Mills v Feng

[2024] NZHC 2354

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-212

[2024] NZHC 2354

BETWEEN

DAVID LAWRENCE MILLS

and
FIONNA EILEEN MILLS as Trustees of THE MILLS FAMILY TRUST
Judgment Creditors

AND

WEIQIANG FENG

also known as BRIAN FENG Judgment Debtor

Hearing:	13 August 2024
Appearances:	Katerina Wendt for the Judgment Creditors Trent Bowler for the Judgment Debtor
Judgment:	22 August 2024

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

[Application for a stay]

This judgment was delivered by me on 22 August 2024 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Powle & Hodson (Donna Powle), Newmarket, Auckland, for the Judgment Creditors Neilsons Lawyers (Trent Bowler), Onehunga, Auckland, for the Judgment Debtor

Copy for:

Katerina Wendt, Richmond Chambers, Auckland, for the Judgment Creditors

MILLS v FENG [2024] NZHC 2354 [22 August 2024]

Introduction

[1]                  Mr Weiqiang (Brian) Feng (Mr Feng) applies for a stay of execution of the Court’s judgment dated 26 September 20231 (the Judgment) which determined two applications:

(a)in proceeding CIV-2023-404-212, decision declining Mr Feng’s application to set aside the judgment creditor’s bankruptcy notice; and

(b)in proceeding CIV-2023-404-972, decision striking out of the judgment debtor’s claim against the judgment creditors.

Background

[2]                  The judgment creditor, David  Lawrence  Mills  and  Fiona  Eileen  Mills  (the Mills) as trustees of the Mills Family Trust (the Mills Trust) initially agreed to sell a property situated at 22 Manapau Street, Meadowbank, Auckland (the Property) to Mr Feng, who then nominated Mr Wang as purchaser under the sale and purchase agreement. Mr Wang subsequently failed to settle, and the Mills Trust was obliged to resell the property at a loss, which it sought to recover by way of summary judgment.

[3]                  On 7 December 2022, Lang J granted summary judgment jointly and severally against Mr Feng and Mr Wang to the value of $756,597.31. Mr Feng subsequently applied for a stay of execution of Lang J’s judgment pending the Mills Trust’s enforcement of their judgment against Mr Wang,  and the outcome of Mr Feng’s  972 proceeding against the real estate agent, Mr Wang and the Mills Trust. On 22 May 2023, Campbell J refused to grant such a stay.

[4]                  In accordance with the Court’s order of 24 April 2023 allowing substituted service of the bankruptcy notice dated 3 February 2023 (the bankruptcy notice), the Mills Trust served Mr Feng on 2 May 2023. On 2 May 2023, Mr Feng filed an application to set aside the bankruptcy notice.

[5]On 19 April 2023, Mr Feng filed the 972 proceeding.

1      Mills v Feng [2023] NZHC 2674.

[6]                  On 2 August 2023, the Mills Trust filed an application to strike out the parts of the 972 pleading which related to them. Mr Feng has subsequently filed an amended statement of claim dated 6 August 2023, in which the Mills Trust is still included.

[7]                  On 26 September 2023, the Court dismissed Mr Feng’s application to set aside the bankruptcy notice and struck out parts of Mr Feng’s statement of claim that related to the Mills Trust.

Legal principles

[8]                  A court determining an application for a stay of execution of judgment pending appeal is required to strike an appropriate balance between a plaintiff enjoying the fruits of the judgment in its favour, and a defendant’s rights in the event their appeal is successful, but they have paid over the judgment sum in the interim. The following factors will be typically taken into account in determining the appropriate balance:

(a)if no stay is granted, whether the appellant’s right of appeal will be rendered nugatory;

(b)whether the appellants are acting in good faith in pursuing their appeal;

(c)whether the successful party will be arduously affected by the stay;

(d)the effect on third parties;

(e)the novelty and importance of the questions involved;

(f)the public interest in the proceedings;

(g)the overall balance of convenience; and

(h)the apparent strength of the appeal.

[9]  These factors are drawn from a range of Court of Appeal decisions, including Keung v GBR Investment Ltd.2 The Court in Keung emphasised that the overall approach is a balancing exercise, with all relevant factors to be weighed by the Court.

[10]              In Wiltshire Investments Ltd v Symons, Associate Judge Bell referred to what he described as “the general approach” to applications for a stay of execution of money judgments, being that an order staying execution will be granted upon payment by the defendant to the plaintiff of the money in question, but “with the plaintiff giving security for [re]payment”.3

[11]              It is important to recognise, however, that there is no general or rigid rule. As the Court of Appeal stated in Haines v Carter:4

In [McLeod] Williams J saw the reconciliation of the competing rights as achieved by saying that an order staying the proceedings would be made only on payment by the defendants to the plaintiff of the money in question subject to the plaintiff giving security for the repayment in the event of the appeal being successful. That approach by the High Court is not uncommon in cases in which, faced with an appeal to this Court, the successful plaintiff seeks immediate payment of the judgment sum. Indeed where there are grounds to believe a successful party may not be able to repay or otherwise restore the position if the appeal succeeds, security is ordinarily required by the High Court: Julius Harper Ltd v FW Hagedorn & Sons Ltd [1989] 2 NZLR 471, 501 per Tipping J. Nevertheless each case must be decided on its own circumstances within which sufficient justification must always be found before the Court acts to protect the defendant’s position by granting a stay or imposing conditions on a successful plaintiff who wishes to execute a judgment.

Mr Feng’s application

[12]Mr Feng seeks an order5 for a stay of execution against the Judgment.

2      Above, n 4.

3      Wiltshire Investments Ltd v Symons  HC Auckland  CIV‐2010‐4040‐1572, CIV‐2010‐404‐1011, 8 October 2010 at [10].

4      Haines v Carter (2001) 15 PRNZ 124 (CA) at [12].

5      Interlocutory application for stay of execution dated 3 October 2023.

[13]              The grounds on which the stay order is sought, as set out in his application, are largely the grounds on which Mr Feng bases his appeal of the Judgment.6

[14]              Mr Bowler, for Mr Rafiq Feng, submits the grounds on which Mr Feng seeks a stay are:

(a)he has filed a notice of appeal against the Judgment, together with an application for extension of time for bringing an appeal out of time;

(b)Mr Feng has been prejudiced by the oversight of the Court and refusal of Mills Trust in granting an extension of time in circumstances where he initiated the appeal in the time-frame but did not file the appeal as he believed he was required to obtain leave of the Court prior to filing the appeal.

[15]              Mr Bowler submits the appeal will be rendered nugatory unless a stay is granted as Mr Feng could be adjudicated bankrupt when he is solvent and able to pay his debts.  He relies on the decision in  Smith v Wadman.7  In addition, he submits   Mr Feng will be prevented from bringing a counterclaim, cross-claim or set-off against the Mills Trust. He submits that at the time of formulating his claim against the Mills Trust, Mr Feng was self-represented and should be given the opportunity to re-cast his claims against the Mills Trust with the benefit of counsel’s advice.

[16]              Mr Bowler submits there is as question of importance involved in the appeal, namely, what weight should be given to evidence that the judgment creditor can obtain the payment by execution against assets of the judgment debtor.

[17]              Mr Bowler submits that in any event it is arguable that s 14 of the Insolvency Act 2006 prevents the Mills Trust seeking an order for adjudication of Mr Feng as the Mills Trust holds a charging order over assets in which Mr Feng has an interest, and is therefore a secured creditor, and that the Mills Trust has not established that the amount of the judgment debt exceeds the value of the charge by at least $1,000.

6 At [2].

7      Smith v Wadman [2024] NZHC 42.

[18]              Mr Bowler submits that the Mills Trust is protected if the stay is granted by the charging order it holds over Mr Feng’s property.

[19]Mr Bowler submits:

(a)Mr Feng is intent on proceeding with the appeal as his actions so far demonstrate;

(b)there is a strong prospect of the appeal succeeding;

(c)any prejudice suffered by the Mills Trust is outweighed by prejudice that will be suffered by Mr Feng if the proceeding is not stayed and he was adjudicated bankrupt;

(d)the overall balance of convenience factors of the Court granting a stay of execution of the Judgment.

The Mills Trust’s opposition

[20]              Ms Wendt, for the Mills Trust, submits that the overall balance of convenience favours the Court not granting the stay sought by Mr Feng. She submits that Mr Feng has not appealed against the joint and several judgments of Lang J in respect of the judgment debt. She submits the appeal would not be rendered nugatory if Mr Feng is adjudicated bankrupt and, even if it was, it is not determinative of the stay application, relying on the authority of the Court of Appeal decision in Keung v GBR Investment Ltd where the Court said:8

In any event, as French J observed, the fact that the appeal is rendered nugatory is not determinative.

referencing Cousins v Heslop.9

8      Keung v GBR Investment Ltd [2010] NZCA 396; [2012] NZAR 17 at [10].

9      Cousins v Heslop [2007] NZCA 377; (2007) 18 PRNZ 677.

[21]Ms Wendt further submits:

(a)Mr Feng’s application for leave to appeal out of time dated 12 August 2024 has no prospect of success;

(b)Mr Feng has provided no explanation for over four months delay in filing his application for leave to appeal out of time, submitted on      9 April 2024. It is noted that leave to appeal from the High Court was not required and in circumstances where Mr Feng has been legally represented since at least May 2024;

(c)Mr Feng has no genuine and triable counterclaim, set-off or cross- demand against the Mills Trust and his appeal has no prospect of success.

[22]              Ms Wendt submits there is significant prejudice to the Mills Trust from further delay for the following reasons:

(a)neither Mr Feng nor Mr Wang has paid any amount towards the judgment debt or the costs awards on their unsuccessful steps to halt enforcement steps against them;

(b)his financial asset position requires investigation.

[23]              As to the issue of s 14 of the Insolvency Act 2006, preventing the Mills Trust seeking an adjudication order against Mr Feng, Ms Wendt submits that the Mills Trust is not a “secured creditor” within the meaning of that section as a secured creditor does not include a party holding a charging order issued by the Court in favour of a judgment creditor.

Result

[24]              I am of the view that Mr Feng’s application for a stay of the Judgment should be dismissed. For the purposes of this judgment, I have assumed that Mr Feng’s application to file his appeal out of time with the Court of Appeal will be successful.

[25]My reasons for declining the application for the stay are:

(a)declining the stay will not necessarily render the appeal nugatory as even if Mr Feng is adjudicated bankrupt, it is possible  for  the Official Assignee to continue the appeal, particularly if there are assets from which the appeal could be funded. Mr Feng has asserted he is solvent although, as noted below, there is no evidence of that before the Court;

(b)even if the appeal is rendered nugatory, it is not determinative in terms of granting a stay, as supported by the authority of Keung v GBR Investment Ltd;10

(c)neither Mr Feng or Mr Wang have appealed the summary judgment in respect of the judgment debt, and no amounts have been paid towards the judgment debt or the costs awards against Mr Feng in respect of his unsuccessful attempts to halt enforcement steps;

(d)there is no evidence of solvency of Mr Feng before the Court. While the Mills Trust has a charging order over property owned by Mr Feng and his wife, there is no evidence of the equity in this property held by Mr Feng and therefore the Court is in no position to make an assessment that the Mills Trust are secured for the judgment debt by the charging order;

(e)the prejudice to the Mills Trust of further delay outweighs prejudice to Mr Feng of the stay not being granted as the assets of Mr Feng require investigation given inconsistent statements made by him as to his assets and ability to pay the debt;

(f)overall, the balance of convenience favours the application for the stay being declined.

10     Above, n 8.

Orders

[26]I make the following orders:

(a)Mr Feng’s application for a stay of the Judgment is dismissed.

(b)Costs are reserved.

…………………………….. Associate Judge Taylor