New Zealand Bloodstock Finance & Leasing Limited v Jones
[2024] NZHC 28
•26 January 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1770
[2024] NZHC 28
BETWEEN NEW ZEALAND BLOODSTOCK FINANCE & LEASING LIMITED
Judgment Creditor
AND
GREGORY JOHN JONES
Judgment Debtor
Hearing: 26 January 2024 Appearances:
F A King for Judgment Creditor Judgment Debtor in person
Judgment:
26 January 2024
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 26 January 2024 at 4 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: McKenna King Dempster, Hamilton Copy to: G J Jones
NEW ZEALAND BLOODSTOCK FINANCE & LEASING LIMITED v JONES [2024] NZHC 28 [26 January 2024]
[1] This is an interlocutory application by Mr Jones as judgment debtor seeking a stay/suspension pending appeal. Mr Jones has filed an appeal in respect of the judgment of Associate Judge Taylor dated 8 December 2023.1 He applies to stay/suspend:
(a)the proceeding pending determination of the appeal, including any application for adjudication; and
(b)an order for examination of the applicant due to take place on 1 February 2024 (CIV-2019-404-1822).
[2] Accordingly, it is necessary to hear and determine the application prior to the examination scheduled to take place on 1 February 2024.
Background
[3] The background is set out in this Court’s judgment dated 8 December 2023.2 The judgment creditor, New Zealand Bloodstock Finance & Leasing Ltd (NZ Bloodstock) provides finance to assist customers in financing the purchase and breeding of horses. The judgment arises from two contracts between NZ Bloodstock and Mr Jones: a contract for a credit facility (the Credit Contract); and a lease to purchase agreement (the Lease Agreement).
[4] On 5 June 2020, Jagose J granted summary judgment for debts then outstanding under the Credit Contract and the Lease Agreement, together with interest and solicitor/client costs of enforcement.3 Mr Jones appealed that decision.
[5] Pending appeal, both Jagose J4 and the Court of Appeal5 dismissed applications to stay execution of the judgment. Related proceedings in the High Court commenced
1 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2023] NZHC 3542.
2 At [2]–[8].
3 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2020] NZHC 1233, (2020) 25 PRNZ 347.
4 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2020] NZHC 1633.
5 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2021] NZCA 213.
by Mr Jones alleging harassment and conspiracy were struck out in part and otherwise stayed.6
[6] On 25 August 2022, the Court of Appeal dismissed Mr Jones’ appeal against the summary judgment.7 The Supreme Court declined leave to appeal.8 Three further applications seeking recall, recusal and leave to adduce further evidence were also dismissed by the Supreme Court.9 On 8 December 2023, a second recall application was dismissed, and the Supreme Court directed the Registrar not to accept for filing any further applications in relation to this matter.10
[7] Meanwhile, questions of interest and cost on the summary judgment proceeding were determined by Jagose J on 23 June 2022.11 The order was then sealed in an amount of $645,148.33. On 23 September 2022, a bankruptcy notice was issued in reliance on the sealed order. Mr Jones applied to set aside the bankruptcy notice and halt bankruptcy proceedings. That application was dismissed by Associate Judge Lester on 11 May 2023.12
[8] The appeal by Mr Jones against the costs and interest decision was deemed abandoned on 21 October 2022, and an application for extension of time was declined by the Court of Appeal on 12 May 2023.13
[9] The judgment creditor applied to adjudicate Mr Jones bankrupt based on the bankruptcy notice. Mr Jones applied to strike out or stay such proceedings, or alternatively to require a witness hearing before any adjudication decision is made. The judgment of Associate Judge Taylor dated 8 December 2023 dismissed that application. It also made orders that if Mr Jones does not pay the amount of
$734,563.49 to NZ Bloodstock by 1 February 2024:
6 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2021] NZHC 3220.
7 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2022] NZCA 397.
8 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2023] NZSC 98.
9 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2023] NZSC 133.
10 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2023] NZSC 158.
11 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 1477.
12 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2023] NZHC 1131.
13 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2023] NZCA 169.
(a)the examination pursuant to r 17 of the High Court Rules 2016, ordered by Associate Judge Brittain by minute dated 5 October 2023 in proceedings CIV-2019-404-1822, will go ahead; and
(b)that as none of the arguments raised by Mr Jones would justify the Court refusing an adjudication order or halting the bankruptcy, NZ Bloodstock shall be entitled to an adjudication order, to be granted at the first available opportunity after 1 February 2024.
Legal principles
[10] Although the stay application refers to r 20.1 of the High Court Rules, the relevant rule for an appeal of a High Court decision is r 12(3) of the Court of Appeal (Civil) Rules 2005. That provides that, pending the determination of an application for leave to appeal or an appeal, the court appealed from (in this case the High Court) or the Court of Appeal may, on an interlocutory application:
(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.
[11] In determining whether or not 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”.14 Factors to be taken into account in this balancing exercise include:15
(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;
14 Keung v GBR Investment Ltd [2012] NZAR 17 at [11], referring to Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.
15 At [11].
(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.16
[12] An analogy can be drawn between the above principles, and those that arise in respect of a stay in the context of bankruptcy proceedings.17 Under s 37 of the Insolvency Act 2006 the Court has a discretion, but not an obligation, to refuse adjudication if (among other things) the debtor is able to pay his or her debts. Under s 38 of the Insolvency Act, the Court has a general discretion to halt a creditor’s application for adjudication. More specifically, under s 42 a court may halt a creditor’s application for adjudication if the debtor has appealed against the judgment debt or order underlying the bankruptcy notice and the appeal is still to be decided. Finally, under s 416 there is a power to suspend an adjudication order until an appeal is decided. Although no adjudication order has been made in this proceeding, an assessment of those merits is contained in the 8 December 2023 judgment, so cases decided under s 416 are also potentially relevant. In Bioletti v Commissioner of Inland Revenue, the principles were treated as analogous to stay pending appeal.18 In that case, the Court of Appeal declined Mr Bioletti’s application to suspend the order, despite a potential impact on the applicant’s ability to practise law.
[13] In ASB Bank Ltd v Dye,19 the High Court dismissed the judgment debtor’s application for orders declining adjudication or halting the process, despite the existence of claims by the judgment debtor against the creditor that were still to be
16 At [11]; and Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377 at [10].
17 Prain v Smith [2021] NZHC 1949 at [36]; Anderson v Demarco [2021] NZHC 1757 at [20]; and Wright v Health Distributors Ltd HC Auckland CIV-2010-419-121, 5 November 2010 at [12], all referencing Pillay v ANZ National Bank Limited HC Auckland CIV-2009-404-4175, 3 December 2009 at [11].
18 Bioletti v Commissioner of Inland Revenue [2013] NZCA 465 at [3].
19 ASB Bank Ltd v Dye [2012] NZHC 647.
determined in High Court proceedings. The Court considered those claims to have little substance and concluded that there was no justification to exercise the jurisdiction against adjudication.20
Analysis
[14]In this case, two different legal processes are involved:
(a)In one, the substantive judgment was awarded and upheld in the High Court, Court of Appeal and Supreme Court. Those appeal processes have now been exhausted. This resulted in the judgment debt.
(b)This proceeding is in the bankruptcy jurisdiction, where a decision falls to be made about whether to adjudicate the judgment debtor bankrupt. The stay application relates to an extant appeal in the bankruptcy process, in which the outcome will be adjudication or not.
[15] In his affidavit sworn on 19 January 2024, Mr Jones states (without supporting evidence) that he can financially afford to pay the judgment debt prior to any adjudication order being made. However, he contends that this would be prejudicial to him compared with the impact of non-payment on the judgment creditor. In particular, he says the judgment creditor is a substantial private company with a high sales turnover, so there is no evidence that non-payment of the judgment debt will impact its financial solvency or its ability to carry out its business.
[16] The judgment debtor’s position would turn on its head the general rule that the defendant should pay the plaintiff the money in question in order to obtain a stay pending appeal, so long as the plaintiff can give security for repayment in the event that an appeal is successful.21 The Court’s approach generally has been that, so long as there is an appropriate assurance of repayment if the appeal is successful, then the
20 At [57].
21 Keung v GBR Investment Ltd, above n 14, at [12], referencing Contributory Mortgage Nominees Ltd v Harris Road No 10 Ltd (2006) 22 NZTC 19,752 (HC).
party successful at first instance should have its money at once.22 In this case, there is no pending appeal of the substantive judgment anyway — as outlined above, the defendant has exhausted those appeal rights (although the judgment debtor remains hopeful that the Supreme Court will reopen that outcome as a miscarriage of justice). Regardless, full payment to the creditor would not only support a stay under the general rule, it would also end the judgment creditor’s need for adjudication. But the judgment debtor has not offered that. At most he suggested that this Court in its discretion might require part payment into court as a condition of granting the stay.
[17] Underlying that position, the judgment debtor contends that this Court in its bankruptcy jurisdiction has a discretion about whether to order adjudication (and stay the process), and in undertaking that task it should be persuaded about his ongoing grievances about the judgment debt and the merits of his alleged counterclaims so as to refuse adjudication unless and until a fresh liability and quantum analysis is undertaken. I do not accept the bankruptcy court (substantively or in a stay application) has that role or jurisdiction. The judgment debt sets the amount payable to the judgment creditor, and the decisions of the High Court, Court of Appeal and Supreme Court are binding in that respect. The ultimate decision in this proceeding is binary: whether or not to grant adjudication. Mr Jones says there is an important public interest question about the degree to which a bankruptcy court can hear and consider issues concerning the underlying judgment.23 Mr Jones will have the opportunity to address the Court of Appeal on that issue in his extant appeal, whether or not this stay is granted. While there may be limited scope for a bankruptcy court to consider such issues in appropriate circumstances, that does not confer any power to set aside or alter the judgment itself.
22 Tadd Management Ltd v Weine [2023] NZHC 3300 at [32], referencing Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [CR12.01(3)] and Contributory Mortgage Nominees Ltd v Harris Road No 10 Ltd, above n 21.
23 Referring to Nightingale v James [2018] NZHC 965, Ocean Energy Innovation Ltd (in liq) v Murray [2022] NZHC 1916 and Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28, (2017) 261 CLR 132.
[18] To the extent that Mr Jones argues that the substantive merits of his alleged defences/counterclaims are relevant to this stay application, I consider those merits to be weak, given the consistent assessment of those issues by the High Court, Court of Appeal and Supreme Court.
[19] On his own evidence, Mr Jones has a practical ability to make full payment and (subject to res judicata issues) pursue any alleged claims against the judgment creditor without the impediment of bankruptcy. A stay is not necessary to achieve that. There is no suggestion that the judgment creditor is unable to meet its proper obligations.
[20] Alternatively, if Mr Jones chooses not to make payment and adjudication follows, then this would not render his appeal rights nugatory either.
(a)Bankruptcy orders do not preclude the bankrupt person from pursuing an appeal of that outcome.24 In the event such an appeal is successful, any adjudication order could be set aside.
(b)Any existing alleged claims against other parties would be choses in action that vest upon bankruptcy in the official assignee.25 The official assignee could assess the value of those objectively and decide whether to pursue them. Similarly, the official assignee decides how to deal with any debts (including judgment debts) provable in the bankruptcy.26
[21] An examination is simply the provision of information, so there is no issue of that being rendered nugatory. The judgment creditor has a proper interest in obtaining that information prior to adjudication, an examination is not an execution process within the scope of s 31 of the Insolvency Act, and in any event the Court granted leave for that process to continue while adjudication was also being pursued.27 In
24 Zhang v Westpac New Zealand Ltd [2019] NZHC 2797 at [3]; Bioletti v Commissioner of Inland Revenue above n 18 at [4].
25 Insolvency Act 2006, s 101.
26 Zhang v Westpac New Zealand Ltd, above n 24, at [6], referencing Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [5].
27 New Zealand Bloodstock Finance & Leasing Ltd v Jones, above n 1, at [77].
Yeoh v Al Saffaf, lack of candour about the judgment debtor’s financial position was one of the reasons why the Court refused a stay pending appeal.28
[22]Even if an appeal would be rendered nugatory, that is not determinative.29
[23] If a stay were granted, then the judgment creditor would be injuriously affected. It has already been more than four years since judgment was awarded. It has still not received the fruits of that judgment despite the appeals process being exhausted, and discretionary questions of stay being determined in favour of the judgment creditor on numerous occasions (at significant legal cost).
[24] Finally, I do not see any novelty, important question or third party or public interest that would justify a stay.
[25] For the above reasons, and stepping back and considering matters in the balance, in my view the successful litigant’s rights to the fruits of the judgment (either payment or adjudication) outweigh any need to preserve the position in case the appeal is successful.
[26] Mr Jones was concerned that the there is some uncertainty about the procedure after 1 February 2024 if payment is not made. He suggested that a further 14 day extension should be granted. I decline to make any orders of that nature. Mr Jones has had the certainty of the judgment issued on 8 December 2023 setting 1 February 2024 as a deadline for payment. Mr Jones will be notified when an adjudication order is sought. Meanwhile, I do not consider that any further extension is appropriate in the context of this stay/suspension application.
Result
[27]The application for stay/suspension is declined.
28 Yeoh v Al Saffaf HC Auckland CIV-2006-404-1164, 21 June 2006 at [33] and [40].
29 Keung v GBR Investment Ltd, above n 14, at [20], referencing Cousins v Heslop [2007] NZCA 377, (2007) 18 PRNZ 677.
[28] The judgment creditor is entitled to costs on a 2B basis, to be fixed by the Registrar, with any disputed issues referred to me.
O’Gorman J
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