NZAgbiz Limited v Hanley

[2025] NZHC 1308

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-037 [2025] NZHC 1308

BETWEEN  NZAGBIZ LIMITED

Plaintiff

ANDPHILIPPA MARY HANLEY, MARCHAL JOSEPH HEAD and HANLEY

SUPPLEMENTS LIMITED
First Defendants

MARCHAL JOSEPH HEAD
Second Defendant

PHILIPPA MARY HANLEY
Third Defendant

HANLEY SUPPLEMENTS LIMITED

Fourth Defendant

Hearing:13 March 2025, with further updating memorandum filed 12 May 2025

Appearances:           MD Branch and K Shaw for the Plaintiff

GN Bradford for Philippa Mary Hanley and Hanley Supplements Limited

No appearance for the second named First Defendant and Second Defendant, MJ Head

Judgment:                23 May 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

Leave to Appeal

This judgment was delivered by me on 23 May 2025 at 3.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Harkness Henry, Hamilton Hill Lee & Scott, Christchurch

NZAGBIZ LTD v HANLEY [2025] NZHC 1308 [23 May 2025]

Introduction

[1]    The plaintiff, NZAgbiz Limited, has applied for leave to appeal my decision dated 11 December 2024, granting a stay of these civil proceedings pending final determination of criminal proceedings against Philippa Hanley, one of the defendants.1

[2]    At the time of my decision the date for the criminal trial had not yet been set, but counsel had been advised that it would be in the first half of 2025. A memorandum was filed on 22 January this year seeking recall of the stay on the basis that counsel for the defendants had failed to advise when updating the court on 12 November 2024 that a trial by jury had been elected, allegedly delaying the likely date for the criminal trial until sometime in 2026. The plaintiff submitted that my judgment, subsequently delivered on 11 December 2024, relied on incorrect advice that the criminal trial would be in the first half of 2025.

[3]    The judgment had been sealed on 14 January 2025, prior to plaintiff’s counsel raising the issue with counsel for Ms Hanley so any application for recall would have had to rely on the inherent jurisdiction of the Court, a higher threshold than under r 11.9(8). Counsel for the plaintiff submitted that fresh evidence coming to light in terms of the likely timing provided an appropriate basis for doing so.

[4]    A memorandum was filed on behalf of Ms Hanley in response on 29 January 2025 confirming that amended charges had been filed against Ms Hanley on 11 November 2024 to which Ms Hanley had pleaded not guilty and elected trial by jury that same day, preserving her rights in respect of mode of trial. The memorandum indicates, however, that on 20 January 2025 Ms Hanley changed her election back to trial by judge.

[5]    Counsel for Ms Hanley emphasised that no further update had been provided by the District Court amending the estimate of first half of 2025 and that the plaintiff was relying on hearsay evidence and the Crown Solicitor’s view that the criminal trial would be in 2026 when it is the District Court that sets the trial date.

1      NZAgbiz Ltd v Hanley [2024] NZHC 3633.

[6]On 30 January 2025, NZAgbiz also filed an application for leave to appeal.

[7]    A telephone conference was held on 10 February 2025 to discuss whether the plaintiff wished to pursue both the application for recall and for leave to appeal and to inquire further as to any updates on the date of the criminal trial. Directions were made following that conference requiring:

(a)counsel for Ms Hanley to make further inquiries as to the likely date of the criminal trial because the date may remove the need for the applications;

(b)for the plaintiff to file and serve a formal application for recall if it wished to pursue that application, given the judgment had been sealed and the allegations being made; and

(c)otherwise making directions for a hearing of the application for leave to appeal.

[8]    No application for recall was filed. The plaintiff's application for leave to appeal was therefore heard on 13 March 2025.

[9]    A memorandum has now been filed on 12 May 2025 by counsel for Ms Hanley confirming that the District Court at Timaru has allocated a trial date for the criminal proceedings commencing on 6 November 2025 for at least seven days.

[10]   The principles applying to leave to appeal are not in dispute and are set out below. After considering the relevant factors, I decline leave for the reasons set out.

Principles governing leave to appeal

[11]   In Tomar v Tomar, the Court of Appeal summarised the approach to applications for leave to appeal pursuant to s 56(3), as follows:2

[6]        In Finewood Upholstery Ltd v Vaughan, Fitzgerald J appropriately observed that the requirement for leave to appeal should serve as a filtering

2      Tomar v Tomar [2021] NZCA 419.

mechanism to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.3 The following considerations were recognised as relevant on an application for leave to appeal:4

(a)A high threshold exists.

(b)The applicant must identify an arguable error of law or fact.

(c)The alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value.

(d)The circumstances must warrant incurring further delay.

(e)The ultimate question is whether the interests of justice are served by granting leave.

[7]        This Court in Ngai Te Hapu Inc v Bay of Plenty Regional Council indicated that considerations similar to the principles applicable to applications under the former s 24G of the Judicature Act 1908, as explained in Meates v Taylor [Leave],5 apply to applications under s 56(5) of the Senior Courts Act, stating:

We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.

Is there an arguable error of law or fact?

[12]NZAgbiz submits that there are arguable errors of fact because:

(a)the judgment proceeds on the basis that the civil and criminal proceedings would have similar timings; and

(b)proceedings against the fourth defendant, HSL were stayed despite HSL not having applied for a stay or providing any argument that a stay against it was appropriate.

[13]   As set out above, at the time of the judgment I understood that the criminal trial was to be heard in the first half of 2025. At that time, a five day backup fixture

3      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].

4      At [9] and [14], citing A v Ministry of Internal Affairs [2017] NZHC 887.

5      Meates v Taylor [Leave] (1992) 5 PRNZ 524 (CA) at 526.

for the civil proceedings was allocated to commence on 31 March 2025 and a firm fixture was scheduled for 22 September 2025. After considering the factors relevant to a stay, I dealt with the stay application relatively briefly as I considered there was a real risk of injustice if the civil proceedings were not stayed because, if the backup fixture was available, the two proceedings would have very similar timings.6

[14]   I therefore made directions vacating the backup fixture scheduled to commence on 31 March 2025 and staying the civil proceedings. I directed an exception to the stay to require the parties to file a joint memorandum after being advised of the criminal trial date addressing whether the firm fixture allocated in September 2025 ought to be vacated or proposing appropriate pre-trial directions if not.

[15]   As set out above, the District Court has now confirmed the criminal trial will commence on 6 November 2025.

[16]   The decision granting a stay in respect of both the civil proceedings against Ms Hanley and all other defendants, including HSL, depended on the criminal trial taking place in the first half of 2025. Now that is no longer the case, the decision could be described as having been based on an error as to the timing so the first requirement for granting leave to appeal, that there is an arguable error of fact or law, would be met.

[17]   In terms of the alleged error in granting a stay against HSL when HSL did not apply, the decision to order a stay against all parties was to avoid a split trial and ensure best use of both the Court’s and the parties’ resources. I do not consider that I erred in doing so. But for the purposes of this application I proceed on the basis that there is an arguable error in this regard as well.

[18]   One of the further reasons why I considered a stay was appropriate was because I considered that the criminal proceedings may result in reparation orders which may reduce the amount claimed in the civil proceedings. I accepted counsel for the plaintiff’s submission that the Court considers different factors in setting appropriate reparation but held that there was no question that any reparation ordered would need

6      NZAgbiz Ltd v Hanley, above n 1, at [60].

to be deducted from the amount claimed by NZAgbiz against Ms Hanley in the civil proceedings.

[19]   NZAgbiz now submits that the potential availability of reparation in the criminal proceedings is of no real value to NZAgbiz and should be given no weight. Counsel emphasises that reparation is a discretionary exercise and that one of the factors that is taken into account is whether payments over time should be allowed. Furthermore, counsel submits that any non-payment of reparation can only be enforced by the courts and so NZAgbiz would have no right to bankrupt Ms Hanley for any unpaid part of the reparation or to liquidate the fourth defendant, HSL. By contrast, if instead NZAgbiz obtains a civil judgment ahead of the criminal proceedings, NZAgbiz submits it can control its own debt recovery process.

[20]   Counsel for the defendants continues to submit that the availability of reparation and the fact that the determination of the criminal proceedings may confine the issues are both factors that were properly taken into account in ordering a stay.

[21]   The plaintiff’s position on reparation has developed since the original hearing and my reliance on the possibility of reparation only went so far as that any reparation orders made may reduce the amount able to be claimed in the civil proceedings. However, for the purposes of this step in considering the application for leave, I treat my reliance on possible reparation as an arguable error as well.

Is the alleged error of sufficient importance, either generally or to the parties, to justify appeal?

[22]   Prior to the memorandum advising the date for the criminal trial, the Fixtures Registrar had found a new date available for the civil trial commencing on 22 June 2026 as the original 22 September 2025 date for the civil fixture is very unlikely to work, even if leave to appeal is granted.

[23]   Counsel for the plaintiff emphasised in submissions in support of leave that the Courts have consistently given a defendant’s right to silence little, if any, weight, relying in particular on the Court of Appeal’s decision in H v East Wind Company Ltd

(in liq).7 NZAgbiz submits that Ms Hanley (and HSL) has already given up this right in any event by denying in her affidavit filed in opposition to the application for leave to bring summary judgment proceedings that she had any knowledge of Ms Carter’s fraud.

[24]   In addition, NZAgbiz relies on a passage from East Wind where the Court of Appeal held:8

As a matter of logic, however, it is difficult to see how Ms H's defence of the criminal proceeding would be prejudiced by an exculpatory statement made by her in her brief of evidence for the civil proceeding …

[25]   NZAgbiz submits that this is exactly the case here and that the evidence that Ms Hanley has put forward in this proceeding, and that she will have to put forward in future, is exculpatory in nature and cannot be prejudicial.

[26]   I accept that Ms Hanley has set out her denial in an affidavit already filed but the circumstances in East Wind were that the criminal trial was still going to take place before the civil fixture with the Court of Appeal recording:9

To clarify, we record that our decision to decline the stay is on the assumption that the criminal trial will take place before the civil fixture so that Ms H will not be subjected to cross-examination in this civil proceeding before her criminal trial.

[27]   Now that the criminal trial is to proceed in November 2025 and a new date is available for the civil trial in June 2026, I do not consider the errors in my original decision are of sufficient importance, either to the parties or more generally, to justify an appeal. Significantly, it is unrealistic for any appeal to be heard and determined in time for the parties to prepare for the September 2025 date for the civil trial. The Court of Appeal are unlikely to grant priority to this matter in such circumstances.

[28]   It is also relevant that Ms Hanley has made a disclosure application in the criminal proceedings that is yet to be resolved (at least at the time of the hearing for the application for leave). Counsel for Ms Hanley submits that these outstanding

7      H v East Wind Company Ltd (in liq) [2023] NZCA 140.

8 At [66].

9 At [76].

disclosure issues heighten the risk of injustice should the stay be set aside and has filed a minute issued in the criminal proceedings on 21 February 2025 recording that Ms Hanley’s disclosure application has been allocated pre-trial argument time in July 2025. I note that Judge Dravitzki requested in his minute that an earlier date be identified, if possible. No further update has been provided since.

[29]   Prior to the conference before Judge Dravitzki in February, an interim report had been filed by Mr Lange, counsel appointed to assist the court in the criminal proceeding to review the documents in issue in Ms Hanley’s disclosure application. Judge Dravitzki granted leave for that report to be provided to the High Court, as counsel for Ms Hanley submits the documents in issue ought to be disclosed as part of NZAgbiz’s ongoing discovery obligations in these proceedings. In his interim report Mr Lange explains the documents in issue fall into four categories:

(a)category one – email communications relating to arranging meetings, changes in investigative staff and the police providing Fonterra with updates on the court proceedings (administrative in nature);

(b)category two – Fonterra's response to the police requesting information;

(c)category three – communications about a witness's formal statement, or briefs of evidence; and

(d)category four – communications involving the police, Fonterra, Fonterra's counsel and Ms Carter's lawyer to which s 57 of the Evidence Act might apply (providing privilege for settlement negotiations and plea discussions).

[30]   Mr Lange anticipates in his interim report for the District Court that any substantive disclosure argument will centre around the documents in category four, with issues regarding the documents in categories one, two and three likely to be readily resolved.

[31]   Counsel for NZAgbiz submits any claimed non-disclosure by the Police is not relevant to the issue of any liability in the civil proceedings (or indeed the criminal proceedings) because the documents all relate to exchanges between the Police and their witnesses which counsel submits would be used “presumably to impeach a witness”. Counsel submits those issues do not in any way impact the civil claim and that to the extent that the disclosure issues do impact the criminal proceedings, that supports why the civil proceedings should proceed as scheduled.

[32]   It is difficult to assess this submission without further information as to the nature of the documents in issue. The report by counsel assisting in the District Court is an interim report and does not contain sufficient detail to come to a view.

[33]   However, it would seem that correspondence between “the Police, Fonterra, Fonterra’s lawyers and Ms Carter’s lawyers”, as Mr Lange describes category four documents, may be relevant to the civil proceeding as the plaintiff relies on Ms Carter’s admission that she had defrauded NZAgbiz in these proceedings, as set out in her affidavit in support of the application for leave to bring a summary judgment application. The details of that admission and other relevant matters may therefore be the subject of the correspondence in category four.

[34]   If the hearing of the disclosure application is not until July 2025, as was timetabled in February 2025, and the application in the criminal proceedings may assist in determining the position in the civil proceedings, the disclosure issue is likely to prevent the civil trial from proceeding earlier than November 2025, the date of the criminal trial, in any event.

[35]This disclosure issue therefore supports declining leave to appeal.

[36]   Furthermore, the circumstances have changed significantly since the hearing of the stay application so the Court of Appeal would essentially be carrying out the balancing exercise necessary to determine whether a stay is appropriate for the first time.

Do the circumstances warrant the further delay of an appeal?

[37]   This factor is neutral in this case as even if leave to appeal were granted and the appeal successful, it would not delay the civil proceedings but instead the opposite.

Are the interests of justice served by granting leave?

[38]   Given the criminal trial has now been scheduled for November 2025, and there is a date available for the civil fixture from 22 June 2026, not in 2027 as counsel for the plaintiff had initially been advised, it is not in the interests of justice for leave to be granted.

[39]   If the plaintiff continues to consider the change in circumstances warrants the stay being lifted, then a new application for stay can be filed. Before doing so, however, the position in respect of disclosure would need to have been resolved, the points made above in relation to the decision in East Wind considered and the ability to proceed on 22 September 2025 realistically assessed after conferral with counsel for the defendants to ensure that any such application is not moot.

Result

[40]NZAgbiz’s application for leave to appeal is declined.

Costs

[41]   I did not hear from the parties on costs. I ask them to confer and file memoranda, on behalf of Ms Hanley and HSL by 13 June 2025 and the plaintiff by 27 June 2025. Costs will then be determined on the papers.

Further directions

[42]    Finally, I make directions requiring the plaintiff to confirm by memorandum by 30 May 2025 whether it intends to reapply for a stay or seek leave to appeal directly from the Court of Appeal so that the 5 days currently allocated from 22 September 2025 can be reallocated to another proceeding and the fixture available on 22 June 2026 confirmed as soon as possible.

Associate Judge Sussock