New Zealand Bloodstock Finance & Leasing Ltd v Jones

[2022] NZHC 3333

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1822

CIV-2020-404-1357 [2022] NZHC 3333

IN THE MATTER

of an application to stay enforcement

UNDER

Rule 17.29 of the High Court Rules 2016

BETWEEN

NEW ZEALAND BLOODSTOCK FINANCE & LEASING LTD

Applicant

AND

GREGORY JOHN JONES

Respondent

Hearing:	On the papers
Counsel:	A Osama and F King for the Applicant Respondent in person
Judgment:	9 December 2022

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 9 December 2022 at 4pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

McKenna King, Hamilton

Copy to: G J Jones

NEW ZEALAND BLOODSTOCK FINANCE & LEASING LTD v JONES [2022] NZHC 3333 [9 December 2022]

Introduction

[1]    The applicant seeks to stay enforcement of a costs order of $21,032.00 made by Harland J in New Zealand Bloodstock Finance & Leasing Ltd v Jones that the respondent is attempting to enforce against the applicant.1

[2]    The application is made on the basis that the enforcement of the respondent’s costs order will result in a substantial miscarriage of justice for the following reasons:

2.1The Respondent owes the applicant 655,444.57, the majority of which has been owing for over two years.

2.2The Respondent has not made any attempts to pay a single cent of the

$655,444.57.

2.3Meanwhile the Respondent has confessed to being “stitched for cash”.

2.4If the Applicant paid the $21,032.00, it is unlikely they will ever see that money returned.

2.5A set-off of $102,837.07 is available due to three costs orders that have been made against the Respondent in the applicant’s favour.

[3]    The grounds on which the respondent opposes the making of the order are as follows:

(a)The judgments to which the applicant refers are [or will be] under appeal and will be costs in the cause depending on the final outcome of the Court of Appeal’s judgment.

(b)The judgment obtained by the respondent will not be a cost in the cause. It is a sum owed independent of the plaintiff’s claim because of the nature of the applications made by the respondent which were successful before Harland J. Those decisions have not been appealed.

(c)A substantial miscarriage of justice will not occur if the respondent is entitled to execute his judgment against the applicant.

Relevant legal principles

[4]Rule 17.29 of the High Court Rules 2016 provides:

17.29 Stay of enforcement

A liable party may apply to the court for a stay of enforcement or other relief against the judgment upon the ground that a substantial miscarriage of justice would be likely to result if the judgment were enforced, and the court may give relief on just terms.

1      New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 948.

[5]    In the recent Court of Appeal decision, SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281 the Court held that the following general principles can be distilled from the case law:2

(a)The starting point is that the successful party is entitled to the fruits of its judgment.

(b)The onus is on the applicant seeking a stay of enforcement to persuade the court to exercise its discretion.

(c)A substantial miscarriage of justice must be involved, substantial being more than minor or insubstantial.

(d)It is not sufficient that a miscarriage of justice might result if the judgment were enforced. It must be probable rather than possible. The test is whether there is a “real and substantial risk”.

(e)The court must undertake a balancing exercise where it recognises and reconciles the conflicting interests of both parties in such manner as will best serve the overall interests of justice.

(f)The mere existence of a counterclaim is not sufficient. A miscarriage of justice is unlikely to result where a party is required to pay to another an amount owing and the payer is otherwise free to pursue its claim against the other party in the normal way.

(g)Other relevant factors may include the apparent strength or weakness of the claim; the ability of the applicant to meet the judgment that is being enforced; and the potential bankruptcy or liquidation of a party seeking to pursue an apparently strong claim.

(footnotes omitted)

[6]The applicant further relies on r 14.17 of the High Court Rules which provides:

14.17 Set-off if costs allowed to both parties

If opposite parties are awarded costs against each other, their respective costs must be set off and the lesser sum must be deducted from the greater, unless the court otherwise directs.

Procedural history

[7]    On 5 September 2019, the applicant applied for summary judgment against the respondent, seeking judgment for $431,632.22 plus 10 per cent interest and solicitor-client costs. On 5 June 2020, Jagose J granted summary judgment in the applicant’s favour.3

2      SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281 [2022] NZCA 518 at [85].

3      New Zealand Bloodstock Finance & Leasing Ltd v Jones [2020] NZHC 1233.

[8]    In August and September 2020, the applicant initiated bankruptcy proceedings. The respondent applied to set aside the bankruptcy notice and to review the Registrar’s decision to seal the order. On 28 May 2021, Harland J set aside the sealed order and bankruptcy notice.4 On 21 February 2022, Harland J declined to recall her judgment.5

[9]    Harland J awarded costs on both decisions ordering New Zealand Bloodstock Finance & Leasing Ltd to pay to Mr Jones the sum of $21,032.00.6

[10]   The respondent has now sealed that order and seeks to enforce it. The respondent served the respondent’s costs order upon the applicant on 20 June 2022.

[11]   This matter was called in the list on 21 July 2022, following which a Minute was issued directing the filing and service of submissions so that a decision could be made on the papers.7

[12]   Also on 21 July 2022, the Court of Appeal accepted Mr Jones’ appeal against the costs judgment of Jagose J dated 23 June 2022 for filing. In the costs judgment Jagose J quantified the sum of solicitor-client costs payable by Mr Jones under his original judgment at $106,421.95 (less GST, if NZ Bloodstock is GST registered) plus interest at 10 per cent per annum. 8

[13]   On 25 August 2022, the Court of Appeal dismissed Mr Jones’ appeal from Jagose J’s decision granting summary judgment to the applicant, New Zealand Bloodstock Finance & Leasing Ltd.9 The Court of Appeal recorded that they had been advised by counsel that there had been issues in relation to the quantification of the judgment that the applicant sought to seal. The Court held that it was beyond the scope of the appeal to express any view on that matter and any disputes on matters of quantification were to be resolved in the High Court.10 Costs were awarded to the

4      Jones v New Zealand Bloodstock Finance & Leasing Limited [2021] NZHC 1228.

5      New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 231.

6      New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 948.

7      Minute of Associate Judge Sussock dated 21 July 2022.

8      New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 1477.

9      Jones v New Zealand Bloodstock Finance & Leasing Ltd [2022] NZCA 397.

10 At [129].

applicant for a standard appeal on a band A basis with an allowance for second counsel together with usual disbursements.11

[14]   On 29 September 2022, following the Court of Appeal decision, the applicant served a bankruptcy notice on the respondent seeking payment of $648,464.99. The respondent applied to set aside the bankruptcy notice on 13 October 2022, with a notice of opposition filed on 27 October 2022. The respondent’s application has been set down for a hearing on Monday, 13 March 2023.12

Application for Stay

[15]The applicant submits that the respondent currently owes the applicant

$655,444.57, the majority of which he has owed for over two years. This amount is made up of $645,148.33 comprised of:

(a)$431,632.22 in principal debt;

(b)$92,540.83 in solicitor-client costs; and

(c)$120,975.28 in interest.

[16]   In addition, Jagose J ordered the respondent to pay $5,755.24 following the dismissal of the respondent’s application for leave to appeal and stay of execution of the summary judgment decision.

[17]   On 26 May 2021, the Court of Appeal struck out the respondent’s leave to appeal application and again ordered costs to be paid.13 An order for the respondent to pay $4,541.00 has been sealed and served upon the respondent, a copy of which was attached to the applicant’s memorandum.

11     Jones v New Zealand Bloodstock Finance & Leasing Ltd, above n 9, at [136].

12     Minute of Associate Judge Andrew dated 10 November 2022.

13     Jones v New Zealand Bloodstock Financing and Leasing Ltd [2021] NZCA 213.

[18]   In total, the applicant therefore says the respondent currently owes the applicant $655,444.57. The applicant submits that the respondent has not made any payments and has never indicated that he intends to make payments. Meanwhile the respondent has told the applicant and the Court that he is “stitched for cash”.

[19]   Counsel for the applicant submits that there would be a substantial miscarriage of justice if the applicant is required to pay the respondent’s costs order when the respondent owes such a significant sum to the applicant. The applicant says that the injustice is further aggravated by the respondent’s impecuniosity as it would be a significant injustice to require the applicant to pay the respondent over $20,000 which the applicant is likely never to see again.

[20]The applicant further refers to r 14.17 of the High Court Rules and says that

$102,837.07 is available as a set-off, which is the total amount currently owed to the applicant for costs orders against the respondent.

[21]   As outlined above in the summary of the general principles applying to the application of r 17.29, the onus is on the applicant seeking a stay of enforcement to persuade the Court to exercise its discretion. A substantial miscarriage of justice must be involved, with “substantial” being more than “minor or insubstantial”.14

[22]   The grounds for the respondent’s opposition are that each of the judgments relied on by the applicant is subject to the awaited decision of the Court of Appeal in respect of Jagose J’s summary judgment decision, other than the Court of Appeal decision which resulted in an award of costs against Mr Jones for $4,541.00. Mr Jones records in his submissions that he had offered for the $4,541.00 owed by Mr Jones to be netted off against the amount owing to Mr Jones of $21,032.00 but that had not been accepted.

[23]   However, now that the Court of Appeal has issued its decision dismissing Mr Jones’ appeal from Jagose J’s decision granting summary judgment, Mr Jones’ grounds for resisting the stay falls away.

14     SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281, above n 2, at [85].

[24]   In the circumstances and weighing the competing interests of both parties, it appears there is a real and substantial risk that a miscarriage of justice would result if the judgment were enforced. If the applicant pays the respondent the amount sought to be enforced it is probable, rather than possible, that the applicant would not recover that amount from the respondent when it seeks to enforce its judgment.

[25]   In these circumstances I consider it is appropriate to grant the application for a stay.

Result

[26]   The application by New Zealand Bloodstock Finance & Leasing Ltd for a stay of enforcement of the costs order from Harland J of $21,032.00 is granted.

Costs

[27]   I ask the parties to confer and try to agree costs. If agreement is not able to be reached, memoranda may be filed of no more than three pages (not including schedules), on behalf of the applicant within 20 working days of receipt of this judgment and on behalf of the respondent within a further 10 working days. Costs will then be determined on the papers.

Associate Judge Sussock