Body Corporate 172108 v Flat Bush Finance Limited

[2022] NZHC 149

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

CIV-2020-485-549

[2022] NZHC 149

BETWEEN

BODY CORPORATE 172108

Plaintiff

AND

FLAT BUSH FINANCE LIMITED

Defendant

Hearing:

8 February 2022

Appearances:

J G Allen for plaintiff

K P Sullivan for defendant

Judgment:

10 February 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    On its face, this is an orthodox proceeding commenced by  the  plaintiff, Body Corporate 172108, against the defendant, Flat Bush Finance Ltd, for a winding up order. However, the case is yet  another  arm  of  the  litigation  between  the Body Corporate and the various entities that over time have owned, legally and beneficially, the unit on the top floor of a complex in Hobson Street in Auckland. This particular arm commenced in late 2020 when the Body Corporate filed and served the originating documentation founded on the defendant’s non-compliance with a statutory demand.

[2]    Flat Bush Finance applied for an order staying the proceeding. I dismissed that application in a judgment dated 18 March 2021.1 Flat Bush Finance sought leave to appeal. In a judgment dated 27 May 2021 I declined leave.2 Flat Bush applied to the

1      Body Corporate 172108 v Flat Bush Finance Ltd [2021] NZHC 555 [Stay judgment]

2      Body Corporate 172108 v Flat Bush Finance Ltd [2021] NZHC 1184 [Leave judgment]

BODY CORPORATE 172108 v FLAT BUSH FINANCE LIMITED [2022] NZHC 149 [10 February 2022]

Court of Appeal for leave to appeal the decision declining it relief in the face of the Body Corporate’s winding up proceeding. In a judgment dated 24 November 2021 the Court of Appeal dismissed the appeal.3

[3]    The appeal having been dismissed, the Body Corporate sought to proceed with its winding up proceeding. In the meantime, Flat Bush Finance commenced other proceedings in this Court’s Auckland registry. Mr Sullivan describes the Auckland proceeding as the substantive proceeding, saying that that case is the appropriate forum in which the real issues between the parties should be determined.

[4]    The first  call  of  this  matter  since  the  appeal  was  disposed  of  was  on 16 November 2021. On that occasion, Mr Sullivan pressed for an adjournment. He resisted  any  orders  or  directions  setting  this  matter  down  for  a  hearing.   At Mr Sullivan’s invitation, I adjourned the case to be called again on 8 February 2022. Essentially it was difficult to see how a great deal could be achieved over the Christmas/New Year holiday period, and I expected that matters might be clearer in the New Year.

[5]    I am informed that the Auckland proceeding was heard on 2 February 2022, and that van Bohemen J has reserved his judgment. There is no reliable indication of when the judgment will be delivered. However, as Mr Sullivan says, as the Registry set the Auckland matter down for hearing as a matter of urgency, it is reasonable to imagine that a judgment will be issued in the near future.

[6]    When the matter was called on 8 February 2022, Mr Sullivan renewed his application for an adjournment — effectively until the Auckland proceeding is disposed of.

[7]    In a nutshell, Mr Sullivan’s argument is that the Auckland proceeding puts in issue the substantive dispute between the parties. He submits that proceeding ought to be allowed to run its course before Flat Bush faces the prospect of liquidation in this proceeding. Mr Sullivan submits that the two proceedings raise precisely the same issue, but that the Auckland proceeding is the platform for dealing with the matter

3      Flat Bush Finance Limited v Body Corporate 172108 [2021] NZCA 622.

substantively, whereas in this proceeding the most that the Court can do is determine whether Flat Bush has an arguable case.

[8]    He adds that, as an outcome in the Auckland proceeding is imminent, I should be cautious in setting this matter down for hearing which would have the effect of cutting across that proceeding.

[9]    I am not prepared to accede to Flat Bush’s application for a further (indefinite) adjournment.

[10]   As Mr Allen submits, the overwhelming weight of authority in relation to insolvency proceedings — both bankruptcy and liquidation proceedings — is that, as summary processes, they need to be disposed of promptly.

[11]   The reality is that this proceeding has been on foot for some time, and has been the subject of two substantive judgments in this Court and one in the Court of Appeal. Further, the Court of Appeal’s clear message was that it needs to be brought to a conclusion.4

[12]   In my view, those points are enough to justify proceeding to set the matter down.

[13]   A further practical point can be made. Mr Allen responsibly refrained from submitting that I ought to deal with the application in the list. He accepted that further steps needed to be taken to place both parties in a position where they can argue the case. Moreover, counsel agree that the matter will require a full days’ hearing. It is obvious to me that the matter will not be set down and disposed of until close to the middle of the year. If, in the meantime, a judgment is delivered in the Auckland proceeding which provides Flat Bush — as it hopes — with a basis for contending that a winding up order should not be made, then that argument can of course be raised in the context of this proceeding.

4 At [17].

[14]   For those essentially practical reasons, and because, as the Court of Appeal has made clear, this matter needs to be brought to an end, I decline the application for any further adjournment.

[15]   Counsel are largely agreed as to the procedural orders required and by consent, I make the following directions:

(a)within 10 working days of today’s date the plaintiff is to file and serve any amended statement of claim;

(b)within a further 10 working days the defendant is to file and serve any statement of defence to the amended statement of claim;

(c)within a further 10 working days the defendant is to file and serve any affidavit evidence on which it wishes to rely;

(d)within a further 10 working days the plaintiff is to file and serve any affidavit evidence in reply addressing new matters raised for the first time in the defendant’s evidence;

(e)the Registrar is to liaise with counsel with a view to setting this matter down for hearing as soon as possible (one day is to be allowed);

(f)fifteen working days prior to the hearing the plaintiff is to file and serve a synopsis of its submissions in support of its application;

(g)five working days prior to the hearing the defendant is to file and serve a synopsis of its submission;

(h)five working days prior to the hearing, the plaintiff is to file an indexed and paginated bundle of relevant documentation for the hearing including extant pleadings, affidavit evidence and any other relevant material.

[16]Costs are reserved. I expect counsel will be able to resolve them. If not they

may file and serve memoranda in the usual way.

Associate Judge Johnston

Solicitors:

Grove Darlow & Partners, Auckland for plaintiff Core Legal Ltd, Masterton for defendant