Body Corporate 172108 v Cummins
[2025] NZHC 1681
•24 June 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 1681
BETWEEN BODY CORPORATE 172108
Judgment Creditor/Respondent
AND ROBERT JAMES CUMMINS
Judgment Debtor/Respondent
Hearing: On the papers
Appearances: J Orpin-Dowell and T Allan for Judgment Creditor / Respondent R Cummins In Person
Judgment: 24 June 2025
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[1] In my judgment dated 30 May 2025, I made an order under s 36 of the Insolvency Act 2006 adjudicating Robert James Cummins bankrupt (Judgment).1 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 has not paid to the Body Corporate by that time the outstanding judgment debts in the sum of
$167,522.41 together with interest.2
[2] On 6 June 2025, Mr Cummins appealed my Judgment to the Court of Appeal. On 17 June 2025, Mr Cummins filed a memorandum in this proceeding seeking urgent interim relief under r 12(3)(b) of the Court of Appeal (Civil) Rules 2005. He effectively sought an extension of the time that the order for adjudication comes into effect pending determination of an application for suspension of adjudication. On
1 Body Corporate 172108 v Cummins [2025] NZHC 1378 [Judgment] at [125].
2 At [125].
BODY CORPORATE 172108 v CUMMINS [2025] NZHC 1681 [24 June 2025]
18 June 2025, Mr Cummins filed an interlocutory application in this proceeding for suspension of adjudication and related orders under s 416 of the Insolvency Act 2006.
[3] Mr Cummins says he previously filed these applications in the Court of Appeal on 11 June 2025 and they were accepted for filing. However, I understand that subsequently, in a minute dated 17 June 2025, Cooke J ordered that the applications should be considered by the High Court in the first instance.3
[4] On 19 June 2025, the Body Corporate filed a notice of opposition to the applications. The same day, Mr Cummins filed a reply memorandum.
[5] In this judgment, I deal with Mr Cummins’ application for urgent interim relief. It seems to me that the application for suspension of adjudication cannot properly be determined until the order for adjudication has come into effect. While I have made an order adjudicating Mr Cummins bankrupt, that order has not yet come into effect. There is no adjudication (and may not be any adjudication) to suspend.4
Application for urgent interim relief
[6]The background to this matter is set out in the Judgment at [8]–[37].
[7] The tests for stay under r 12(3)(a) and interim relief under r 12(3)(b) of the Court of Appeal (Civil) Rules are substantially similar.5 Further an application for suspension of adjudication under s 416 of the Insolvency Act is similar to an application for stay.6 Therefore, the application for interim relief can be dealt with by considering the factors that are relevant to an application for suspension as set out by the Court of Appeal in Bioletti v Commissioner of Inland Revenue:7
3 See Salem Ltd v Top End Homes Ltd (2005) 18 PRNZ 122 (CA) at [15] and Gibson v Official Assignee [2016] NZCA 93.
4 Re Kim Maxwell Ltd (in liq) [1992] 1 NZLR 69 (HC) at 75. See also Jason Bull (ed) Insolvency Law & Practice (online looseleaf ed, Thomson Reuters) [Insolvency Law & Practice] at [IN416.01]–[IN416.02].
5 Royal Forest and Bird Protection Society of New Zealand Inc v Minister of Fisheries [2021] NZHC 2282 at [13].
6 Bioletti v Commissioner of Inland Revenue [2013] NZCA 465 at [4]–[10] as cited in Insolvency Law & Practice, above n 4, at [IN416.02].
7 At [4]–[10].
(a)whether the applicant's right of appeal will be rendered nugatory if a stay 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 novelty and importance of the question involved;
(e)the public interest in the proceeding;
(f)the strength of the appeal; and
(g)the overall balance of convenience.
[8]The Court of Appeal has also held that:8
The fact that a 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.
[9] As noted above, the application for urgent interim relief is effectively an application for extension of the time that the order of adjudication comes into effect pending determination of Mr Cummins’ substantive interlocutory application for suspension of adjudication.
[10] The basis for the application for urgent relief as set out in Mr Cummins’ memorandum dated 11 June 2025 filed in the Court of Appeal is that, as at 4.00pm on 24 June 2025, Mr Cummins would be prohibited from being a company director, including of Flat Bush Finance Ltd (FBFL), of which he is the sole director. Mr Cummins says that FBFL holds the registered mortgage over Unit 12A in the Hobson Apartments. He says FBFL is also the current trustee of the Manchester Securities Trading Trust. He says that FBFL is currently involved in litigation with the Body Corporate (CIV-2009-404-6868 and CIV-2019-404-1445).
8 Ward v Ward [2021] NZCA 115 at [8] (footnote omitted).
Various applications, including an application by the Body Corporate for further variation of the remediation scheme for the building, are to be heard on 14 July 2025.9 He says it is important that he remains as a director, at least until his application for suspension of adjudication is determined 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”. He says that the outcome of the Body Corporate’s current application for further variation of the remediation scheme could be “devastating for FBFL as mortgagee in its own right and as trustee”. He says this will also impact on him personally in terms of his ability to pursue the cross-claims against the Body Corporate and his reliance on his trustee indemnity.
[11] Mr Cummins says that 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.
[12] Regarding the balance of convenience, Mr Cummins says that if he is compelled to resign as sole director of FBFL any appointee as replacement director will necessarily have to adopt a minimalist approach to FBFL’s affairs and its ability to protect its interests will be undermined. On the other hand, he submits that there is no real prejudice to the Body Corporate if the adjudication is delayed, at least until the suspension application is determined. He submits that at that stage a further assessment of the balance of convenience can be made. He notes 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 Judgment before a claim is admitted.
9 This application is discussed in the Judgment, above n 1, at [4]– [5] and [44]–[58]. FBFL has filed an application seeking to be joined in proceeding CIV-2009-404-6868 for the purpose of opposing the Body Corporate’s application for further variation of the remediation scheme.
My assessment
[13] Taking into account the relevant factors set out above, I am not satisfied that I should grant the urgent interim relief sought by Mr Cummins for the following reasons.
Appeal not rendered nugatory and bona fides of applicant in prosecuting the appeal
[14] It is clear that a bankrupt may pursue an appeal against an order for adjudication without any need for the adjudication to be suspended in the meantime.10
[15] Mr Cummins only filed the appeal against the 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.
Will the Body Corporate be injuriously affected by the extension sought?
[16] I found in the Judgment that the legitimate interests of the Body Corporate and the other unit owners in Hobson Apartments are being grossly prejudiced.11 I found that the ongoing dispute and litigation regarding remediation and the 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 should not be allowed to continue unchecked. An intervention by way of an order of adjudication is needed, triggering the disqualifications of bankruptcy, and bringing Mr Cummins’ affairs under the control and investigation of the Official Assignee.12 I also found that it is not in the public interest for Mr Cummins’ conduct to continue unchecked.13
[17] Counsel for the Body Corporate ask the Court to determine Mr Cummins’ interlocutory application for suspension on the papers filed. However, it is apparent that Mr Cummins will be seeking a hearing on the application. If so, it is not clear when a hearing could be scheduled. Therefore, it is not clear how long any extension,
10 Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [4] and Ward v Ward, above n 8, at [6].
11 See Judgment, above n 1, at [94]–[96].
12 At [108]–[111].
13 At [112]–[114].
between 4.00pm on 24 June 2025 and the determination of Mr Cummins’ application, would be.
[18] In any event, it follows from my findings referred to above that even minimal further delay in the order for adjudication coming into effect would be prejudicial to the Body Corporate and other unit owners, and not in the public interest.
The effect on third parties
[19]Mr Cummins says that any extension would have no effect on third parties.
[20] However, as set out above, Mr Cummins contends that it is important he remains as a director of FBFL, at least until his application for suspension of adjudication is determined, to instruct counsel for FBFL in the matters to be heard on 14 July 2025. Mr Cummins is concerned that FBFL will become “rudderless” if he is unable to continue to provide instructions to counsel. Mr Cummins submits that the outcome of the Body Corporate’s current application for further variation of the remediation scheme could be “devastating for FBFL as mortgagee in its own right and as trustee” and his personal interests would be affected.
[21] 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.
[22] 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, when Mr Cummins sought the opportunity to adduce further evidence and make further submissions opposing bankruptcy.14 Mr Cummins withdrew his 19 February 2025 application to effectively stay the adjudication application pending the outcome of the Body Corporate’s further variation 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.
14 Body Corporate 172108 v Cummins HC Wellington CIV-2021-485-458, 14 April 2025.
[23] Further, 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 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.
Novelty and importance of questions involved
[24] Mr Cummins contends that the assessment of “special circumstances” is a novel point.15 I disagree. The Court of Appeal has already assessed that “special circumstances” exist in the context of this case.16 Further, I made it clear in the Judgment why the “special circumstances” in this case. In particular, the circumstances and history of the dispute regarding remediation of Hobson Apartments, require an order for adjudication even if Mr Cummins has genuine triable cross-claims.17
Public interest in the proceedings
[25] There is no particular public interest in the proceedings justifying extending the time for the order for adjudication to come into effect.
15 Judgment, above n 1, at [89]–[96].
16 At [92]–[93] citing Cummins v Body Corporate 172108 [2021] NZCA 145, [2021] 3 NZLR 17 at [68].
17 At [94]–[96].
Strength of the proposed appeal
[26] Mr Cummins has raised a plethora of alleged errors in his Notice of Appeal dated 6 June 2025. However, the bulk of these relate to my findings in relation to the cross-claims against the Body Corporate. I do not accept that I have erred in this regard. There are clearly issues with these claims regarding both quantum and liability. There is clearly a dispute between the parties regarding the cross-claims. 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.
[27] 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 have identified are such that he should be adjudicated bankrupt even if he has genuine triable claims. But as noted above, I have made it clear in the Judgment why the “special circumstances” require an order for adjudication.18
[28] 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. It will be a matter for the Court of Appeal as to whether the “new evidence” will be admitted on appeal. I note that the “new evidence” only relates to one aspect of my analysis of the cross- claims.19
Overall balance of convenience
[29] For the reasons given above and, in the Judgment, even minimal further delay in the order for adjudication coming into effect would be prejudicial to the Body Corporate and other unit owners, and not in the public interest.
[30] 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
18 At [94]–[96].
19 At [82]–[83] and [86]–[87].
prejudice or unfairness to him or FBFL if I do not extend the time that the order of adjudication comes into effect.
[31] In my view, the overall balance of convenience militates against granting an extension of the time that the order of adjudication comes into effect.
[32] On 30 May 2025, Mr Cummins was given a final opportunity to pay the outstanding judgment debts together with interest before the order of adjudication comes into effect at 4.00pm on 24 June 2025. Even at this stage, Mr Cummins could still seek to avoid the consequences of bankruptcy by paying the outstanding amounts.
Result
[33] Mr Cummins’ application seeking urgent interim relief under r 12(3)(b) of the Court of Appeal (Civil) Rules 2005 is declined.
[34] 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.
[35] The parties are to promptly advise the Court whether they are content for Mr Cummins’ interlocutory application for suspension of adjudication to be determined on the papers filed, assuming the order of adjudication comes into effect. If either party advises that a hearing is required, I will issue a direction requiring the Registry to liaise with the parties as to an appropriate date for a two-hour hearing.
Associate Judge Skelton
Solicitors:
Grove Darlow Partners, Auckland for Judgment Creditor
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