BROTHERS IN BUILDING PTY LTD v CHAO DONG [2024] SASC 136

Applicant: BROTHERS IN BUILDING PTY LTD Counsel: MR P ADAMS - Solicitor: MINTER ELLISON First Respondent: CHAO DONG Counsel: MR M HOILE - Solicitor: LEGAL PROJECTS Second Respondent: YUE HONG ZHAO Counsel: MR M HOILE - Solicitor: LEGAL PROJECTS Third Respondent: THE DONG FAMILY COMPANY PTY LTD Counsel: MR M HOILE - Solicitor: LEGAL PROJECTS Fourth Respondent: TORRENS CONSTRUCTIONS PTY LTD Director of Company: MR C DONG Hearing Date/s: 13/11/2024, 25/11/0204 File No/s: CIV-22-002817 B SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. IN THE MATTER OF TORRENS CONSTRUCTIONS PTY LTD [2024] SASC 136 Reasons for Decision of the Honourable Justice Kimber 3 December 2024 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - PROCEDURE PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - FACTORS RELEVANT TO EXERCISE OF DISCRETION The applicant brings a claim in various statutory and common law causes of action against the respondents following the breakdown of a business relationship between the respective directors of the applicant and fourth respondent. There are two applications by the first to third respondents; first, an application for security for costs from and including the second day of trial (FDN 113); and second, an application for costs with respect to an interlocutory application by the applicant which was withdrawn (FDN 116). With respect to the application for security for costs, the respondents submit that, on the basis of a 15-day trial, the appropriate amount of any security is the sum of $118,700.00. The applicant did not dispute that an order for security should be made, but submits that it should be an amount that it has offered namely $70,00.00. The applicant disputes the respondents’ estimated length of the trial. Further, the applicant submits that the approach of the respondents to the proceedings should result in a lesser sum than would otherwise be ordered. As to the costs of the withdrawn application, the respondents seek an order for costs on an indemnity basis. The respondents submit, inter alia, that the application had no chance of success and was filed at a late stage in the proceedings. Held, with respect to the application for security for costs: -- 1 of 13 -- 1. A trial length of 12 days should be used for the application of the respondents, which includes the first day of the trial. In the circumstances, the conduct of respondents during the proceedings relied upon by the applicants is not such to warrant sanction. Security for costs is granted from the second day of trial in the amount of $85,580.00 in favour of the respondents. with respect to the application for costs following the withdrawal of FDN 116: 2. The respondents are entitled to their costs with respect to FDN 116 on a party-to-party basis, to be agreed or taxed. Uniform Civil Rules 2020 (SA) S 115.1; Corporations Act 2001 (Cth) SS 181(1), 181(2), 223; Competition and Consumer Act 2010 (Cth) S 20, referred to. Reschke v Trevor Reschke Nominees Pty Ltd; Reshcke v Australian Executor Trustees [2020] SASC 60, applied. Re Torrens Constructions Pty Ltd [2023] SASC 25; In the Matter of Torrens Constructions Pty Ltd (No 2) (Supreme Court of South Australia, Bochner J, 6 March 2023), considered. -- 2 of 13 -- IN THE MATTER OF TORRENS CONSTRUCTIONS PTY LTD [2024] SASC 136 Civil: Application KIMBER J: 1 These are applications by the first, second and third respondents (the respondents) for security for costs from and including the second day of the trial in this matter (FDN 113) and for costs with respect to an interlocutory application by the applicant which was withdrawn (FDN 116). 2 The trial is listed to commence on 3 February 2025 with 15 days set aside. In the application for security for costs, the respondent seeks an order in the amount of $118,700.00, or such other amount which the Court deems fit and just. The applicant accepts that some order should be made, but disputes the amount sought by the respondents. On 25 September 2024, the applicant offered to pay $70,700.00 but that offer has been rejected. With respect to the application that was withdrawn, the respondents seek an order for costs on an indemnity basis. The applicant submits that order should not be made. 3 With respect to FDN 113, I order that the applicant pay security for costs from the second day of the trial and in the amount of $85,580.00. With respect to FDN 116, I order that the applicant pay the respondents’ costs of that application on a party-to-party basis, to be agreed or taxed. My reasons follow. Background 4 Given that the applicant accepts that some costs order should be made in relation to the trial, and as the applicant did not submit that the summary of the proceedings set out in Re Torrens Constructions Pty Ltd [2023] SASC 25 (the first judgment), was inaccurate in any relevant way, I respectfully, and gratefully, adopt that summary. 5 The applicant commenced this action in March 2022, alleging that the affairs of the fourth respondent, Torrens Constructions Pty Ltd (Torrens Constructions), had been conducted in a manner contrary to the interests of the members as a whole, or otherwise oppressive, or unfairly prejudicial to or unfairly discriminatory against the applicant. The applicant further alleges that the respondents have committed the tort of conspiracy, and that Torrens Constructions has breached its contract with it. The applicant seeks declarations, damages and an order that the respondents purchase its shares in Torrens Constructions. 6 The applicant pleads, in its revised statement of claim, that the applicant was registered by its sole director, Mr Peter Toubia, in May 2012, to carry on the business of a construction company. It engaged principally in the renovation, repair, and maintenance of commercial and residential properties. It appears, however, that the applicant is, in fact, the trustee of the INYHWHI Trust, which -- 3 of 13 -- [2024] SASC 136 Kimber J 2 carries on the business of a construction company. Between about February and June 2019, the applicant was in a contractual relationship with Torrens Constructions, to carry out renovations, maintenance and repair of commercial and residential properties. From 1 July 2019, the applicant operated as consultant to Torrens Constructions. 7 The first respondent, Mr Chao Dong, was a director of Torrens Constructions from 29 January 2019 to 20 April 2021. The second respondent, Ms Yue Hong Zhao, is the sole director of the third respondent (the Dong Family Company Pty Ltd), and since 20 April 2021, she has been the sole director of Torrens Constructions. She is married to Mr Dong. 8 Torrens Constructions was registered on 29 January 2019. Its registration came about because of an agreement reached between Mr Toubia and Mr Dong in late 2018 to go into business together to carry out renovations, maintenance and repairs to, and construction of, commercial and residential properties. They agreed that a new company (Torrens Constructions) would be formed, and Mr Toubia would bring in the existing clients and business of the applicant, while Mr Dong would refer new work to the company, including the introduction of significant projects. At registration, Torrens Constructions had two directors, Mr Dong and Mr Toubia. The applicant held 49 per cent of the fully paid-up shares of Torrens Construction and Mr Dong and Ms Zhao jointly held the remaining 51 per cent. At this time, the paid-up capital of Torrens Constructions was $2,000. 9 Torrens Constructions commenced business in January 2019. The applicant says that it was agreed that the applicant would work as a contractor to Torrens Constructions and would invoice Torrens Constructions for the work that it carried out. The applicant and Mr Dong would share the profits of the company in accordance with their respective shareholdings. The business of Torrens Constructions carried on in accordance with this initial arrangement until 30 June 2019. Effective 1 July 2019, it was agreed that the applicant would become a consultant to Torrens Constructions, and in return for providing consulting services, it would receive a fee of $150,000 per year as well as reimbursement of expenses. 10 It appears that from June 2020, Mr Dong commenced working part time for Torrens Constructions. It was agreed that he would undertake all its administration and would be paid $50,000 per annum by way of a consultant’s or director’s fee. From about June 2021, Mr Dong’s hours increased to full time, and he was paid $150,000 per year. On 29 April 2020, Mr Dong and Ms Zhao transferred all their shares in the applicant to the third respondent. On 5 May 2021, the third respondent transferred one share back to Mr Dong. Both these transfers were done without the knowledge of Mr Toubia. 11 On 20 April 2021, Torrens Construction Group Pty Ltd (TCG) was registered. TCG’s sole director and secretary was and remains Ms Zhao and the sole shareholder of TCG is the third respondent. At some time prior to April 2021, -- 4 of 13 -- [2024] SASC 136 Kimber J 3 the relationship between Mr Toubia and Mr Dong broke down. It appears that Torrens Constructions had some liquidity problems, and Mr Toubia and Mr Dong were unable to agree on a way in which they should be resolved. Mr Dong says that he proposed that each of them make a cash contribution to Torrens Constructions; he says that this proposal was rejected by Mr Toubia. 12 The applicant says that, on 10 May 2021, a meeting of the shareholders of Torrens Constructions was held. It says that it was not given notice, or proper notice, of the meeting and did not attend. At the meeting, Mr Toubia was removed as a director and a resolution was passed authorising the issue of 2000 new ordinary shares at $1 per share to the third respondent. After the meeting, the applicant’s and Mr Toubia’s access to Torrens Constructions’ bank account, accounting program and email account was removed. When the new shares were issued in accordance with the resolution passed at the meeting, the applicant’s shareholding was diluted from 49 per cent to less than 2.5 per cent. Torrens Constructions ceased paying the applicant’s invoices and it commenced proceedings in the Magistrates Court against Mr Toubia in respect of tools that it says he had purchased on behalf of it and continued to retain. Since these events, the applicant says that Mr Dong and Ms Zhao have refused to provide the applicant with financial statements and have taken steps to wind down the business of Torrens Constructions. Mr Dong says that the new shares were issued to raise the capital needed to address Torrens Constructions’ liquidity problems. 13 The applicant commenced this action, seeking remedies pursuant to the Corporations Act 2001 (Cth) (the Act), the Australian Consumer Law, breach of contract and in tort. 14 It appears that the respondents largely accept the account of events set out above, other than they say that the applicant was offered the opportunity to purchase sufficient shares from the new issue to maintain his 49 per cent shareholding. They say that he did not avail himself of this offer. They deny any breaches of directors’ duties or of the Australian Consumer Law, or any other wrongdoing. The application for security for costs for the trial (FDN 113) The first judgment 15 In 2022, the respondents made an application for security for costs. In the first judgment, delivered on 24 February 2023, an order was made that the appropriate amount for security for costs up to and including the first day of the trial was $56,000.00. The current application 16 As set out above, the respondents seek an order in the amount of $118,700.00 from and including the second day of the trial. That sum has been arrived at based upon the trial being listed for 15 days; a report of Mr Ericson prepared in advance of the first judgment, Mr Ericson being a highly respected and experienced expert -- 5 of 13 -- [2024] SASC 136 Kimber J 4 in costs; and an estimate of costs provided by the expert to be called by the respondents, Mr Morris. 17 The respondents arrive at the figure of $118,700.00 in the following way. In his report, Mr Ericson estimated the party-to-party costs to be $7,300 per trial day (for solicitor, counsel and electronic transcript). An order is sought from the second day of the trial and, as the trial has been listed for 15 days, the respondents seek $102,000.00. In addition to costs for solicitor, counsel and electronic transcript, the respondents intend to call an expert, Mr Morris. In an email dated 22 July 2024, Mr Morris estimated his costs for preparation for the trial and attendance at trial. He has estimated those costs to be in the range of $13,200.00 to $19,800.00, inclusive of GST. That estimate is based on Mr Morris being engaged for between 20 to 30 hours at $660 per hour, inclusive of GST. Mr Morris has opined that his attendance ‘at trial should not require any more than one day, although that is out of my hands’. For Mr Morris, the applicant seeks the mid-point of the above range, being $16,500.00. 18 It can be immediately observed that the respondents seek the mid-point of the range provided by Mr Morris, notwithstanding that range is based upon work that would be done well in advance of the second day of the trial (e.g. - if ordered, as much as two days for any conference between experts and any joint report). 19 As set out above, the applicant does not oppose the making of an order for security for costs from the second day of the trial. The applicant submits that the order should not exceed that which has been offered, namely $70,700.00. The applicant also does not relevantly dispute what is set out in the report of Mr Ericson, nor does it dispute that an appropriate order should take into account the attendance of Mr Morris at trial. The disputes relate to two matters. First, the number of trial days. The applicant submits that the trial will take no more than 10 days, likely less. Second, in exercising my discretion, the applicant submits that regard should be had to what it submits are relevant aspects of the approach of the respondents to the litigation. The duration of the trial 20 It is anticipated that there may be five witnesses at trial. There may be three lay witnesses; Mr Toubia, Mr Dong, and Ms Zhao. That said, the respondents submit that the involvement of Ms Zhao may be limited. There will be two experts, Mr McFarlane and Mr Morris. Nevertheless, the respondents submit that a trial estimate of 15 days is appropriate given what it says are complex issues of fact and law. The respondents submit that the applicant has brought claims which include: a claim for an order under s 233 of the Corporations Act 2001 (Cth) (for convenience, the ‘oppression claim’); breaches of s 181(1) of the Corporations Act 2001 (Cth); breaches of s 182(2) of the Corporations Act 2001 (Cth); breaches of s 20 of the Australian Consumer Law; breach of contract; and in the tort of conspiracy. The respondents submit that the applicant’s opening may take a day; that together the evidence of the three lay witnesses may take about six–eight days; -- 6 of 13 -- [2024] SASC 136 Kimber J 5 that together the experts may take about two days; and that closing addresses may take more than two days. 21 The applicant submits that the trial will not take longer than 10 days. The applicant does not dispute the respondents’ summary of the nature of the claims advanced. Nevertheless, the applicant submits that its opening will take less than a day (perhaps half or two-thirds of a day); submits that the evidence-in-chief of Mr Toubia and its expert should not take more than a day in total; and submits that the balance of the evidence should not take nearly as long as estimated by the respondent. 22 In some respects, it is difficult to estimate the length of the trial with any great confidence given the different positions of the parties. A starting point is that both parties should be expected to be faithful to the obligations in UCR 3.1, including to cooperate with the other parties; to use reasonable endeavours to ensure that the time incurred is proportionate to the importance and value of the subject matter of the proceeding; and to use reasonable endeavours to minimise delay. 23 Certainly, many issues are raised and there appear to be substantial matters which are in dispute, particularly with respect to the evidence of the lay witnesses. There are multiple causes of action alleged against multiple respondents. The claims against each respondent differ and somewhat different defences will be mounted by each. It appears that the matter has been hard fought to date. There is no criticism in my observation that the applicant is pursuing his claims with some vigour. That may be expected to continue at trial and may be reflected in the way the trial is conducted by the applicant. There is also no criticism in my observation that the conduct of the proceedings to date has left me with the clear impression that the respondents are also defending the matter with some vigour and that few, if any, concessions have been made. There are differences in the opinions of the experts, but there appear to be matters not in dispute. The experienced counsel involved should be expected to deal with examination-in-chief and cross-examination of the experts in a way which is efficient and does not unnecessarily traverse matters not in dispute. I have raised with the parties the appropriateness of the preparation of a joint report. While no order has yet been made, neither party submitted a joint report would not be appropriate. While difficult to be precise, it seems unlikely that each expert would need to give evidence for any more than one day given the issues that may be in dispute. 24 It is relevant that Mr Ericson, who is experienced in such things, opined in his report that ‘estimates of trial length normally are in error on the short side (if at all) as many things can cause a trial to run longer than anticipated while few will shorten them’. Mr Ericson also referred in his report to having been told by the solicitor for the respondents that the trial was estimated to take four to five days. That said, without meaning any disrespect, I do not attach much weight to that -- 7 of 13 -- [2024] SASC 136 Kimber J 6 given that when the matter was listed, the estimate given by counsel for the respondent was 15 days. 25 In the circumstances, including that in a trial it is not uncommon that time is lost, I consider that a trial length of 12 days should be used for the purposes of the application of the respondents. The estimate of 12 days includes the first day of the trial. The approach of the respondents to litigation 26 The applicant submits that aspects of the approach of the respondents to the proceedings should result in an order for a lesser amount than would otherwise be made. The applicant directs attention to three matters. Firstly, certain findings in the first judgment. Secondly, certain findings in a subsequent judgment with respect to an application for further and better discovery (the second judgment).1 Thirdly, other aspects of the approach of the respondents which are not the subject of the first and second judgments. The first judgment 27 In the first judgment, it was concluded that, among other things, Mr Dong had disregarded the objects of the pre-action steps and behaved unreasonably in so doing. It was also concluded that other respondents had behaved unreasonably by not complying with pre-action steps at all and had behaved unreasonably when refusing to attend mediation at an earlier time. It was held that they were matters which could be considered when considering orders relating to the costs of a proceeding and that the respondents should be sanctioned. 28 It was held that the order made for security for costs in the first judgment should be one that took into account the conduct of the respondents. It was held that the respondents were ‘not entitled to an order which would provide security for costs incurred prematurely or unreasonably’, and determined that the appropriate amount was 50 per cent of that estimated by Mr Ericson, namely $56,000.00. 29 In the application before me, the respondents advanced submissions which reflected a lack of acceptance of the correctness of the above findings of the Judge. Putting that aside, the respondents do not accept that the order I am asked to make should consider any of the conduct, the subject of discussion in the first judgment. Contrary to the position of the applicant, the respondents submit the relevant conduct is ‘spent’ and not relevant to the current application. The second judgment 30 The second judgment relates to an application for further and better discovery from the respondents. There were 18 categories of documents, but nine of those 1 In the Matter of Torrens Constructions Pty Ltd (No 2) (Supreme Court of South Australia, Bochner J, 6 March 2023). -- 8 of 13 -- [2024] SASC 136 Kimber J 7 were not pursued, and one was limited in its scope. With respect to the majority of the balance, orders were made contrary to the submissions of the respondents. In the application before me, the applicant directs attention to criticisms within the second judgment of the approach of counsel for the respondents to the application for further and better discovery. That is, an aspect of the approach of the respondents was held to be ‘most unhelpful’ and contrary to the objects of, and certain obligations, within the Uniform Civil Rules 2020 (SA) (‘the Rules’). It was held that time which could have been saved had not been and that the ‘conduct of the respondents in [the application do not] accord with the standards of modern litigation’.2 Other aspects of the approach of the respondents 31 The applicant also directed my attention to matters not the subject of any finding in either the first or second judgment. Specifically, the offer of security for costs in the amount of $70,700 having been made, what the applicant submits has been a failure by the respondents to negotiate with respect to that offer; the approach taken to a request for certain documents pursuant to s 198F(2) of the Corporations Act; and the approach of the respondents when challenged by the applicant as to whether a conflict arose that might have prohibited the solicitor for the respondents acting in these proceedings. Consideration 32 In so far as it was submitted by the respondents that I should doubt any finding in the first judgment, that submission must be rejected. It is not open to me to question the approach in the first judgment. In any event, I am not satisfied that the relevant findings should be taken into account by me. The conduct found to be unreasonable and premature occurred some time ago and are related to pre-trial steps and mediation. As for the second judgment, that is also conduct that occurred some time ago and I am also not satisfied it should impact the order I am asked to make. As to those other aspects of the approach of the respondent, even assuming, without deciding, that the failure to negotiate differently with respect to costs and the approach taken to documents sought pursuant to the Corporations Act should be regarded as reflecting an approach that might be contrary to the overarching obligations within UCR 3.1(f), I would not regard those matters as sufficient to warrant any sanction being reflected in the outcome of this application. 33 As to the approach taken to the possibility of a conflict, I have reviewed the correspondence said to warrant a finding that the response of the respondents failed to meet the overarching obligation in UCR 3.1(f) and said to warrant sanction.3 In my view, key aspects of the correspondence relied upon by the applicant are not of any significant relevance to the application before me, as while the solicitor for 2 In the Matter of Torrens Constructions Pty Ltd (No 2) (Supreme Court of South Australia, Bochner J, 6 March 2023) [39]. 3 Affidavit of William Hudson dated 11 September 2024 (FDN 117) and exhibits thereto. -- 9 of 13 -- [2024] SASC 136 Kimber J 8 the respondents may have responded to at least parts of the correspondence in a more cooperative fashion, the applicant did not pursue the issue between 19 October 2021 and 16 May 2024 despite the Pre-Action Notice being dated 1 October 2021. There was then correspondence between 16 May 2024 and 10 September 2024 before the interlocutory application (FDN 116) was filed on 11 September 2024 seeking orders that information be provided by the solicitor for the respondents consistent with that sought in the correspondence and, if deemed appropriate by the Court, an order that the solicitor be removed. That interlocutory application was not proceeded with following the filing of an affidavit of the solicitor setting out the absence of any conflict.4 In my view, it is reasonable to conclude that the solicitor for the respondents could have provided information to the applicant about why he believed there was no conflict earlier than he did. Had he done so, there may have been no application filed. Nevertheless, with some hesitation, I have reached the view that delay in providing the information ultimately contained in the affidavit is not such to warrant a sanction in the costs application which is before me. Some principles 34 Given the applicant concedes that some order should be made, I do not consider it necessary to traverse the principles in a detailed way. 35 Rule 115.1(1) of the Rules provides: 115.1—Security for costs (1) The Court may order that an applicant in an action provide security for costs if— (a) the applicant is bringing the claim or application for someone else’s benefit; (b) the applicant is ordinarily resident outside Australia; (c) there are reasonable grounds to suspect that the action has been brought for an ulterior purpose; (d) the order is authorised by statute; or (e) the order is necessary in the interests of justice. 36 In Reschke,5 when dealing with the previous Rules, Blue J summarised the principles to be applied in application for security in the way set out below. 6 These principles remain applicable to the current Rules: Paragraph (e) of subrule 194(1) is expressed in different terms to the specific paragraphs (a) to (d). Paragraphs (a) to (d) clearly import a two-stage test: first, has the defendant established the prerequisite contained in the relevant paragraph (for example that the plaintiff is ordinarily resident outside Australia in the case of paragraph (a)); secondly, 4 Affidavit of Cleophas Pfang dated 10 October 2024 (FDN 123). 5 Reschke v Trevor Reschke Nominees Pty Ltd; Reschke v Australian Executor Trustees [2020] SASC 60. 6 Ibid [43]-[47]. -- 10 of 13 -- [2024] SASC 136 Kimber J 9 should the Court exercise a discretion to make a security order in all of the relevant circumstances. By contrast, paragraph (e) only applies when the Court is satisfied that a security order is necessary in the interests of justice. Before the Court can so conclude, it must take into account all relevant circumstances. If the Court concludes that a security order is necessary in the interests of justice, there is no room for the exercise of a residual discretion. Accordingly, in the case of paragraph (e), the test involves only a single stage. In this respect, I agree with the following observations by Hinton J in Strazdins v ANZ Banking Group Ltd: If the Court arrives at the conclusion that an order is necessary in the interests of justice, what discretion is there then to be exercised? All factors relevant to the question of the order being necessary in the interests of justice will have been considered. If the order is necessary, it is necessary. I cannot think of a circumstance where a court, having arrived at a conclusion that an order for security for costs is necessary in the interests of justice, would then decline to make the order. What additional factor not considered as part of determining whether the jurisdictional fact is established would subsequently be considered and, potentially, justify a conclusion that no order be made? Absent any additional factor, the answer arrived at in determining whether the jurisdictional fact was satisfied must be decisive of the exercise of the discretion. It is well-established that security for costs ought not ordinarily be ordered against a natural plaintiff if that would stultify the action. Thus, in Pearson v Naydler Megarry V-C said: The basic rule that a natural person who sues will not be ordered to give security for costs however poor he is, is ancient and well-established. As Bowen LJ said in Cowell v Taylor, both at law and in equity ‘the general rule is that poverty is no bar to a litigant’. The power to require security for costs ought not to be used so as to bar even the poorest man from the courts. In this respect, the position is different as between a natural person and a corporation. In the case of a corporation, stultification of the action if security is ordered is an important factor against ordering security but it is not decisive. In the case of a natural person (absent special circumstances such as the person being resident out of Australia), stultification of the action will preclude an order for security. It is well-established that the onus of proving that a security order will stultify an action lies on the plaintiff. On the other hand, the onus of establishing the pre-requisite under paragraphs (a), (b), (c) or (d) of subrule 194(1) lies on the defendant. In conclusion, if the plaintiff, on being unsuccessful in the action, will not have sufficient resources to meet an order for costs and an order for security will not stultify the action, it may be (depending on all of the relevant circumstances) that it will be necessary in the interests of justice to order that the plaintiff provide security for costs. (citations omitted) Conclusion — application for security for costs 37 There is no dispute that an order for security for costs should be made from the second day of the trial. There is no dispute about the expert opinion of Mr Ericson that the likely party-to-party costs for trial that would be allowed on taxation are likely to be $7,300.00 per day. There is also no dispute about the opinion provided by Mr Morris that his costs will be $660.00 per hour, inclusive -- 11 of 13 -- [2024] SASC 136 Kimber J 10 of GST. While there should be some prospect of Mr Morris not giving evidence for a full day, I am satisfied it is appropriate to allow for a full day. 38 In my view, the appropriate order is for 11 days from the second day of trial, with the costs of solicitor, counsel, and electronic transcript being a total of $7,300.00 per day. To that amount should be added the costs of Mr Morris attending to give evidence. As I have said, he has estimated that as $660.00 per hour, inclusive of GST. I allow eight hours for the attendance of Mr Morris at trial (i.e. - $5280 inclusive of GST). This results in an amount of $85,580.00. 39 I order that the applicant pay security for costs from the second day of the trial in the amount of $85,580.00. 40 I will hear the parties as to whether any further orders are appropriate, including as to when that amount should be paid. FDN 116 — Costs 41 FDN 116 is the interlocutory application filed by the applicant on 11 September 2024 seeking, among other things, orders that the solicitor for the respondents advise whether he had provided advice to the fourth respondent and, if the Court deemed appropriate, that the solicitor be removed as the solicitor on the record for the respondents. On 12 September 2024, FDN 116 was set down for argument, but the interlocutory application was not pursued following the filing of an affidavit from the solicitor for the respondents (FDN 123). I have made reference to that affidavit above. 42 The interlocutory application not having been pursued, the respondents seek an order for costs in their favour on an indemnity basis. The respondents submit that the application had no basis; came after correspondence suggesting that the solicitor may be in breach of his professional obligations; and was made at a late stage after the parties had signed a certificate of readiness for trial. 43 It may be accepted that an order that costs be paid on an indemnity basis may be appropriate when the applicant, properly advised, should have known that it had no chance of success. 44 As set out earlier, there had been substantial correspondence between the parties between 12 October 2021 and 19 October 2021 and 16 May 2024 and 10 September 2024 which was relevant to the issue of a possible conflict (and other matters). The information ultimately provided in the affidavit (FDN 123) refuting the existence of a conflict could have been provided in that correspondence but was not. Had there been greater cooperation by the solicitor for the respondents, FDN 116 may not have been filed. For that reason alone, I am not satisfied that an award of costs on an indemnity basis should be made. 45 At the same time, the applicant has not satisfied me that an application that contemplated an order that the solicitor be removed as the solicitor on the record -- 12 of 13 -- [2024] SASC 136 Kimber J 11 had any significant prospect of success. In addition, the application was not pursued. For those reasons, some award in favour of the respondents is appropriate. In the circumstances, in the exercise of my discretion, I am satisfied that the respondents are entitled to their costs with respect to FDN 116 on a party-to-party basis, to be agreed or taxed. -- 13 of 13 --