Evertop Group Limited (in liquidation) v Guo
[2025] NZHC 113
•12 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1513
[2025] NZHC 113
BETWEEN EVERTOP GROUP LIMITED (IN LIQUIDATION)
PlaintiffAND
HAI GUO
Defendant
Hearing: 21 November 2024 Appearances:
Howard Thompson for the Plaintiff Andrew Peat for the Defendant
Judgment:
12 February 2025
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for security for costs]
This judgment was delivered by me on 12 February 2025 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
McMahon Butterworth Thompson (Howard Thompson), Auckland, for the Plaintiff D B Hickson, Auckland, for the Defendant
Copy for:
Andrew Peat, Shortland Chambers, Auckland, for the Defendant
EVERTOP GROUP LIMITED v HAI GUO [2025] NZHC 113 [12 February 2025]
Introduction
[1] The defendant in this proceeding, Mr Hai Guo (Mr Guo) seeks an order requiring Evertop Group Ltd (in liquidation) (Evertop) to pay security for costs.
Background
[2] Between 8 and 9 October 2020, Evertop transferred a total of $711,000 to SJ Lawyers trust account by way of three separate electronic payments.
[3]On 9 October 2020, on Mr Guo’s instructions, SJ Lawyers transferred
$710,344.69 of the funds to the solicitors, Queen City Law for the purposes of settling Mr Guo’s purchase of a property at Unit 321, 3 Kaipiho Lane, Albany (the Property). Consequently, the Property was transferred into Mr Guo’s name, and he became the registered owner of the Property.
[4] Evertop claims to have funded the purchase of the Property with the mutual intention that it would be the beneficial owner of the Property under a resulting trust. Mr Guo denies this and says there was no intention for Evertop to have any interest in the Property.
[5] On 21 June 2023, Evertop’s liquidator sent a letter to Mr Guo through his lawyers. The letter required Mr Guo, as the trustee for Evertop, to transfer the Property to Evertop. Mr Guo has not transferred the Property and expressly denies holding it on trust for Evertop.
[6] Mr Guo says Evertop does not appear to have any assets and the proceeding is understood to be funded by the liquidator, Mr Digby Noyce (Mr Noyce). Mr Guo therefore seeks security for costs and stay of the proceeding until Evertop has paid the initial security for costs amount.
Mr Guo’s application for security for costs
[7]Mr Guo seeks orders, in summary:
(a) That Evertop provide security for costs in the amount and in the manner specified in his application.
(b) Alternatively, that Mr Noyce provide security for costs (as above) or an undertaking that he:
(i)has sufficient unencumbered assets to meet any costs awarded against Evertop; and
(ii)will pay any adverse costs awarded against Evertop.
(c)That the proceeding be stayed until:
(i)Evertop pays the initial security for costs amount; or
(ii)Mr Noyce pays the initial security for costs amount or provides the undertaking set to at [7](b)(i) and (ii).
[8]The grounds on which the orders are sought are, in summary:
(a) There are good reasons to believe that Evertop will be unable to pay costs to Mr Guo if Evertop is unsuccessful because:
Evertop is in liquidation.
(ii)Evertop is insolvent. There are no available assets from which a costs award can be paid.
(iii)There is no evidence to suggest that Evertop can meet a costs award.
(b) There will be an injustice to Mr Guo if security for costs is declined, as this would effectively make Evertop immune from a costs order.
(c) Evertop’s solicitor has confirmed Mr Noyce is acting as a non-party funder of the litigation and funding the proceeding personally.
(d) Mr Noyce has control of the proceeding which is a commercial interest. He would derive a personal gain from pursuing the proceeding, thus he is the ‘real party’ to the litigation.
(e) No information has been provided about Mr Noyce’s ability to meet any adverse costs award.
(f) The premise underpinning an order for security for costs is triggered here. Namely that a person who supports failed litigation should pay (or at least contribute) to the costs of the successful party.
(g) The approach taken by Evertop and Mr Noyce transfers all the cost- risk of the proceeding onto Mr Guo.
(h) The staged approach to security for costs protects Mr Guo as to costs, while not unduly preventing or inhibiting Evertop from pursuing the claim.
(i) An order for security will not prevent Evertop from pursuing its claim.
(j) The merits of Evertop’s claim are not strong given that:
(i)Mr Guo is the registered proprietor of the Property.
(ii)Mr Guo purchased the Property and funded it, in his sole name and for his sole benefit.
(iii)Evertop (and its director) were aware Mr Guo was purchasing and funding the Property.
(iv)There was never any intention that Evertop would have any interest, beneficial or otherwise, in the Property.
(v)Evertop never contributed, in the character of a purchaser, to the acquisition of the Property.
(vi)The manner in which funds were held by Evertop for Mr Guo, or provided to Mr Guo, was incompatible with the creation of a resulting trust.
Evertop’s opposition
[9]Evertop opposes the application on, in summary, the following grounds:
(a) Mr Guo delayed bringing his application for security for costs, which was filed over three months after he filed and served his statement of defence on 30 April 2024.
(b) The application is inconsistent with the timetable agreed between the parties in the joint memorandum dated 28 March 2024 (and the directions accordingly in the minute of Preston J dated 3 April 2024). Mr Guo ought to have raised the issue of security for costs and the possibility of a stay when he sought agreement on timetable directions.
(c) There is no reason for the liquidator as a non-party to provide the undertakings set out at [7] (b)(i) and (ii), and the Court should not order him to do so, or to provide security for costs.
(d) Evertop’s claim is boda fide and meritorious. It is a routine claim by a company in liquidation.
(e) The defence is not strong. Mr Guo has provided no evidence to show that he provided the funds for the purchase of the Property. All he has shown so far is that he transferred funds from one bank account in China to another bank account in China. He relies on a special relationship with the director of Evertop which effectively makes him an insider.
(f) Evertop, through no fault of its own, has already experienced substantial delays in this proceeding, which was first served on Mr Guo a year ago, on 30 August 2023. The progress of the liquidation of Evertop is being delayed in the meantime.
(g) If the Court orders Evertop to provide security for costs, it is likely that Evertop will be prevented from pursuing its claim and be denied access to justice.
Legal principles
[10]Rule 5.45 of the High Court Rules 2016 provides:
5.45 Order for security of costs
(1)Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
(a)that a plaintiff—
(i)is resident out of New Zealand; or
(ii)is a corporation incorporated outside New Zealand; or
(iii)is a subsidiary (within the meaning of section 5 of the Companies Act 1993) of a corporation incorporated outside New Zealand; or
(b)that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.
(2)A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.
(3)An order under subclause (2)—
(a)requires the plaintiff or plaintiffs against whom the order is made to give security for costs as directed for a sum that the Judge considers sufficient—
(i) by paying that sum into court; or
(ii) by giving to the satisfaction of the Judge or the Registrar, security for that sum; and
(b)may stay the proceeding until the sum is paid or the security given.
(4)A Judge may treat a plaintiff as being resident out of New Zealand even though the plaintiff is temporarily resident in New Zealand.
(5)A Judge may make an order under subclause (2) even if the defendant has taken a step in the proceeding before applying for security.
(6)References in this rule to a plaintiff and defendant are references to the person (however described on the record) who, because of a
document filed in the proceeding (for example, a counterclaim), is in the position of plaintiff or defendant.
[11] In determining applications under r 5.45, the Court will generally follow these steps:1
(a)Has the applicant satisfied the court of the threshold under r 5.45(1)?
(b)How should the court exercise its direction under r 5.45(2)?
(c)What amount should security for costs be fixed at?
(d)Should a stay be ordered?
[12] The decision to order security, and the quantum of such security, are at the Court’s discretion. It is generally not to be to be fettered by constructing “principles” from the facts of previous cases.2 But the Court is to balance the competing interests
— being the defendant’s interest in protection from a costs order that is incapable of fulfilment and the plaintiff’s right of access to justice.3 Courts will be slow to make an order for security that will stifle a genuine claim.4 This balancing exercise is the Court’s overriding consideration.5
[13]As above, the Court should assess whether there is:6
… credible (that is, believable) evidence of surrounding circumstances from which it may reasonably be inferred that the [party] will be unable to pay the costs. This does not, of course, amount to proof that the [party] will, in fact, be unable to pay them.
[14] The Court will assess the claim’s merits and prospects of success, to the extent that is possible at an early juncture.7 The Court will also consider the extent to which the plaintiff’s impecuniosity may have been caused by the defendant’s conduct.8
1 Busch v Zion Wildlife Gardens Ltd (in rec and in liq) [2012] NZHC 17 at [2].
2 A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [13] and [14].
3 Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2837 at [4].
4 Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [3].
5 Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017 at [24(c)].
6 Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No 2) [1997] 1 NZLR 516 (HC) at 519; NZ Kiwifruit Marketing Board v Maheatataka Coolpack Ltd (1993) PRNZ 209 (HC) at 212; and Stephenson v Jones [2013] NZHC 638.
7 Meates v Taylor (1992) 5 PRNZ 524 (CA); and Lee v Lee [2019] NZCA 345 at [73].
8 Bell-Booth Group Ltd v Attorney-General (1986) 1 PRNZ 457 (HC).
[15] A plaintiff’s unwillingness to pay previous judgment debts weighs in favour of an order for security.9 But whether a plaintiff has been a responsible litigant is secondary to the issue of whether the lack of merit of the claim justifies security that would prevent the claim from proceeding.10
[16] Quantum of security is discretionary and is assessed in the round. It need not be fixed by reference to likely cost awards.11 It is to be what the Court thinks fit in all the circumstances.12
[17]A Court will generally stay a proceeding until the security ordered is given.13
Analysis
[18]The issues to be determined in this judgment are those set out at [11] namely:
(a)Has Mr Guo satisfied the Court of the threshold under r 5.45(21)?
(b)How should the Court exercise its discretion under r 5.54(2)?
(c)What amount should security for costs be fixed at?
(d)Should a stay be ordered?
Mr Guo’s submissions
[19] Mr Peat, for Mr Guo, submits that there are strong grounds for security for costs to be ordered against Evertop which are, in summary:
(a)Evertop is in liquidation and insolvent with litigation funding being provided. Mr Noyce, who also happens to be the liquidator of Evertop,
9 Taylor v Adair [2018] NZHC 1975 at [30]–[31], citing Burden v Dixie Cummings New Zealand
[2016] NZHC 729 at [22] and Mawhinney v Auckland Council [2014] NZHC 3207.
10 Wright v Attorney-General [2019] NZHC 3046 at [26].
11 Sharp v Pillay [2017] NZHC 647; and Red 9 Ltd v The Learning Ladder Ltd (in liq) [2021] NZCA 284 at [30].
12 A S McLachlan Ltd v MEL Network Ltd, above n 2.
13 Tomanovich Holdings Ltd v Gibbston Community Water Co 2014 Ltd [2018] NZHC 990 at [68] and [85].
has taken on the additional role of funding the litigation. No details of a funding arrangement have been disclosed and Mr Noyce has refused to provide an undertaking or any security.
(b)Evertop’s claim is speculative. Mr Guo is the registered proprietor of the Property and has explained how he purchased the Property with the assistance from the director of Evertop, including transferring his own funds from China for its purchase. There is no basis for Evertop to now assert there was a “mutual intention” that Evertop would own the Property and Mr Guo hold it on a resulting trust.
Litigation funders – inherent jurisdiction
[20] Mr Peat submits that it is now settled that the Court has power, under its inherent jurisdiction, to order security against the funder of litigation, citing Saunders v Houghton14 and White v James Hardie New Zealand.15 He submits the power arises in part due to the following propositions:
(a)Maintenance of litigation “is lawful, provided always that the one who supports litigation if it fails, pays the costs of the other side”.16
(b)The admission of a funder “substantially alters the balance between the plaintiffs and the defendants”.17
(c)Any financial gain to be made from the litigation, and commensurate risks and costs.18
[21] Mr Peat submits that the Court of Appeal has observed that, for policy reasons, the presence of a litigation funder points to the need for the funder to provide security for costs in most cases, relying on a statement in Saunders v Houghton:19
14 Saunders v Houghton [2009] NZCA 610, [2010] 3 NZLR 331.
15 White v James Hardie New Zealand Ltd [2019] NZHC 188 at [12]-[14].
16 Hill v Archbold [1968] 1 QB 686 (CA).
17 Above, n 14 at [36], citing Hill v Archbold [1968] 1 QB 686 (CA).
18 Walker v Forbes [2017] NZHC 1212 at [31], citing Green (as liquidator of Arimco Mining Pty Ltd v CGU Insurance Ltd) [2008] NSWCA 148, (2008) 67 ACSR 105.
19 Above, n 14, at [36].
The making of orders for both representation and admission of a funder substantially alters the balance between plaintiffs and defendants. We consider that the change is so radical as to justify the High Court, in exercise of its inherent jurisdiction under s 16 of the Judicature Act 1908, to consider ordering security as a term of such orders, even where numerous natural persons are among the plaintiffs, as the price of the privilege to employ such a procedure. That is in order to protect a defendant against the effect of a procedure which could otherwise be oppressive. The fact that the funder has no personal right at stake, that takes part of the proceeds of any claim, and that it is motivated by the financial considerations that gave rise to the common law prohibition of champerty point to the need for the funder to provide security for costs in most cases.
[22] Mr Peat submits that the policy reasons in favour of granting security when litigation funding is present are not limited to the funding of representative actions, relying on White v James Hardie New Zealand.20
Role of the liquidator
[23] Mr Peat submits that the role of Mr Noyce as a liquidator and that of a funder of litigation should not be conflated. The two are distinct roles and he submits that:
(a)While a liquidator has a statutory role, that does not include an obligation to provide funding for litigation. He refers to s 254 of the Companies Act 1993 which expressly provides that the Official Assignee is not required to provide funding, and there is correspondingly no positive obligation otherwise on private liquidators as the same principle should apply.
(b)The Court has previously considered it reasonable for liquidators to refuse to fund investigations.21
(c)The Court has observed that absent private funding, the reasonable course of action is for the liquidator to stand aside.22
20 Above n 15 at [13].
21 Katavich v Meltzer and Hayward as Liquidators of Blackball Kitchens Ltd (In Liquidation) & Anor HC Auckland, CIV-2006-404-005968, 29 October 2010.
22 Above, n 22 at [44] and [45].
[24] Mr Peat submits that where a liquidator also elects to provide litigation funding, the orthodox principles as to security for costs for litigation funders should apply.
Present circumstances
[25] Mr Peat, applying the above principles to Mr Guo in the Evertop circumstances, submits that:
(a)Evertop is in liquidation and is insolvent, and therefore the initial threshold under r 5.45(1) is satisfied.
(b)Mr Noyce has confirmed he is personally funding the litigation and providing litigation funding is not a requirement of his role as liquidator. Evertop and Mr Noyce have refused to provide any details of the funding arrangement, despite the matter being raised by Mr Guo.
(c)Where a plaintiff company is in liquidation and is funded, as is the case here, the Courts are inclined to order security. The presence of funding, as has been recognised, strongly tells in favour of security being ordered.23
Other factors
[26] Mr Peat deals with the other factors influencing the Court’s decision on whether to order security as follows:
(a)Merits of Evertop’s claim
Evertop’s claim appears to be speculative at best, is contrary to the affidavit evidence of Mr Guo, the documentary record currently available, and there is an absence of evidence proffered by Evertop. As to the two causes of action, he submits as follows:
23 Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2837 at [9] and Houghton v Saunders [2013] NZHC 1824 at [125]; White v James Hardie New Zealand [2019] NZHC 188 at [13].
(i)First cause of action – existence of a resulting trust
Evertop asserts that there was a “mutual intention” that it would be the beneficial owner of the Property and that a resulting trust arises. Mr Peat submits that this is a weak argument given that:
(1) Mr Guo has provided evidence of how he purchased the Property, how the director of Evertop assisted him, and how he transferred funds for its purchase.
(2) Evertop’s solicitors’ trust account ledger records “Evertop Group in credit of Guo H Contribution”.
(3) There is no evidence that Evertop was intended to be “the real purchaser” of the Property and the presumption of a resulting trust only operates if the provider of the money did so “in the character of a purchaser”, which is a “vital ingredient”.
(4) No evidence has been adduced as to the intention of Evertop’s director (being the directing mind and will of the company) which would substantiate the assertion of a “mutual intention”.
(5) While it is a matter for trial, it is difficult to see how the relationship between the parties, given the context, the reliance placed on the director by Mr Guo, and the cultural considerations, is compatible with the creation of a resulting trust.
(6) Evertop has refused to disclose any documents as to Evertop’s financial affairs and business dealings or the liquidator’s investigations, enquiries or file notes.
(ii)Second cause of action – existence of a loan
Evertop’s second alternative cause of action based on a loan is similarly weak. No particulars of the loan arrangements have been provided and no record has been produced that might indicate the existence of a loan.
(b)Inability to pursue the claim
The Court should not have any concern about Evertop’s ability to pursue its claim should security be ordered as Evertop is funded and there is no evidence to suggest that Evertop cannot obtain funding. Mr Noyce is prepared to do so personally.
(c)Cause of impecuniosity
There is no evidence to suggest that Mr Guo’s conduct was the cause of Evertop’s insolvency and the liquidator’s reports indicate systemic issues with Evertop’s management.
(d)Delay
There has been no delay in the application for security as it was foreshadowed ahead of the first case management conference. The proceedings are at an early stage, with pleadings settled, but no further steps have been taken. While Mr Guo previously applied and was granted leave to file a statement of defence out of time, those circumstances do not amount to a delay that ought to prejudice the present application.
Evertop’s submissions
[27] Mr Thompson, for Evertop, submits that in the circumstances of the case it would not be just for the Court to order either Evertop or Mr Noyce to provide security for Mr Guo’s costs. He submits:
(a)The claim is an orthodox claim by a company in liquidation, acting through its liquidator. It is wrong for Mr Guo to apply to this situation authorities relating to the position of commercial litigation funders and
to do so disregards a very long-established practice of the Court to the effect that it would be unusual for the Court to order a liquidator to provide security for costs;
(b)The claim is not speculative. It does not appear to be disputed that most of the funds used for the purchase of the Property were paid by Evertop to Mr Guo’s then lawyers and then were paid over to the vendor’s lawyers on settlement. Mr Guo has not produced any evidence that the funds were his own funds.
Special position of liquidators
[28] Mr Thompson submits it is a long-established practice that the Court will be reluctant to order a company in liquidation or a liquidator to provide security for costs. He refers to the decision of Red 9 Ltd v The Learning Ladder Ltd,24 and submits that this position has been taken in numerous cases decided by the Court over a very long period of time.
[29] Mr Thompson submits that a liquidator’s principal duty under s 253 of the Companies Act 1993 is to take possession of, protect, realise and distribute the assets or the proceeds of the realisation of the assets of a company to its creditors in accordance with the Act, and if there are surplus assets thereafter, to return them to the shareholders or otherwise deal with them according to the company’s constitution. In carrying out this duty, the liquidator must act in a reasonable and efficient manner.
[30] Mr Thompson submits that although the liquidator is not obliged to provide personal funding for liquidation activities, nothing in the Act or company law suggests that it is inappropriate for a liquidator to fund liquidation activities. He distinguishes the case of Katavich,25 which he submits is only authority for the proposition that a liquidator who declines to carry out investigations or other activities on the grounds of a lack of funding, should step aside in favour of the Official Assignee. He submits
24 Red 9 Ltd v The Learning Ladder Ltd (In Liq) (2021) 25 PRNZ 780 (CA).
25 Above, n 21.
it is clearly not applicable in the present circumstances where a liquidator has not declined to take such steps.
Litigation funders
[31] Mr Thompson submits that it is wrong to equate a third party litigation funder with a liquidator who funds litigation or makes contingency arrangements with lawyers. He submits that the liquidator is the statutory agent of the company in liquidation and can be distinguished from the situation of a third party commercial funder such as in the situation in Saunders v Houghton,26 where the funder has no personal right at stake in the litigation. He submits that where the liquidator has a personal right at stake as he or she has a positive duty to get in company’s assets.
[32] Mr Thompson submits that the special position of liquidators is also recognised in statute law for similar policy reasons to those underlying the Court’s reluctance to order security for costs against a liquidator, citing reg 6 of the High Court Fees Regulations 2013 and cl 1(2)(d) of the Seventh Schedule to the Companies Act as examples.
Other factors
[33] Mr Thompson deals with the other factors influencing the Court’s discretion to grant security as follows:
(a)The merits of the claim
The merits of the claim are clearly in favour of Evertop. He submits that there are unanswered questions regarding the transfer of the purchase money from Mr Guo to Evertop.
As to the alternative cause of action that the payment was a loan, Mr Thompson relies on the fact that as a starting point the payment of a sum of money from one person to another prima facie imports an obligation to repay, and once the
26 Above, n 14.
fact of payment is proven the defendant has a burden of rebuttal. He submits that in the present case there is no dispute that Evertop paid money for the benefit of Mr Guo and it was used to settle the purchase of the Property. He submits there was no suggestion it was a gift, and while the defence has been raised that the money used for the settlement was Mr Guo’s own money, there is no evidence that the money which Mr Guo says was transferred to another bank in China found its way to New Zealand or to Evertop’s bank account.
As to Mr Guo’s assertion that there was a special relationship between himself and Evertop’s director, Mr Qiu, no evidence of the relationship with Mr Qiu has been given supporting Mr Guo’s position, nor has Mr Guo served a third party notice on Mr Qiu. He submits the liquidator denies receiving an explanation from Mr Qiu that the funds were Mr Guo’s.
(b)Inability to pursue the claim
Mr Noyce has made it plain that he will not personally provide security for Mr Guo’s costs and if the Court makes the orders sought by Mr Guo, the proceeding will be stayed.
(c)Cause of impecuniosity
While Evertop does not suggest that its impecuniosity was solely caused by the transactions the subject of this proceeding, the fact that Mr Guo received
$711,000 of Evertop’s funds, apparently without providing commensurate value to Evertop, is a factor for the Court to weigh in the exercise of its discretion.
(d)Delay
It is incorrect for Mr Guo to say there was minimal delay in bringing the application and it should have been brought at the same time as Mr Guo applied for leave to defend the proceeding. He submits that Mr Guo correctly says that the proceeding is at an early stage, but that is only because of delays created by Mr Guo who did not respond to the liquidator’s correspondence, did not file
a statement of defence on time, and has now further delayed matters firstly with the time taken to file his application for leave to defend the proceeding, and now with this application for security for costs.
Result
[34] I am of the view that security for costs should be ordered against Evertop. The reasons for this view are:
(a)Evertop is in liquidation and is insolvent. Accordingly, the threshold under r 5.45(1) is clearly satisfied.
(b)In my view it is correct to treat Mr Noyce as the third party funder of the litigation, similar to commercial third party litigation funders. I do not accept Mr Thompson’s submissions that he is funding the litigation as part of his role as liquidator. On the authority of Saunders v Houghton27 and White v James Hardie New Zealand,28 the Courts have been prepared to order security for costs in the case of litigation funding to restore the balance between receiving the benefits of the litigation and bearing the risk of the litigation being unsuccessful.
(c)There is insufficient evidence before the Court to make any real assessment of the merits of the claim. Clearly discovery needs to be undertaken as to the flow of funds and the defence raised by Mr Guo that the funds used to purchase the Property were his own funds. The arrangements between Evertop’s director, Mr Qui, and Mr Guo in relation to the funding and purchase of the Property need to be clarified.
(d)Although Mr Noyce has said that if an order for security is made he will not fund the litigation, this is not, in my view, a reason to decline security for costs. That is Mr Noyce’s choice depending upon his view
27 Above, n 14.
28 Above, n 15.
of the merits of the claim and whatever arrangements he has in place regarding funding of the litigation.
(e)There is insufficient evidence for the Court as to the causes of Evertop’s impecuniosity for the Court to form any view as to whether the transactions contributed to Evertop’s impecuniosity. The submission by Mr Thompson that the transactions which are the subject of this proceeding deprived Evertop of approximately $711,000 of its own funds without appropriate consideration being given by Mr Guo begs the question as to the outcome of the proceedings, and therefore does not weigh in favour of granting security.
(f)Any delay by Mr Guo in bringing the application has not been a significant factor and the proceedings are at an early stage.
Amount of security
[35] In my view, Mr Peat’s proposal of staged security as set out in the schedule to his submissions is a reasonable approach and achieves a balance between providing sufficient protection to Mr Guo as the proceedings are advanced and allowing Evertop/Mr Noyce to arrange appropriate funding for the various stages of the proceedings as proposed. However, the level of security sought by Mr Guo is, in my view, excessive. The expert’s fees of $30,000 included in Mr Peat’s calculation should be deducted as this is a speculative disbursement at this stage.
[36] In striking the balance between Evertop and Mr Guo in terms of allowing the claim to proceed and protecting Mr Guo, in my view an order for security of $70,000 is appropriate. In addition, some time should be allowed for Evertop to pay the initial instalment of the security ordered.
Staying the proceeding
[37] The usual position that the proceeding should be stayed until the first instalment of the security for costs is paid should apply.
Orders
[38]I make the following orders:
(a)Evertop shall provide security for costs on the following terms:
(i)The sum of $20,000 within 15 working days of the date of this judgment.
(ii)The sum of $20,000 at the time Evertop’s briefs of evidence are due.
(iii)The balance of $30,000 two months prior to trial.
(b)The proceeding will be stayed should Evertop fail to pay the amounts of the security in accordance with the above orders.
(c)Mr Guo is the successful party and costs should follow the event. Counsel are directed to endeavour to agree costs and failing agreement being reached within a period of 20 working days from the date of this judgment, counsel for Mr Guo will file a memorandum as to costs (not to exceed five pages) within 5 working days after the expiry of the 20 working day period, and counsel for Evertop will file a memorandum (not to exceed five pages) in response within 5 working days of receipt of counsel for Mr Guo’s memorandum. A decision as to costs will then be made on the papers.
…………………………….. Associate Judge Taylor
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