The Court held that where directors exercise their residual authority to bring proceedings in the name of companies in receivership without receiver consent, they are required to indemnify the companies against costs liability, and where the directors are impecunious such that the indemnity is effectively worthless, the court may order security be paid into court to give the indemnity value. The Court treated stultification as a relevant but not determinative factor in the discretion to order security and in fixing quantum, reducing the defendants' claimed $500,000 to $175,000 and allowing 60 days for payment, with a stay of the corporate plaintiffs' proceedings (but not the individual plaintiffs' claims) to take effect only if security was not provided within that period. The question of whether there is a discretion to order an indemnity (as distinct from ordering security for the indemnity) was noted as potentially unresolved, but did not arise on the facts because the indemnity was conceded.
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