Daisley v Ark Contractors Limited - [2020] NZHC 1432

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2015-404-002799

[2020] NZHC 1432

BETWEEN
MALCOLM JAMES DAISLEY

First Plaintiff

AND

SDD LIMITED

Second Plaintiff

AND

ARK CONTRACTORS LIMITED

First Defendant

AND

PAUL GERRARD KELLER and KAREN ELIZABETH KELLER

Second Defendants

AND

THOMSON WILSON LAW (a firm)

Third Defendant

Hearing: 19 June 2020

Appearances:

E Smith for Plaintiff (via telephone)

J Browne for First and Second Defendants (via telephone)

Judgment:

23 June 2020

JUDGMENT OF WALKER J

This judgment was delivered by me on 23 June 2020 at 4.00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

DAISLEY v ARK CONTRACTORS LTD [2020] NZHC 1432 [23 June 2020]

Introduction

[1] The first plaintiff (Mr Daisley), first defendant (Ark) and second defendants (the Kellers) have been in dispute for over a decade. The dispute has also drawn in several business entities owned by Mr Daisley. The genesis was a business venture which went sour within days and has proved a financial and emotional drain for all parties.

[2] There are three High Court proceedings on foot. Following a two-week trial in the Whangārei High Court, I issued judgment for Mr Daisley against the Kellers and Ark and dismissed the claim against the third defendant. I awarded compensation to Mr Daisley of $541,721 which represented his initial contribution to the business venture through transfer to Ark of equity in property he owned.1 Costs have not yet been fixed.

[3] The two remaining proceedings are to be heard later this year. They are a claim by Ark against Mr Daisley and companies he owns, and a claim by one of Mr Daisley’s companies against the Kellers.

[4] Ark and the Kellers have appealed my judgment on various grounds captured in the comprehensive notice of appeal dated 19 May 2020. The appeal was promptly filed. Mr Daisley has cross-appealed in respect of my determination on the issue of interest.

[5] Ark and the Kellers now apply for an order that my judgment (as it relates to them) be stayed pending determination of the appeal. They also seek a direction that the security for costs paid by Mr Daisley is held by the High Court pending the appeal.2 The application for stay relies on rule 12(3)(a) of the Court of Appeal (Civil) Rules 2005 and rule 20.10 of the High Court Rules 2016.

1 Daisley & Anor v Ark Contractors Ltd & Ors [2020] NZHC 793.
2 There are two sums held by way of security. The first in respect of the claims against Ark and the Kellers and the second in respect of the claims against the third defendant. The costs claim of the third defendant is yet to be fixed.

Legal principles

[6] A successful party is ordinarily entitled to the fruits of judgment and an appeal does not automatically operate as a stay of either a proceeding or of execution.3 These principles are uncontroversial and regarded as the starting point in the…

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 1432
Decision Date: 23 June 2020

CaseChat Overview and Summary

The appeal in Daisley v Ark Contractors Limited concerns the decision of Walker J in the Whangārei High Court, wherein judgment was entered in favour of Malcolm James Daisley against Ark Contractors Limited and Paul Gerrard Keller and Karen Elizabeth Keller. The case revolves around a business venture that went sour and resulted in a long-standing dispute between the parties. The Kellers and Ark Contractors Limited appealed the judgment on various grounds and applied for a stay of execution pending the appeal. The primary issue before the court was whether a stay of execution should be granted to the Kellers and Ark Contractors Limited, pending the outcome of the appeal. The application for stay was based on several grounds, including the likelihood of a substantial miscarriage of justice if a stay was not granted, the only means of payment being the sale of the Knight Road property owned by Ark Contractors Limited, and the potential inability of the Kellers to repay the judgment sum in the event of a successful appeal.

The court considered the relevant factors in determining whether to grant a stay of execution, including the likelihood of the appeal being successful, the bona fides of the appellants, the effect on third parties, and the overall balance of convenience. The court found that the balance of convenience favoured the grant of a stay, as Mr. Daisley had a charging order over the Knight Road property, there was no evidence of Mr. Daisley's ability to repay the judgment sum in the event of a successful appeal, and a forced sale of the Knight Road property at that juncture may result in a sale at an undervalue. The court also noted that post-judgment interest would be payable on the judgment sum irrespective of whether a stay was granted, protecting Mr. Daisley's interests and incentivising diligent prosecution of the appeal.

The court granted the application for a stay of execution against the first and second defendants pending the outcome of the appeal. The court reserved leave to Mr. Daisley to vary or review this order in the event that the Kellers and Ark Contractors Limited did not prosecute their appeal with due diligence. The court deferred the decision on the security for costs aspect of the application, as no orders as to costs had been made, and the plaintiff had not yet made a claim for costs.

Orders