly left it open to the defendant to make a further application by memorandum when stage one attendances were complete.  I expressed the view that the Court and the parties would be in a better position to analyse the strength of the plaintiff’s claim once discovery and inspection of documents had been completed.

[3]      In this judgment, I deal with two further applications.   The first is by the defendant for an order directing that the plaintiff give further security in respect of remaining interlocutory matters and the trial itself.  The second application is by the plaintiff which seeks an order in reliance on r 7.51 rescinding my earlier order for security on the ground that it had been obtained fraudulently or improperly by the defendant.  The plaintiff argues that if the first order is rescinded then, as a matter of principle, no further security ought to be ordered.

Security principles

[4]      The ordinary principles governing applications for security for costs are well established.  For convenience I set out here the summary that appeared in my earlier judgment:

[2]       An application for security gives rise to the following issues:

(a)      Has  the  applicant  satisfied  the  Court  of  the  threshold  under r 5.45(1)?

(b)      How should the Court exercise its discretion under r 5.45(2)? (c)    At what amount should security for costs be fixed?

(d)      Should a stay be ordered?

[3]      The ordinary approach was helpfully restated by the Court of Appeal in A S McLachlan Ltd v Mel Network Ltd.2   Whether or not to order

1 Aerospace Developments Ltd v Altitude Aerospace Interiors Ltd [2012] NZHC 2723.

security, and if so the quantum, are discretionary. They are matters for the Judge, who is to take into account all the relevant circumstances. The discretion is not to be fettered by constructing principles from the facts of previous cases.

[4]       It is accepted by the plaintiff that the case meets the threshold test in r 5.45(1) because it accepts that it will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the proceeding.

[5]       Where, for the purposes of the rule a plaintiff is impecunious, an order having the effect of preventing a plaintiff from pursuing the claim should be made only after careful consideration and in a case in which the claim has little chance of success. Access to the courts for a genuine plaintiff is not likely to be denied.3

[6]       On a security for costs application the Court will endeavour to assess the merits and prospects of success of the claim, but realistically, such an inquiry will be limited in a relatively complex matter such as this. Any assessment will be no more than a matter of impression.4

[7]       A reasonable probability, established by persuasive evidence, that the plaintiff’s impecuniosity results from the defendant’s actions complained of in the proceeding, is a factor that militates against an order for security.5   But care must be taken to avoid the circular argument that because the defendant does not accede to the claim and pay damages, the plaintiff’s impecuniosity is therefore its fault.6

[8]       The amount of security is equally in the Court’s discretion. It is not necessarily to be fixed by reference to a likely costs awards. Rather, it is to be what the Court thinks fit in all the circumstances.7 Those circumstances will ordinarily include such matters as:

(a)       The amount and/or nature of the relief claimed;

(b)       The character of the proceeding, including the complexity and novelty of the issues, and therefore the likely extent of interlocutory disputes;

(c)       The estimated duration of the trial;

(d)       Probable costs payable if the plaintiff is unsuccessful.

2 A S McLachlan Ltd v Mel Network Ltd (2002) 16 PRNZ 747 (CA) at [13]-[14]

3 At [15]-[16].

4 Meates v Taylor (1992) 5 PRNZ 524 (CA); A S McLachlan Ltd, at [21].
5  Davy  v  Howell  (1993) 7  PRNZ  141  (HC);  Weld  Street  Takeaways  & Fisheries  Ltd  v  Westpac  Banking

Corporation [1986] 1 NZLR 741 (HC).

6 Birnie Capital Partnership Ltd v Birnie HC Auckland CIV-2010-404-3000, 29 October 2010.

7 A S McLachlan Ltd, above n 2.

The r 7.51 jurisdiction

[5]      Rule 7.51 of the High Court Rules provides:

Order may be rescinded if fraudulently or improperly obtained

(1)       A  Judge  may  rescind  any  order  that  has  been  fraudulently  or improperly obtained.

(2)       The Judge may grant any further relief by way of costs that the interests of justice require.

(3)       This rule does not limit any other remedies of a party who has been adversely affected by an order that has been fraudulently or improperly obtained.

[6]      The rule and its predecessor has received only limited attention in the cases. A helpful summary appears in the decision of Associate Judge Abbott in Yang v Ko.8

There, His Honour reviewed Hutchinson Bros Ltd v Auckland City Council,9  and

Nand  v  Williams  (No.3).10   Associate  Judge  Abbott  considered  the  following principles could be drawn from those two authorities:

(a)       The rule exists to prevent intentional or innocent misuse of the Court’s

processes;

(b)The focus of the inquiry is the knowledge and conduct of the party that obtained the order in question:  orders are fraudulently obtained when there is an intentional misuse of Court processes, but improperly obtained when there is innocent misuse;

(c)      A key factor in an inquiry into whether the order was improperly obtained is whether the party obtaining it knowingly ignored a legal obligation so that it would be contrary to the interests of justice to allow the order to stand;

(d)The conduct of the party seeking to rescind the order is relevant only insofar as it affects the knowledge of the party who obtained it;

8 Yang v Ko HC Auckland CIV 2005-404-4583, 31 July 2007.

9 Hutchinson Bros Ltd v Auckland City Council HC Auckland M184/88, 30 May 1988.

10 Nand v Williams (No.3) HC Auckland CP429/97, 24 November 1998.

(e)      The fact that the order would not have been granted had the alleged impropriety not  occurred  is  a  relevant  fact  in  the  exercise  of  the discretion.

The plaintiff ’s argument

[7]      It is common ground that the plaintiff is impecunious.  Indeed, it has ceased to trade.  It is on that basis that the defendant made its initial application for security for costs.   That application was opposed by the plaintiff on the ground that the defendant’s conduct complained of in this proceeding had brought about the impecuniosity.   In those circumstances, the Court was called upon to form an impression as to the relative strengths of the parties’ respective cases.

[8]      In my earlier judgment, I held that this was not a case in which the plaintiff had  established  such  a  clear  link  between  alleged  blameworthy conduct  on  the defendant’s part, and its own impecuniosity, so as to justify the refusal of an order.11

[9]      On  its  present  application  for  rescission,  the  plaintiff  argues  that  the defendant obtained its order for security by placing before the Court misleading evidence upon which the Court relied.   Mr Carruthers argues that in consequence, the order was either fraudulently or improperly obtained.  Whether the evidence was deliberately  or  innocently  misleading  does  not  matter,  he  argues,  because  the outcome ought to be the same:  the earlier order ought to be rescinded.

Factual background

[10]     The plaintiff specialised in furniture for corporate jets.   It was a start up company which sought to leverage accumulated expertise in New Zealand derived from  the fitting out  of super-yachts.    It  undertook  the design,  manufacture and installation of bespoke aircraft furniture and interiors, including veneering, cabinetry, and associated finishing services.  Some of this work was subcontracted out by the

plaintiff.

11 Aerospace Developments Ltd v Altitude Aerospace Interiors Ltd, above n 1,at [30].

[11]     The defendant, a subsidiary of Air New Zealand, provided a comprehensive fit-out service for corporate aircraft, subcontracting much of the work to yet more specialised companies.   The defendant provided supply, management, design, engineering, certification, manufacturing, installation and maintenance services in respect of aircraft interiors.  There was some degree of overlap between the services offered by the parties.

[12]     The defendant had taken over Air New Zealand’s aviation design engineering

business in about May 2008.   The plaintiff was incorporated in about September

2008 in order to take over part of the operations of two other companies.  There was a degree of synergy between the respective businesses of the parties.  They worked together at times to attract clients and build capacity.  They worked on prospective leads together, and worked to convert those leads into sales.

[13]     The  plaintiff  says  that  the  parties  were  throughout  engaged  in  a  joint enterprise, and that each project they carried out together was in law a joint venture pursuant to which the defendant was subject to fiduciary obligations of trust and confidence owed to the plaintiff.   The plaintiff accepts however, that it was not intended that the parties would eventually execute a joint venture agreement.  That is plain from the draft documents passing between them.   Rather, on the plaintiff ’s case, it was eventually to become a preferred supplier to the defendant in respect of work within its expertise.

[14]     The present claim relates to two particular projects (known as OG3 and Samsung respectively).  The plaintiff says that the defendant unlawfully refused to engage the plaintiff on those projects after it had obtained the head contract with the plaintiff’s assistance.  It is common ground that the Samsung project was by far the bigger and more lucrative of the two projects, and indeed, it has become virtually the sole focus in this proceeding.

[15]     The plaintiff says that it received no reward or recompense for its preliminary work  on  the  defendant’s  behalf.    Instead,  the  arrangement  was  that  when  the defendant secured a contract, it would subcontract the tasks within the plaintiff’s

expertise to it.  In reliance on those understandings, the plaintiff invested time and money in building its capacity to carry out that work.

[16]     Considerable time and money was expended by the plaintiff in anticipation of a significant role in a potential contract to fit out a private Boeing 737 owned by the South Korean conglomerate Samsung.   In the negotiation stage, a sample cabinet was prepared by the plaintiff at its sole expense and at the request of the defendant.

[17]     The defendant did eventually secure the Samsung contract, but it did not engage the plaintiff to carry out the work. Although the plaintiff was initially offered a minor role, namely digital veneering, even that prospect disappeared when no work of that type was required.  The plaintiff says that the loss of the Samsung subcontract stripped it of its work flows and viability, and that it closed down soon afterwards.

[18]     The plaintiff pleads breach of contract, breach of fiduciary duty, estoppel and breach of s 9 of the Fair Trading Act 1986.   In respect of the claim for breach of fiduciary duty, it seeks an account of the value of the veneering and associated services work on the OG3 and Samsung projects, together with declaratory relief in respect of the other causes of action.  It also seeks an inquiry as to damages.

[19]     In respect of the Samsung contract, the plaintiff contends that its losses ran into many hundreds of thousands of dollars.  The defendant’s position is those losses would not have exceeded US$110,000.

[20]     For its part, the defendant acknowledges that the parties were from time to time engaged in contractual relationships, pursuant to which the plaintiff carried out work on a subcontract basis for the defendant.  It remained willing throughout the relevant period to enter into further subcontracts where appropriate.   However, it says, there was never an element of exclusivity about the relationship between the parties.  Each was free to contract with others. Accordingly, the plaintiff was entitled to source and carry out work for other customers.   Likewise, the defendant was entitled to look to other subcontractors as appropriate.

[21]     The defendant accepts that the parties were working towards a formal written agreement but says that the overall relationship was not, and was never intended to amount to, a joint venture.

[22]     In respect of the Samsung project, the defendant says that the plaintiff failed to secure a subcontract because it was unable to satisfy Samsung that it had the capability (either itself or through its own subcontractor) to produce the very high standards required by the customer.

[23]     In my earlier judgment, I placed some reliance on evidence to that effect, holding that the plaintiff had not established to the requisite level that its impecuniosity had been caused by the defendant.12

[24]     The plaintiff’s argument now is that the defendant’s affidavit evidence upon

which I relied was either fraudulently or innocently misleading.

[25]     I turn now to a more detailed consideration of that argument.

The rescission argument

[26]     In my earlier judgment I said:

[18]     Importantly,  in  respect  of  the  Samsung  contract,  the  defendant alleges that there was never any practical prospect of the plaintiff becoming entitled to the associated veneering and cabinet work. That was because, prior to entry into the contract, representatives of Samsung had visited the premises of SMI, a company to which the plaintiff sub-contracted some of its work. On the defendant’s case, the Samsung representatives were not impressed and expressly refused to let the contract to the defendant unless the veneering and cabinetry work was undertaken by another sub-contractor. There was explicit affidavit evidence to that effect. The plaintiff is in no position to refute that evidence as yet, because discovery is incomplete and inspection has not been undertaken.

[26] The second important aspect of the plaintiff’s claim concerns the Samsung contract. Mr Flanagan accepts that this contract lies at the heart of the proceeding. It is said that the plaintiff spent a great deal of time and money in preparing for what it believed was a strong likelihood that the defendant would get the head contract from Samsung, and that the plaintiff

12Aerospace Developments Ltd v Altitude Aerospace Interiors Ltd, above n 1, at [18].

would get the relevant sub-contract. The defendant did ultimately get the contract,  but  the  plaintiff  did  not  benefit.  That  was  because,  on  the defendant’s affidavit evidence, Samsung personnel had formed an unfavourable view of the plaintiff and its associates, and would not permit the defendant to sub-contract to the plaintiff.

[27] Mr Flanagan submits that the Court ought not to accord significant weight  to  that  contention  because,  although  it  is  supported  by  sworn evidence, the defendant has not as yet given full discovery on the issue. While that is correct, I consider there to be substance in Mr Gedye’s submission that it is inherently unlikely that the defendant’s deponent would simply have made the Samsung story up, or somehow embellished the truth. If Samsung would not work with the plaintiff then the defendant could not be in breach of any obligation, contractual or fiduciary, to the plaintiff in respect of the Samsung sub-contract, because the defendant’s hands were tied by its customer.

[28] Standing back and assessing these considerations, I conclude as a matter of impression that the plaintiff’s case, although not weak, faces certain hurdles. It follows that the link between the defendant’s alleged conduct and the plaintiff’s impecuniosity is not strongly established, and certainly not to the point at which the Court would be justified in refusing an order for security on that ground alone.

[27]     In forming a view about the respective strengths of the parties’ cases in relation to the Samsung project, I relied to some considerable extent on the evidence of Mr Pervan, who had sworn an affidavit in support of the defendant.   He is the defendant’s general manager, who in that capacity had dealings with the plaintiff from September 2008 onwards.

[28]     In his first affidavit he said:

I have been advised it would not be appropriate to go into the facts in detail in this affidavit.  However, I briefly state further that the defendant’s client in the Samsung project did not regard ADL, or its sub-contractors as acceptable for that project.  Regardless of any other issues between the parties, it was not feasible to provide the veneered cabinetry contract to ADL in respect of the Samsung contract.

[29]     Mr Pervan swore a further affidavit on 29 November 2012 in support of the defendant’s application for further security for costs.  Mr Carruthers is critical of the fact  that  this  affidavit  is not  expressed  to  have been  filed  in  opposition  to  the plaintiff’s  application  for  rescission,  but  the  two  applications  with  which  I  am dealing are closely inter-related and counsel have each dealt at length with material appearing in them.

[30]     I will summarise the salient features of Mr Pervan’s later affidavit:

(a)      By January 2010, the Samsung contract had not been signed and the defendant was actively and intensively endeavouring to secure Samsung’s agreement;

(b)For that purpose, the defendant needed to persuade Samsung that it had the capability to carry out the major fit out job in prospect;

(c)       Therefore, the capability and reliability of the defendant’s subcontract

suppliers was a matter of prime importance;

(d)      A number of Samsung representatives visited New Zealand in January

2010 to investigate the possibility of entering into the fit out contract with the defendant.  As part of that visit they went to Whangarei to view the premises of SMI which was a proposed subcontractor of the plaintiff, intended to carry out much of the veneering and finishing work for the aircraft cabinetry.  Indeed, SMI would be doing most of the work at a practical level, the plaintiff having chiefly a project management role.;

(e)      The Samsung delegation was most unimpressed by the state of SMI’s premises and personnel, and later expressed grave misgivings about SMI’s involvement in the Samsung work.  It is common ground that Samsung subsequently asked the defendant to secure an alternative subcontractor to replace SMI;

(f)      At that time the defendant was unaware of any other veneer supplier or finisher having associations with the plaintiff;

(g)The defendant had two options:   either it could endeavour to find another supplier to replace SMI, or it could attempt to persuade Samsung that SMI’s offering could be brought up to standard;

(h)During early February 2010, the defendant continued to work with SMI in the hope that the first sample cabinet prepared for Samsung could be finished to the necessary standard, but the defendant entertained serious doubts about whether Samsung would accept SMI, given the vehemence with which its opinions of its personnel had been expressed earlier;

(i)During   this   period,   the   defendant   was   investigating   potential alternative suppliers of cabinetry and veneering work, including The Nordam Group, a major US aviation component manufacturer which had a long standing relationship with Air New Zealand;

(j)The  defendant  was  also  aware  of  Robinson  Marine,  an Auckland based yacht building company which had cabinetry and veneering capabilities;

(k)In  mid-February  2010  Mr  Sheppard,  managing  director  of  the plaintiff, advised the defendant that the plaintiff would not be using SMI’s services on the Samsung contract (Mr Pervan says that the defendant was told by Mr Sheppard that the plaintiff had severed its relationship with SMI completely.  Mr Sheppard says that the plaintiff continued to work with SMI on other projects.  Nothing turns on that discrepancy in my view);

(l)Also in mid-February 2010, Mr Sheppard advised the defendant that the plaintiff had formed a relationship with a new supplier which was able to undertake the relevant veneering and finishing work;

(m)The  new  supplier  turned  out  to  be  Robinson  Marine.    So  far  as Mr Pervan  knew,  Mr  Sheppard  had  not  had  any  significant  prior relationship with Robinsons, but the defendant was prepared to investigate a possible plaintiff/Robinsons joint offering;

(n)In  view  of  the  uncertainty,  and  because  the  defendant  wanted  to secure  the  Samsung  contract,  it  agreed  to  enter  into  a  formal agreement  with  Samsung  that  contained  a  condition  precedent enabling Samsung to terminate if it was dissatisfied with a mock up aircraft cabin to be produced by the defendant in its Christchurch facility. The contract was signed on 9 March 2010.

(o)Some time after Mr Sheppard’s advice of his new relationship with Robinsons, Mr Khan of Robinsons contacted the defendant to indicate that he did not wish to work on the Samsung project via the plaintiff, because  it  did  not  make business  sense to  have a “middle man”. Subsequently the defendant formed the view that the plaintiff’s offering was  no longer viable because Robinsons wished to work directly with the defendant, and without a subcontractor, the plaintiff had no relevant part to play;

(p)In early June 2010, Robinsons indicated that they were unable to undertake the work in any event because their resources were committed elsewhere.   At that stage the defendant was already concerned about Robinsons, given that their expertise was chiefly in marine work;

(q)      At that point the defendant switched to Nordam;

(r)      The plaintiff was offered the digital veneer (or thin film transfer) work for the Samsung project but it declined to accept it.  Later that work was deleted from the project altogether in any event.

[31]     It  is  important  to  note  that  the  plaintiff  does  not  accept  much  of  what Mr Pervan says.   For example, Mr Carruthers points to evidence that the plaintiff was itself experienced in project management.  In addition to its specialist skill in the digital veneering field, it had developed expertise in the areas of marketing, project scoping, project management and installation, documentation, and veneer matching and procurement.  Accordingly, Mr Carruthers argues, the defendant had no proper

basis to conclude that  without Robinsons, the plaintiff had nothing to offer the defendant in relation to the Samsung project.

[32]     For the same reason, the plaintiff does not accept the defendant’s contention that the plaintiff and SMI were intertwined to the point that the loss of SMI spelt the loss of any real contribution from the plaintiff.

[33]     Likewise, the plaintiff does not accept the defendant’s claim that Robinsons simply decided that it no longer wished to do the work.  The plaintiff’s case is that the defendant failed to send contract documents to Robinsons until late May 2010, by which time it was too late for Robinsons to begin work on a second sample cabinet intended to be submitted to Samsung.  Moreover, the defendant’s proposed contract was too onerous for Robinsons.

[34]     Further, the plaintiff does not accept the defendant’s evidence that Mr Khan

did not wish to deal through the plaintiff.   Mr Carruthers points to an e-mail of

4 March 2012 in which Mr Khan himself advised the plaintiff that Robinsons were ready to sign a contract with the plaintiff.

[35]     These and other points made by Mr Carruthers do not require resolution now. They are matters for trial.   For present purposes, the question is whether the very brief evidence Mr Pervan gave in his first affidavit ought now to be regarded as misleading to the extent that it led to the obtaining of an order fraudulently or improperly.  The plaintiff relies principally on Mr Pervan’s second affidavit which Mr Carruthers argues cannot be reconciled with his first brief statement.

[36]     Among the factors identified by Associate Judge Abbott in Yang v Ko as relevant to the exercise of the Court’s discretion, two are of particular application here.

[37]     The first is whether Mr Pervan knowingly ignored a legal obligation when swearing his first affidavit so that it would be contrary to the interests of justice to allow the order to stand.  The second is whether or not the order would have been granted had the alleged impropriety not occurred.

[38]     The first must plainly be answered “No”.   Mr Pervan’s first affidavit was sworn in support of an application for security for costs at a time when the issue of impecuniosity (and so the merits of the parties’ respective cases) had not yet been formally raised.  Mr Pervan made it clear in his affidavit that he had received legal advice to the effect that it was inappropriate to go into the facts of the case in detail.

[39]     Mr Pervan’s statement that Samsung did not regard the plaintiff as acceptable may well be open to a degree of criticism.   The more detailed evidence recently tendered by Mr Pervan suggests that, at best, his earlier evidence was a shorthand way of saying that Samsung was opposed to the involvement of SMI, which was crucially important to the plaintiff’s prospects.

[40]     But Mr Gedye submits that, although it is correct that Samsung’s criticisms were directed chiefly at SMI, given that the plaintiff’s offering was a joint one with SMI and  that  the plaintiff itself  would  carry out  little if  any,  of the  work,  the Samsung criticisms inescapably applied to the plaintiff’s offering.

[41]     Viewed in that general sense, there is some substance in that submission, particularly when, at the time Mr Pervan’s first affidavit was sworn, the question of the merits  of the respective claims  in  the  case did  not  loom  particularly large. Although Mr Pervan’s statement about Samsung’s attitude may have been somewhat conflated, I am satisfied that he had no intention to mislead.

[42]     The second factor is whether I would have made an order for security for costs had Mr Sheppard given in his first affidavit, the evidence he gave in his second with respect to the detail of the Samsung/plaintiff/defendant relationship.

[43]     I am satisfied that I would have made such an order.  The Court now appears to have in affidavit form from various deponents much of the detailed evidence that will be given at trial.   But of course, none of it has been the subject of cross- examination.   Moreover, of necessity, the Court has had no more than limited submissions from counsel.

[44]     As the Court of Appeal observed in McLachlan, it is not possible in most cases to form anything more than an impression of the merits of the plaintiff’s claim on an application for security for costs.  The factual matrix in this case is complex. Matters developed over a period of many months.  A great many documents have been discovered.   A number of witnesses have sworn affidavits and more will no doubt be called at trial.

[45]     Having now carefully read Mr Pervan’s second affidavit, and a number of other affidavits filed in respect of the present applications, my assessment of the plaintiff’s  claim  is  the  same  as  it  was  in  October  2012.    In  other  words,  had Mr Pervan’s second affidavit been available at that time, I would have concluded that this was not a case in which the plaintiff had established such a clear link between allegedly blameworthy conduct of the defendant and the plaintiff’s own impecuniosity, so as to justify the refusal of an order.

[46]     Stepping back and considering the overall justice of the case, I have reached the clear view that it would not be appropriate to rescind the order for security for costs, because I am not satisfied that the earlier order was improperly obtained.  The application for rescission is accordingly dismissed.

Further security

[47]     Given that the plaintiff’s impecuniosity is common ground, it is not seriously disputed that the defendant is entitled to an order for further security.   It is not suggested that the making of a further order would bring the proceeding to an end. (The amount of the earlier order has been duly paid).

[48]     This case has a ten day fixture to commence on 25 November 2013.   I consider that time estimate to be reasonably accurate.  Mr Gedye now estimates the likely total  costs  of  the  defendant  following  a  ten  day trial  to  be  of  the  order

$110,000.  At the earlier hearing Mr Flanagan argued that Mr Gedye’s figures were too high, but on this occasion Mr Carruthers simply asks me to take into account the usual factors and to reach a figure that is appropriate in all the circumstances of the case.

[49]     The amount of security is in the Court’s discretion.  It is not necessarily to be fixed by reference to a likely ultimate costs award but is to be fixed having regard to what is appropriate in all the circumstances.  I consider an appropriate further figure to be $40,000, making a total of $60,000 in all.  The sum of $40,000 is to be paid on or before Friday 28 June 2013, and is to represent security for the whole of the costs for the rest of the proceeding, including the trial.

Next steps

[50]     The plaintiff has filed an application for further particular discovery against the defendant in respect of certain defined categories of documents.  Any notice of opposition, together with affidavits in support, is to be filed and served by the defendant on or before 13 June 2013.

[51]     The proceeding is to be called for further mention in the Commercial List at

9.15 am on Friday 14 June 2013, when attention can be given to the timetabling of further interlocutory steps.

Costs

[52]     The defendant having succeeded, there will be an order directing the plaintiff to pay to the defendant a single set of costs calculated on a Band 2B basis, together with reasonable disbursements to be fixed by the Registrar if necessary.

C J Allan J

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