ODIN ENTERPRISES LIMITED & ORS V CRAWFORD & ANOR HC CIV 2008-404-000581

ODIN ENTERPRISES LIMITED & ORS V CRAWFORD & ANOR HC CIV 2008-404-000581 17 October 2008IN THE HIGH COURT OF NEW ZEALAND CIV 2008-404-000581BETWEEN ODIN ENTERPRISES LIMITED, SARAH MARY ROBERTS AND RODERICK CHARLES JENDEN AND MARTIN VICTOR RICHARDSON AS TRUSTEES OF THE JENDEN BUSINESS TRUST Plaintiffs AND CRAIG STIRLING CRAWFORD First Defendant AND LOIS JEAN YELCICH Second Defendant Hearing: 13 October 2008 Counsel: GJ Toebes for plaintiffs PT Finnigan for defendants Judgment: 17 October 2008 at 1630JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for summary judgment]Solicitors: Buddle Findlay, PO Box 2694, Wellington for plaintiffs Coast to Coast Law, PO Box 181, Wellsford for defendantsThe application[1] The plaintiffs seek summary judgment against the defendants as guarantors of two loans made to Sans Hills Developments Limited, Church Road Corporation Limited and Ruawai Properties Limited on 27 July 2006 for $770,075 and on 6 December 2006 for $390,000. The loans were secured by mortgages registered against the applicable titles. It is claimed that, as at 30 January 2008, the sum due and owing, including interest, was $1,351,074.41 after giving credit for the proceeds received on a mortgagee sale. Interest on that sum at the default rate of 29.5% is sought from 30 January 2008 to the date of judgment, together with a declaration that the defendants are liable to pay interest on the outstanding debt at the contractually agreed default interest rate until the date of payment plus costs.The opposition[2] Mr Finnigan confirmed that the defendants' opposition was now based on two grounds, namely: a) Breach of the plaintiffs' duty of good faith in that they failed as mortgagees to take reasonable care to obtain the best price reasonably obtainable as at the time of sale with the result that the defendants, as guarantors, had suffered a loss; and b) That the application fees charged and the penalty interest charged on the two loans were oppressive and that, in the circumstances, the defendants sought to re-open the contracts and seek relief in terms of ss 120 to 124 of the Credit Contracts and Consumer Finance Act 2003.The previous examination by the Court of the exercise of the power of sale[3] The exercise of the power of sale has been the subject of a judgment, although it did not involve these plaintiffs. One of the principal debtors, RuawaiProperties Limited, applied to lodge a second caveat or, in the alternative, for an interim injunction. That application was designed to stop completion of a sale to Black Developments Limited pursuant to the mortgagee's power of sale. I will explain later in this judgment the property owning interests of the three principal borrowers. [4] Randerson J declined that application. He acknowledged that there was prima facie evidence of a sale of Ruawai Properties Limited's property at an undervalue (see [41] of the judgment). However, he concluded that there was no basis for a case which would justify the setting aside of the sale to Black Developments Limited. On that basis, the applications were both declined.The Court's approach to a summary judgment application[5] I set out a short summary of the general approach which the Court takes in relation to an application for summary judgment by a plaintiff. Rule 136 of the High Court Rules requires that the plaintiff satisfy the Court that the defendant has no defence. That was explained by the Court of Appeal in Pemberton v Chappell[1987] 1 NZLR 1 at 3 as follows:In this context the words "no defence" have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example, no bona fide defence, no reasonable ground of defence, no fairly arguable defence.[6] The Court added at 4:Satisfaction here indicates that the Court is confident, sure, convinced, is persuaded to the point of belief, is left without any real doubt or uncertainty. ...[7] And further at 4:Where the only arguable defence is a question of law which is clear cut and does not require findings of disputed facts or the ascertainment of further facts, the Court should normally decide it on the application of summary judgment, just as it will do on an application to strike out a claim or defence before trial on the ground that it raises no cause of action or no defence.[8] The Court also commented on the position where a defence is not evident on a plaintiff's pleading and said at 3:If a defence is not evident on the plaintiff's pleading I am of opinion that if the defendant wishes to resist summary judgment he must file an affidavit raising an issue of fact or law and give reasonable particulars of the matters which he claims ought to be put in issue. In this way a fair and just balance will be struck between a plaintiff's right to have his case proceed to judgment without tendentious delay and a defendant's right to put forward a real defence.[9] That position was further reinforced in Australian Guarantee Corporation (NZ) Limited v McBeth [1992] 3 NZLR 54 at 59 where the Court said:Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff's verification stands unchallenged and ought to be accepted unless it is patently wrong[10] Hypothetical possibilities in vague terms, unsupported by any positive assertion or corroborative documents advanced by defendants will not frustrate the obligation on a plaintiff to discharge the onus of proof: SH Lock (NZ) Ltd v Oremland HC AK CP641-86 19 August 1986. [11] The Court of Appeal in Tilialo v Contractors Bonding Limited CA50-93 15 April 1994 at 7 raised a caution and said:The Courts must of course be alert to the possibility of injustice in cases in which some material facts to establish a defence are not capable of proof without interlocutory procedures such as discovery and interrogatories. That does not mean that defendants are to be allowed to speculate on possible defences which might emerge but for which no realistic evidential basis is put forward.[12] A Court is not required to accept uncritically any or every disputed fact: Eng Mee Yong v Letchumanan [1980] AC 331 at 341. However the Court will not reject even dubious affidavit evidence, even though there must be suspicion as to the good faith of the deponent, if there is an essential core of complaint that supports a defence. In essence, the inquiry is whether or not the person's assertion passes the threshold of credibility: Pemberton v Chappell; Orrell v Midas Interior Designs(1991) 4 PRNZ 608 at 613.[13] In Tilialo v Contractors Bonding Limited the Court of Appeal at 8 observed:Drawing the line between mere assertions of possible defences and material which sufficiently raises an arguable defence so that the defendant should not be denied the opportunity to employ interlocutory procedures and have a trial is a matter of judgment. Views may well differ.[14] Rule 136 creates a residual discretion as to whether judgment should be entered, although, as expressed by Casey J in Pemberton v Chappell at 5, it is difficult:to conceive of circumstances where the Court should not give judgment for the plaintiff . . . it can only be a discretion of the most residual kind.The discretion was the subject of comment in Waipa District Council v Electricity Corporation of New Zealand [1992] 3 NZLR 298 at 303. [15] Rule 136 permits the Court to give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a claim in the statement of claim or to a particular part of any statement of claim. In Australian Guarantee Corporation (NZ) Ltd v McBeth at 59 the Court of Appeal said of rr 136 and 137 that they:would seem to permit the giving of judgment on a particular part of a claim both as to liability and as to quantum.[16] The Court further observed at 59-60 that the word "claim" is to be distinguished from the phrase "cause of action".The pleadings[17] Although it is usually not necessary to refer to specific documents, it is appropriate that I do so in this case. When this case was first called I issued a minute on 1 April 2008, which was emailed to counsel. It provided as follows:1. I order as follows: a. Answering affidavits and amended notice of opposition shall be filed and served by 11 April 2008; b. Reply affidavits shall be filed and served by 28 April 2008;c. In variation of r251A, the plaintiffs' documents, including a casebook of the relevant pleadings and affidavits, indexed and paginated, shall be filed and served by 5 May 2008 and the defendants' documents shall be filed and served by 12 May 2008; d. The application is adjourned for a half-day fixture at 10am on 13 October 2008 or such earlier date as shall be notified to counsel by the Registrar after 16 May 2008.[18] An amended notice of opposition was filed and further affidavits in opposition have been filed. No reply affidavits were filed. No book was prepared. No submissions were filed in advance of the hearing. [19] When I enquired of counsel as to why this had occurred I was advised that Mr Finnigan had prepared an index and that counsel agreed that he could refer to the affidavits and pleadings in the caveat and injunction proceeding to which I have made reference. The result was that the Court, on this application, was not provided with a good volume of the material until counsel's addresses commenced at the hearing. That position is unsatisfactory. I am recording it so that any person reviewing this file appreciates that the source documents are now much greater than those which appear on the Court index.Background[20] The defendants are directors of three property companies, namely Sand Hills Developments Limited, Church Road Corporation Limited and Ruawai Properties Limited. [21] Sand Hills Developments Limited owns a property at Mangawhai. Church Road Corporation Limited owns a property at Matakohe. Ruawai Properties Limited was the registered proprietor of two blocks, one a 32.2669 hectare block at Ruawai, which is referred to as "the farm block", and the other, a 4.289 hectare block nearby, which is referred to as "the home block". [22] The defendants' defence of a sale at undervalue relates to the sale of the farm block and the home block for $1.2 million.[23] On or about 27 July 2006 the plaintiffs lent $770,075 to Sand Hills Development Limited, Church Road Corporation Limited and Ruawai Properties Limited. The loan was for a period of six months from the date of the first drawn down. Interest was required to be paid at 19.5% per annum. Second mortgages were required to be given over the properties at Mangawhai, Matakohe and Ruawai. The defendants executed a written deed of guarantee and indemnity, also on 27 July 2008. [24] On or about 6 December 2006 Sand Hills Development Limited, Church Road Corporation Limited and Ruawai Properties Limited entered into a second term loan agreement with the plaintiffs. The sum advanced was $390,000. [25] On or about January 2007 Sand Hills Development Limited, Church Road Corporation Limited and Ruawai Properties Limited breached their obligations under the July 2006 agreement and failed to pay the funds due. In or about March 2007 the same companies defaulted in respect of the December 2006 agreement. [26] In August 2007 Property Law Act notices were issued. They were not complied with. A mortgagee sale followed.The grounds in opposition[27] I examine the grounds advanced in opposition. [28] The first ground advanced is an allegation that the sale by the mortgagee was at an undervalue. The precise ground is set out in full in [2]a) of this judgment. [29] At the time of the mortgagee sale the relevant provision was s 103A of the Property Law Act 1952. That did not relate to the position of a guarantor. The position can be contrasted with the current position which is covered by s 176(1) of the Property Law Act 2007, which does cover the position of guarantors. Despite the fact that s 103A of the Property Law Act 1952 did not apply to guarantors, there are similar obligations owed to a guarantor in equity which depend, for their existence, on the terms of the contract. That position was confirmed by the Court of Appeal inBryers v Harts Contributory Mortgages Nominee Co Ltd [2002] 3 NZLR 343 at 347. In the High Court, in that case, Fisher J held that the guarantor had expressly contracted out of the obligations which the mortgagor would otherwise have had. [30] The two main contracts contain an identical term:All payments shall be made to the lender under this agreement or the security documents or any of them shall be made without set-off, counterclaim or deduction (other than as this agreement may provide) and The security documents include, by definition, the guarantee. [31] Mr Toebes submitted, correctly in my view, that the defendants must therefore pay the amount demanded under the guarantee without set-off or deduction of any kind. That, he submitted, justified the entry of summary judgment as sought. [32] I put to Mr Toebes, however, that the terms of the contract did not prohibit the staying of execution of a judgment if the Court was satisfied that there was a foundation for breach of the equitable duty of good faith. He agreed, in principle, with the proposition. Accordingly, I consider whether there is a foundation for the claim that there has been a breach of the equitable duty. [33] In considering whether there has been a breach of the duty of care, some general propositions can be stated: a) The duty of care is concerned with obtaining the best price reasonably obtainable as at the time of sale: Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd (2001) 4 NZ ConvC 193,480 at [70]. It is a duty to take reasonable care. It does not necessarily follow that the best price reasonably obtainable will be achieved. b) The duty has to be measured at the time of the sale: Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd at [75]. The duty arises at the time the decision to sell is made: Tse Kwong Lam v Wong Chit Sen and Others [2004] 1 NZLR 721 at [77]. There is thusa need to analyse the steps taken once the decision to sell is made, up to the time of sale. c) The duty of care does not qualify the mortgagee's right to decide if and when to sell: Agio Trustees Co Ltd v Harts Contributory Mortgages Nominee Co Ltd at [70]; Downsview Nominees Ltd v First City Corporation Ltd [1993] 1 NZLR 513. d) When deciding whether reasonable steps have been taken by a mortgagee to obtain the best price, the steps taken by the mortgagee and those acting with it must be looked at in the round. The issue is a commercial one to be viewed in practical commercial terms: Apple Fields v Damesh Holdings Ltd [2001] 2 NZLR 586 (CA) at 729. e) Assistance in determining the issue mentioned in (d) above can be found by considering the steps endorsed by Fisher J in Harts Contributory Mortgages Nominee Co Ltd v Bryers HC AK CP 403im00 19 December 2001 at [43] where the following matters were mentioned:[c] Where the security is substantial, or specialised property is involved, it will usually be necessary for the mortgagee to obtain and act upon specialised advice as to the method of sale: Tse Kwong Lam v Wong Chit Sen [1983] 3 All ER 54 (PC). Appointing a competent agent to sell does not discharge the mortgagee's duties, but since its duty is ultimately only one of reasonable care, putting the matter in the hands of a competent agent will usually go a long way towards discharging the mortgagee's duties. [d] In the normal course the proposed sale will need to be advertised with an adequate description of the property's attributes and, within reason, widely enough to attract all possible purchasers. In some cases this will need to extend to both general and specialist publications: See Kwong supra at p 61; Ansell v NZI Finance Ltd (unreported, Wellington Registry, A434/83, Quilliam J, 14 May 1984). [e] There is no obligation to postpone the sale in the hope of a better price later, or to break up the assets and sell in a piecemeal manner if this can only be carried out over a substantial period or at a risk of loss: Kwong supra at p 59.[f] When assets are sold by tender or auction, a reasonable period must usually be allowed for purchasers to inspect the property and arrange finance before submitting bids: seeFairer Fishing Co Ltd v Broadlands Finance Ltd(unreported, Timaru Registry, A35/77, 17 August 1984); discussed by Ross, supra, along with Ansell v NZI Finance Ltd.f) For the breach of duty to be actionable there must be proof of damage:Apple Fields Ltd v Damesh Holdings Limited at 729 PC. [34] I have already recorded in this judgment that, on evidence placed before him, Randerson J, in the case involving one of the principal borrowers and the purchaser under the mortgagee sale, that there was prima facie evidence of a sale at undervalue. That, of course, is not a binding ruling so far as the matters that I am considering at this time. His Honour's analysis of the facts, however, is very helpful. [35] I now consider the evidence in relation to this issue. [36] The defendants quantify their claim in paragraph 35 of the first amended statement of defence and set-off statement of claim in the following way:35. As a consequence of the breach of good faith towards the mortgagors and the defendants, the mortgagors have suffered the following losses:The loss of silage on the farm block:(a) At the time that Odin mortgagees sold the farm and home blocks to Blomfield's company Black Developments Ltd, the mortgagors were just going to cut grass for silage for sale. Based on such area of grass land ready for harvesting at a height of 600 millimetres approximately, and a yield of 100 bales per acre, the mortgagors lost 8,000 bales of silage. The gross value per bale is $10, which after deducting cutting and baling costs would yield a nett $8.00 per bale. The loss to the mortgagors was $64,000 plus gst. Amount claimed $64,000.002.687 hectares to have been subdivided from farm block(b) The fair market value of the land subdivided land estimated at $630,000 less the cost of development estimated at $85,000 as per affidavits filed in support, a loss of $545,000 subject to sale expenses, being a nett loss of $500,000 for which an inquiry as to damages is sought Estimated amount claimed $500,000.00The water right located on the home block(c) Sale of the water dam supply area on the home block to neighbours Stanaway and Hart based on the price they were willing to pay, namely $150,000 plus gst Amount claimed $150,000.00Loss of home block(d) The loss of the home block estimated at 15 November 2007 at $770,000 inclusive of gst Amount claimed $770,000.00[37] It is immediately apparent that the formulation set out in paragraph 35 of the first amended statement of defence is not expressed in terms of a sale of the property the subject of the mortgage at a price less than the price reasonably obtainable. In short, the pleading does not address the specific entitlements that flow from a breach of the equitable duty. I shall now explain this by reference to the specific heads of claim that are set out in paragraph 35 of the amended statement of defence. [38] The loss of the silage is the loss of a crop. There is no evidence that the plaintiffs ever had possession of the silage. The silage only has relevance if, in fact, its existence on the land would cause a person assessing what is a reasonable price for the land to assess the value at a higher figure. There is no evidence of that specifically before me. [39] The loss of the ability to subdivide the land is not claimable for the specific reason which I have referred to in [33]e)[e] of this judgment. The same applies inrespect of the water right located on the home block. To achieve the values claimed would require some form of subdivision of the subject property. A mortgagee is not obliged, based on the authorities which I have referred to, to take such action in completing the sale. [40] The loss of the home block, however, is in a different category. [41] The Ruawai farm and home blocks were sold to Black Developments Limited for $1,200,000,00 plus GST. Black Developments Limited then onsold the farm block to a Mr Mark Stanaway for $1,100,000.00 plus GST. [42] Mr SR McNally, a registered valuer, has filed an affidavit on the defendants' behalf. He valued the home block on 1 September 2006 and updated to March 2007 at $770,000.00 inclusive of GST. He said he would have reconfirmed that opinion as at 15 November 2007, which was at about the time of the mortgagee sale. Although his figure was inclusive of GST, because it involved a home, counsel were agreed that I should treat his valuation as a valuation of a net of GST figure of approximately $700,000.00. In that way, the exclusion of the home for GST purposes, pursuant to s 5(15) of the Goods and Services Tax Act 1985 is appropriately allowed for. Although I was provided with no precise calculation, in view of counsel's agreement, I proceed based on the assumed net of GST figure of $700,000.00. [43] When the above sales are taken into account together with Mr McNally's valuation and using the net of GST figures, it is apparent that a case can be made out for a potential realisable value of the farm and home blocks at $1.8 million, made up of the sale price to Stanaway of the farm block at $1.1 million and the valuation of the farm block at $700,000.00. What the mortgagee has given credit for, by virtue of the sale to Black Developments Limited is a sale at $1.2 million. The actual sale by the mortgagee has therefore produced a figure $600,000.00 less than what might be said to be the reasonable price based on the sale to Mr Stanaway and Mr McNally's valuation.[44] The exercise just carried out, of course, does not take account of the costs associated with realisation but at least it gives an indicative figure, based on the evidence before me, which might represent the basis for the claim that the price received was less than the best price that was reasonably obtainable by the sum of $600,000.00. [45] I now briefly look at what steps were undertaken by the mortgagee preparatory to the actual mortgagee sale. [46] The evidence as to the precise steps to test the market that were taken by the mortgagees is scant. The Ruawai properties were not listed by the mortgagees with any real estate agent. No auction or no advertising of the properties at Ruawai for sale was undertaken. The sale to Black Developments Limited for $1.2 million followed almost immediately by the sale of the farm block for $1.1 million again calls into question whether adequate steps were taken by the mortgagees to test the market before selling the property. [47] I do not overlook that the mortgagors had a conditional sale which did not proceed because of the refusal of the mortgagees' consent. What is apparent to me, however, is that, on the material so far disclosed to me, there is a prima facie basis for the proposition that there has been a sale in breach of the equitable duty. [48] I canvassed with counsel that if I reached this view, what was appropriate in terms of any stay that I ordered. Clearly, the starting figure, as I have already recorded in this judgment, is a sale at a figure of some $600,000.00 less than was justified on the evidence. The summary judgment, however, has an interest component in it which needs to be taken into account. The plaintiffs' calculation of the sum due as at 30 January 2008, which includes interest, is $1,351,074.41. That includes interest on the sum claimed of 29.5%. Accordingly, there would be a need to calculate interest at 29.5% on $600,000, namely, $29,500.00 for two months and to declare that the sum of $629,500.00 is the amount which is the subject of any stay. There will also be questions dealing with the costs of sale, which would need to be factored in. Having said that, the exercise that I undertake at this stage is, of course, not a final determination of the issue of whether there has been a breach of theequitable duty. At the appropriate trial of the proceeding to test that matter, the whole circumstances and background concerning the mortgagees' exercise of the power of sale and what was achieved will be examined and then the answer given. What I must do, at this stage, as best I can, is to come to a view as to the extent to which execution of the summary judgment should be stayed pending the determination of that proceeding. [49] It is appropriate to add that, with respect to any stay, conditions must be added which require the issue of proceedings promptly and an assurance that they will be prosecuted with due diligence to judgment or other appropriate conclusion. Counsel were in agreement that the deadline for issue of proceedings, if a stay was granted by me, should be 28 days from the date of this judgment. These matters are accordingly reflected in the orders made at the conclusion of this judgment. [50] The second ground advanced in opposition to summary judgment asserts that the two loans were oppressive in circumstances where they should be reopened and relief granted pursuant to the Credit Contracts and Consumer Finance Act 2003. [51] Mr Toebes correctly accepted that a pleading that a contract was oppressive does not raise a set-off defence. It does raise a defence which is not excluded by the term excluding set-offs, counterclaims and deductions contained in the contracts which I have referred to in [30] of this judgment: Raptorial Holdings Ltd (in receivership) v Elders Pastoral Holdings Ltd [2001] 1 NZLR 178 at [52]-[56]. [52] Accordingly, it is necessary to analyse this defence. It is a positive defence. The authorities and the position which I have recorded in [9] and [10] of this judgment are important in analysing the defence. [53] In Greenbank New Zealand Ltd v Haas [2000] 3 NZLR 341 the Court of Appeal confirmed the approach which is applicable in summary judgment applications and to which I have made reference in [52] of this judgment at [19]. The Court was there considering the provisions of the former Credit Contracts Act 1981. The Court helpfully added at [24] and [25] the following:[24] 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. [25] That will usually, indeed almost always, necessitate the calling of evidence on the point, as is contemplated by s 13. There would be difficulties and dangers in expecting Judges and Masters to take an intuitive or impressionistic approach to the question. What to one Judge might seem unjustly burdensome might not necessarily seem so to another. The commercial experience of judicial officers may differ markedly. Save in the plainest of cases, Judges cannot be expected to take some form of judicial notice of what is or is not in accordance with reasonable standards of commercial practice.[54] There will always be those cases where the oppression is self-evident from the contract document itself for reasons, for example, which were explained by the Court of Appeal in Raptorial Holdings Ltd (in receivership) v Elders Pastoral Holdings Ltd. [55] What is apparent in this case is that the security offered was a second mortgage. No evidence was provided of the debtors' ability to make any payments other than by recourse to the property over which the security was given. In short, there was virtually no value in the borrowers' personal covenant to repay. There was a deed of priority which extended the amount of the first mortgagee by twenty-four months interest. The only comparative material that I have access to is the first mortgage. [56] I am not satisfied that there has been placed before me any foundation for the proposition that the application fees or the interest rate, for that matter, or the two combined, were oppressive having regard to the overall circumstances. In short, I conclude that the defendants have not demonstrated some tenable basis for a defence which negates the plaintiffs' assertion that there is no defence in this case.[57] I accordingly reject the second ground as providing a defence to the application for summary judgment.Conclusion[58] I conclude, therefore, that the plaintiffs are entitled to summary judgment as sought and as I have recorded in [1] of this judgment. I am also satisfied that a stay of execution of part of that judgment should be ordered in this case to enable the defendants to pursue a claim based on breach of the equitable duty which is owed by the plaintiffs to the defendants. [59] Both counsel accepted that, in the event that I came to the conclusion I have, costs on a 2B basis were appropriate. That is, therefore, the reason why orders to that effect are made at the conclusion of this judgment.Judgmenta) Judgment is entered against the defendants for $1,351,074.41 plus interest on that sum at 29.5% from 30 January 2008 to the date of judgment plus a declaration that the defendants are liable to pay interest at the rate of 29.5% on the outstanding debt until payment; b) Execution of that judgment in respect of $629,500.00 and interest at the rate of 29.5% on that sum from 30 January 2008 is stayed. It shall be a condition of such order of stay that the defendants file and serve proceedings against the plaintiffs on or before 17 November 2008 and prosecute such proceeding with due diligence. Leave is reserved to the plaintiffs to apply to lift the stay on fourteen days' notice if the conditions are not complied with; c) The defendants shall pay the plaintiffs' costs in relation to this application based on Category 2 Band B together with disbursementsas fixed by the Registrar. _____________________ JA Faire Associate Judge