Criffel Deer Limited v ANZ Bank New Zealand Limited

[2022] NZHC 2901

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-384

[2022] NZHC 2901

BETWEEN

CRIFFEL DEER LIMITED

First Plaintiff

PRIME COMMERCIAL LIMITED
Second Plaintiff

MICHAEL ROBERT GARNHAM
Third Plaintiff

SBF PROPERTIES LIMITED

Fourth Plaintiff

AND

ANZ BANK NEW ZEALAND LIMITED

Defendant

Hearing:

27 October 2022

Counsel:

T J Shiels KC for Plaintiffs

M G Colson KC and S J Leslie for Defendant

Judgment:

4 November 2022

JUDGMENT OF CHURCHMAN J

[Stay]

Introduction

[1]                  I have previously issued two judgments in this matter. Firstly, on 29 July 2022, I struck out the plaintiffs’ claims.1 Secondly, on 21 September 2022, I awarded costs to ANZ in the sum of $150,917.55 plus disbursements.2

1      Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 1851.

2      Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 2418.

CRIFFEL DEER LIMITED v ANZ BANK NEW ZEALAND LIMITED [2022] NZHC 2901 [4 November 2022]

[2]                  The plaintiffs have now filed an application for a stay of execution, against both decisions pending an appeal to the Court of Appeal (in relation to the first decision only), in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. The application is opposed by ANZ.

[3]                  I note that there is conflicting authority as to whether the court has jurisdiction to stay the enforcement of a costs decision when only the substantive decision has been appealed. In Lu v Industrial and Commercial Bank of China (New Zealand) Limited3 the Court of Appeal concluded that where a costs decision has not been appealed, there is no basis for staying enforcement of it when the substantive decision has been appealed. The opposite conclusion was reached in Siddiqui v Siddiqui.4 However as Mr Colson KC indicated that he was not pursuing the point, I am not required to deal with it.

Positions of the parties

The Garnham companies

[4]                  I will refer to all the plaintiffs as the Garnham Companies even though the third plaintiff is Mr Garnham personally. The Garnham companies seek to prevent ANZ from enforcing the costs judgment or its securities, while pursuing its appeal against the strike-out decision. Counsel for the Garnham companies, Mr Shiels KC, says that their appeal will involve the submitting to the Court of Appeal of an amended statement of claim:

…alleg[ing] ongoing oppression continuing up to the present time and will expressly apply to set aside the 2015 settlement document as being entered into while the Plaintiff were the recipients of oppressive conduct.

[5]Mr Shiels further says:

While it is acknowledged that the evidence is not detailed, Counsel’s instructions are that it is fully expected that cashflow in the immediate future will enable the costs order to be met or the amount placed in trust pending the outcome of the appeal.

3      Lu v Industrial and Commercial Bank of China (New Zealand) Limited [2020] NZCA 538 at [31].

4      Siddiqui v Siddiqui [2021] NZHC 2822; and Siddiqui v Siddiqui [2022] NZCA 44.

It is not appropriate to debate in detail the merits of the appeal pending the opportunity for new advisers to become fully familiar with the matter, prepare an amended Statement of Claim, and file submissions in the Court of Appeal.

Given the security margins, it is submitted that little if any weight should be put on the strength of [the] appeal at this stage and that it is particularly inappropriate for a High Court Judge to be asked to assess the strength of an appeal against his judgment.

[6]                  Mr Shiels submits that the overall balance of convenience favours a stay of enforcement of the costs order and an interim order restraining enforcement of the securities. His argument is that as ANZ has securities to a value higher than the costs judgment, their position would remain adequately protected if a stay is granted.

ANZ

[7]                  Counsel for ANZ, Mr Colson KC, submits that the Court has no jurisdiction to grant an order to prevent ANZ from enforcing its securities, and that it would be contrary to all established authority to grant the stay application. He says that the plaintiffs’ application is “in reality a backdoor application for an interim injunction under r 7.53…without meeting any of the criteria for granting an injunction”.

[8]                  Mr Colson submits that the plaintiffs submissions and evidence do not give any reasons other than ANZ’s secured position why a stay should be granted. He says that the appeal would not be rendered nugatory by a stay, because ANZ’s enforcement of its securities would not prevent the plaintiffs from pursuing their appeal and, if successful, their claim against ANZ. He says also that the appeal itself is adequate to protect the plaintiffs’ position.5 He says that there is no evidence before the Court that the plaintiffs cannot pay the costs order, and that therefore paying the costs order should not affect their ability to pursue the appeal.

[9]                  Mr Colson submits that the claim was found to be wholly without merit, time- barred, the subject of a settlement agreement, and unsupported by any credible evidence. He says that the appeal is hopeless, not bona fides, and that ANZ will be injuriously affected by the stay, stating:

5      Green Meadow Holdings ApS v Sargison [2018] NZHC 2216.

…the orders sought would entail a serious abrogation of ANZ’s rights as secured creditor. Staying the costs order would force ANZ to lend further to customers who have been in default  of  their  obligations  to  the  bank for 10 years, while remaining out of pocket for its costs.

The “further lending” he is referring to is in respect of the quantum of the costs judgment which is a sum of money that the defendant is entitled to now but which, if the application is granted, it would be obliged to effectively lend to the plaintiffs until the appeal is disposed of.

[10]              Mr Colson says that the public interest favours lenders being able to carry on their business without being subjected to vexatious litigation, and the ability of litigants to be able to recover their costs promptly. He says that there is no authority for the proposition that a secured creditor should be treated differently on a stay application. Overall, he submits that the balance of convenience does not favour the granting of the orders sought, and that typically a successful litigant is entitled to the fruits of judgment.6 He submits that the application should be dismissed with further indemnity costs to ANZ.

Discussion

[11]              The general approach to a stay application involves the balancing of the competing rights of the parties. There is a need to provide the benefit of a judgment to a successful party, while also preserving the rights of an appellant in the event that their appeal is successful. The factors noted by the Court of Appeal in  Keung v  GBR Investment Ltd are to be taken into account in the balancing exercise.7 However, as I have previously stated:8

The starting point is the general rule that a party is entitled to enjoy the fruits of a judgment in its favour and that a party is seeking a stay has to persuade the Court that if it were not granted, its appeal rights would be rendered nugatory.9

6      See Siddiqui v Siddiqui [2022] NZCA 44.

7      Keung v GBR Investment Ltd [2010] NZCA 396.

8      Forster v Stobart Holdings Ltd [2022] NZHC 1304 at [29].

9      Phillip Morris (New Zealand) Ltd v Leggett & Myers Tobacco Co (NZ) Ltd [1977] 2 NZLR 41 (CA).

[12]              In short, I am of the view that the balancing exercise falls in favour of the application being dismissed. I do not accept the plaintiffs’ submissions that it is inappropriate to ask a High Court Judge to assess the strength of an appeal against his judgment. That is an exercise that the Court is routinely called upon to undertake in relation to stay applications and applications for leave to appeal. There is no realistic prospect of success on the appeal, and I find it difficult to conclude that the appeal itself is bona fides. An amended statement of claim is yet to be filed in the Court of Appeal. No case on appeal has yet been filed. The plaintiffs are effectively inviting the Court to grant a stay prior to having the opportunity to adequately enquire into the strength of the proposed grounds of appeal. Without further information as to the nature of the proposed appeal, the Court may only make an assessment of the information that has been put before it, which indicates that the appeal, like the plaintiffs’ case in this Court, is wholly without merit. In the substantive judgment I noted:10

As submitted by counsel for ANZ, what Mr Garnham is asking the Court to find is that he, an experienced commercial property lawyer and investor, executed formal loan documentation for a sum of tens of millions of dollars, while believing the written terms did not reflect the true bargain. This is not plausible.   The   clarity   of   the   contemporaneous   documents   makes   Mr Garnham’s claims untenable. The loan documents that were signed, and the correspondence between ANZ and Mr  Garnham,  directly  contradict  Mr Garnham’s version of events.

[13]              On my assessment, nothing has changed that position in the interim. However, I note that Mr Garnham has recently had another money judgment made against him, and that the plaintiffs’ previous counsel were granted leave to withdraw on the basis that Mr Garnham had not paid their fees.11 I accept Mr Colson’s submission that the plaintiffs have failed to adequately identify why a stay should be granted, and that the fact that ANZ is a secured creditor does not change the situation. It is also clear that ANZ will be injuriously affected by a stay on the basis outlined by Mr Colson. In those circumstances, the balance of convenience favours the dismissal of the application for a stay. It is also clear that the appeal will not be rendered nugatory if the stay is not granted. There is no suggestion that ANZ would not be in any position to repay the costs award should the substantive appeal be successful.

10     Above n 1, at [57].

11     See Dunajtschik v Garnham [2022] NZHC 2467; and Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 2175.

[14]              As to the application for an order preventing the enforcement of ANZ’s securities, while it is arguable that the Court may have the jurisdiction to make such an interim order pending appeal, in the present case there is no appropriate basis for doing so. As identified by Mr Colson, the plaintiffs’ reliance on Brook Valley Community Group Inc v Minister for Environment is misplaced.12 For the reasons identified above as to the stay application, I am also of the view that an order preventing the enforcement of ANZ’s securities pending the appeal is not appropriate. I dismiss that application.

Result

[15]              The applications are dismissed. I award ANZ costs on this matter on a 2B basis plus usual disbursements.

Churchman J

Solicitors:

Stephens Lawyers Limited, Wellington for Plaintiffs Bell Gully, Wellington for Defendant

12     Brook Valley Community Group Inc v Minister for Environment [2017] NZCA 377.