Auto Sounds and Alarms Limited (in receivership and liquidation) v Crone

[2013] NZHC 3534

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-007325 [2013] NZHC 3534

BETWEEN  AUTO SOUNDS AND ALARMS LIMITED (IN RECEIVERSHIP AND LIQUIDATION)

First Plaintiff

GRAEME WILLIAM MILLS AND KAREN ANN MILLS

Second Plaintiffs

ANDSTEPHEN CRONE First Defendant

SCITUATE LIMITED Second Defendant

Hearing:                   On the papers

Counsel:                  PJ Dale and LT Meys for Plaintiffs

G Bogiatto and GS Aulakh for Defendants

Judgment:                20 December 2013

JUDGMENT OF ASHER J (Decision on application for stay)

This judgment was delivered by me on Friday, 20 December 2013 at 1.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Neilsons Lawyers Ltd, Auckland.

PJ Dale, Auckland.

G Bogiatto, Auckland.

AUTO SOUNDS AND ALARMS LTD (IN RECEIVERSHIP AND LIQUIDATION) v CRONE [2013] NZHC

3534 [20 December 2013]

Introduction

[1]      The plaintiffs Graeme and Karen Mills apply for an order staying execution of my judgment of 28 May 2013 pending disposal of their appeal.  In that judgment I entered judgment against the plaintiffs in favour of the defendants and ordered costs against the plaintiffs of $197,247.71 including disbursements.

[2]      On 21 June 2013 the plaintiffs filed a notice of appeal against the decision and the parties await a fixture.   The defendants have issued bankruptcy notices against the plaintiffs and are not prepared to agree to a stay.

[3]      The second plaintiff Mrs Mills and the first defendant Mr Crone have filed affidavits.  Mr and Mrs Mills contend that they do not have the means to meet the costs award.   Security for costs of $50,000 has been paid.   The parties’ primary assets are their shareholding in Onehunga Car Clinic and the equity in their home.

[4]      Their home has been on the market and an agreement for sale and purchase for $2.45 million has recently collapsed.  The Bank of New Zealand is owed $1.85 million and there is a facility of $1.9 million.  The Mills wish to avoid selling their home, despite it having been on the market.   They run a successful business of Onehunga Car Clinic and draw approximately $220,000 per annum out of that business. They own a section in Marton worth $18,000.

[5]      The Mills were initially pursuing the insurance company IAG.  They received

$195,000 in a settlement.

[6]      The principles that apply in relation to a stay are clear.  They are summarised in Keung v GBR Investment Ltd:1

The stay application is brought under r 12(3) of the Court of Appeal (Civil) Rules 2005. 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”.   Factors to be taken into account in this balancing exercise include:

1      Keung v GBR Investment Ltd [2010] NZCA 396 at [11].

(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.

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

[7]      It is my assessment that with effort, the Mills should be able to pay the judgment sum.  They have, it would seem, equity of at least $300,000 or $400,000 in their home, plus the IAG monies and some other assets.  They are also enjoying a comfortable income from Onehunga Car Clinic.

[8]      I am not of the view that the appeal will be rendered nugatory by the lack of stay, in the sense that the Mills will allow themselves to go bankrupt.   I take into account the fact that $50,000 is already available in the form of the security for costs.

[9]      Mr  Crone  is  the  successful  litigant  and  is  entitled  to  the  fruits  of  the judgment.   Mr Crone has significant assets and will be well able to refund the payment of any money should the plaintiffs succeed in their appeal.

[10]     Accordingly I decline the application for stay of execution of judgment.

……………………………..

Asher J