Frank & Anor v Chlorelle Construction Ltd

given the number of them that would be a comparatively modest exercise for each of them to protect their own position. There is no question in my view of stifling here. 06 There is a risk of disadvantage of a gross nature in costs so far as the Defendants are concerned. They have a)ready voluntarily funded and provided the expert evidence in their case in relation to the counterclaim; they have expended a great deal of actual money already in pursuit of defending the claim and pursuing the counterclaim. They make it very clear to me if I were to order security for costs and the Claimants did not pursue the action they would in fact drop the counterclaim. They would drop the counterclaim, one draws the common sense inference that they would not throw good money after bad. 07 So far as the strength of the action is concerned as to the respective merits, this court is not invited to weigh up the merits. It is not in a position to. Suffice it to say on the face of it this is not a sham or spurious claim; neither is it a sham or spurious Defence and Counterclaim. I have come to the conclusion here that the only security that is offered is the insurance policy and it is that at which I must look. It is a document that is appallingly drafted; it is a document that emanates from insurers who have been less than candid with the court, I am surprised to see the redactions that were in the documents and the endorsements made in July 2010, and that those endorsements were not provided to this court and the parties until 1 today. I ask myself this; how on earth can any party faced with that sort of document be in a position to say 'Wells what are we in for? What is the cover that is being proposed for us? What risks do we in fact face?' There are certain specific criticisms made of the document that think are of importance that weigh with me. It is right that I should make some mention of them. When it comes to pre-inception expenses and costs, the position is very much less than clear. An argument was addressed to me by Miss Lemon — it was a helpful argument — but the document on its construction was not clear about pre-inception costs as opposed to expenses. There is an argument that she mounted and I give her all due credit for her ingenuity for putting it before me. But this is not a question of ingenuity; this is a question of clarity, so that the defendant knows where they stand, what they are in for, what sort of offers they can afford to make and what offers they should make. They should be placed in a position to assess clearly the cover that they may get should this litigation proceed in relation to expenses, costs and the like. I was very much less than impressed with what constitutes success — partial success, lack of success, Costs and expenses and money to be recovered were mixed up in various parts of the insurance contract, and when one comes to consider what constitutes success it is with difficulty that one arrives at a firm conclusion, It strikes me that the submissions made on behalf of the Defendants by Miss Rosemary Jackson where she closely analysed the document in a way that I am not going to recapitulate at the moment but which f adopt because it shows how in a very careful construction or attempted construction, clarity is not possible. Miss Lemon is, as always, realistic and candid. Such security as possibly may be afforded by this After the Event insurance is something frankly that is not as good as money in the bank or as good as any guarantee, am not in the position sensibiy to weigh up what the real advantage of this strange contract is today. If I am not, what about the Defendants and their legal advisers when they are assessing their position and their risk, and their duty under the Civil Procedure Rules to consider settlement? How possibly do they realistically consider settlement in such a situation? 08 I have come to the reluctant conclusion here that there must be some security for costs and I am going to order security for costs. It will not be in the sum of $200,000 as is sought. I am going to pitch it at a lower stage so that that valiant body of creditors who seek to be protected are in a sensible position, should they wish to, to put their hands in their pocket and contribute towards the fund that will support their action, the action adopted by the liquidator on their behalf, I put that sum at El 00,000. This is an action that has either to die a natural death or to have a swift trial. It has been going on for far too long. It will be stayed for 12 weeks and if the money is not paid within 12 weeks the action do stand dismissed. That will give the creditors time to consult, to look at their accounts that are yielding precious little at the moment and see whether they want to utilise it towards an investment to their future. I so order. -5.