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, 11 February 2009.

appeal, and not the consequential uses to which the liquidators may put the document in seeking to trace funds.

[5]    For the liquidators, Robert Hucker responds the appeal must stand or fall on the liquidators’ entitlement to use the documents; the solicitors’ claim to be without  s 261(2)(f)’s range is weak. But the liquidators would undertake not to use the results of any such exercise as evidence of the funds’ currency or realisation, pending determination of the appeal.

[6]    A stay of execution would be to prevent the liquidators having access to the documents. But enforcement of the judgment would not render the solicitors’ appeal nugatory. It would remain to be determined and, if successful, any substantive steps taken in reliance on the judgment avoided by the undertaking. Certainly disclosure would have occurred when arguably it need not, but that does not render the appeal nugatory. I do not doubt the solicitors’ bona fides in prosecuting the appeal.

[7]    I accept the liquidators are detrimentally affected by stay of execution, in not being able to obtain the fruits of their judgment (at least, to the extent of their undertaking) and thus to perform their statutory duty.6 I therefore disregard the contended effect on third creditors, because tracing would not have evidentiary consequences. I do not have any appeal documents, so cannot assess the appeal’s novelty, importance or public interest.

[8]    That leaves, essentially, the balance of convenience: does it bear harder on the liquidators to be held out of execution of the judgment until after the solicitors’ appeal is determined in the liquidators’ favour, than it does on the solicitors to have to disclose the documents subject to the liquidators’ undertaking if successful on appeal?7

[9]    Judgments establish legal rights and obligations thereafter to be met, and “justice between the parties” is to be my touchstone. Without any other factor to tip

6      Companies Act 1993, s 253.

7      By analogy with Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV- 2007-485-1756, 30 July 200, at [4], citing [Cayne] v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237.

the balance in the solicitors’ favour, the judgment should be available for execution, subject to the liquidators’ undertaking.

[10]   The solicitors’ application for stay is dismissed, subject to filing in Court the liquidators’ undertaking in terms of [5] above, or as otherwise agreed between the parties, by 31 July 2020.

—Jagose J