GLENMORGAN FARM LIMITED (IN REC AND IN LIQ) V NEW ZEALAND BLOODSTOCK LEASING LIMITED HC AK CIV-2008-404-1759

GLENMORGAN FARM LIMITED (IN REC AND IN LIQ) V NEW ZEALAND BLOODSTOCK LEASING LIMITED HC AK CIV-2008-404-1759 11 August 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2008-404-1759BETWEEN GLENMORGAN FARM LIMITED (INRECEIVERSHIP AND INLIQUIDATION)PlaintiffAND NEW ZEALAND BLOODSTOCKLEASING LIMITED, NEW ZEALANDBLOODSTOCK FINANCE LIMITEDAND NEW ZEALAND BLOODSTOCKPROGENY LIMITEDDefendantsAND S H LOCK (NZ) LIMITEDNon-PartyHearing: 5 August 2011Counsel: M C Black for PlaintiffP J Morgan QC for DefendantD Campbell and M Broad for Non-PartyJudgment: 11 August 2011 at 10:00 AMJUDGMENT OF POTTER Jon costsIn accordance with r 11.5 High Court RulesI direct the Registrar to endorse this judgmentwith a delivery time of 10 a.m. on 11 August 2011.Solicitors: Craig Griffin & Lord, P O Box 9049, Newmarket, Auckland 1149J Collinge, „Akarana‟ 10 London Street, St Mary‟s Bay, Auckland 1011Copy to: M C Black, P O Box 1984, Shortland Street, Auckland 1140P J Morgan QC, P O Box 19021, Hamilton 3244Introduction[1] This judgment concerns $17,005 ("the shortfall") being the balance of$34,9241 costs and disbursements claimed on a 2B basis by the defendants, after deduction of $17,500 paid as security for costs and interest of $419 accrued thereon.[2] The defendants were the successful parties in the substantive litigation. Judgment was entered on the defendants‟ counterclaim for $2,221,796.14 and the defendants were awarded costs ("the judgment").2[3] The judgment has been appealed. I understand the main focus of the appeal to be on the determinations in the judgment on the plaintiff‟s cause of action in trespass and conversion.Defendants' application[4] The defendants seek orders that the shortfall be paid by the liquidator of the plaintiff personally, and in the alternative that the shortfall be paid by the non-party,S H Lock (NZ) Limited ("Lock"). The stated grounds are that such orders are just and in the case of the non-party, that it funded the proceedings and has substantially controlled it for its own benefit. However, in submissions the defendants did not maintain that Lock controlled the proceedings. They claim that Lock funded the proceedings for its own benefit.1 Costs were incorrectly calculated in the schedule to the sealed judgment as Mr Morgan QC forthe defendants accepted. A revised costs schedule is attached to this judgment showing coststotalling $33,004 and disbursements of $1,920, a total of $34,924.2 Glenmorgan Farm Ltd (in rec and in liq) v New Zealand Bloodstock Leasing Ltd HC AucklandCIV-2008-404-1759, 27 September 2010 at [116]-[117].Opposition[5] The liquidator opposes the defendants‟ application, essentially on the ground that only in exceptional circumstances will costs be awarded against the official liquidator. Other grounds stated in the notice of opposition were not pursued. They were that the order for security of costs raised an issue estoppel and thatdetermination of the defendants‟ application should await the outcome of the appealwhich is scheduled for hearing on 20 and 21 September 2011.[6] Lock opposes the defendants‟ application upon the following stated grounds:(a) It would be unjust to make an award of costs against the non-party.(b) The non-party has not funded the proceeding generally or otherwise in any substantial way.(c) The non-party has not controlled the proceeding in any way.(d) The proceeding was for the benefit of creditors generally (which includes the non-party).(e) The non-party‟s involvement has been limited to providing theliquidator with $17,500 in order that the security for costs ordered on 13 April 2010 could be met and contributing towards the costs of some photocopying.(f) The security for costs ordered raises issue estoppel. (This ground was not pursued in submissions).(g) The litigation was in large part a product of the fact that the defendants took possession of Generous in the absence of anystatutory right. (This appears to be a reference to the defendants‟claim in trespass and conversion which I understand to be the main focus of the appeal).Background[7] Extensive litigation revolving around the defendants‟ failure to register a purchase money security interest ("pmsi") over the stallion Generous has resulted inthis Court and the Court of Appeal determining that Lock‟s debenture takes priorityover the defendants‟ security. However, the failure to register the pmsi did not affect the debt due to the defendants by Glenmorgan Farm Limited (in receivership andliquidation) ("Glenmorgan") or the liability of its guarantors.3[8] On 5 August 2008 Pricewaterhouse Coopers completed the Receivers‟ finalReport on the State of Affairs of Glenmorgan Farm Limited and Tuscany Farms Limited both in receivership. Particulars of debts and liabilities then outstanding and requiring to be satisfied from the property in receivership were listed as follows:Secured creditors Lock $1,077,000New Zealand Bloodstock Finance Limited $1,382,000Preferential creditors Inland Revenue Department GST/PAYE $219,000Unsecured creditors $1,501,000Total liabilities - $4,179,000[9] Glenmorgan went into liquidation and a liquidator was appointed on 9 March 2005.[10] This proceeding was commenced on 1 April 2008. It was heard in July 2010 resulting in the judgment.[11] On 4 December 2008 the defendants filed an application for security for costs which was not finally determined until 13 April 2010. Associate Judge Christiansen ordered in a minute that security for costs be paid by the plaintiff in the sum of $17,500.[12] Subsequently, Mr Rea, one of the liquidators, advised the Court that the liquidators were holding the security for costs ordered in a separate interest bearing3 Waller v New Zealand Bloodstock Ltd [2006] 3 NZLR 629 (CA); New Zealand BloodstockLeasing Ltd v Jenkins (2007) 3 NZCCLR 811 (HC); Jenkins v New Zealand Bloodstock LeasingLtd [2008] NZCA 413.trust account. At trial Mr Rea gave evidence that the security ordered, $17,500, had been paid by Lock.The judgment[13] I held that all the plaintiff‟s claims failed. I entered judgment for the defendants on the counterclaim in the sum of $2,221,796.14. At the conclusion of the judgment I gave an overview. I said:4[111] The failure by NZB Leasing/NZB Finance to register its pmsi in Generous under the Act has given rise to much litigation, each proceeding concerning the interests of particular parties which have been, or may have been, affected by that omission. It is regrettable that essentially the same issues have had to be determined from the perspective of different parties, though the factual background and the central issues have much commonality.[112] Glenmorgan received advances from NZB Leasing/NZB Finance exceeding $2.5m to finance the purchase of Generous, but it did not pay for the stallion. It defaulted in payment of every instalment required to be paid in terms of LPA1, LPA2, the Refinancing Agreement and the Contract for Current Advances. While it paid between 1 November 2002 and 3 March 2004 a total of approximately $1.5m, NZB Finance advanced in excess of $2.5m under the Refinancing Agreement to remedy prior defaults by Glenmorgan. Glenmorgan continued to default in payments due under the Refinancing Agreement and the Contract for Current Advances. Eventually after continuing defaults over a period of nearly three years, NZB Finance exercised its rights against the security provided by Generous under the Contract for Current Advances. At that point, NZB Finance was owed some $2.4m by Glenmorgan.[113] NZB Leasing/NZB Finance failed to protect and perfect its security interest by registering LPA1/LPA2. That failure resulted in loss of priority to the first debenture holder, Lock, in respect of the security provided by Generous and the mares secured by the Contract for Current Advances.[114] There is still a balance owing to Lock of approximately $1m. Any recoveries by Glenmorgan would therefore in the first instance have to be credited to Lock. The essence of the situation is that while the failure of NZB Leasing/NZB Finance to register under the Act cost it dearly because it had to surrender priority to Lock, the failure to register had no adverse implications as far as Glenmorgan is concerned, it being indebted to both secured creditors at all relevant times.[115] Glenmorgan‟s own defaults under the various financing agreements, and its own default in entering into financing agreements with NZB Leasing/NZB Finance which charged Generous and other assets, when it had previously charged all its assets and undertakings to Lock, ultimately4 At [111]-[115].resulted in its losses. There is no basis upon which Glenmorgan could succeed in its claims against the defendants.Defendants' submissions on costs against the liquidator[14] The defendants referred to the first of the principles by which the discretion of the Court to order costs to be paid by a non-party is to be exercised, as summarised by the Privy Council in the Dymocks case,5 the leading authority on non-party costs:Although costs orders against non-parties are to be regarded as"exceptional", exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such"exceptional" case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact- specific jurisdiction and there will often be a number of different considerations in play, some militating in favour of an order, some against.[15] The defendants say that this case is fact-specific. The specific situation is that the liquidator brought and pursued litigation that was entirely without merit. He did so, and was able to do so, because Lock who was to benefit from a judgment in favour of the liquidator, provided such funding as was required. The defendants submit that the liquidator could have been under no illusions that his case was hopeless. Because of the preceding judgments of this Court and the Court of Appeal, he must have recognised that he did not have a reasonably arguable case because the essential elements of his claim had already been determined in the previous judgments.[16] There was no realistic prospect, the defendants say, of any court accepting theliquidator‟s argument that all the funds paid under the two lease to purchase agreements (LPA1 and LPA2) should be paid by the defendants to him as liquidator of Glenmorgan. Nor was there any prospect of any court concluding that he should receive damages equivalent to the value of Generous, claimed to be between $3m and $4m, when Generous had been sold for just over $1m and the proceeds appliedin reduction of Glenmorgan‟s debt.5 Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2005] 1 NZLR 145 (PC) at 156.[17] The defendants submit that the liquidator proceeded with the case when he knew it had no sensible prospect of success. That is what distinguishes the position of the liquidator in this case from the situation identified in Metalloy Supplies Ltd v MA (UK) Ltd,6 referred to with approval by the Supreme Court in Mana Property Trustee Ltd v James Developments Ltd:7As Waller LJ remarked in Metalloy, it cannot be seen as unreasonable, let alone an impropriety, for liquidators to continue with a proceeding in which they bona fide believe there is some prospect of recovery. To brand liquidators as unreasonable or as acting improperly could only be justified"if the action or defence [or appeal] were not conducted bona fide in thesense of being reasonably arguable".[18] Mr Morgan referred to the whole of that passage from Metalloy including:8No court can tell where the merits of these respective arguments lie prior to a trial, and to brand one or other as unreasonable or as acting improperly could only be justified if the action or defence were not being conducted bona fide in the sense of being reasonably arguable. ...[19] Counsel emphasised that Waller J went on to say in Metalloy:No-one has suggested that the liquidator should have appreciated that the action had become a hopeless one on the merits. ... There was nothing exceptional in his conduct; there was nothing improper in his conduct; and no-one in fact warned him that they were going to suggest otherwise.[20] By contrast, in this case the defendants submit that the liquidator elected to proceed when it was obvious that the case was hopeless, no doubt in the hope that he would be protected by the court‟s reluctance to make awards of costs againstliquidators and because he had an arrangement with counsel for the plaintiff that fees would not be charged unless there was a successful outcome in the litigation, as referred to in Mr Rea‟s affidavit filed in opposition to the application.Liquidator's submissions[21] Mr Black for the liquidator noted that the liquidator has appealed the judgment and that ultimately the merits of the case will be judged on appeal. In his6 Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613 (CA).7 Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124, [2011] 2 NZLR 25 at[14].8 At 1619.written submissions Mr Black referred to the plaintiff‟s arguments in the cause of action in trespass and conversion and noted particularly that the plaintiff‟s rights inconversion were not determined in the Jenkins proceedings.9 Relying on the contention that the title or right to sue in conversion is available to the party with the possessory interest in the asset, the plaintiff maintains its entitlement to sue for the full loss at the time of conversion, said to be the value of Generous between $3m and $4m, together with loss of earnings.[22] Mr Black said the liquidator had received legal advice throughout and it is wrong for the defendants to speculate that he has not. Further, the defendants sought and obtained security for costs and had not sought to review the security ordered by Associate Judge Christiansen, nor did the defendants seek a bond or indemnity from the liquidator personally.[23] The liquidator relies also on the Supreme Court judgment in Mana Property Trustee Ltd v James Development Ltd where the Court said:10A non-party like a director or liquidator is not at risk of a costs award in other than exceptional circumstances, that is, circumstances outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. In the case of a liquidator that is a principle of very long standing. There is certainly jurisdiction to order a liquidator as a non-party to pay costs personally but such an order will not be made unless there has been some relevant impropriety on the part of the liquidator. The courts recognise that the other party can protect its position, should it be successful, through its ability to seek in advance an order for payment of security for costs.[24] The Supreme Court then referred with approval to a passage in the judgment of Millett LJ in Metalloy:11[A liquidator] is under no obligation to the defendant to protect his interests by ensuring that he has sufficient funds in hand to pay their costs as well as his own if the proceedings fail. It may be commercially unwise to institute proceedings without the means to provide any security for costs which may be ordered, since this will only lead to the dismissal of the proceedings; but it is not improper to do so. Nor (if he considers only the interests of the company as he is entitled to do), is it necessarily unreasonable.9 New Zealand Bloodstock Leasing Ltd v Jenkins (2007) 3 NZCCLR 811 (HC); Jenkins v NewZealand Bloodstock Leasing Ltd [2008] NZCA 413.10 At [10].11 At 1620.Discussion and conclusion on costs against the liquidator[25] I expressed in the overview section of the judgment my views about the merits of this proceeding. However, the liquidator, presumably on the basis of the legal advice he had received, considered he had at least an arguable case, and now assesses that on the trespass and conversion cause of action he has a ground for appeal.[26] The Supreme Court in the passage cited above12 referred to "relevant impropriety" on the part of the liquidator as a requisite for such an order to be made.In Metalloy Waller LJ said:13... there is jurisdiction to order a liquidator as a non-party to pay the costs personally; but it will only be in exceptional cases that the jurisdiction will be exercised, and impropriety will be a necessary ingredient, particularly having regard to the fact that the normal remedy of obtaining an order for security for costs is available ...[27] Here the defendants obtained an order for security for costs. The security has proved insufficient, costs on a 2B basis and disbursements approaching twice the amount ordered as security. The plaintiff was wholly unsuccessful in the proceedings and the defendants succeeded fully on their counterclaim, reflecting the respective merits of the case. It was perhaps surprising that the liquidator pursued the proceedings. However, I do not find the necessary ingredient of impropriety inthe liquidator‟s pursuit of this proceeding to distinguish this case as "exceptional" such that the Court‟s discretion to award costs against the liquidator should beexercised.Defendants' submissions on costs against Lock[28] The defendants again refer to the principles in the Dymocks case where the Privy Council said of the third principle:14Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will12 At [24].13 At 1618.14 At 156.ordinarily require that, if the proceedings fail, he will pay the successfulparty‟s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his ownpurposes. He himself is "the real party" to the litigation, a conceptrepeatedly involved throughout the jurisprudence – see for example, the judgments of the High Court of Australia in Knight and Millett LJ‟sjudgment in Metalloy.(citations omitted)[29] Mr Morgan also referred to the issue addressed by the Board as the fourth principle:Perhaps the most difficult cases are those in which non-parties fund receivers or liquidators (or, indeed, financially insecure companies generally) inlitigation designed to advance the funder‟s own financial interests. Sincethis particular difficulty may be thought to lie at the heart of the present case, it would be helpful to examine it in the light of a number of statements takenfrom the authorities. First, Tompkins J‟s judgment in Carborundum at p 765:Where proceedings are initiated by and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in their result, such as a receiver or manager appointed by a secure creditor, a substantial unsecured creditor or a substantial shareholder, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued. That will be so whether or not the person is acting improperly or fraudulently.In many cases a major consideration will be the reason for the non- party causing a party, normally but not always an insolvent company, to bring or defend the proceedings. If a non-party does so for his own financial benefit, either to gain the fruits of the litigation or to preserve assets in which the person has an interest, it may, depending upon the circumstances, be appropriate to make an order for costs against that person. The relevant factors will include the financial position of the party through whom these proceedings are brought or defended and the likelihood of it being able to meet any order of costs, the degree of possible benefit to the non-party and whether, in all the circumstances, the bringing or defending of the claim – although in the end unsuccessful – was a reasonable course to adopt.[30] The Board then concluded, after reference to various authorities:15In the light of these authorities Their Lordships would hold that, generally speaking, where a non-party promotes and funds proceedings by an insolvent company solely or substantially for his own financial benefit, he should be liable for the costs if his claim or defence or appeal fails. As explained in15 At [29].these cases, however, that is not to say that orders will invariably be made in such cases, particularly, say, where the non-party is himself a director or liquidator who can realistically be regarded as acting rather in the interests of the company (and more especially its shareholders and creditors) than in his own interests.[31] The defendants submit that the following facts are established by the evidence, referring to the evidence at trial and the affidavits filed in this application:The litigation was for the benefit of the non-party Lock.It is a secured creditor and has preference over all other creditors. Lock is shown as a secured creditor for $1,077,000 in the receivers‟ report16 which was confirmed by the liquidator, Mr Rea, in his evidence at trial as the sum still owing to Lock.The defendants‟ debt is $2,221,796.14 as established by the judgment and ranks behind Lock‟s debt.The Inland Revenue Department follows as a preferential creditor and there is a substantial body of unsecured creditors.The amount the plaintiff attempted to recover in the proceedings being the monies paid under LPA2, totals $1,420,000.That sum would have been available had the plaintiff been successful after deduction of the liquidator‟s costs. Thus the benefit of the proceedings wasfor Lock.Lock paid the security for costs of $17,500. That enabled the litigation to continue.That Lock paid the security for costs only became known during evidence at trial. It appears that Lock subsequently made a small contribution towards disbursements of $1,125.16 See [8] above.[32] The defendants also submit that it is "beyond coincidence" that Mr vanTilborg gave evidence at trial supporting the plaintiff‟s case, he being a director ofLock and contracted to recover various loans owed to Lock and another company,Easy Factors International Limited. Further, that it is "beyond coincidence" thatcounsel for the plaintiff sent Mr van Tilborg a "courtesy copy" of the plaintiff‟sclosing address with a request for the contribution towards photocopying disbursements.[33] The defendants submit this is an entirely appropriate case for the non-party to meet the shortfall in costs. While accepting there is no evidence that Lock controlled the litigation, Lock funded it to the extent that it was funded and the litigation wascertainly for Lock‟s benefit.[34] Mr Morgan submitted that this proceeding was clearly not for the general creditors. Their ranking in priority was such that they could never have benefited. He submitted it was "unreal" to suggest other than that from the inception of the proceedings it was Lock who was to benefit from the proceedings. Accordingly, Lock funded the proceedings as was necessary by paying the amount ordered as security for costs.Lock's submissions[35] Lock submits that its involvement in the proceedings was limited, andimportantly it has not funded the plaintiff‟s legal costs for the proceedings. At all times Mr Rea controlled the proceedings. Lock had no control at all and did not obtain any rights when it paid the security for costs, nor has it had any involvement with the appeal.[36] Lock says its involvement was limited to providing the liquidator with $17,500 in order to pay the security for costs ordered on 13 April 2010 and making a contribution of $1,125 to the cost of photocopying after the trial. Lock and Mr van Tilborg believed that the security for costs was being put up in order to allow the proceedings to progress for the benefit of creditors including Lock. Lock says this isnot a classic case where a non-party has funded litigation and controlled the proceedings, although Lock hoped to benefit from the litigation if it was successful.[37] Lock was aware that the liquidator‟s claim in the proceedings was $3m to $4m. The report from Pricewaterhouse Coopers in August 2008 showed total liabilities of $4,179,000 and while Lock would have first call on the recoveries for the $1m approximately owing to it, there was potential for the unsecured creditors to benefit.[38] Counsel referred to the third principle from the Dymocks case17 andsubmitted that Lock does not equate with "the real party" to the litigation and isnowhere near to being in that situation. Lock simply paid a modest amount by way of security for costs to enable the litigation to proceed for the benefit of creditors generally as stated by Mr van Tilborg in his affidavit sworn 25 July 2011.[39] Finally, Lock submits that if the Court were to consider awarding non-party costs against Lock it should be liable for costs only from 28 May 2010 when it paid the security for costs because Lock had no involvement with the proceedings prior to that date.Discussion and conclusion on costs against Lock[40] In opposition to the defendants‟ application for security for costs Mr Rea, the liquidator, swore an affidavit dated 19 December 2008 in which he stated:3. Glemorgan (in liquidation) has no assets or funds available to pay or meet any security order that may be made. This position is also confirmed by the Receivers (Pricewaterhouse Coopers) final report dated 5 May 2008 (which is exhibit B to the affidavit of Ian Ross Gwyn). If an order for security was made, then it is unlikely that these proceedings could be continued or advanced.4. The liquidators in bringing these proceedings have not claimed or sought any costs to date. In respect of legal costs involving these proceedings, I also confirm that no costs have been sought or paid to the solicitors or counsel representing the Plaintiff Glenmorgan (in liquidation). The liquidators and their legal representatives have agreed to conduct these proceedings on the basis that if they are17 See [28] above.successfully concluded in favour of the Plaintiff, a reasonable fee will then be agreed. If required, the liquidators would then refer all costs including legal costs to the court for approval.[41] It is clear from this evidence that the liquidator being without assets or funds, the proceedings could only be pursued by the accommodation of the liquidators and legal representatives of Glenmorgan, who agreed to seek payment of fees only if the proceedings were successful. Therefore, when the Court ordered security for costs to be paid in the sum of $17,500 there would have been no available source of funding had Lock not been prepared to come to the party. In fact Lock is the only entity that appears to have provided any funding for the proceedings. According to Mr Rea‟sevidence both in opposition to the application for security for costs and in opposition to this application, neither of the expert witnesses called for the plaintiff nor theplaintiff‟s solicitors or counsel received any payment until a tax refund received in late November 2010 covered the disbursements for the appeal and enabled payments towards the liquidator‟s and counsel‟s fees. Mr Rea says he does not accept thatLock was the principal beneficiary of the litigation. He refers to there being numerous other creditors, including the Inland Revenue Department as a preferential creditor. Nor, apparently, does he accept that the defendants are secured creditors in respect of the judgment debt.[42] I consider that the situation in this case, is neatly encapsulated in a passage from the judgment in Arklow Investments Ltd v MacLean,18 which was cited by the Privy Council in the Dymocks case.19 In Arklow Fisher J said:20... the overall rationale [is] that it is wrong to allow someone to fund litigation in the hope of gaining a benefit without a corresponding risk that that person will share in the costs of the proceedings if they ultimately fail.[43] I accept that Lock did not control these proceedings. But it certainly stood to benefit from them and it stood to benefit from them in priority to, and realistically to the exclusion of, all other creditors. Lock was and still is owed approximately $1m (excluding interest, legal and other costs). Had the litigation succeeded Lock had first call after the liquidator‟s costs on any proceeds. Despite the plaintiff‟s claim18 Arklow Investments Ltd v MacLean HC Auckland CP49/97, 19 May 2000.19 At [26].20 At [21].that it was entitled to damages in the region of $3m to $4m, being the claimed value of Generous, the reality was that Generous was sold in June 2005 for $1,013,153. On any realistic assessment of the situation the likely recovery would have met or substantially met the balance owing to Lock but would have left nothing over forother creditors. Lock‟s priority had been established by the previous judgments ofthis Court and the Court of Appeal. That priority meant that Lock was first in line to benefit from any recovery made in the proceedings and realistically it was the only party likely to benefit.[44] Lock was the only party that put up any money, which was logical because Lock was the only party that realistically stood to benefit from the litigation. Thus,while this case is not, as Lock‟s counsel submitted, a classic case of a non-party funding litigation and controlling the proceedings, it is a case where Lock has been the sole provider of any funding and has clearly stood to benefit from the litigation.[45] I reject Lock‟s submission that if it is ordered to pay costs it should be liablefor only those costs arising after 24 May 2010 when it paid the security for costs of $17,500. I consider it irrelevant when Lock made the payment. The payment was the catalyst for the proceedings to be advanced. Because of the arrangements made by the liquidator in respect of his fees and the fees of the plaintiff‟s legalrepresentatives no payments had been required prior to the order for security for costs made on 13 April 2010. That payment caused and enabled what had gone before and what followed in the proceedings to be put into effect.Result[46] For those reasons I order that Lock pay the shortfall between the security for costs of $17,500, and the scale 2B costs and disbursements of $34,924 as set out in the attached schedule.Amendment of sealed order[47] I order that the judgment sealed on 25 March 2011 be amended by deleting the costs schedule included in that judgment and substituting the schedule annexed.COSTS SCHEDULENo Details Days2 Commencement of defence by Defendant receiving instructions, researching facts and law, and preparing, filing and serving Statement of Defence or notice of opposition)2.03.1 Counterclaim 1.63.6 Pleading in response to Plaintiff‟s amended pleading 0.64.10 Filing memorandum for case management conference or mentions hearing (5)2.04.11 Appearance at case management conference (3) 0.94.12 Preparing and filing interlocutory application and supporting affidavit (security for costs)0.64.14 Preparation for hearing of defended interlocutory application 0.254.18 Sealing judgment 0.28 Preparation for hearing if case proceeds to hearing 6.09 Appearance at hearing 3.09.2 Second and subsequent Counsel 1.5TOTAL 18.65Daily rate $1,880 per day 11.3 days at $1,880.00 = $21,244.00Daily rate $1,600 per day 7.3 days at $1,600 = $11,760.00 $33,004.00DisbursementsDetails Amounta) Filing fee on Statement of Defence and Counterclaim $1,190.00b) Filing fee on application for security for costs $600.00c) Filing fee on Amended Statement of Defence $90.00d) Mr Perry‟s witnesses‟ expenses Nile) Sealing fee on judgment $40.00f) Photocopying NilTotal Disbursements $1,920.00Total $34,924.00