ICL Construction (2016) Limited v Ian Roebuck Crane Hire Limited

[2022] NZHC 1047

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2022-443-17

[2022] NZHC 1047

UNDER

The District Court Act 2016

IN THE MATTER OF

An appeal against a decision of the District Court at New Plymouth

BETWEEN

ICL CONSTRUCTION (2016) LIMITED

Appellant

AND

IAN ROEBUCK CRANE HIRE LIMITED

Respondent

Hearing:

On the papers

Appearances:

V A Whitfield for the Appellant

I D Matheson for the Respondent

Judgment:

13 May 2022

JUDGMENT OF PALMER J

Solicitors

C&M Legal, New Plymouth

Connect Legal Taranaki, New Plymouth

ICL CONSTRUCTION (2016) LIMITED v ROEBUCK CRANE HIRE LIMITED [2022] NZHC 1047 [13 May 2022]

The proceedings

[1]    In September 2017, ICL Construction (2016) Ltd (ICL) hired a crane from Ian Roebuck Crane Hire Ltd (Roebuck). After ICL stopped paying regular invoices for its use, a dispute arose as to whether there was a binding estimate for the entirety of the services provided or not. On 23 August 2021, Judge A S Greig in the New Plymouth District Court found that ICL was liable to Roebuck.1 It was material to his decision that the Judge did not believe the evidence of Mr Cole Wenmoth, the shareholder and director of ICL, who he said was not a plausible witness.2

[2]    ICL then disputed the quantum based on an argument about which standard rate applied. ICL briefed witnesses for that purpose. Roebuck applied for orders to strike out that evidence and/or that ICL was estopped from advancing its defence based on the evidence. On 15 February 2022, Judge Greig set aside the evidence as going to issues outside the scope of the pleadings, held ICL was so estopped, and ordered ICL to make an interim payment and to pay costs and interest.3 He stated that “[t]he defendant, having tried one ploy to evade paying what he owes, is now simply wriggling to find another”.4

[3]    ICL appeals to the High Court, applies for a stay of enforcement of the judgment and is prepared to pay security for costs on a standard basis. Roebuck opposes the stay and seeks a greater amount of security. By consent, I determine those two interlocutory issues on the papers.

Security for costs

[4]    Rule 20.13 of the High Court Rules 2016 (the Rules) provides that the amount of security for costs of an appeal must be fixed in accordance with a prescribed formula unless a Judge otherwise directs.

1      Ian Roebuck Crane Hire Limited v ICL (2016) Limited [2021] NZDC 16806.

2      At [31]; and Ian Roebuck Crane Hire Limited v ICL Construction (2016) Limited [2022] NZDC 1576 [Roebuck v ICL] at [21].

3      Roebuck v ICL at [55] – [56].

4 At [35].

[5]    Mr Matheson, for Roebuck, submits security for costs should be fixed at the total of 2B scale costs for the appeal and the stay application. He submits ICL is now a non-trading company which has no apparent assets. ICL says the litigation is funded by a third party, the purchaser of its business. Mr Matheson submits Roebuck has no certain way of enforcing any judgment except to the extent of the security provided. Further, it would be a serious injustice for Roebuck to be put to the cost of this appeal and application for a stay without sufficient security. Ms Whitfield, for ICL, submits that if security is set too high, the risk is that ICL is further denied justice. She submits there is no justification for departing from the presumption.

[6]    On the basis of the evidence before me, I do not consider there is sufficient justification to depart from the prescribed formula for security for costs. Security will be paid in accordance with the formula in r 20.13.

Stay of execution of the District Court judgment

[7]    Rule 20.10 of the Rules provides that the Court may stay enforcement of a judgment appealed against. The Court determines an application on the balance of convenience between the parties in order to serve the overall interests of justice.5 The Court weighs the balance of factors between the right of a successful litigant to the fruits of judgment and the need to preserve an appellant’s position in the event the appeal is successful.6 The factors include, relevantly: whether the absence of a stay would render the appeal nugatory; the bona fides of the applicant; whether the successful party will be injuriously affected; the effect on third parties; the novelty and importance of the questions involved; the public interest in the proceeding; the overall balance of convenience; and the apparent strength of the appeal.7

[8]    ICL applies for a stay of enforcement of the District Court’s judgment of 15 February 2022. Ms Whitfield submits:

5      Philip Morris v Ligget & Myers Tobacco Co [1977] 2 NZLR 41 (CA) at 43 (per Cooke J).

6      Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.

7      Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Limited (1999) 13 PRNZ 48 (HC) at [9]; and Keung v GBR Investments Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].

(a)the appeal is seriously arguable and has a strong prospect of success because the decision apparently contradicts the right to natural justice and the Court erred in its decision in various respects;

(b)if the judgment is not stayed, the appeal would be rendered nugatory because ICL does not have the funds to pay the amounts ordered and is likely to be put into liquidation;

(c)a stay could be conditional on expeditious prosecution of the appeal and applies from the date of commencement of liquidation proceedings;

(d)if a stay is not granted, Roebuck will be a creditor for more than the amount to which ICL considers it is entitled.

[9]Mr Matheson submits:

(a)ICL is hopelessly insolvent and is pursuing the appeal with funds which are not subject to the normal constraint of the prospect of having to pay costs. Cases where stays were granted on the prospect of liquidation were where liquidation could be to the detriment of the business and the interests of others. There is no evidence the appeal would be rendered nugatory and the third party can fund the liquidator in relation to the appeal.

(b)The appeal is without merit, as is clear from the District Court’s adverse findings as to Mr Wenmouth’s credibility.

[10]   On the basis of the material before me, the merits of the appeal are not strong. Ordinarily, Roebuck should be entitled to the fruits of its success. There is authority that, in general, it will often be appropriate that a money judgment should be paid and a stay not granted unless security is provided.8 In Cullen Group Ltd v Commissioner of Inland Revenue I agreed there was no general rule to that effect but considered “it

8      Contributory Mortgage Nominees Ltd v Harris Road No 10 Ltd (2006) 22 NZTC 19,752 (HC) at [8]; Keung v GBR Investment Ltd, above n 7 at [12].

is likely that consideration of [the factors relevant to a stay] will usually, but not always, result in that outcome”.9 The argument about security suggests the payment of security does not necessarily suggest a stay should be granted.

[11]   It is not clear on the evidence that ICL will be liquidated in the event that the stay is declined. And it is not clear on the evidence that, if it is liquidated, ICL could not continue with the appeal if it is soundly based. So a stay will not necessarily render the appeal nugatory. In Cullen Group Ltd, the prospects of liquidation did not militate in favour of a stay.10 There is no public interest in the appeal. I do not consider the interests of justice or balance of convenience require a stay to be granted. I dismiss the application.

Palmer J

9      Cullen Group Ltd v Commissioner of Inland Revenue [2019] NZHC 3110, (2019) 24 PRNZ 703 at [12].

10 At [19].