Body Corporate 172108 v Cummins
[2025] NZHC 1790
•2 July 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-458
[2025] NZHC 1790
BETWEEN BODY CORPORATE 172108
Judgment Creditor/Respondent
AND
ROBERT JAMES CUMMINS
Judgment Debtor/Applicant
Hearing: On the papers Appearances:
J Orpin-Dowell and T Allan for Judgment Creditor/Respondent R Cummins In Person
Judgment:
2 July 2025
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[Application for suspension of adjudication]
[1] The background to this matter is set out in my judgment dated 30 May 2025 (Bankruptcy Judgment),1 which should be read with this judgment.
[2] In the Bankruptcy Judgment, I made an order under s 36 of the Insolvency Act 2006 adjudicating Robert James Cummins bankrupt. I ordered that the adjudication order would not come into effect until 4.00pm on Tuesday 24 June 2025, and then only if Mr Cummins had not paid to the Body Corporate by that time the outstanding judgment debts in the sum of
$167,522.41 together with interest.2
[3] On 6 June 2025, Mr Cummins appealed the Bankruptcy Judgment to the Court of Appeal. On 17 June 2025, Mr Cummins filed a memorandum in this proceeding
1 Body Corporate 172108 v Cummins [2025] NZHC 1378 [Bankruptcy Judgment] at [8]–[37].
2 At [125].
BODY CORPORATE 172108 v CUMMINS [2025] NZHC 1790 [2 July 2025]
seeking urgent interim relief under r 12(3)(b) of the Court of Appeal (Civil) Rules 2005. He effectively sought an extension of time before the order for adjudication would come into effect, pending determination of an application for suspension of adjudication. On 18 June 2025, Mr Cummins filed an interlocutory application in this proceeding seeking orders suspending the adjudication and restraining the Official Assignee from advertising the adjudication under ss 416 and 66 of the Insolvency Act 2006.
[4] Mr Cummins says he previously filed these applications in the Court of Appeal on 11 June 2025 and they were accepted for filing.3 I understand that, subsequently, in a minute dated 17 June 2025, Cooke J ordered the applications were to be made to this Court in the first instance.4
[5] On 19 June 2025, the Body Corporate filed a notice of opposition to the applications. The same day, Mr Cummins filed a reply memorandum. Due to Matariki, the applications came before me on 23 June 2025. This was the day prior to the date the order for adjudication was to come into effect.
[6] In my judgment dated 24 June 2025 (issued at 11.50 am), I declined to extend the time that the order for adjudication would come into effect.5 Mr Cummins did not pay the outstanding debt, the respondent filed an updated solicitor’s certificate under r 24.20 of the High Court Rules 2016, and the adjudication came into effect at 4.00pm on 24 June 2025.
[7] The parties then advised they were content for me to determine Mr Cummins’ application for suspension of adjudication on the papers filed and Mr Cummins sought an early decision. Due to other urgent scheduled matters, I was unable to determine Mr Cummins’ application for suspension immediately. Therefore, on 25 June 2025, I made an interim order suspending the adjudication and prohibiting the Official Assignee from advertising the adjudication until further order of the Court.6
3 See Gibson v Official Assignee [2016] NZCA 93 at [2]–[6] and Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [CR12.01(5)].
4 In accordance with Bioletti v Commissioner of Inland Revenue [2013] NZCA 465 at [2].
5 Body Corporate 172108 v Cummins [2025] NZHC 1681.
6 Body Corporate 172108 v Cummins HC Wellington CIV-2021-485-458, 25 June 2025 at [6].
[8] This judgment deals with Mr Cummins’ application for suspension of bankruptcy and related orders.
Legal principles – application to suspend adjudication pending appeal
[9]The Court of Appeal has held that:7
[6] As this Court explained in Lindsay v Vaucluse Holdings Ltd a person who has been adjudicated bankrupt can pursue an appeal against the order of adjudication without any need for that order to be suspended in the meantime. An appeal can proceed even though there has been no suspension. Indeed, as this Court said, it may often be contrary to the public interest and the interests of creditors to have a suspension of adjudication pending the hearing of the appeal.
[7] As this Court went on to explain, suspension of adjudication is not necessary to enable an appeal to be pursued against a judgment debt that led to the adjudication. If an appeal against the relevant judgment has merit, the Official Assignee can pursue it in the name of the bankrupt. If there is a dispute as to whether that should be done, the assistance of the Court may be sought.
[8] The fact that the debtor will endure the consequences of bankruptcy pending an appeal is not of itself a basis to suspend adjudication. Suspension of adjudication is not an automatic consequence of filing an appeal. The debtor must identify some additional factors that would result in irreversible prejudice or unfairness to the debtor if the bankruptcy proceeds in the normal way pending determination of the appeal.
[10] An application for suspension of adjudication under s 416 of the Insolvency Act is similar in nature to an application for stay under r 12(3)(a) of the Court of Appeal (Civil) Rules 2025.8 The factors relevant to an application for suspension were set out by the Court of Appeal in Bioletti v Commissioner of Inland Revenue:9
(a)whether the applicant’s right of appeal will be rendered nugatory if a suspension is not granted;
(b)the bona fides of the applicant in prosecuting the appeal;
(c)whether the respondent will be injuriously affected in some way;
(d)the effect on third parties;
7 Ward v Ward [2021] NZCA 115 at [6]–[8] (footnotes omitted).
8 Bioletti v Commissioner of Inland Revenue, above n 4, at [3].
9 At [4]–[10].
(e)the novelty and importance of the question involved;
(f)the public interest in the proceeding;
(g)the strength of the appeal; and
(h)the overall balance of convenience.
Should I suspend the adjudication pending the outcome of Mr Cummins’ appeal?
[11] Considering the principles and relevant factors set out above, I am not satisfied that the adjudication should be suspended pending the outcome of Mr Cummins’ appeal for the reasons set out below.
Right of appeal rendered nugatory?
[12] As noted above, a bankrupt may pursue an appeal against an order for adjudication without any need for the adjudication to be suspended in the meantime.10 However, the issue here is whether the right of appeal would be rendered nugatory absent suspension.
[13] Mr Cummins has not expressly contended that his right of appeal would be rendered nugatory absent suspension. However, he submits he will suffer undue prejudice because he will be prohibited from being a company director, including of Flat Bush Finance Ltd (FBFL), of which he is the sole director. Mr Cummins says FBFL holds the registered mortgage over Unit 12A in the Hobson Apartments. He says FBFL is also the current trustee of Manchester Securities Trading Trust, the beneficial owner of Unit 12A. He says FBFL is currently involved in litigation with the Body Corporate (in CIV-2009-404-6868 and CIV-2019-404-1445). Various applications, including an application by the Body Corporate for further variation of the remediation scheme for the Hobson Apartments, are to be heard on 14 July 2025. The application for further variation of the scheme is discussed in the Bankruptcy Judgment.11 Under the direction of Mr Cummins, FBFL, is seeking to intervene and
10 Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [4] and Ward v Ward, above n 7, at [6].
11 Bankruptcy Judgment, above n 1, at [4]–[5] and [44]–[58].
be joined in proceeding CIV-2009-404-6868 for the purpose of opposing the Body Corporate’s application for further variation of the scheme.
[14] Mr Cummins says it is important that he remains as a director to instruct counsel for FBFL in these matters. This is because he has “detailed knowledge of the property and the complexity of the consenting and remediation scheme issues that will need to be addressed in the context of the Body Corporate’s current variation application”. Mr Cummins is concerned that FBFL will become “rudderless” if he is unable to continue to provide instructions to counsel. He says that the outcome of the Body Corporate’s current application for further variation of the remediation scheme could be to extinguish the cross-claims against the Body Corporate which would be “devastating for FBFL as mortgagee in its own right and as trustee”. He says this would also impact significantly on him personally in terms of his ability to pursue the cross-claims against the Body Corporate and his reliance on his trustee indemnity.
[15] Mr Cummins says it is difficult to find a replacement director with sufficient expertise and time available to get on top of the complex background to be able to instruct counsel. He says he has approached three close business associates and the response has been “generally negative”. He says the same considerations would apply to the appointment of a professional director or receiver, such that the costs incurred by FBFL would be prohibitive.
[16] Mr Cummins says that if he is compelled to resign as sole director of FBFL, any replacement director will necessarily have to adopt a minimalist approach to FBFL’s affairs. Therefore, he submits that FBFL’s ability to protect its interests (and therefore his own interests) will be undermined.
[17] However, as submitted by counsel for the Body Corporate, Mr Cummins has had several years to arrange a replacement director of FBFL against the known risk that he might be adjudicated bankrupt. Further, Mr Cummins has not raised any issues in this regard earlier in this proceeding including after the Body Corporate filed its application for further variation of the remedial scheme in CIV-2009-404-6868 on 19 February 2025. Mr Cummins sought a stay of the adjudication application pending the outcome of the application for further variation of the scheme, and the opportunity
to adduce further evidence and make further submissions opposing bankruptcy, but did not raise issues regarding his potential disqualification as a director.12 Mr Cummins ultimately withdrew his application to stay the adjudication application. He must have known that, if he was adjudicated bankrupt prior to the hearing of the Body Corporate’s application on 14 July 2025, he would be disqualified as a director of FBFL.
[18] While Mr Cummins says it is very difficult to find a suitable replacement director, it seems to me a replacement director could be found. Mr Cummins states in his affidavit that FBFL was established as an investment vehicle for his sons, James and Harry, who are aged 32 and 29 respectively, and have professional careers. I note that James and Harry are the shareholders of Flat Bush Finance Trustee Ltd which is the ultimate 100 per cent shareholder of FBFL. Mr Cummins states that his sons do not have “a general business background, or specific knowledge of the background issues, that would enable them to realistically manage the affairs if FBFL vis a vis the Body Corporate”. However, it seems to me that Mr Cummins is making too much of the director issue. Either of his sons could be appointed as replacement director (or as directors) of FBFL which is their investment vehicle. As submitted by counsel for the Body Corporate, bankruptcy would not prevent Mr Cummins from giving evidence for FBFL, assisting counsel for FBFL and assisting any replacement director(s) to get up to speed on the relevant issues.
Bona fides of applicant in prosecuting the appeal
[19] Mr Cummins only filed the appeal against the Bankruptcy Judgment on 6 June 2025. At this stage, I am unable to assess the bona fides of Mr Cummins as to the prosecution of the appeal.
[20] Even if Mr Cummins pursues the appeal in good faith, given the pressures on the Court of Appeal, it may take some time (possibly up to a year) for Mr Cummins’ appeal to be heard and determined. This further delay in final determination of the application for adjudication needs to be considered in the context of a bankruptcy
12 Body Corporate 172108 v Cummins HC Wellington CIV-2021-485-458, 14 April 2025.
process that commenced in 2021 over a judgment debt of $32,818.45.13 Bankruptcy proceedings should be determined promptly. However, this case has already been the subject of extraordinary delay due to Mr Cummins challenging the process (unsuccessfully) at every step. This has involved applying for recall and/or leave to appeal or appeal of all the judgments in the High Court and for recall of one of the Court of Appeal judgments.
Will the Body Corporate be injuriously affected by suspension?
[21] Mr Cummins contends the Body Corporate will not be injuriously affected by any suspension. He argues that the Official Assignee will not be able to ascertain a net position so as to admit the Body Corporate’s claim against him in the near future. Further, he submits that the Official Assignee would have no incentive to devote resources to carry out any investigations as contemplated in the Bankruptcy Judgment before a claim is admitted.
[22] As to these points, whether the judgment debts in favour of the Body Corporate are admitted in Mr Cummins’ bankruptcy will, in the first instance, be a matter for the Official Assignee. This will likely involve the Official Assignee considering whether the mutual credit and set off provisions of s 254 of the Insolvency Act apply in respect of the unliquidated cross-claims which may never be able to be pursued in arbitration under the remediation scheme.14 It will also likely involve investigation of whether Mr Cummins is entitled to pursue the cross-claims in his own name and apply any proceeds to the judgment debts as he contends he is.15
[23] Further, in the Bankruptcy Judgment, consistent with the prior finding of the Court of Appeal,16 I found that the legitimate interests of the Body Corporate and the other unit owners in Hobson Apartments are being grossly prejudiced by the current position.17 In particular, the fact that necessary remedial work on level 12 of the building has still not been completed, the ongoing dispute and litigation regarding
13 See Bankruptcy Judgment, above n 1, at [19]–[21].
14 At [109]; Cummins v Body Corporate 172108 [2021] NZCA 145, [2021] 3 NZLR 17 [Liquidation Appeal Judgment] at [59]–[64] and Body Corporate 172108 v Cummins [2023] NZHC 1535 at [47]–[55].
15 Bankruptcy Judgment, above n 1, at [109].
16 Cummins v Body Corporate 172108 [2024] NZCA 303 [Halt Special Leave Judgment] at [25].
17 See Bankruptcy Judgment, above n 1, at [94]–[96].
remediation, and the extraordinary delay in determination of these bankruptcy proceedings are prejudicial to their interests. I found that Mr Cummins’ pattern of conduct regarding the dispute with the Body Corporate, including incurring a series of judgment debts in litigation relating to the dispute which he cannot pay, is not in the pubic interest, and should not be allowed to continue unchecked.18 I found that an intervention by way of an order of adjudication was needed, triggering the disqualifications of bankruptcy, and bringing Mr Cummins’ affairs under the control and investigation of the Official Assignee.19
[24] As discussed above, it may take some time for Mr Cummins’ appeal to be heard and determined. In any event, based on my findings referred to above I consider that any suspension of the adjudication would be prejudicial to the Body Corporate and other unit owners, and not in the public interest.
The effect on third parties
[25] Apart from the position in relation to FBFL discussed above, this factor does not seem to be of any particular relevance to the exercise of my discretion.
Novelty and importance of questions involved
[26] Mr Cummins contends that his appeal raises important questions of law in relation to the exercise of judicial discretion under s 37 of the Insolvency Act regarding the assessment of merits of cross-claims and the assessment of evidence asserting that cross-claims are subject to a bona fide dispute. However, it seems to me that the issues raised by Mr Cummins are as to my findings on the particular facts of this case.
[27] Mr Cummins submits that the appeal raises novel questions of law in relation to “special circumstances” making it inappropriate to dismiss an application for adjudication even where the debtor has genuinely triable cross-claims.20 However, I do not consider any novel questions of law arise. The law is already established in
18 The series of judgment debts incurred by Mr Cummins in litigation with the Body Corporate is detailed in the affidavit evidence filed by the Body Corporate in support of the application for adjudication.
19 At [108]–[111] and [112]–[114].
20 At [89]–[96].
Re Bayoil SA21 as referred to by the Court of Appeal in Cummins v Body Corporate 172108.22 Further, this Court found, in declining leave to appeal the decision declining to halt this proceeding, that “terms such as “special circumstances” defy exhaustive definition, and it seems doubtful that the Court of Appeal would regard it appropriate to attempt any comprehensive analysis”.23 Subsequently, when Mr Cummins applied to the Court of Appeal for leave to appeal, the Court did not consider it necessary to provide any guidance on “special circumstances”.24
[28] Furthermore, the Court of Appeal has already assessed that “special circumstances” exist in the context of this case.25 I also made it clear in the Bankruptcy Judgment why the “special circumstances” in this case (in particular, the circumstances and history of the dispute regarding the remediation of Hobson Apartments) mean that it would have been inappropriate to dismiss the application for adjudication even if Mr Cummins has genuine triable cross-claims.26
Public interest in the proceedings
[29] As noted above, I have found that it is not in the public interest to allow Mr Cummins’ conduct to continue unchecked.
[30] Otherwise, it is not apparent that any public interest in the proceeding is a matter of particular significance.
Strength of the proposed appeal
[31] Mr Cummins has raised a plethora of alleged errors in his Notice of Appeal dated 6 June 2025. The bulk of these relate to my findings in relation to the cross-claims against the Body Corporate. In this regard, the starting point is that, after a five-day trial, Powell J found that any cross-claim under cl 21.2 of the scheme appeared to be “pending rather than actual”.27 In particular, it was not clear whether
21 Re Bayoil SA [1999] 1 WLR 147 (CA).
22 Liquidation Appeal Judgment, above n 14, at [67]–[69].
23 Cummins v Body Corporate 172108 [2023] NZHC 3169 at [32], [37]–[39].
24 Halt Special Leave Judgment, above n 16 at [22].
25 Bankruptcy Judgment, above n 1, at [92]–[93] citing Liquidation Appeal Judgment, above n 14, at [68] and Halt Special Leave Judgment, above n 16, at [22].
26 Bankruptcy Judgment, above n 1, at [94]–[96].
27 Body Corporate 172108 v Meader [2024] NZHC 1280 at [92].
all relevant invoices were made available or whether sufficient supporting documentation had been provided to establish that the relevant consultant costs benefitted the other owners or the Body Corporate.28 The Body Corporate submitted before me that Mr Cummins was relying on the same documents previously adduced in the trial before Powell J. The Court of Appeal subsequently found, on the basis of Powell J’s judgment, that “any conceivable strength that Mr Cummins’ cross-claim argument might once have had has all but evaporated”.29
[32] There is clearly a dispute between the parties regarding the cross-claims. There are issues with the cross-claims both as to liability and quantum. Further, even on the basis of the current remediation scheme, it is unlikely that Mr Cummins will ever be able to pursue these claims in arbitration under the scheme.30
[33] In his Notice of Appeal dated 6 June 2025, Mr Cummins relies on the 2018 decision of the Court of Appeal in Manchester Securities Ltd v Body Corporate 172108.31 Regarding the cl 21.2 claim, the Court of Appeal stated:32
we recognise the fact that it is likely that at least some of the consultants’ costs would have been for the benefit of the whole building, even though they were addressing the roof, cladding and structural soundness of the top level, the weathertightness of which was essential to the lower levels.
[34] The Court of Appeal also held that “the claim under art 21.2 is not necessarily strong, and because of the lack of detail we are not able to give it full evaluation”.33 Subsequently, Mr Cummins has had the opportunity to provide further detail, in particular in the five-day trial before Powell J, and in this bankruptcy proceeding. The information provided has been found to be inadequate. Powell J also found that, for the Body Corporate to benefit from the consultant reports, the reports should have been provided to the Body Corporate prior to undertaking its own work.34
28 At [92].
29 Halt Special Leave Judgment, above n 16, at [23].
30 Bankruptcy Judgment, above n 1, at [67]–[88].
31 Manchester Securities Ltd v Body Corporate 172108 [2018] NZCA 190, [2018] 3 NZLR 455.
32 At [41].
33 At [42].
34 Bankruptcy Judgment, above n 1, at [76] citing Body Corporate 172108 v Meader, above n 27, at [115].
[35] As indicated in the Bankruptcy Judgment, I consider Mr Cummins is required to adduce expert analysis (including by a building surveyor, architect or engineer) of the relevant consultant reports, advice and invoices to substantiate any benefit to other owners or the Body Corporate.35 A further complicating factor since 2018 is that remedial work on level 12 ceased in 2022 and has not been completed. Some of the consultant reports and advice relied on by Mr Cummins may initially have been viewed as providing a benefit to other owners or the Body Corporate. However, if the reports and advice have not been relied on or used to undertake physical works, there is a question as to whether the reports and advice ultimately provide a benefit for the purposes of cl 21.2. They may never be so used because, for example, the remedial work may be completed by a new owner of Unit 12A who prefers to take a different approach, including possibly demolishing some or all of the work that has been done.
[36] As noted above, even if Mr Cummins does have genuine triable cross-claims, “special circumstances” exist which make it inappropriate for the application for adjudication to be dismissed. Mr Cummins contends that I have erred by not giving reasons or explanation as to how or why the “special circumstances” I identified are such that it would be inappropriate to dismiss the application for adjudication even if Mr Cummins has genuine triable claims. But as noted above, I made it clear in the Bankruptcy Judgment why the “special circumstances” made it inappropriate to dismiss the application adjudication.36
[37] Although not raised in the Notice of Appeal, Mr Cummins has now indicated that he wishes to put “new evidence” before the Court of Appeal. In the subject application, which I understand Mr Cummins initially filed in the Court of Appeal on 11 June 2025, he seeks an order granting leave to adduce further evidence. I apprehend that it was not intended that the High Court would consider and determine this aspect of the application in the first instance. It will be a matter for the Court of Appeal to determine whether the “new evidence” will be admitted on appeal.37
35 Bankruptcy Judgment, above n 1, at [75].
36 At [94]–[96].
37 Court of Appeal (Civil) Rules 2025, r 45.
[38] I note that the “new evidence” only relates to one aspect of my analysis of the cross-claims. In particular, it concerns whether the cross-claims are assets of Manchester Securities Ltd (in liq), and relatedly whether Mr Cummins is entitled to pursue the cross-claims in his own name and apply the proceeds to payment of the judgment debts he owes to the Body Corporate.38
Overall balance of convenience
[39] For the reasons given above and in the Bankruptcy Judgment, any suspension of the adjudication would be prejudicial to the Body Corporate and other unit owners, and not in the public interest.
[40] On the other hand, I am not satisfied that Mr Cummins has identified additional factors beyond the usual consequences of bankruptcy that would result in irreversible prejudice or unfairness to him or any third party if I do not suspend the adjudication.
[41] In my view, the overall balance of convenience militates against suspension of the adjudication pending the outcome of Mr Cummins’ appeal.
Restraint on advertising of adjudication
[42] Mr Cummins also seeks an order that the Official Assignee be prohibited from advertising the adjudication pending the determination of the appeal.
[43] Mr Cummins does not specify any reasons why advertising should be restrained. In Re Parlane, ex parte Young,39 the Court held that:
[40] Having reached the conclusion I have in relation to suspension, I would not consider it appropriate on the facts of this case to order a restraint on advertising if the bankruptcy concerns arose simply with regard to the relationship between himself and his creditors. Advertising is a very important function of the Assignee’s functions as it enables the Assignee to establish and satisfy himself as to the extent of creditors. There might be rare cases where the impact on others (possibly businesses, possibly close relatives) might call for a period of non-advertising. The only issue raised by Mr Young relates to the impact on companies of which he is a director. I do not view that as an appropriate basis to order no advertising in this case. The legislation effects a disqualification of the bankrupt from the role of director
38 Bankruptcy Judgment, above n 1, at [82]–[83], [86]–[87] and [109].
39 Re Parlane, ex parte Young HC Auckland CIV-2010-404-5478, 25 July 2011 at [40].
— given my decision to not suspend the adjudication that disqualification applies. Mr Young is in a position to protect the reputation of the companies by resigning his directorships.
[44] In the present case, it is not a sufficient reason for restraining advertising that it would affect Mr Cummins’ reputation, as that is one of the ordinary consequences of bankruptcy. Mr Cummins has not raised any impact of advertising on businesses or close relatives or family. If he is concerned about the impact on companies of which he is a director, for example FBFL, then, as noted in Re Parlane, he can protect the reputation of the companies by promptly resigning his directorships.
[45] Having found that Mr Cummins is not entitled to suspension of adjudication, I do not see any basis for an order that the Official Assignee must not advertise the adjudication.
Result
[46] Mr Cummins’ application for orders suspending adjudication and prohibiting the Official Assignee from advertising the adjudication pending determination of his appeal is declined.
[47] My interim order dated 25 June 2025 suspending the adjudication and prohibiting the Official Assignee from advertising the adjudication is discharged from 4.00pm on the date of this judgment.
[48] I have not heard from the parties on costs. My preliminary view is that the Body Corporate has been successful and is entitled to 2B costs and reasonable disbursements. If costs cannot be agreed, then memoranda may be filed (not exceeding three pages, excluding costs schedules) and costs will be determined on the papers.
Associate Judge Skelton
Solicitors:
Grove Darlow Partners, Auckland for Judgment Creditor
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