Knight Investments Limited v Peng

[2024] NZHC 2093

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001397

[2024] NZHC 2093

BETWEEN

KNIGHT INVESTMENTS LIMITED

Plaintiff

AND

YAOWEI PENG

Defendant

Hearing:	On the papers
Appearances:	R Rao / C Richardson for the Plaintiff / Respondent Z Chen for the Defendant / Applicant
Judgment:	30 July 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 30 July 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Inder Lynch, Auckland Righteous Law, Auckland

KNIGHT INVESTMENTS LTD v PENG [2024] NZHC 2093 [30 July 2024]

Introduction

[1]    In a judgment delivered on 23 February 2024 I entered summary judgment for Knight Investments Ltd (Knight) for orders for specific performance by Yaowei Peng of two agreements for sale and purchase of land at Clarks Beach Waterfront Estate.1 Mr Peng had opposed summary judgment on the grounds that it was impossible for him to perform the agreements as he could not pay the settlement sums. I found that Mr Peng had not laid a sufficient evidential foundation for that defence.

[2]    Mr Peng has filed a notice of appeal to the Court of Appeal. He applies for a stay of execution of the judgment pending determination of that appeal.

[3]His grounds for a stay are that:

(a)he is bona fide in prosecuting the appeal;

(b)there is at least a serious question to be tried;

(c)a lack of stay would render a successful appeal nugatory;

(d)a stay will not injuriously affect Knight;

(e)a refusal to grant a stay will cause significant injury to him as he is unable to comply with the orders;

(f)there are important questions involved in the appeal.

Legal principles

[4]    Rule 12(3) of the Court of Appeal (Civil) Rules 2005 provides that, pending the determination of an application for leave to appeal or an appeal, the court appealed from may, on an interlocutory application:

1      Knight Investments Ltd v Peng [2024] NZHC 285.

(a)order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or

(b)grant any interim relief.

[5]    In determining whether to grant a stay, the Court must weigh the factors “in the balance” between the successful litigant’s rights to the fruits of the judgment, and “the need to preserve the position in case the appeal is successful”.2 Factors to be taken into account in this balancing exercise include:3

(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;

(g)the overall balance of convenience; and

(h)the apparent strength of the appeal.4

Analysis

[6]    I am not persuaded that a stay of execution of the judgment is warranted in the circumstances.

2      Keung v GBR Investment Ltd [2012] NZAR 17 at [11], referring to Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.

3 At [11].

4      At [11]; and Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377 at [10].

[7]    I have no reason to doubt that Mr Peng is bona fides in prosecuting the appeal. I understand that he has paid security for costs for the appeal.

[8]    However, I consider the strength of the appeal to be weak; and critically, that a stay is not necessary to preserve the position in case Mr Peng’s appeal is successful.

[9]    As to the merits of the appeal, a defendant to an application for summary judgment is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.   As stated in the judgment,   Mr Peng’s affidavit evidence fell well short of laying a sufficient evidential foundation for his defence of impossibility/inability to perform the agreements.

[10]   Mr Peng has filed an affidavit in support of his application for a stay in which he purports to provide further evidence of his financial position. The additional evidence does not change my assessment that Mr Peng has failed to substantiate his defence of impossibility/inability to perform the agreements.

[11]   Mr Peng submits that I erred by omitting to consider the defence of set-off he raised in opposition to the application for summary judgment. But Mr Peng did not seek to raise a set-off to the application for summary judgment. As his counsel at the hearing confirmed, he intends to raise a set-off to Knight’s claim to damages in relation to the resale of three other properties that Mr Peng had also agreed to buy.

[12]   In terms of the necessity of a stay, Mr Peng does not dispute that he is liable to settle the purchases under the agreements. He opposed summary judgment on the sole ground that it is impossible for him to performance the agreements because he does not have the financial means to settle the purchases.

[13]   That remains his position in his application for a stay of execution of the judgment (and indeed his appeal). In his submissions for the stay, it is reiterated that Mr Peng accepts that he is in default of the agreements. What he disputes is that an order for specific performance is appropriate; claiming that because he is unable to perform the agreements Knight should instead cancel the agreements and retain the properties or resell them and sue him for any damages on the resale.

[14]   In view of Mr Peng’s position, I cannot see how it is necessary to stay execution of the judgment to preserve the position until his appeal is determined. If Mr Peng is truly unable to perform the agreements, he will remain unable to comply with the orders whether a stay is granted or not. The status quo will be maintained until the appeal is determined. There will be no property transaction to “unwind” if he is successful in his appeal because, on his own evidence, he is unable to complete the transactions despite being ordered to do so.

[15]   If, on the other hand, Mr Peng can perform the agreements, he has no basis to appeal the orders for specific performance, remembering that his only ground for opposing the orders was that he would be unable to meet them.

[16]   Furthermore, if there is any chance that Mr Peng can perform the agreements, Knight will be injuriously affected by a stay. It will continue to be deprived of the benefit of the agreements Mr Peng was required to settle almost a year ago in     May 2023 (an obligation that he does not dispute).

[17]   Finally, I do not accept that the appeal raises questions of novelty or public interest. Summary judgment was entered because Mr Peng failed to substantiate his defence with evidence.

Result

[18]   Mr Peng’s application for a stay of execution of the orders for specific performance made by summary judgment is dismissed.

[19]   As the losing party, I order Mr Peng to pay Knight’s costs on a scale 2B basis and reasonable disbursements to be fixed by the Registrar.

Associate Judge Gardiner