Composite Cladding & Signage Manufacture and Installations Limited v Lee

[2012] NZHC 3081

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2011-488-176 [2012] NZHC 3081

BETWEEN  COMPOSITE CLADDING & SIGNAGE MANUFACTURE AND INSTALLATIONS LIMITED

Applicant

ANDOLIVIA LEE Respondent

Hearing:         19 November 2012

Counsel:         R Espie for Applicant

G Beresford for Respondent

Judgment:      19 November 2012

(ORAL) JUDGMENT OF LANG J [on application for release of funds]

COMPOSITE CLADDING & SIGNAGE MANUFACTURE AND INSTALLATIONS LIMITED V OLIVIA LEE HC WHA CIV-2011-488-176 [19 November 2012]

[1]      This  proceeding  commenced  in  this  Court  on  21  March  2011,  when Composite Cladding & Signage Manufacture and Installations Limited (“CCS”) applied for and obtained an order for the sale of a property owned by the respondent, Ms Lee.[1]   CCS filed that application in order to enforce a judgment it had obtained against Ms Lee in the District Court following a defended hearing before Judge David Harvey.[2]   As at March 2011, the amount outstanding under the judgment was

$89,914.23

[1] Under r 17.62(4) of the High Court Rules.

[2] Composite Cladding & Signage Manufacture and Installations Ltd v Lee DC Whangarei CIV 2008

088 0562 27 October 2009.

[2]      On  18  April  2011,  Ms  Lee  filed  an  application  for  an  order  staying enforcement of the judgment and, in particular, staying the order for sale.  Before the application could be heard, the parties reached agreement regarding the manner in which Ms Lee’s application was to be determined.  This resulted in Brewer J issuing a minute on 7 June 2011 recording the agreement the parties had reached as follows:

[a]     The plaintiff has obtained a judgment of $53,979.40 (with interest, costs and disbursements that sum has increased to $105,847.91).

[b]     The defendant has a counterclaim which will be heard in the District

Court by way of rehearing in September 2011.

[c]     The defendant seeks to stay the enforcement of the sale order and has paid into Court $105,847.91.

[d]     The parties have agreed that the enforcement of the judgment obtained by the plaintiff should be stayed pending the rehearing and determination of the defendant’s counterclaim.

[e]     The parties are further agreed that costs on the application to stay the enforcement of the sale order should lie where they fall.

[3]      The Judge made orders by consent in the following terms:

[a]     Enforcement of the judgment of Judge Harvey dated 27 October 2009 including the sale order is stayed pending the rehearing and determination of the defendant’s counterclaim;

[b]     Costs on the stay application are to lie where they fall.

[4]      The proceeding in the District Court has a convoluted history, but for present purposes it is not necessary to describe that further.  The important point is that Ms

Lee had a counterclaim against CCS relating to work it had carried out on her property.    The  counterclaim  has  now  been  heard  and  finally determined  in  the District Court.  On 16 August 2012, Her Honour Judge Sharp entered judgment on the counterclaim in favour of Ms Lee for the sum of $100.[3]     Ms Lee has now appealed to this Court against Judge Sharp’s decision.  Her appeal is due to be heard in Auckland on 18 February 2013.

[3] Composite Cladding & Signage Manufacture and Installations Ltd DC Auckland CIV-2009-088-

562, 16 August 2012.

[5]      CCS now applies for an order that the funds Ms Lee paid into Court in accordance with the minute issued by Brewer J on 7 June 2011 be paid out to it.  It does so on the basis that, in terms of the orders made in the Judge’s minute, Ms Lee’s counterclaim has now been heard and determined.

[6]      Ms Lee opposes the funds being paid out at this stage.  She contends she has a strong case on appeal, and that this will result in judgment being entered in her favour on her counterclaim for between $122,000 and approximately $500,000.  Her counsel bases this submission on evidence Ms Lee proposes to adduce in support of the appeal when it is heard in this Court.  That evidence was not before Judge Sharp when the counterclaim was heard in the District Court.  Ms Lee has therefore been required to apply for leave to adduce fresh evidence on appeal.  Counsel advise me that this application is to be heard by the Duty Judge in Auckland on 21 November

2012.  It goes without saying that CCS opposes Ms Lee’s application, and will be arguing that Ms Lee should not be permitted to adduce the new evidence in support of her appeal.

[7]      Ms Lee contends a miscarriage of justice will occur if the funds are paid out at this stage, because CCS will not be able to meet the amount of the counterclaim if Ms Lee’s appeal is successful.   Ms Lee is concerned that CCS will dissipate the

funds that she paid into Court if those funds are released to CCS at this stage.

Decision

[8]      Counsel for Ms Lee has approached the present application as if it were an extension of the original application by Ms Lee for an order staying enforcement of the judgment.  I do not consider, however, that it can properly be approached on that basis.  I consider the original application for stay of enforcement of the sale order was effectively compromised when the parties reached the agreement set out in Brewer J’s minute dated 7 June 2011.

[9]      The orders that the Judge made are clear in their terms.   They were that enforcement of the judgment was to be stayed “pending the re-hearing and determination of Ms Lee’s counterclaim”.  The orders made no mention of what was to happen if there was an appeal against the judgment on the counterclaim.

[10]     Counsel for CCS says that the issue of extension of the stay beyond the hearing was never discussed.   He says that, had it been raised in June 2011, CCS would never have agreed to the enforcement of the judgment being stayed beyond the original hearing in the District Court.

[11]     Counsel for Ms Lee frankly concedes he gave consideration to the issue of whether or not the stay should enure beyond the hearing in the District Court.  He elected, however, not to raise the issue in June 2011 because he had confidence in the strength of Ms Lee’s counterclaim.

[12]     I consider that concession effectively determines the present application.  Ms Lee and her counsel considered the possibility of an adverse result in the District Court to be so remote that the stay did not need to extend beyond the hearing in the District Court.  They must therefore be taken to have accepted in June 2011 that, in the event that Ms Lee’s counterclaim failed in the District Court, the stay was to be lifted.

[13]     Counsel for Ms Lee has also approached the present application in some respects as if it were an application for a freezing order under Part 32 of the High Court Rules.  This requires the applicant to show not only that it has a good arguable

case, but also that the plaintiff is likely to dissipate assets in the event that the application is not granted.[4]

[4] Euro-National Corporation v Petricevic Financial Services Ltd (1989) 2 PRNZ 351.

[14]     I do not consider that to be a correct approach, given the circumstances that led to the orders Brewer J made on 7 June 2011.  I consider both parties agreed at that time that the stay of enforcement was to cease to have effect once the hearing in the District Court had been determined.   At that stage, provided Ms Lee did not succeed with her counterclaim, the funds in Court were to be paid out to CCS.  That time has now arrived, and I direct that the funds presently held in Court are now to be paid forthwith to CCS together with any interest they may have accrued.

Costs

[15]     CCS is entitled to an award of costs on a category 2 Band B basis, together with disbursements as fixed by the Registrar.

Lang J

Solicitors:

Robin Espie, Whangaparaoa

Grimshaw & Co, Auckland