Body Corporate 172108 v Manchester Securities Ltd

[2021] NZHC 686

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2009-404-6868

[2021] NZHC 686

BETWEEN

BODY CORPORATE 172108

Applicant

AND

MANCHESTER SECURITIES LIMITED

37th Respondent

CIV-2019-404-1445

BETWEEN

BODY CORPORATE 172108
Applicant

AND

MANCHESTER SECURITIES LIMITED

Respondent

Hearing:

22 March 2021 (by telephone)

Appearances:

J B Orpin-Dowell and T J G Allan for Body Corporate 172108 the liquidators of Manchester Securities Ltd (in Liquidation) in person

K Sullivan for R J Cummins

Further submissions completed:

24 March 2021

Judgment:

30 March 2021

JUDGMENT OF POWELL J

[Application for leave to appeal/application for interim relief]

This judgment was delivered by me on 30 March 2021 at 4.30 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BODY CORPORATE 172108 v MANCHESTER SECURITIES LIMITED [2021] NZHC 686 [30 March 2021]

[1]                 Robert Cummins seeks leave to appeal my decision declining to join him as a party to the present proceedings.1 Mr Cummins has also applied for interim relief, namely the adjournment of the substantive proceedings which are otherwise set down for a five-day hearing commencing on 19 April 2021.

[2]                 There is no dispute with regard to the principles applicable to both applications. As the decision declining to join Mr Cummins was an interlocutory application, the position is as set out in Finewood Upholstery Ltd v Vaughan.2 Specifically:3

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay; and

(e)the ultimate question is whether the interests of justice are served by granting leave.

[3]                 In relation to the application for interim relief, the parties agree that the principles are as set out by the Court of Appeal in Keung v GBR Trustees Ltd.4 In particular, the factors to be taken into account are:

(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;

1      Body Corporate 172108 v Manchester Securities Ltd [2021] NZHC 365.

2      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13], an approach endorsed by the Court of Appeal in Greendrake v The District Court of New Zealand [2020] NZCA 122 at [6].

3      Greendrake, above n 2, at [6].

4      Keung v GBR Trustees Ltd [2010] NZCA 396 at [11].

(f)the public interest in the proceeding; and

(g)the overall balance of convenience.

Discussion

[4]                 Turning first to the application for leave, it is apparent that the critical issues were my conclusions that Mr Cummins’s application was “essentially premature”,5 and that joinder should therefore only be granted if he took legal title from Manchester Securities Ltd (in Liquidation) (“Manchester”), the former trustee of the Manchester Securities Trading Trust, and paid the sums various Courts had said were currently due and owing from Manchester to the Body Corporate.6

[5]                 This conclusion was ultimately based on my assessment of the long history of the litigation between the parties, and that for Mr Cummins to be joined to the litigation only in his capacity as the new trustee and without taking legal ownership was an abuse of process as it amounted:7

… to an attempt to participate in the proceedings while continuing to delay payment of those sums that go with the ownership of the property and which the Courts have consistently directed to be paid.

[6]                 Thus, while Mr Orpin-Dowell on behalf of the Body Corporate submitted that my conclusion is unimpeachable, it is apparent that my assessment of whether the application for joinder was an abuse of process depended on my assessment of the effect of the earlier judgments involving the Body Corporate and Manchester. It is at least arguable, as Mr Sullivan contends, that different considerations can be said to apply to Mr Cummins following of the liquidation of Manchester. I am therefore satisfied that while a high threshold exists there is at least an arguable error to be considered on appeal.

[7]                 Given this position, the other parts of the test as set out in Finewood are clearly established. First, while the alleged error is not of any general or public importance, the overall history of this litigation means that the issue is clearly of significant importance to Mr Cummins and is sufficient to outweigh the lack of general or

5      Body Corporate 172108 v Manchester Securities Ltd, above n 1, at [8].

6 At [16].

7 At [13].

precedential value. In particular, unless Mr Cummins is given leave to challenge the refusal to join him as a party to the current proceedings, it is likely that those proceedings will proceed by way of formal proof without express consideration of his position. This was never intended to be the case, albeit it had also always been envisaged that the sums currently in issue would have been paid to the Body Corporate in the meantime.

[8]                 It follows that while the current substantive fixture has been set down for a long time, the importance of the issues — in particular, the determination of whether the trust will have the opportunity to argue about the claimed set offs and counterclaim in the substantive proceedings — outweighs the further delay that will result. The interests of justice therefore require leave to be granted.

[9]                 As a result of this conclusion I have come to with regard to the application for leave to appeal, I conclude also that the interim relief sought must also be granted and the current fixture vacated.

[10]             First, it will be apparent that in the circumstances described above there will be a high likelihood any appeal will be rendered nugatory in the event interim relief is not granted. The situation is in fact already complex given Mr Cummins has also challenged the decision placing Manchester in liquidation and the Court of Appeal has yet to issue its decision on that matter. It is no answer for Mr Orpin-Dowell to submit that the risk is essentially borne by the Body Corporate, as to proceed at present will simply create additional uncertainty in the event of a successful appeal and this can only be made worse by any subsequent requirement to attempt to unwind steps taken in the meantime.

[11]             Secondly, there can be no issue as to the bona fides of Mr Cummins as to the prosecution of the appeal given the history of the proceedings to date which have demonstrated (if nothing else) that appeals have been prosecuted with vigour, up to and including the appeal against the liquidation of Manchester noted above.

[12]             On the other hand, other than the delay already noted it is difficult to see how the Body Corporate will be “injuriously affected” by a stay. There are no identified effects on third parties. I conclude the overall balance of convenience favours a stay.

Decision

[13]             The applications for leave to appeal and interim relief are granted. The fixture scheduled to begin on 19 April 2021 is vacated and is to be rescheduled once the outcome of the appeal is known. Costs on the application are fixed on a 2B basis and will be payable to the successful party on the substantive appeal.

Powell J