V R & J C SIEMER AND ANOR V K M FARDELL AS EXECUTRIX OF THE ESTATE OF JRF FARDELL HC AK CIV 2003-404-005782

V R & J C SIEMER AND ANOR V K M FARDELL AS EXECUTRIX OF THE ESTATE OF JRF FARDELL HC AK CIV 2003-404-005782 2 May 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2003-404-005782BETWEEN V R & J C SIEMER First Plaintiffs AND PARAGON SERVICES LTD Second Plaintiff AND K M FARDELL AS EXECUTRIX OF THE ESTATE OF JRF FARDELL Defendant Hearing: 28 April 2008 Appearances: No appearance for Plaintiffs M Gilbert for Defendant Judgment: 2 May 2008 at 12:30 pmJUDGMENT OF ASSOCIATE JUDGE ABBOTTThis judgment was delivered by me on 2 May 2008 at 12:30 pm pursuant to Rule 540(4) of the High Court Rules.Registrar/ Deputy RegistrarSolicitors: Gilbert Walker, PO Box 1595, Shortland Street, Auckland, for Defendants Copy to: V R & J C Siemer, 29 Clansman Terrace, Gulf Harbour[1] The defendant applies for an order that all plaintiffs provide security for her costs in this proceeding. She is the executor of the estate of the late Robert Fardell QC. The plaintiffs allege that Mr Fardell was negligent and in breach of fiduciary duty whilst acting as barrister for the first plaintiffs (the Siemers) in an earlier proceeding. The defendant denies any breach of duty. [2] The Siemers oppose the application. They are self-represented. The first plaintiff Mr Vince Siemer has been conducting the case on their behalf from the beginning. The notice of opposition filed by Mr Siemer also purports to be on the second plaintiff's (Paragon) behalf. Paragon is in liquidation and receivership. Neither the liquidator nor the receiver has taken any step to oppose the application. [3] For reasons which I set out below, I am satisfied on the evidence before the Court on this application that the threshold requirements for an order for security for costs have been met, and that I should exercise my discretion to make an order in the sum of $100,000.Non-appearance of plaintiffs[4] The plaintiffs did not appear at the hearing on 28 April 2008. This application was filed on 24 April 2007. The parties were advised of the hearing date on 26 November 2007. The date was set after the Court had established that the parties were available for it. [5] Late last week the Court received an affidavit from Mr Siemer, sworn in St Louis, Missouri, seeking adjournment of the hearing. In this very brief affidavit, Mr Siemer states that he is resident in the United States, and has business commitments which require him to remain there "through May 2008". Mr Siemer was able to attend the hearing of an appeal to the Supreme Court on another interlocutory matter on 28 February 2008 and the hearing of an application on another proceeding in which he is plaintiff on 20 March 2008. He chose to leave New Zealand after that with knowledge of this hearing. He did not put forward any reason, let alone a compelling one, for departing ahead of the hearing or not returning for it. I declinedthe request for adjournment, sending a minute of my decision to Mr Siemer by e- mail that day (23 April 2008). [6] The defendant's submission for this hearing was both sent to Mr Siemer by e- mail late on 22 April 2008 and delivered to the Siemers' address for service, 27 Clansman Terrace, Gulf Harbour, shortly after 9:00 am on 23 April 2008. Mr Gilbert, counsel for the defendant, has this morning handed up a copy of an e-mail received in his office from Mr Siemer last Friday morning (25 April 2008) attaching various documents, including a memorandum by the first plaintiffs. There is comment in the memorandum on the amount of security being sought by the defendant. This suggests that Mr Siemer received the defendant's submission before he prepared the memorandum as the amount being sought was not mentioned in the application nor any other document filed prior to that submission. [7] The heading of the e-mail received by Mr Gilbert shows the e-mail as having also been sent to my associate. That copy has not been received, nor is that the appropriate way to file documents in the Court. Nevertheless, the memorandum has reached me through Mr Gilbert. I have read and taken the first plaintiffs' memorandum into account in this decision.Background[8] This proceeding has been in train since October 2003. It has its genesis in a dispute that arose in late 2000 over a business venture being conducted through Paragon. The first plaintiffs invested a significant sum of money in the venture, obtaining a minority shareholding in Paragon as a consequence. There was a falling out between the shareholders over the management and direction of Paragon. Paragon was unable to conduct its business as a consequence. [9] Mr Fardell accepted instructions on 14 November 2000 to act as barrister for the first defendants in the dispute. He gave advice, issued a proceeding on 22 November 2000 seeking relief under s 174 of the Companies Act 1993, and a further proceeding on 6 December 2000 alleging misrepresentation by some of his co-shareholders and others in relation to the initial investment. He also advised the first plaintiffs that they should apply to place Paragon into receivership. [10] On 15 December 2000 Mr Fardell obtained an order in the s 174 proceeding for the appointment of Mr Stiassny of the firm Ferrier Hodgson as receiver for Paragon. The order was made by consent after initially being opposed. The receiver came to the view that Mr Siemer, as the only shareholder of substance, would need to provide substantial funding if Paragon was to remain in business. Mr Siemer declined to provide the funding and Paragon ceased business about the end of February 2001. The receiver reported to the Court that certain parties had not relinquished all relevant material and that one of Paragon's important assets was missing. [11] The s 174 proceeding was heard on 18 July 2001. Judgment was delivered on 19 July 2001. The Court ordered amongst other things that certain shares in Paragon be transferred to the Siemers. Paragon was removed from receivership following that judgment. The issue over the missing property was not resolved. [12] In the meantime, the Siemers had become dissatisfied with the conduct of Mr Stiassny and Ferrier Hodgson, and the fees charged. In August 2001 these parties entered into a settlement of that dispute, including a confidentiality clause. However, the matter did not end there. In January 2002 the Siemers purported to cancel that agreement. Mr Siemer subsequently embarked on a sustained campaign of public criticism of Mr Stiassny, with further consequences for him. [13] In October 2003 the Siemers commenced this proceeding alleging that Mr Fardell was negligent and had breached his fiduciary duty to them. They joined Paragon as second plaintiff in August 2004. [14] In April 2005 Ferrier Hodgson and Mr Stiassny issued a proceeding against Mr Siemer, Paragon and others seeking substantial damages for alleged breach of the confidentiality clause and for defamation. That proceeding is ongoing. Several costs orders have been made against Mr Siemer in that proceeding.[15] Mr Fardell died on 11 December 2005. [16] In a third amended statement of claim filed on 12 February 2007 the plaintiffs added to their cause of action for breach of fiduciary duty a claim for indemnity for any sums for which they may be found liable in the Ferrier Hodgson/Stiassny proceeding. [17] Paragon was put into liquidation and receivership on 15 March 2007.This application[18] The defendant applies for the following orders: a) Requiring the plaintiff to give security for costs in respect of such sum as the Court considers sufficient by paying that sum into Court or by giving, to the satisfaction of the Registrar, security for that sum; b) Staying the proceeding until such sum is paid or the security given, as the case may be; c) Reserving the costs of and incidental to this application. [19] The application has been brought at this stage because Mr Siemer has not paid costs which he has been ordered to pay in this proceeding, and the defendant has learned that he has not paid sums which he has been ordered to pay in the Ferrier Hodgson/Stiassny proceeding.The applicable principles[20] The application is brought under Rule 60 of the High Court Rules, the relevant parts of which read:60 Power to make order[(1) Where the Court is satisfied, on the application of a defendant,—(a) That a plaintiff— (i) Is resident out of New Zealand; or (b) 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,— the Court may, if it thinks fit in all the circumstances, order the giving of security for costs.] (2) An order under subclause (1)— (a) Shall require the plaintiff or plaintiffs against whom the order is made to give security for costs in respect of such sum as the Court considers sufficient— (i) By paying that sum into Court; or (ii) By giving, to the satisfaction of the Registrar, security for that sum; and (b) May stay the proceeding until the sum is paid or the security given, as the case may be. (3) This rule— (a) May apply, if the Court thinks fit, although a plaintiff may be temporarily resident within New Zealand; and (b) Shall apply notwithstanding that the defendant may have taken a step in the proceeding before making his application for security. [21] The principles on which the Court acts in exercising the recognised discretion it has under r 60 are well settled by cases such as Bell-Booth Group Ltd v Attorney- General (1986) 1 PRNZ 457, Nikau Holdings Ltd v Bank of New Zealand (1992) 6 NZCLC 67, 939, and A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA). Authorities relied on by the plaintiffs (Ernst & Young v Benchmark Jewellery Co (NZ) Ltd (In Liquidation) (1993) 7 PRNZ 13 (CA) and Horn v Smith & Ors (HC CHCH CIV 2005-418-63, 1 March 2006, Christiansen AJ) are simply applications of the general principles:a) The Court has to be satisfied as a threshold requirement that a plaintiff is resident out of New Zealand or there is reason to believe the plaintiff will be unable to meet an adverse order for costs; b) The Court then has a discretion whether or not to order security, and as to the quantum of any security; c) This discretion is to be exercised having regard to the circumstances of the case, with no predisposition one way or the other; d) The Court has to assess what is just and reasonable having regard to the competing interests of plaintiff and defendant; e) The amount of any security is to be what the Court thinks fit in all the circumstances. [22] The grounds, as set out in the application, are that there is reason to believe that the Siemers will be unable to pay the defendant's costs if they are unsuccessful, and appearing from the affidavit filed in support. That affidavit is by a solicitor in the firm acting for the defendant. He has produced documents obtained from various public registers as to the status of the second plaintiff and the title to a property at 27 Clansman Terrace, Gulf Harbour, currently registered in the name of the Siemers (and used as their address for service). The defendant also relies on documents filed and judgments delivered in this proceeding, in the original s 174 proceeding and in the Ferrier Hodgson/Stiassny proceeding, as well as the judgment of this Court in a proceeding filed by Mr Siemer early this year (CIV 2008-404-0104) which was struck out following a hearing on 20 March 2008. [23] Notice of opposition was filed by Mr Siemer (4 May 2007) purportedly on behalf of both first and second plaintiffs, although at that time the second plaintiff was in liquidation and receivership. The memorandum filed for this hearing is on behalf of the first plaintiffs only. Although several grounds of opposition are stated in the notice, they come down to two grounds, stated in differing ways: that the Siemers have an asset in the house at 27 Clansman Terrace from which any costs canbe paid, and that it would not be in the interests of justice to make an order when the losses are a consequence of Mr Fardell's allegedly wrongful advice and actions. In their memorandum the Siemers also challenge the quantum of security being sought on the grounds that the trial is the only issue remaining. One affidavit has been filed in support of the opposition. It is by a real estate agent expressing a view as to the market value of the property at 27 Clansman Terrace. [24] The Siemers' notice of opposition states that they rely on unspecified provisions of the New Zealand Bill of Rights Act 1990 and equity and good conscience. I do not see that they would require any different considerations from those usually applied in exercising the discretion under r 60. [25] The issues for this application are: a) Whether the defendant has satisfied the Court on the threshold requirements for an order; b) Whether the Court should exercise its discretion to order security; c) If so, what amount of security is just and reasonable.Meeting the threshold[26] The defendant brought this application on the basis that there was reason to believe the plaintiffs would be unable to pay costs if they were unsuccessful (r 60(1)(b)). In addition, and as a consequence of Mr Siemer's affidavit of 18 April 2008, the plaintiffs also say they are entitled to an order against Mr Siemer on the ground that he is resident out of New Zealand (r 60(1)(a)(i)). [27] First, I am satisfied that the threshold requirement has been met in respect of Mr Siemer, having regard to his affidavit of 18 April 2008 in which he describes himself as being of Springfield, Missouri and a resident of the United States.[28] Secondly, I consider whether the threshold requirement has been met on the basis of grounds to believe there is an inability to pay. I will deal first with Paragon, as this part of the application can be dealt with quickly. I am satisfied that there is reason to believe Paragon will be unable to meet any costs. I base this finding on the appointment of a receiver and manager and the order placing it into liquidation both made on 15 March 2007, and a record on the Companies Register, which appears to have been filed by the Official Assignee (as liquidator), showing an unsecured creditors' claim of $209,734 and unpaid petitioning creditor's costs of $3,545. [29] I turn next to consider whether there is reason to believe that the Siemers will be unable to pay. The Siemers claim that there is sufficient equity in the property at 27 Clansman Terrace to meet any adverse award of costs. In their notice of opposition they contend that a mortgage and charging orders (in respect of several costs awards against them) account for less than half of the worth of the property. They rely on the evidence of the managing director of a real estate business operating in the area that the property has a market value of between $1.4 and $1.5 million as at May 2007. It is reasonable to infer that the Siemers' ability to pay depends entirely on whether there is this value in the Clansman Terrace property in light of a recent written submission (31 January 2008) made by Mr Siemer to the Supreme Court when seeking leave to appeal a decision on another interlocutory application. In that submission, Mr Siemer remarked that the Supreme Court's ruling in the appeal would have relatively minor effect:The reason is the appellant has moved his assets off-shore and will establish residency in the United States [30] Counsel for the defendant says that the evidence of the real estate agent is no answer to the application. He challenges its establish efficacy on three grounds. The first is a procedural one. He argues that the agent's opinion as to value is inadmissible as he has not qualified himself in terms of Rule 330A of the High Court Rules, and leave to file the affidavit has not been sought. The second is that the evidence is nearly a year out of date. The third, and most important, is that it does not address the critical question as to the value of the Siemers' interest in the property.[31] A title search of the property shows that it is registered in the Siemers' names, but is subject to a mortgage to ANZ Banking Group (New Zealand) Limited registered in August 2000, and to three charging orders and two caveats. [32] Although the Siemers assert in the notice of opposition that the value of the mortgage and charging orders are less than half the worth of the property, they have produced no evidence to that effect, particularly as to the amount secured by the mortgage. [33] What is known is that there are unmet judgments or costs awards against the Siemers, some covered by charging orders, and some not, as follows: a) Against Mr Siemer in the Ferrier Hodgson/Stiassny proceeding for judgments or orders made between 16 March 2006 and 9 August 2006 for $206,688.78 which, together with costs totalling $1600 are charged against Mr Siemer's interest in Clansman Terrace under two charging orders registered in November 2006; b) A costs order against the Siemers in this proceeding made on 18 July 2006, which together with costs of $800 is the subject of a charging order registered against the property in February 2007; c) Further costs judgments against the Siemers in this proceeding made on 31 July 2007 for a total sum of $5720, which are the subject of a charging order made on 28 September 2007 against the property but not showing on the (earlier) copy of the title produced when the application for security was filed; d) Costs orders made against the Siemers in this proceeding by the Court of Appeal on 22 November 2007 ($3000 plus usual disbursements) and by the Supreme Court on 28 February 2008 for $1500 when dismissing an appeal and application for leave to appeal respectively from a judgment on an earlier interlocutory application;e) An order that Mr Siemer pay costs to Ferrier Hodgson/Stiassny and the Attorney-General on an indemnity basis, made on 20 March 2008 at the time of dismissing Mr Siemer's recent proceeding against those parties (CIV 2008-404-0104). Those costs were not quantified in the judgment. [34] The unpaid judgments and costs orders secured by charging orders total $217,853.78. The costs orders made in the Court of Appeal and Supreme Court (not yet the subject of charging orders) total $4500 plus the disbursements in the Court of Appeal. There are also likely to be further significant costs payable by Mr Siemer under the order made in CIV 2008-404-0104. All now appear to depend for payment on the Siemers having equity in Clansman Terrace. This is all before the costs at issue in this application are considered. [35] The caveats registered against the property are also instructive on the value of the Siemers' interest in Clansman Terrace. They show that on 4 December 2002 the Siemers granted themselves a lease of Clansman Terrace and entered into an agreement for sale and purchase with Mrs Siemer as trustee for a company to be formed called Lauren Trustee Limited as purchaser, and that the property was transferred to Lauren Trustee Limited by transfer dated 9 June 2005. There is no evidence as to beneficial interest in the property. (A search of Lauren Trustee Limited shows Mrs Siemer to be the sole director and shareholder of that company, although there is an unexplained difference in name: she is shown in the company records as Jane Dinsdale Siemer). It is also noteworthy that these caveats were lodged on 2 February 2007, after the charging orders in the Ferrier Hodgson/Stiassny proceeding. [36] I am satisfied that there is reason to believe that the Siemers will be unable to pay any costs awarded against them in this proceeding on the basis of the evidence I have just set out. There is no evidence from the Siemers as to the value of any interest they may still have in Clansman Terrace, notwithstanding the evidence put before the Court by the defendant. In particular they have failed to explain the effect of the lease and sale transactions in 2002 on their interest. I am entitled to, and do,draw an adverse inference from that: Arklow Investments Ltd v McLean (1994) 8 PRNZ 188, 191. [37] Counsel for the defendant properly drew to my attention the fact that Ferrier Hodgson (now known by the name Korda Mentha) are pursuing bankruptcy proceedings against Mr Siemer in respect of the judgments and cost orders they have obtained. If they pursue that path to its ultimate conclusion that will reduce the amounts charged against Clansman Terrace. However, it will not alter the overall view that I have reached that there is reason to believe that the Siemers will not be in a position to pay any costs that may yet be awarded in the future.Should an order be made?[38] The primary ground advanced by Mr Siemer for opposing an order for security is that an order would not be just and reasonable where the plaintiffs are pursuing recovery of losses allegedly caused by Mr Fardell. This involves an analysis of the claims, and some assessment of their merits (to the extent that is possible at this stage). Although Mr Siemer does not appear to advance this, for the sake of completeness I will also consider the possible effect of any order. [39] The plaintiffs' claims as set out in the third amended statement of claim dated 12 February 2007 are: a) Mr Fardell was negligent in advising the Siemers to issue the s 174 proceeding and to seek the appointment of Mr Stiassny as Paragon's receiver. They allege that if Mr Siemer had been competently advised he could have had Paragon issue a proceeding to restrain disposal of its intellectual property and obtained Anton Pillar orders to recover missing documents rather than leave this to the receiver. On that basis they seek compensation for lost technology, fees paid to the receiver, Paragon's expenditure during Mr Stiassny's receivership, interest and the legal fees paid to Mr Fardell and to his instructing solicitors.b) Mr Fardell was in breach of fiduciary duty by failing to disclose a conflict of interest (through acting for Mr Stiassny on other matters) and wrongly advising the Siemers to enter into the settlement agreement with Mr Stiassny. c) The defendant has an obligation to indemnify Mr Siemer or Paragon for any losses they suffer as a result of the Ferrier Hodgson/Stiassny proceeding. (This appears to be a further aspect of the claim for negligence, in relation to advice given on the settlement agreement.) [40] These contentions need also to be considered having regard to the speed with which Mr Fardell acted. He was instructed on 14 November 2000. Proceedings were issued on 22 November 2000, and an interim order for appointment of receiver obtained on 15 December 2000 (one month after being instructed). The substantive s 174 proceeding was heard and decided in mid-July 2001, eight months after Mr Fardell was instructed. [41] I accept the submission of counsel for the defendant that for the Siemers to succeed on their negligence claim they would have to prove that Mr Fardell gave advice that no competent barrister could have given: Moy v Pettman Smith [2005] 1 All ER 903, approved in Chamberlains v Lai [2007] 2 NZLR 7, 43 (SC). This claim seems weak at best. It is difficult to see how the steps which the plaintiffs allege should have been taken could have been any more effective than the steps taken on Mr Fardell's advice, including the appointment of a very experienced receiver. I note that this appears also to have been the view of the Judge who heard the s 174 proceeding. In a minute issued at the start of the substantive hearing he commented on the "sensible course" that had been taken. He also remarked at para [32] of the judgment of 19 July 2001:[32] Having regard to all these considerations, I am of the clear view that there has been oppression within the meaning of the Statute; and that the relief sought by the plaintiffs is appropriate and indeed the only effective relief which is available to them. [42] The Siemers also face a substantial hurdle in proving that any advice or action by Mr Fardell was the cause of their loss. As I have said, it is difficult to seethat the steps which they contend should have been taken would have achieved anything more. The biggest component of their claim ($750,000) is for loss of technology. Counsel referred me to an affidavit by Mr Siemer filed in the s 174 proceeding in which Mr Siemer acknowledged that the industrial process in which he was investing was still in the development phase, and said that if the matter proceeded to trial, the defendant would be leading expert evidence that "there was no magic in the industrial formula" and that equivalents were available on the internet. [43] The claim for breach of fiduciary duty is also uncertain, at best. To succeed the Siemers would have to prove that Mr Fardell failed to disclose to them that he was working with Mr Stiassny on other matters. In an affidavit sworn on 19 July 2004 in answer to interrogatories, Mr Fardell set out all matters on which he had worked for Mr Siemer or Ferrier Hodgson between February 1999 and August 2003. None of them related to the Siemers or matters in which they had any involvement. In the same affidavit, Mr Fardell says that he told Mr Siemer at an early stage, and prior to Mr Stiassny's appointment, that he worked regularly with Mr Stiassny and his firm. [44] The critical contention in the Siemers' claim for breach of fiduciary duty is that Mr Fardell advised them to enter into the settlement agreement with Mr Stiassny/Ferrier Hodgson. Again in the affidavit of 19 July 2004, Mr Fardell told the Siemers that he would not get involved in any dispute with Ferrier Hodgson and they would need to obtain independent advice for that purpose, and set out in detail the reasons for that position. [45] As far as I am aware the Siemers have not responded to this sworn evidence – certainly not in any evidence put before the Court on this application. It is not for me to determine any dispute on these points in this application. They will be matters that the Siemers will have to prove at trial. It seems inevitable that that will depend on a finding on their credibility. They will have to satisfy the Court that it should reject this unequivocal evidence from a senior and experienced barrister, well used to issues of conflict of interest and the need to take appropriate steps in relation to them. That will not be an easy task.[46] Counsel for the defendant also made the point that the Siemers will have a further hurdle to surmount in that they are seeking equitable damages (with the Court having a discretion in that respect). The Court will need to assess whether those damages arise out of any inducement by Mr Fardell to enter into the settlement agreement, as against the more obvious cause of the Siemers' own deliberate decision not to abide by the confidentiality obligations imposed under the agreement. [47] The claim for indemnity in respect of the Ferrier Hodgson/Stiassny proceeding is merely another form of loss arising out of the claim for fiduciary duty, and is no stronger than that cause of action. [48] The overall conclusion that I reach is that the Siemers' case on both causes of action is not strong. [49] I turn now to consider other factors which bear on the exercise of my discretion. The first is whether an order for security could prevent the Siemers from pursuing their claim. [50] An order for substantial security may have the effect of preventing a plaintiff from pursuing a claim. It will be made therefore only after careful consideration and in a case where a claim has little chance of success. It must also be balanced against the interest of a defendant who is entitled to protection from unjustified litigation, particularly litigation that is overly complicated or unnecessarily protracted:A S McLaughlin Ltd v MEL Network Ltd at paras [15] and [16]. [51] There is no evidence from the Siemers that the effect of an order that they provide substantial security would be that they could not continue the proceeding. To the contrary, the comments by Mr Siemer in his submission to the Supreme Court suggest that he has the assets, but prefers to put them out of reach of the defendant. I do not consider this to be a factor against making an order. [52] In balancing the interests of the parties I also take into account the plaintiffs' conduct of this proceeding. It has been running for close to five years without having come to trial. The Siemers have chosen to exercise their right to representthemselves, but have done so in a way which has delayed the proceeding and increased its cost. Three trial dates have had to be abandoned. In a judgment on 12 December 2006, Williams J (who had a strong grasp of the case by reason of having presided over many conferences and hearings and given several judgments between July 2005 and that date) noted at para [9]:[9] the plaintiffs have acted for themselves throughout nearly all this matter and have regularly filed documents containing wide-ranging comments on what they see as live issues in the claim – not just the issue with which the memo was primarily concerned – couched in terms never encountered in documents filed by lawyers and which, were they filed by lawyers, would risk disciplinary or contempt proceedings.[53] Mr Siemer clearly has a fixed view on the merits of the claim, and has great difficulty accepting the outcome of decisions against the plaintiffs. His submissions are often intemperate and highly rhetorical, focused only on his view of the case rather than seeking to distil the real issue for decision and concentrate on the arguments for and against that issue. Recent submissions to the Supreme Court on an application for leave to appeal exemplify the point. His failure to pay costs awards, and to prefer other affairs over this hearing, demonstrate an uncooperative approach to the proceeding generally. The defendant claims that the net effect of this is that she is being drawn into unjustified and unnecessarily protracted litigation. She says that the defendant should not have to continue defending a claim being advanced on that basis, without the costs of doing so being secured. There is certainly justification for that view in the material before me on this application. [54] Weighing all of these factors I come to the view that an order for the Siemers to provide security for costs is appropriate.The position of Paragon[55] Before considering the quantum of any award, I will comment briefly on the application in respect of Paragon. Counsel for the defendant makes the point that the claim "filed" by Mr Siemer for Paragon was in contravention of r 41. The claim is that Paragon is entitled to the benefit of the Siemers' contract of retainer with Mr Fardell by virtue of the Contracts (Privity) Act 1982. I do not see how thatcontention could succeed given that Mr Fardell was only instructed to act because Paragon's lawyers perceived a potential conflict between the interests of the Siemers and of Paragon. Neither the liquidator nor the receiver has taken any step to pursue the claim pleaded for Paragon. I do not consider that there should be an order against the liquidator or receivers given that position. Paragon has no right to be heard separately, and without legal representation. In those circumstances, I adjourn the application against Paragon sine die but with leave to the defendant to bring that application back before the Court on seven days notice if circumstances should change.What quantum of security is appropriate?[56] The quantum of security to be ordered is also to be assessed in the circumstances of the case. [57] The defendant asks the Court to take into account the protracted nature of the case to date, and a likely award of costs on a scale 2B basis. The defendant has produced a schedule of costs according to scale, based on an estimate of the trial occupying 15 days, together with likely filing fees, totalling more than $200,000. The defendant seeks security in the sum of $100,000, being approximately 50% of the estimated scale costs, but at the same time noting that actual costs are likely to be significantly in excess of scale. In addition, counsel submits that in light of Mr Siemer's attitude towards the proceeding (exemplified by his conduct of the case and the removal of his assets from the jurisdiction), there will be a case for increased or indemnity costs which could take an award well beyond the estimate of $200,000. [58] In their memorandum for this hearing, the Siemers submit that the amount being requested cannot be justified where a trial is the only issue remaining. They also claim that the defendant has contributed substantially to the protracted course of the proceeding to date by delays in filing a statement of defence, and failure to provide proper discovery requiring several applications to obtain relevant documents. No detail is provided to support these assertions.[59] The schedule of costs produced by the defendant is only for steps not otherwise dealt with by awards of costs already made. As such they can be expected to be treated as costs in the cause (to be awarded to the party ultimately successful), although this is subject to the overall discretion of the Court. [60] I have considered the defendant's assessment of a likely award of costs on a scale 2B basis. I have also reviewed the Court file generally. I am not persuaded that the defendant would necessarily obtain an award of $200,000 without an order for increased or indemnity costs. Nor do I consider that I should assume an order for increased or indemnity costs will be made, although I do not dismiss that as a possibility. Whilst understanding counsel's caution in allowing for three weeks for trial, if Mr Siemer focuses on the essential issues, it ought to be possible to complete the trial in less than that. There is also a claim for second counsel which may not be upheld, and it is also possible that the defendant will not be awarded the costs of all of the early interlocutory skirmishing. Having said that, I can foresee the possibility that an award of costs and disbursements would exceed the $100,000 being sought. I consider that is an appropriate sum to award in the circumstances of this case.Decision[61] I find that there is reason to believe that the plaintiffs will be unable to meet any adverse award of costs from assets within New Zealand. I make no finding on whether or not the Siemers have assets elsewhere but, if they do, I find that it is most unlikely that those assets will voluntarily be made available to meet any award of costs. [62] In my view, the plaintiffs' prospects of success are weak. There was no evidence before me to the effect that the security being sought would unreasonably prevent the Siemers pursuing the proceeding. The steps taken by the Siemers in relation to the Clansman Terrace property, and Mr Siemer's remarks to the Supreme Court about removing assets from New Zealand, leave me in no doubt that if the proceeding does not continue as a consequence of the order I make, it will be because the Siemers make a deliberate decision not to expose their assets to an adverse award.[63] When I balance the competing interest of the defendant, and look at the protracted history of this proceeding, I am left in no doubt that without a substantial order for security she is unfairly exposed to costs which have been driven up significantly by the way in which Mr Siemer has chosen to conduct this litigation. [64] I have no doubt that this case will occupy a significant amount of trial time, and result in the defendant incurring substantial legal costs. The amount of the security must recognise those factors, and the likelihood of an award against the plaintiffs if they do not succeed (as seems more likely than not) in excess of $100,000. [65] As I have not heard from Mr Siemer on the issue of timing, I consider it reasonable to allow time for the security to be provided. However, I must also factor in the need for this proceeding to be brought to an end, one way or another. [66] The first plaintiffs are to give security for costs in the sum of $100,000 by paying that sum into Court, or securing for it to the satisfaction of the Registrar, by 30 June 2008. [67] The proceeding is stayed pending provision of the security. [68] The plaintiffs are to pay the defendant costs of and incidental to this application on a 2B basis, together with disbursements as fixed by the Registrar.____________________ Associate Judge Abbott