Hart v ANZ National Bank Limited

[2012] NZHC 3195

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2583 [20123] NZHC 3195

BETWEEN  BARRY JOHN HART First Applicant

ANDWOODHILL STUD LIMITED Second Applicant

ANDWOODHILL HOLDINGS LIMITED Third Applicant

ANDMALORY CORPORATION LIMITED Fourth Applicant

ANDANZ NATIONAL BANK LIMITED Respondent

Hearing:         28 November 2012

Counsel:         B J Hart in person

J N Bioletti for Corporate Applicants
L A O'Gorman and A L Williams for Respondent

Judgment:      28 November 2012

(ORAL) JUDGMENT OF LANG J

[on application for stay of execution of judgment and order]

BARRY JOHN HART V ANZ NATIONAL BANK LIMITED HC AK CIV-2012-404-2583 [28 November 2012]

[1]      In this proceeding Mr Hart advanced claims against the ANZ Bank New Zealand Limited (“the Bank”) based on alleged breaches of ss 97 and 176 of the Property Law Act 2007.  Both causes of action arise out of the manner in which the bank has endeavoured to exercise its powers as mortgagee of properties owned by the plaintiffs.

[2]      The cause of action under s 97 alleges that the manner in which the Bank exercised  its  powers  effectively  clogged  the  plaintiffs’  right  to  redeem  the mortgages.  The claim under s 176 alleges that the Bank has exercised its powers of sale in respect of the mortgaged properties in a manner that has failed to obtain an appropriate sale price for them.

[3]      The Bank counterclaimed against the plaintiffs in respect of monies allegedly owing to it under several banking facilities.   The bank then applied for summary judgment against the plaintiffs, both in respect of the plaintiffs’ claims and in respect of its own counterclaims.  In a judgment delivered on 29 October 2012, Associate Judge  Abbott  granted  the  bank’s  applications.[1]      He  entered  summary judgment against the plaintiffs on their substantive claims, and also entered summary judgment in favour of the bank on its counterclaims.

[1] Hart v ANZ National Bank Ltd HC Auckland CIV-2012-404-2583, 29 October 2012.

[4]      As a consequence, the plaintiffs now have judgment debts against them for substantial sums of money.  The bank had already served a bankruptcy notice on Mr Hart in respect of an award of costs[2]  it received at an interlocutory phase of this proceeding.   Mr Hart had sought to have the bankruptcy notice set aside.   In the judgment that he delivered on 29 October 2012, the Associate Judge dismissed this application.   As a consequence, the Bank has now filed a creditor’s application

seeking to have Mr Hart adjudicated bankrupt, and this is due to be called in the Associate Judge’s bankruptcy list on 13 December 2012.  The Bank also relies on the judgment debts arising out of this proceeding in advancing this application.

[2] In the sum of approximately $30,000.00.

[5]      The proceeding comes before the Court today because the plaintiffs seek an

order   staying   execution   of   the   Associate   Judge’s   judgment   pending   the

determination of an appeal they have filed in the Court of Appeal against the judgment of the Associate Judge.  They say they have arguable grounds of appeal and that, to a large extent, their appeal rights will be rendered nugatory in the event that a stay is not granted.

[6]      The application for stay has two distinct aspects.  First, the plaintiffs seek a stay of the Associate Judge’s ancillary order requiring the plaintiffs to provide the bank with vacant possession of the remaining block of land that it wishes to sell within ten working days following service of an order on Mr Hart.[3]   Although there is no evidence on the point, I infer that the time for giving and taking of possession has now passed.

[3] This proceeding concerns eight separate properties. The Bank has already sold all but one of the properties.

[7]      The second aspect of the stay relates to the bankruptcy proceeding currently before this Court.

a)       The order requiring the plaintiffs to give up possession of the property

[8]      In  order  to  understand  this  issue,  it  is  necessary  to  have  regard  to  the background to today’s application.

[9]      This  is  not  the first  occasion  on  which  Mr Hart  and  the  plaintiffs  have endeavoured to prevent the bank from selling the properties.  The plaintiffs filed an application for an interim injunction on 11 May 2012 seeking to prevent the bank from exercising its power of sale as mortgagee of the properties.  This was listed for call on 21 June 2012.  When the application was called on that date, however, Mr Hart withdrew the application.

[10]     The plaintiffs filed a second application for an interim injunction seeking the same relief on 3 July 2012.  This was listed for first call on 12 July 2012.  On that

date, it came before Venning J.  The bank had filed documents in opposition to the

application, and the Judge was in a position to hear the application on a defended basis.  Again, however, Mr Hart sought leave to withdraw the application.

[11]     Venning J was clearly concerned at the prospect of successive applications for injunctive relief being filed in relation to the bank’s exercise of its powers of sale as mortgagee.  I infer this from the following passages of the judgment that Venning J delivered on 12 July 2012:[4]

[4] Hart v ANZ National Bank Ltd HC Auckland CIV-2012-404-2583, 12 July 2012.

[3]       When the matter was called at 2.15 this afternoon, Mr Hart indicated he no longer opposed the bank’s opposition in relation to the injunction and indicated he would withdraw the application for interim injunction.

[4]       Ms O’Gorman opposed the matter being dealt with on that basis given what had occurred on an earlier date.  In relation to that, I note that the first application for interim injunction by Mr Hart in these proceedings was before the Court on 21 June.   On that date counsel was granted leave to withdraw in Mr Hart’s presence, and the Court was advised the application was to be withdrawn.  The Judge dismissed the application.  Ms O’Gorman was concerned that the same position might arise in relation to the injunction application before the Court today and the bank would be faced with a further application.

[5]       Given the background to the matter, I indicated to Mr Hart that I would only be prepared to deal with the matter without hearing full argument on it if he undertook that no further application for interim injunction to prevent the bank exercising its powers of sale as mortgagee would be made. Mr Hart sought time to consider his position.

…

[7]      After Mr Hart had take time to consider his position, he confirmed that he was prepared to give an undertaking to the Court that he would not pursue further injunctive relief against the bank to prevent the bank’s mortgagee sales and also confirmed he would not oppose the application to remove the caveats in the related proceedings.

[8]       On that basis I consider it unnecessary for Ms O’Gorman and the bank to proceed formally with the opposition to the second application for injunctive relief.  However, I record that Ms O’Gorman was ready and able to deal with the matter substantively.  I also record that the Court had time to deal with the matter substantively and that the applicants, Mr Hart and the related companies, had the opportunity to put their full case in support of the interim injunction before the Court but chose not to do so.

[9]       Finally, I record the undertaking referred to above.  On the basis of the matters I have referred to I formally dismiss the application for interim injunction.

[12]     Ordinarily, in an application for stay of execution of a judgment, the Court would take into account a wide range of factors.  These are whether the appeal would be rendered nugatory by the lack of a stay, the bona fides of the applicant as to the prosecution of the proposed appeal, whether the successful party will be injuriously affected by the stay and the overall balance of convenience.   The strength of the proposed appeal may also be taken into account when considering where the balance of convenience lies.

[13]     I consider that the undertaking Mr Hart gave to the Court on 12 July 2012 is determinative of this aspect of the application.   The spirit, if not the letter, of the undertaking he gave to the Court on that date was that he would not make any further attempts to prevent the bank exercising its power of sale as mortgagee.  The present application therefore directly contravenes the spirit of that undertaking.   If anything, the plaintiffs’ position is now worse than it was when the proceeding was before Venning J on 12 July 2012, because summary judgment has now been entered against them in respect of their substantive claims against the bank.   They can no longer claim to have a good arguable case against the Bank.  I consider this factor alone is sufficient to justify the Court declining this aspect of the application for stay of enforcement of the Associate Judge’s judgment.

[14]     The Bank has indicated, however, that its preferred outcome in relation to the present application is that a stay should be granted, but on a limited basis so that the plaintiffs can seek a stay from the Court of Appeal.  I propose to take that course of action, but record my own view of the situation for what it is worth.

b)       The enforcement of the judgment through bankruptcy proceedings

[15]     The judgments that the Associate Judge entered against Mr Hart do not form the basis of the creditor’s application for adjudication.  As mentioned earlier, the act of bankruptcy alleged in that application relates to Mr Hart’s failure to comply with a bankruptcy notice served on him prior to the delivery of the Associate Judge’s judgment.  The judgment debt on which the bankruptcy notice was based an order for costs that this Court made against Mr Hart when it dismissed his first application for an interim injunction.   The Court would therefore be entitled to determine the

adjudication application without having regard to the judgments that the Associate

Judge entered against Mr Hart on 29 October 2012.

[16]     When exercising its insolvency jurisdiction, the Court has the power to halt bankruptcy proceedings in appropriate circumstances.  This may be done where the debtor is pursuing an appeal against the judgment that founds the bankruptcy proceeding.   Although that is not strictly the case in the present proceeding, the creditor relies on the judgments that the Associate Judge entered against Mr Hart in its application for Mr Hart’s adjudication.   I propose to leave it to the Associate Judge who hears the creditor’s application on 13 December 2012 to decide whether or not the bankruptcy proceeding should be halted to enable Mr Hart to exercise his rights of appeal to the Court of Appeal against those judgments.

Result

[17]     The plaintiffs are granted a stay of enforcement of the orders and judgments made by Associate Judge Abbott on 29 October 2012.  The orders are to remain in place until 14 December 2012 so as to enable Mr Hart to apply to the Court of Appeal for a stay of execution from that Court.

[18]     In the event that the plaintiffs obtain a stay of execution from the Court of Appeal prior to 14 December 2012, the orders of this Court will be supplanted by those of the Court of Appeal and will cease to have any effect.

[19]     In the event that the Court of Appeal has heard an application for stay of execution prior to 14 December 2012 but has not delivered judgment on it, the stay of execution granted by this Court shall remain in place until such time as the

judgment of the Court of Appeal is delivered.

Lang J

Solicitors:

Buddle Findlay, Auckland

Counsel:

J N Bioletti, Auckland
Copy to:

B J Hart, Auckland