Anderson v De Marco

[2021] NZHC 544

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-622

[2021] NZHC 544

BETWEEN

NORMAN HUGH ANDERSON and REBECCA ALICE CARRASCO
Plaintiff

AND

EUGENE JOHN DE MARCO

Defendant

Hearing:	On the papers
Appearances:	E S Dalzell and D Viatos for Plaintiffs Defendant in person
Judgment:	17 March 2021

JUDGMENT (No 3) OF COOKE J

(Stay of Execution)

[1]                  By application dated 24 February 2021 the defendant has applied for a stay of execution of this Court’s judgment pending an appeal to the Court of Appeal. The application is supported by an affidavit from the defendant dated 23 February 2021. The application is opposed and an affidavit sworn 1 March 2021 has being provided by Mr Anderson on behalf of him and his wife, who are the plaintiffs.

Background

[2]                  By judgment dated 11 November 2020 I upheld the plaintiffs’ claims for misrepresentation and breach of contractual warranty.1 The claims related to a cancelled sale and purchase agreement for a domestic property. In the period between entry of a contract and the settlement date the plaintiffs became aware of factors that

1      Anderson v De Marco [2020] NZHC 2979.

ANDERSON v DE MARCO (No 3) [2021] NZHC 544 [17 March 2021]

suggested that there had been misrepresentations about the building’s weathertightness, and following unsatisfactory responses from the defendant’s representatives they cancelled the contract and sought return of the deposit. Mr De Marco declined to return the deposit and the plaintiffs brought proceedings. I upheld the plaintiffs’ claims in both misrepresentation and breach of contractual warranty, holding that the defendant had misrepresented the position in more than one respect.

[3]                  By further judgment dated 21 December 2020 the plaintiffs were awarded costs and the quantum of the judgment was settled. 2 The final amount that has been sealed is $323,441.53. In that judgment I noted that Mr De Marco had advised he wished to apply for a stay of the judgment pending a proposed appeal. I directed that he should file and serve any submissions in support of the anticipated stay by 18 January 2021 which could be responded to by the plaintiffs by 22 January, following which I would give directions as to the procedure for dealing with the application.

[4]                  Nothing was filed by Mr De Marco on 18 January. On 22 January counsel for the plaintiffs filed a memorandum inviting the Court to dismiss the application, but if the Court did not do so, contending that the Court should give directions requiring detailed information in support of the stay application, including Mr De Marco’s financial position, to be filed and served by Mr De Marco by 5 February 2021.

[5]                  Mr De Marco responded in person by memorandum dated 28 January 2021. He said that he had exhausted his own abilities, the matter was over his head, and that he had applied for legal aid. He said that he hoped to have something filed by 5 February but requested a stay until legal aid was granted.

[6]                  By Minute dated 29 January 2021 I outlined what would be required for the grant of the stay, referring to r 20.10 of the High Court Rules 2016. I advised that I was prepared to give a temporary stay to give Mr De Marco “a final opportunity to put forward material that might persuade the Court to grant a stay”. I directed that a formal application with supporting affidavit evidence and submissions were to be filed  by  5 February and that a stay would be entered under r 20.10 until 9 February. I advised

2      Anderson v De Marco [2020] NZHC 3490.

that if an application was filed I would consider whether to grant an extension of the stay until the matter could be dealt with.

[7]                  No application was filed as directed and accordingly the temporary stay that I had granted ended on 9 February 2021.

[8]                  The application dated 24 February now filed by Mr De Marco is again made by him in person. He indicates that counsel who is instructed on the grant of legal aid is presently involved in a major criminal trial. Mr De Marco sets out his position in support of the application in his affidavit.

Principles to be applied in relation to stay application

[9]                  As I have previously indicated, r 20.10 of the High Court Rules 2016 allow the High Court to grant a stay pending appeal. A provision to the same effect arises under r 12 of the Court of Appeal (Civil) Rules 2005. Whilst there are two rules that potentially apply, it is appropriate that the principles applied under either of them should be substantively the same. The relevant principles in relation to r 12 were set out by the Court of Appeal in Keung v GRB Investment Ltd in the following terms:3

[11]              ….In determining whether or not to grant a stay, the Court must weigh the factors “in the balance” between the successful litigant’s rights to the fruits of a judgment and “the need to preserve the position in case the appeal is successful”.4 Factors to be taken into account in this balancing exercise include:5

(a)Whether the appeal may be rendered nugatory by the lack of a stay;

(b)The bona fides of the applicant as to the prosecution of the appeal;

(c)Whether the successful party will be injuriously affected by the stay;

(d)The effect on third parties;

(e)The novelty and importance of questions involved;

(f)The public interest in the proceeding; and

(g)The overall balance of convenience.

3      Keung v GRB Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].

4      Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.

5      Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9].

That list does not include the apparent strength of the appeal but that has been treated as an additional factor.6

…

[12]              The applicants for the stay accept that generally a stay upon payment of a judgment sum would only be granted on provision of security.7 …

Application of the present case

[10]I do not think it appropriate to grant a stay in the present case.

[11]              First, Mr De Marco has provided no offer of security in support of the application. As I indicated in my Minute of 29 January he is not entitled to a stay simply by showing that he is impecunious. Indeed Mr De Marco’s impecuniosity may make enforcement more important for the plaintiffs, because there may be a risk that any other creditors might take action against Mr De Marco while they are prevented from doing so. The plaintiffs are individuals and they could be significantly disadvantaged if they are not able to enforce their judgment in the absence of security in support of the stay.

[12]              A related factor is the lack of clarity about Mr De Marco’s financial position. Mr Anderson indicates in his affidavit that the plaintiffs served a notice that Mr De Marco complete a financial statement of means under r 17.10 of the High Court Rules and that this was not responded to. Mr De Marco now says in his affidavit that he is staying in New Zealand “to fight out the legal claims which may lead to funds being made available to settle this judgment” and that he is not a flight risk due to him having probation conditions arising from a recent period of imprisonment. He then indicates that the plaintiffs have obtained security over a plane owned by a company of which he is the sole shareholder. He says the plane is worth approximately $3 million, that there is a claim against that plane of $1.6 million leaving an equity of $1.4 million. He asserts that the plaintiffs are accordingly secured.

[13]              This affidavit does not provide a proper assessment of Mr De Marco’s assets and liabilities. I am not prepared to proceed on the basis that the plaintiffs are secured

6      Body Corporate No 188529 v North Shore City Council (No 6) HC Auckland CIV-2004-404-3230, 11 February 2009.

7      Contributory Mortgage Nominees Ltd v Harris Road No.10 Ltd (2006) 22 NTTC 19,752 (HC).

simply because Mr De Marco says so, particularly given his identification there are unparticularised claims against the plane in question of $1.6 million. There is not sufficient information disclosed in relation to Mr De Marco’s financial position overall. I remain concerned that the plaintiffs would be disadvantaged if other creditors of Mr De Marco are able to take enforcement action if they cannot. The position would be different if there was security that clearly covered the position, but I am not persuaded that there is.

[14]              These matters alone mean a stay is not appropriate. But there are three other factors of relevance.

[15]              The first is that a failure to grant the stay will not render the appeal nugatory. I am satisfied that the plaintiffs will be able to repay any amounts they receive by way of enforcement should Mr De Marco prevail in his appeal, and I note that Mr De Marco appears to be in receipt of legal aid for the appeal.

[16]              Secondly, and notwithstanding what Mr De Marco says, I do not presently see that there is much strength in the potential appeal. The key findings against Mr De Marco are factual findings. I found that he and his representatives made misrepresentations concerning the weathertightness of the home he was selling to the plaintiffs. More than one misrepresentation was found. It may be difficult to persuade the Court of Appeal to overturn this Court on such factual finding, and nothing has been put forward by Mr De Marco in his stay application identifying where there may be vulnerabilities in those findings.

[17]              Finally, these proceedings originate in a decision made by Mr De Marco to retain a deposit for a sale that the plaintiffs had provided. In other words the dispute originates from an amount of the plaintiffs’ money. They commenced proceedings to get their money back, together with a claim for consequential losses caused. In those circumstances I would only have been prepared to grant a stay if the plaintiffs’ position was clearly protected in relation to appeal. That position has not been reached.

[18]              For these reasons the application for a stay is declined. Counsel for the plaintiffs may file a memorandum in relation to the costs of this application within

five working days of receipt of this judgment (no more than two pages) which may be responded to by the defendant within five working days thereafter (no more than two pages). I will then determine the costs of this application on the papers.

Cooke J

Solicitors:

Parker & Associates, Wellington for Plaintiffs