Concrete Structures Limited v NMHB Limited - [2020] NZHC 1852

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2074

[2020] NZHC 1852

UNDER the Companies Act 1993

BETWEEN

CONCRETE STRUCTURES LIMITED

Plaintiff

AND

NMHB LIMITED

Defendant

Hearing: 28 July 2020

Appearances:

P F Dalkie and S M Bhanabhai for the applicant, Dyer Whitechurch

R B Hucker for the respondents, Jeffrey Meltzer and Michael Lamacraft, liquidators for NMHB Limited

Date of judgment:

29 July 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 29 July 2020 at 1.00pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
P F Dalkie Barrister, Auckland Dyer Whitechurch, Auckland Hucker & Associates, Auckland

CONCRETE STRUCTURES LTD v NMHB LTD [2020] NZHC 1852 [29 July 2020]

[1] The defendant’s liquidators obtained judgment from this Court, requiring the defendant’s solicitors to produce any record or document relating to their receipt of funds from the defendant and transfer or payment of the funds within or from their trust account under s 261 of the Companies Act 1993.1 As duty judge, I have the solicitors’ application for its stay pending their appeal.

[2] Rule 12(3) of the Court of Appeal (Civil) Rules 2005 entitles “the court appealed from” to order “a stay of execution of the decision” pending determination of the appeal. In doing so, I am to weigh the liquidators’ right to the fruits of their judgment against “the need to preserve the position in case the appeal is successful”,2 “where it can be fairly achieved, to arrange matters … to do justice between the parties, whatever the outcome of the appeal may be”.3

[3]Factors to be taken into account include:4

(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.

The apparent strength of the appeal is an additional factor.5

[4] For the solicitors, Paul Dalkie argues the solicitors’ appeal is rendered nugatory by disclosure to the liquidators. He says the obligation to disclose is the subject of the

1      Concrete Structures Ltd v NMHB Ltd (in liq) [2020] NZHC 1218 at [58].
2      Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.
3      New Zealand Insulators Ltd v ABB Ltd (2006) 18 PRNZ 459 (CA) at [13], citing Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd [1976] FSR 139; [1976] RPC 671 (CA).
4      Keung v GBR Investment Ltd [2010] NZCA 396 at [11], citing Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd [1999] 3 NZLR 239, (1999) 13 PRNZ 48 (HC) at [9].
5      At 11, citing Body Corporate No 188529 v North Shore City Council (No 6) HC Auckland CIV- 2004-404-3230,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 1852
Decision Date: 29 July 2020

CaseChat Overview and Summary

In Concrete Structures Limited v NMHB Limited, the plaintiff, Concrete Structures Limited, sought a judgment requiring NMHB Limited's liquidators to disclose records related to the transfer of funds. NMHB Limited's liquidators were granted this judgment under section 261 of the Companies Act 1993, and subsequently sought to enforce it. NMHB Limited's solicitors applied for a stay of this judgment pending their appeal against the initial judgment. The court was required to determine whether the enforcement of the judgment should be stayed pending the outcome of the appeal.

The court considered several factors in making its decision. These factors included the potential impact on the liquidators' ability to perform their duties, the bona fides of the solicitors in prosecuting their appeal, and the overall balance of convenience between the parties. The court noted that the liquidators would be prejudiced if the judgment was stayed, as it would prevent them from performing their statutory duties. However, the court also considered that the solicitors' appeal was not likely to be rendered nugatory by the enforcement of the judgment, as the liquidators had undertaken not to use the disclosed documents as evidence in their tracing exercise pending the outcome of the appeal. The court concluded that the balance of convenience favoured allowing the judgment to be enforced, subject to the liquidators' undertaking.

The court dismissed the solicitors' application for a stay of the judgment, subject to the filing of the liquidators' undertaking by a specified date. This outcome allowed the liquidators to enforce the judgment while also providing some protection to the solicitors in the event their appeal was successful. The court's decision highlights the importance of balancing the rights and interests of all parties involved in a legal dispute, particularly in cases where the outcome may have significant implications for the administration of justice.

Orders