Cox v Rice Craig Solicitors Nominee Company Limited [2016] NZHC 2745 (17 November 2016)

Last Updated: 24 November 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-877 [2016] NZHC 2745

BETWEEN	GAYLE MARIE COX AND STEWART NEVILLE COX Plaintiffs
AND	RICE CRAIG SOLICITORS NOMINEE COMPANY LIMITED Defendant

Hearing:	14 November 2016
Appearances:	G M Cox in person P J Napier for Defendant
Judgment:	17 November 2016

_{JUDGMENT OF ASSOCIATE JUDGE R M BELL}

This judgment was delivered by me on 17 November 2017 at 10:00am

pursuant to Rule 11.5 of the High Court Rules

.............................................................

Registrar/Deputy Registrar

Solicitors:

Keegan Alexander (P J Napier), Auckland, for Defendant

COX AND COX v RICE CRAIG SOLICITORS NOMINEE COMPANY LIMITED [2016] NZHC 2745 [17 November 2016]

[1] The defendant applies for security for costs. It estimates that if it is

successful in defending the plaintiffs’ claim it will obtain an order for costs of

$38,133. It seeks an order that the plaintiffs provide security in that sum.

[2] I gave the background to the proceeding in my decision on the defendant’s

strike-out application:¹

[2] Rice Craig is a solicitors nominee company. It made two loans. The first, made in March 2008, was a loan of $1,015,000 to Riverside Court Ltd. That company carried out a development at Red Hibiscus Road, Whangaparaoa. That is the “Red Hibiscus” loan. Mr and Mrs Cox are directors of Riverside Court Ltd and guaranteed the loan.

[3] The second, made in August 2009, was for $1,538,000 to the trustees of the Cox Family Trust, repayable after two years with security over a property in Duncansby Road, Whangaparaoa. That is the “Duncansby” loan. Mr and Mrs Cox were two of the three trustees of the trust. They also guaranteed the loan.

[4] The Riverside Court Ltd development was a subdivision to create

12 residential lots. The development was financed by Rice Craig Solicitors

Nominee Company Ltd as first mortgagee and by Marac Finance Ltd as second mortgagee. During 2009, Marac Finance had the property revalued. That showed a substantial decline in value to the extent that Marac required the Coxes to put the Riverside Court development on the market.

[5] That resulted in a Mr Lam entering into an agreement to buy the property for $1,168,000, with settlement on 16 December 2009. It was also agreed that following the sale the Coxes would continue to project-manage the development, for which they would be paid. The Coxes hoped that from that income they would be able to continue to pay the instalments on the Duncansby loan. The agreement for sale and purchase with Mr Lam required the Coxes to complete the construction of a retaining wall alongside a stream. Mr Lam was to hold back $250,000 pending completion of the wall. Those funds were to be held in the trust account of his solicitors. With the $250,000 held back on settlement, there would not be enough money available to repay the Red Hibiscus loan in full. The Coxes conferred with Mr Parker, partner in the law firm, Rice Craig, as to how the transaction could be made to work. The Coxes say that they made an agreement with Mr Parker under which he agreed that the nominee company would give a discharge of the mortgage on settlement in return for the sum of $250,000 to be held in the purchaser’s solicitors’ trust account, to be released by the end of February 2010 or on completion of the work. Rice Craig does not accept that Mr Parker did make such an agreement.

¹ Cox v Rice Craig Solicitors Nominee Company Ltd [2016] NZHC 985.

[6] The Coxes told Mr Parker about the agreement around 10 December

2009. Settlement was due on 16 December 2009. Mr Parker received a final version of the agreement for sale and purchase on 14 December 2009. On

15 December 2009 Mr Parker sent a letter to the Coxes’ lawyer setting out a

number of requirements for settlement. In particular, two undertakings were required, one by the Coxes’ lawyer and the other by Mr Lam’s solicitors. They were to undertake as follows:

that we are holding irrevocable instruction from the purchaser to hold the sum of $250,000 in our trust account pending satisfaction of the conditions of the agreement, we are holding the sum of

$250,000 in that trust account and that on satisfaction of the terms clauses 16 and 17 of the contract we will pay the sum of $250,000

to George Bogiatto, solicitor, without deduction.

[7] The undertaking of Mr Bogiatto, the Coxes’ lawyer, required him to forward the funds immediately to Rice Craig upon receipt of payment by the purchaser.

[8] The purchase did not settle on 16 December. The following day Mr Lam returned to China, leaving the matter in the hands of his Auckland lawyers. They served a settlement notice on the Coxes’ lawyer.

[9] Mr Lam’s lawyer sent an email to Mr Bogiatto with an amended

undertaking. Of importance the amended undertaking said:

We on having instructions from the purchaser to hold the sum of

$250,000 in the trust account pending satisfaction of the conditions of agreement we are holding the sum of $250,000 in our trust account, and on satisfaction of the terms of clauses 16 and 17 of the contract will pay the sum of $250,000 to George Bogiatto, without deduction.

Significantly, the requirement for the purchaser’s instructions to be

irrevocable had been deleted.

[10] There were no other developments before Christmas 2009. After Christmas, while Mr Parker was absent, another lawyer in Rice Craig dealt with the matter. That lawyer proposed an amended undertaking, under which Mr Lam’s solicitors themselves would undertake to hold the funds in their trust account rather than holding irrevocable instructions. They demurred at giving that kind of personal undertaking themselves. They indicated a willingness to revert to the original undertaking proposed by Mr Parker in his letter of 15 December 2009.

[11] By this stage the question of payment to Marac had been resolved. But Mr Lam had lost patience. In early February 2010 he cancelled the contract for non-performance. His settlement notice had long expired.

[12] The Coxes’ grievance is that what looked like a potential lifesaver for them had disappeared. They could not sell the property in Red Hibiscus Road. Riverside Court Ltd went into liquidation. They were unable to maintain payments under the Duncansby loan. Both the Duncansby and the Red Hibiscus loans went into default.

[3] In CIV-2010-404-2802 Rice Craig Solicitors Nominee Company Ltd v Cox, Rice Craig sued the trustees of the Cox Family Trust and Mr and Mrs Cox as guarantors of the Duncansby loan. It claimed $1,606,659.51 plus interest. In their statement of defence the Coxes alleged oppressiveness under Part 5 of the Credit Contracts and Consumer Finance Act 2003. They pleaded the facts relating to the aborted sale to Mr Lam and alleged that Rice Craig had wrongfully refused to provide a discharge of the mortgage notwithstanding the undertaking of Mr Lam’s lawyers. That refusal prevented Riverside Court Ltd completing the sale, with the result that the Coxes were unable to meet their obligations under the Duncansby loan. Rice Craig applied to strike out the defence and sought judgment. In a judgment of 9 September 2011, I found for Rice Craig and gave judgment against

the Coxes.² I held that oppressiveness under Part 5 of the Credit Contracts and

Consumer Finance Act 2003 could not be a defence to a claim on the Duncansby loan, as any alleged oppressiveness related only to the Red Hibiscus loan. I also held obiter that in the circumstances there had not been any oppressiveness under the Red Hibiscus loan.

[4] Since that judgment, Mr and Mrs Cox have moved to Queensland. They are self-employed working as real estate agents.

[5] In this proceeding, the Coxes rely on the same events in December 2009. They sue Rice Craig for failing to give a discharge of mortgage, so as to allow the sale to Mr Lam to proceed. They claim damages of $660,000 for loss of income, legal fees and distress and anxiety. There are three causes of action:

[a] oppressiveness under Part 5 of the Credit Contracts and Consumer

Finance Act 2003;

[b] breach of duty of care; and

_{[c] breach of contract.}

² Rice Craig Solicitors Nominee Company Ltd v Cox HC Auckland CIV-2010-404-2802,

9 September 2011.

[6] Rice Craig applied to strike out the Coxes’ claim on the grounds of issue estoppel. I held against Rice Craig.³ That was because I found that the argument as to oppressiveness in relation to the Red Hibiscus loan was not fundamental so as to give rise to an issue estoppel.

[7] Mr and Mrs Cox are liable to Rice Craig as guarantors under both the Duncansby and Red Hibiscus loans. Rice Craig sold the secured property under the Red Hibiscus loan. A statement shows that after sale Rice Craig had a shortfall of

$857,487.56 after taking into account the proceeds of sale, the costs of exercising the power of sale and accrued interest. Rice Craig assigned the Duncansby loan for

$1,190,397.17 leaving a balance of $347,602.84 as at 7 November 2011. Rice Craig has continued to charge interest on the shortfall. It says that the total payable under the Duncansby loan at September 2016 is $967,831.06.

[8] Rice Craig has not enforced its judgment against the Coxes under the Duncansby loan and has apparently not taken any steps to sue the Coxes as guarantors under the Red Hibiscus loan. It says that the Coxes’ indebtedness to it is more than $1.8 million.

[9] One of the grounds for ordering security for costs is that a plaintiff is resident out of New Zealand. Rice Craig does not, however, rely on that. In this case it is unlikely to provide a basis for ordering substantial security. As the Coxes live in Queensland, any order for costs this court might make against them would be easily registered and enforceable against them under the Australian Trans-Tasman Proceedings Act 2010 (Cth). The costs of registering and enforcing the judgment are unlikely to be much higher than the costs of enforcing the judgment against them if they were still in New Zealand.

[10] Instead, Rice Craig relies on r 5.45(1)(b) of the High Court Rules:

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}

³ Cox v Rice Craig Solicitors Nominee Company Ltd [2016] NZHC 985.

[11] The Coxes have given evidence as to their financial circumstances. They have relatively modest assets, household contents, motor vehicles, plant and equipment used in their real estate agency. They have credit card debts of about AUD 14,000. Mr Cox’s income is said to be AUD 99,200 - Mrs Cox’s income AUD 141,000. The Coxes filed an affidavit in October 2016. Rice Craig’s submissions criticised the information in that affidavit for being light in detail. In response, Mrs Cox filed a further affidavit in November providing more supporting information. Mr Napier objected to the second affidavit being read, as it was out of time and had been filed in response to his submission. He contended that it would be unfair for the Coxes to be able to rely on that affidavit, given that I fixed the time within which Rice Craig was to file its security for costs application. The November affidavit is admitted, even though it was filed late and in response to Rice Craig’s submissions. I bear in mind that the plaintiffs do not have legal representation. I see no unfairness to Rice Craig in the Coxes providing further documents to corroborate their statements as to their financial position.

[12] While I accept what the Coxes say as to their current financial position in Australia, their New Zealand liabilities (their indebtedness to Rice Craig) must also be taken into account. As mentioned above, they owe Rice Craig NZD 1.8 million. In this proceeding, they are in effect trying to reduce their liability under the Red Hibiscus loan. Even so, they remain liable under the Duncansby loan. Whatever happens in this proceeding, their liability under the September 2011 judgment will still stand. The damages they are seeking in this proceeding will not totally eliminate their liability under the Red Hibiscus loan, let alone reduce their debt under the Duncansby loan. Regardless of the outcome of this proceeding, the Coxes will remain insolvent in that they are unable to meet all their liabilities, once their debts to Rice Craig are taken into account.

[13] Mrs Cox contended that I should ignore the New Zealand debts because of the claims made in this proceeding. That argument may have a place in the exercise of the discretion under r 5.45(2) of the High Court Rules, but it is not relevant in deciding the threshold question under r 5.45(1)(b), whether the Coxes will be able to meet any order for costs made against them. Because their New Zealand liabilities can be taken into account and because they are balance-sheet insolvent, there is

reason to believe that the Coxes will be unable to pay the full amount of any costs awarded to Rice Craig if the Coxes fail at trial. I accordingly find that Rice Craig has made out the threshold ground under r 5.45(1)(b) of the High Court Rules.

[14] Making out one of the grounds under r 5.45(1) does not mean that an order for security for costs is made automatically. The court has a discretion under r 5.45(2): “if the Judge thinks it is just in the circumstances.” The discretion to order security involves a balancing exercise. The court must take into consideration:

[a] protecting the defendant against the consequence of a barren costs order; and

[b] not barring or unduly impeding the plaintiffs’ access to the court.⁴

The discretion is not to be fettered by constructing principles from the facts of previous cases.

[15] It is necessary to form some view as to the merits of the claim, even though the information available to the court may be limited on a security for costs application (which is usually made in the early stages of a proceeding).

[16] The matters in issue go to the Coxes’ proposals in December 2009 that Rice Craig should consent to discharging the mortgage over the Riverside Court property to enable the sale to Mr Lam while leaving unpaid the sum of $250,000 pending the completion of a retaining wall. The funds were to be handed over on a professional providing a producer statement. The Coxes maintain that Mr Nelson-Parker of Rice Craig agreed that settlement would proceed on that basis. Rice Craig’s later insistence that the purchaser’s solicitors should give an irrevocable undertaking to hold and pay the $250,000, was a breach of contract by Rice Craig, was a breach of duty of care, and was oppressive under the Credit Contracts and Consumer Finance

_Act.

4. A S McLachlan Ltd v MEL Network Ltd [2002] NZCA 215; (2002) 16 PRNZ 747 (CA) at [13]—[16]; and Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017.

[17] Rice Craig’s response is that it did not at any time agree to discharge the mortgage without an irrevocable undertaking. Further, it was not unreasonable to insist on that undertaking. As to the absence of any agreement to discharge the mortgage, Rice Craig refers to the affidavit of Mr Nelson-Parker denying that he entered into any such agreement with the Coxes and the absence of any documents evidencing such an agreement (including the notes made by Mr Nelson-Parker). It submits that if such an agreement had been made, the Coxes would have raised it once it became clear that Rice Craig was insisting on an irrevocable undertaking.

[18] The Coxes’ evidence and submissions did not engage with the merits of this issue. On this, the Coxes appear to face an uphill task in contending for the agreement they have pleaded.

[19] Mrs Cox focused more on contending that Rice Craig ought to have discharged the mortgage, even if the arrangements to secure payment of the

$250,000 on completion of the retaining wall were less than ideal. Hers was a business argument that any reasonable commercially-minded lender would appreciate that in the global financial crisis with property values falling markedly, some losses to Rice Craig’s contributors was inevitable. Those losses could be minimised by allowing the sale to Mr Lam to go ahead, even with the attendant risk that the $250,000 would not be paid.

[20] I do not see how that argument can be properly fitted into causes of action for breach of contract or breach of a duty of care in tort. The Coxes’ best hope is to try to bring their claim as one for oppressiveness under Part 5 of the Credit Contracts and Consumer Finance Act. The relevant provisions of that Act include the following:

118 Meaning of oppressive

In this Act, oppressive means oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice.

...

120 Reopening of credit contracts, consumer leases, and buy-back transactions

The court may reopen a credit contract, a consumer lease, or a buy-back transaction if, in any proceedings (whether or not brought under this Act), it considers that—

...

(b) a party has exercised, or intends to exercise, a right or power conferred by the contract, lease, or transaction in an oppressive manner;

121 Refusal to agree to early termination, variation, or waiver

If a party refuses to agree to the early termination of a credit contract, consumer lease, or buy-back transaction, or to vary or waive any term of a credit contract, consumer lease, or buy-back transaction, or imposes conditions on that agreement, the party is deemed, for the purposes of this Act, to be exercising a right or power under the contract, lease, or transaction.

[21] In December 2009 the version of s 124 then in force said:

124 Guidelines for reopening credit contracts, consumer leases, and buy-back transactions

In deciding whether section 120 applies and whether to reopen a credit contract, consumer lease, or buy-back transaction, the court must have regard to—

(a) all of the circumstances relating to the making of the contract, lease, or transaction, or the exercise of any right or power conferred by the contract, lease, or transaction, or the inducement to enter the contract, lease, or transaction (as the case may be); and

(b) the following matters if they are applicable:

(i) whether the amount payable by the debtor under the contract, lessee under the lease, or occupier under the transaction is oppressive (whether or not on default by the debtor, lessee, or occupier):

(ii) if a debtor, lessee, or occupier is in default under the contract, lease, or transaction, whether the time given to the debtor, the lessee, or the occupier to remedy the default is oppressive, having regard to the likelihood of loss to the creditor, lessor, or transferee:

(iii) if the creditor has required, as a condition of the full prepayment of a credit contract, that the debtor pay a certain amount, whether the amount is oppressive having regard to

the expenses of the creditor and the likelihood that the amount repaid can be reinvested on similar terms:

(iv) if the creditor, lessor, or transferee has refused to release part of any security interest relating to the contract, lease, or transaction, or has agreed to the release subject to conditions, whether the refusal is, or the conditions are, oppressive, having regard to the obligations secured by the security interest and the extent of the security that would remain after the release; and

(c) any other matters that the court thinks fit.⁵

(Emphasis added)

[22] There is also guidance from the case law, including cases decided under the Credit Contracts Act 1981. The provisions for reopening credit contracts for oppressiveness under that Act have been reproduced in the 2003 Act. In Greenbank New Zealand Ltd v Haas, the Court of Appeal said:⁶

[24] ... The various words which together form the definition of the term

``oppressive'' all contain different shades of meaning but they all contain the underlying idea that the transaction or some term of it is in contravention of reasonable standards of commercial practice. In a sense that phrase gives the underlying commercial rationale for the earlier words or phrases. Something which is, for example, unjustly burdensome must necessarily be regarded as being in contravention of reasonable standards of commercial practice; similarly with something harsh. To determine whether a contract or term is oppressive within any of the words or phrases in the definition, it is necessary to have some basis of comparison. In the context the comparator can only be what would be expected or acceptable in terms of reasonable standards of commercial practice. Something which is in accordance with such reasonable standards could hardly be held to be oppressive. Conversely something which is not in accordance with (ie in contravention of) such standards is, by definition, oppressive. It is therefore important, unless the oppressive aspect is beyond rational dispute, for the Court to be properly informed how the contract or term measures up against reasonable standards of commercial practice.

[23] That is subject to the qualification added by the Supreme Court in

GE Custodians v Bartle:⁷

The Court of Appeal has correctly said in Greenbank New Zealand Ltd v Haas that the various words which together form the definition of the term “oppressive” all contain different shades of meaning. but they all contain the underlying idea that the transaction or some term of it is in contravention of

⁵ This section was repealed and replaced under s 74 of the Credit Contracts and Consumer

_{Finance Amendment Act 2014.}

⁶ _{Greenbank New Zealand Ltd v Haas [2000] NZCA 145; [2000] 3 NZLR 341 (CA) at [24].}

⁷ GE Custodians v Bartle [2010] NZSC 146, [2011] 2 NZLR 31 at [46].

reasonable standards of commercial practice. That sets an objective standard. A contract or course of conduct may therefore, as Arnold J also said, be treated as oppressive even though the party whose conduct is said to be oppressive may be (subjectively) blameless because the party is simply following industry practice. Where that practice is in breach of reasonable standards, compliance with it will not immunise a lender. It is for the courts rather than the industry to set the standard.

[24] In support of its defence, Rice Craig cites the following paragraphs of my decision of 9 September 2011:⁸

[32] It is necessary to bear in mind that Rice Craig is a solicitors nominee company. It is lending out funds placed with it by contributors, and its foremost duty is to its contributors to protect and uphold their interests under the loan agreement. It was faced with a situation where it was being asked to give a release of a first mortgage and accept, first, payment of less than all the amounts payable under the loan agreement and, second, a proposal under which funds would be left in to be paid at a later date. In this situation the nominee company needs to ensure that the contributors’ funds are properly protected.

[33] The arrangements proposed had elements of risk to Rice Craig.

Experienced lawyers are all too often aware of arrangements under which funds are left in, for example, for work to be completed,

only for parties to change their minds. Their enthusiasm to pay the

funds held back may not be as high as it was when they entered into the initial agreement.

[34] Rice Craig was properly protecting the interests of its contributors by requiring that the purchaser’s solicitors give irrevocable instructions. That would have ensured that, even if the purchasers had a change of heart later, they could not reverse the instructions to their solicitors to hand over the funds. So in requesting irrevocable instructions, Mr Parker was taking a responsible course consistent with a lender’s obligations to its contributors. To that extent there was not a breach of reasonable standards of commercial practice.

[35] In hindsight, it is possible to see how matters might have been managed better. Mrs Cox points to the fact that Mr Parker wrote his letter to Mr Bogiatto on 15 December, the eve of the date of settlement. She says that if this matter had been raised at an earlier time there would have been the opportunity to take the matter up with the purchaser directly. Given more lead-in time, there were greater chances of the purchaser and the solicitors agreeing to the arrangement proposed. That is a hindsight judgment. All too often

⁸ Rice Craig Solicitors Nominee Company Ltd v Cox HC Auckland CIV-2010-404-2802, 9

September 2011.

we can see how matters might have been managed better if we had only known how matters would unfold.

[36] The evidence shows that this transaction proceeded within a very short space of time. Rice Craig was provided with a copy of the contract only a few days before settlement. The fact that this question of undertaking could have been addressed earlier does not mean the omission to address the matter earlier makes that omission oppressive in terms of s 118 of the Credit Contracts and Consumer Finance Act. It needs to be something much stronger than that to give the Coxes an arguable case for oppression. On that ground I am not satisfied that there is an arguable defence which the Coxes can rely on under Part 5 of the Credit Contracts and Consumer Finance Act.

[37] This has brought me to the conclusion that, unfortunate as this has been for the Coxes, they do not have an arguable defence in terms of their pleadings to the statement of claim. In my judgment their argument under the Credit Contracts and Consumer Finance Act is not an arguable defence. The balance of the pleadings does not show any other matters capable of serious argument. The case has stood or fallen on the Credit Contracts Act point alone. Rice Craig has proved the service of notice under the Property Law Act to entitle Rice Craig to accelerate the loan, but in any event the time for payment of the principal has passed.

[25] In addition, it relies on an affidavit by an experienced conveyancing lawyer who addresses what would be required of a competent lawyer operating a solicitors nominee company. In his opinion, a competent lawyer would have required at least the irrevocable undertaking which Rice Craig sought as a term of discharging the mortgage.

[26] There may be an argument for the Coxes that what I said in my 2011 decision and the expert’s opinion may view the matter too narrowly. Although there was no evidence to support her submission, Mrs Cox put her case on the basis of how other lenders in similar circumstances dealt with defaulting mortgagors during the global financial crisis.

[27] The Coxes do not suggest that in refusing to give a release of the mortgage

without the protection of a solicitors’ irrevocable undertaking as to the $250,000

Rice Craig intended to secure some collateral advantage. The Coxes’ case is simply

a challenge to the commercial judgment of Rice Craig in not being prepared, on

behalf of its contributors, to take a risk as to the payment of the $250,000, given that the alternative turned out to be much worse.

[28] Mrs Cox did not cite any cases that showed that an oppressiveness argument had succeeded in similar circumstances. Mr Napier submitted that he was not aware of any such cases. I also am unaware of any. The Coxes’ oppression argument seemed to be pushing the reopening power under the Credit Contracts and Consumer Finance Act into an untested area in suggesting that creditors may be held to act oppressively if they take an unduly cautious view when they refuse to release a security in a falling property market. Given the novelty of the Coxes’ case, I regard them as having very much an uphill task.

[29] Overall I assess the Coxes as not having a strong case.

[30] I come back to Mrs Cox’s point that the liabilities under the Duncansby and Red Hibiscus loans should be ignored. That is really an argument that Rice Craig caused their impecuniosity.

[31] As to that, in 2009 the Duncansby loan was in default. Even if the Coxes have a claim in respect of the Red Hibiscus loan, nothing they have raised can extinguish or reduce their liability under the Duncansby loan. Rice Craig’s actions did not cause the Duncansby loan to go into default. The proposed rescue package may have reduced their liabilities under the Red Hibiscus loan, but would not have taken the Duncansby loan out of default.

[32] As for the Red Hibiscus loan, on the Coxes’ case that it would have been worthwhile taking the risk of not being paid the $250,000, they faced a potential exposure for the unpaid $250,000. They have not given any evidence to show any ability to have met that residual liability. In short, even if Rice Craig had acted as the Coxes now contend they should have, the Coxes would still have ended up impecunious.

[33] In my assessment, there is a significant risk to Rice Craig if security for costs

is not ordered. Correspondingly, given the relative weakness of the Coxes’ claim,

there is no injustice in requiring them to put up security as a condition of continuing with this proceeding. In the circumstances I order security.

[34] I do not, however, accept Rice Craig’s submission that the Coxes should give

100 per cent security. It is unusual to order security for the full amount of costs. Mr Napier cited Highgate on Broadway Ltd v Devine as an example where full security had been ordered.⁹ But that decision is, in that respect, an outlier. While the merits seem to be on Rice Craig’s side, an order for 100 per cent security would be tantamount to holding that the Coxes have no hope whatsoever. Notwithstanding my decision of September 2011, it would be bold to take that position on this

application.

[35] In the circumstances I fix security in the sum of $25,000. The proceeding is stayed until that sum is paid into court, to be held on an interest-bearing basis.

[36] If the Coxes do not pay that security by 31 March 2017, Rice Craig may apply to strike out their claim for non-compliance with the order.

[37] When the Coxes pay the required security into court, the Registrar is to arrange a further telephone case management conference for directions to be given. I anticipate that it is likely that directions through to trial will be given. The parties should accordingly advise the number of witnesses they are likely to call and give an estimate of the time required for hearing. I hope that by then the Coxes will have instructed counsel for the trial.

[38] I invite the parties to confer as to costs on this application. If they cannot agree costs, memoranda may be filed. I note that each side has had success on the interlocutory applications in this case. The parties may wish to consider whether the net costs position should also be even.

...............................................

_{Associate Judge R M Bell}

⁹ Above n 4.