Cato v Manaia Media Limited
[2024] NZHC 599
•22 December 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-3091
[2024] NZHC 599
UNDER the Defamation Act 1992 BETWEEN
KRISTIN PIA CATO
Plaintiff
AND
MANAIA MEDIA LIMITED
First Defendant
ROWAN DIXON
Second DefendantJANE THOMPSON
Third Defendant
Hearing: 24 October 2023 Appearances:
R Butler and K Hursthouse for the plaintiff F King for the defendants
Judgment:
22 December 2023
Reasons:
19 March 2024
REASONS JUDGMENT OF ROBINSON J
[Application for a stay of execution]
This judgment was delivered by me on 19 March 2024 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors: Lee Salmon Long, Auckland
McKenna King Dempster, Hamilton
Counsel:S Mills KC, Auckland R Butler, Auckland
CATO v MANAIA MEDIA LIMITED [2024] NZHC 599 [22 December 2023]
Introduction
[1] On 22 December 2023, I issued a results judgment granting the defendants’ application for a stay of execution of this Court’s judgment in Cato v Manaia Media Limited & Ors1 (and the costs judgment, then reserved), pending determination of their substantive appeal. The stay was subject to the condition that the second and third defendants are not to increase the levels of debt secured against property to which they each refer in their supporting affidavits. These are the reasons.
Background
[2] Following the dismissal of the defendants’ public interest defence, and in accordance with the jury’s verdicts, I entered judgment against the defendants, requiring them to pay $240,000 in damages (general damages of $225,000 and punitive damages of $15,000), together with costs. The costs judgment was reserved at the time of hearing the stay application. The plaintiff sought costs and disbursements of $428,121.60, whilst the defendants said these should not exceed
$100,347.35. So, the judgment debt would be at least $340,347.35, and up to
$668,121.60.
Ms Dixon
[3] The second defendant is the sole director and shareholder of the first defendant, Manaia Media Limited. Ms Dixon filed an affidavit deposing that if the judgment is enforced against Manaia Media Limited, it would likely be liquidated and that it is unlikely a liquidator would pursue the appeal.
[4] In terms of her personal circumstances, Ms Dixon deposed that the only personal asset she and her partner own that is capable of satisfying the judgment debt is their family home in which they live together with their son. She says they have approximately $560,000 equity in the property but that, if they sold it to pay the judgment, they would be unable to replace it unless they are successful on appeal.
1 Cato v Manaia Media Ltd & Ors [2023] NZHC 385.
[5] Ms Dixon says that she and her partner are unable to extend their mortgage any further. Ms Dixon says she also owes a significant debt to legal aid in relation to these proceedings, as well as to her former solicitors.
[6] In response, the plaintiff has filed an affidavit from a litigation support assistant employed by her solicitors to show that Ms Dixon is the sole registered proprietor of the property. The plaintiff’s affidavit also shows that the website estimates the value of the property to be $175,000 more than Ms Dixon had estimated in her affidavit.
Ms Thompson
[7] For her part, the third defendant, Ms Thompson, deposes that the only significant asset she owns is a half share in the family home in which she lives with her husband, who owns the other half share. She values her half share of the property at $490,000. She owes approximately $130,000 in personal loans. She says that she cares for an adult family member who is on a benefit. Ms Thompson says she provides that person with financial support, but she has not given any further evidence about that.
[8] The defendants’ appeal is scheduled to commence in the Court of Appeal on 8 May 2024. In the meantime, the plaintiff has obtained charging orders over the properties described above, as she is fully entitled to do. She had not taken steps to enforce those orders.
[9] The plaintiff has served each of the second and third defendants with a notice to provide financial information under r 17.10 of the High Court Rules 2016, but the only information they have provided is that set out in their affidavits and summarised above.
Legal principles
[10] Under r 12 of the Court of Appeal (Civil) Rules 2005 (CA Rules), the Court appealed from and the Court of Appeal have concurrent jurisdiction to grant a stay of execution pending determination of a substantive appeal. The discretion is wide.
When determining whether or not to make an order under the rule, the Court must weigh the successful party’s right to the fruits of their judgment and the need to preserve the unsuccessful party’s position in the event that the appeal is successful.
Relevant considerations include:2
(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.
[11] The apparent strength of the appeal is an additional factor the Court may consider.3
[12] Mr Butler for the plaintiff submits that the right of successful parties to the fruits of their judgment is not to be diminished when balancing that right with the need to preserve the unsuccessful party’s position pending appeal. Counsel submits that the successful party’s rights ought only to be restricted to the extent necessary to preserve the unsuccessful party’s appeal right. Counsel cites the Court of Appeal in Haines v Carter:4
The right of plaintiff in the present case is an absolute right to have his money at once. The right of defendants is the right of appeal, and the right in some way or other to have it made certain by this Court that that appeal shall not be fruitless. The duty of this Court is, I think, to reconcile as far as possible the conflicting rights of the plaintiff and the defendants.
2 Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].
3 At [11].
4 Haines v Carter (2001) 15 PRNZ 124 (CA) at [11], citing McCleod v NZ Pine Co Ltd (1892) 11 NZLR 493 (SC) at 495.
[13] It has been observed that money judgments are generally not stayed pending appeal absent the provision of adequate security.5
[14] Mr Butler also submits that the courts take an appropriately robust approach to stay applications made by judgment debtors on the grounds that enforcement will render them impecunious and unable to pursue a meritorious appeal. By way of example, counsel refers to the recent decision of Cooke J in Anderson v De Marco,6 rejecting an application of that kind because:7
(a)the judgment debtor had refused to respond to a notice to provide financial information under r 17.10, as a result of which the Court was not in a position to assess his claims of impecuniosity or the adequacy of the security provided by a charging order the judgment creditor had obtained over an aircraft; and
(b)enforcement would not render the appeal nugatory because the judgment debtor had been granted legal aid in respect of the appeal.
Submissions
[15] Mr Butler submits that the plaintiff is entitled to the fruits of her judgment and says that a stay of execution is not required to preserve the defendants’ appeal rights, or otherwise to prevent an injustice. He emphasised three important points which he submitted were common ground or beyond dispute.
[16] First, Mr Butler submits that there is no risk of enforcement rendering the appeal nugatory. He points out that the appeal is funded by the second defendant’s grant of legal aid, and all relevant filing fees and security for costs in respect of the appeal have been paid. All that remains is for the defendants to file submissions and for counsel to appear at the appeal.
5 Keung v GBR Investment Ltd, above n 2, at [12].
6 Anderson v De Marco (No 3) [2021] NZHC 544.
7 At [11]–[13] and [15].
[17] Secondly, Mr Butler submits that there is no risk that the defendants would be rendered insolvent if the plaintiff enforces her judgment. Mr Butler is critical of the paucity of evidence from the defendants as to their financial position. He points out that the evidence they have provided shows that, together, the second and third defendants have net assets well in excess of the judgment sum. Counsel says that would be so even if the properties were to be sold through an enforcement process. In that regard he says it is entirely speculative as to whether an enforcement sale will be required. He points out that an application for a stay should not be treated as an application to injunct or restrain an enforcement sale in any event.
[18] Thirdly, Mr Butler quite rightly points out that it is common ground that the plaintiff will be able to repay the judgment sum if the defendants’ appeal succeeds.
[19] Taking these points together, counsel submits that a stay would be contrary to the interests of justice and would merely pay lip service to the principle that the plaintiff is entitled to the fruits of her judgment.
[20] In terms of the other considerations set out at [10] above, Mr Butler accepts the defendants’ bona fides as to the prosecution of their appeal, but submits that the plaintiff will be injuriously affected by the stay. As noted, counsel criticises the lack of the defendants’ evidence to support their claims of impecuniosity. He says that any impecuniosity would tell in favour of enforcement because of the risk that other creditors will enforce their rights against the defendants and their assets prior to the appeal. Counsel also points out that, before determination of the appeal, interest on the judgment debt will continue to accrue and the second defendant’s legal aid debt will increase. Also, the second and third defendants’ secured mortgaged debts might increase. And, if the appeal is dismissed, there will be additional cost orders. For these reasons, the defendants’ impecuniosity (if any) will only make enforcement more difficult over time.
[21] As for the overall balance of inconvenience, Mr Butler submits there is a significant risk that the defendants’ equity in their homes will dwindle between now and determination of the appeal. He says the Court should not assume a significant risk of a forced sale, particularly in circumstances where the defendants have provided
insufficient evidence of income, secured debt levels, and their ability to refinance. He points out that the plaintiff has taken no steps to enforce the charging orders and suggests (understandably without concession) that, as matters stand, there is no incentive to go down that track.
[22] Mr King for the defendants submits that the case involves several novel points of law, particularly the public interest defence, which he says has only recently been accepted as the law in New Zealand.8 He points out this was the first time the public interest defence was considered in the context of a jury trial, and submits that the public has an interest in the further development of this defence. Also, he says that the appeal involves issues of freedom of the press and reporting which tell in favour of granting a stay. In response, Mr Butler points out that, in assessing the public interest defence, the Court found there was only a modest public interest in the article and that any public interest in the appeal will be limited.9
Discussion
[23] There is considerable force in Mr Butler’s submission. I do not perceive a significant risk that the appeal would be rendered nugatory without a stay. The appeal is well progressed, security has been paid, and the second defendant is legally aided.
[24] I accept, of course, that the plaintiff is entitled to the fruits of her judgment. I also agree that the defendants’ evidence of their impecuniosity lacks detail.
[25] However, Ms Dixon’s and Ms Thompson’s evidence is sufficient to satisfy me that they would each have to sell their family homes (or, in Ms Thompson’s case, her share in it) in order to pay the judgment debt. And while there is no dispute that the plaintiff would be able to repay the judgment debt if the appeal succeeds, it would be highly unlikely that at that point Ms Dixon and Ms Thompson would be able to purchase their family homes back.
[26] On the other hand, as matters stand there appears to be sufficient equity in the properties to pay the judgment. The plaintiff’s legitimate concerns about the
8 Durie v Gardiner [2018] NZCA 278, [2018] 3 NZLR 131.
9 Cato v Mania Media Ltd, above n 1, at [81] and [102].
depreciation of that equity and the increased claims of competing creditors in the interim can, to some extent, be addressed by the orders making it a condition of the stay that neither Ms Dixon nor Ms Thompson increase the levels of debt secured against those properties.
[27] This is not to say that a stay of execution will necessarily be appropriate in other cases simply because a judgment debtor/appellant might demonstrate that they will be required to sell their family home in order to pay the judgment debt. I accept Mr Butler’s submission that, even in those circumstances, the Court is not to treat to an application under r 12 of the CA Rules as though it were an application for an injunction restraining a forced sale. However, it is well established that the overall balance of convenience is a proper consideration. Every case will turn on its own facts. In the present case, I consider that the overall balance of convenience favours the granting of the stay on the conditions stated.
Result
[28] As noted, the application for a stay of execution of the Court’s judgment in Cato v Manaia Media Ltd10 (and the subsequent costs judgment) pending the determination of the appeal by the Court of Appeal has been granted, subject to the conditions that:
(a)the second defendant is not to increase the level of debt secured against the property referred to in paragraph 9 of her affidavit of 16 August 2023; and
(b)the third defendant is not to increase the level of debt secured against her share of the property referred to in paragraph 3 of her affidavit dated 19 July 2023.
Robinson J
10 Cato v Mania Media Ltd, above n 1.
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