OHL Limited v Premier Property Developments Limited
[2023] NZHC 3211
•14 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-001536
[2023] NZHC 3211
BETWEEN OHL LIMITED
Applicant
AND
PREMIER PROPERTY DEVELOPMENTS LIMITED
Respondent
Hearing: 27 September 2023 Appearances:
J D McBride for the Applicant
S E Wroe & G R Grant for the Respondent
Judgment:
14 November 2023
JUDGMENT OF TAHANA J
(Application for stay of execution)
This judgment was delivered by me on 14 November 2023 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Burton Partners, Auckland Grant and Co, Auckland
Richmond Chambers, Auckland
OHL LIMITED v PREMIER PROPERTY DEVELOPMENTS LIMITED [2023] NZHC 3211 [14 November 2023]
[1] OHL Ltd (OHL) seeks a stay of execution of the judgment dated 27 July 20231 (the Judgment) pending determination of its appeal. The Judgment ordered the release of funds from a solicitor’s trust account for payment to Premier Property Development Limited (Premier).
[2] OHL says the status quo should remain and that there is a risk that it will not be able to recover against Premier if it is successful on appeal and the stay application is declined.
[3] Premier opposes the stay and says there is no basis to deny it the fruits of the Judgment.
Background
[4] The dispute concerns Premier’s sale of a commercial property in central Auckland (Unit A) to OHL.
[5] The marketing of the property for sale included an information memorandum containing statements as to the tenancies.
[6] On 23 October 2018 OHL entered into an unconditional sale and purchase agreement (the SPA) with Premier to purchase Unit A for $3.5 million.
[7] Prior to settlement, OHL became aware of a leak into the downstairs tenancies. OHL’s evidence was that it met with the tenant who indicated that there were issues with the tenancy and rent was being paid in cash and sporadically.
[8] Premier offered to underwrite the rent for the balance of that tenant’s lease but the offer was not accepted.
[9] Prior to settlement, OHL claimed compensation amounting to $692,000 plus GST (if any). Premier and OHL agreed that this amount would be deducted from the settlement amount and held in trust under cl 8.4(1) of the SPA, which provides that:
1 Premier Property Developments Ltd v OHL Ltd [2023] NZHC 1962.
If the amount of compensation is disputed:
(1) an interim amount shall be deducted on settlement and paid by the purchaser to a stakeholder until the amount of the compensation is determined.
[10] The parties did not resolve the dispute and in 2021 Premier filed proceedings to recover the balance of the purchase price. OHL counterclaimed alleging breach of s 9 of the Fair Trading Act 1986 and breach of the warranties under the SPA.
Decision under appeal
[11] The Judgment determined that Premier was entitled to recover the remainder of the purchase price (plus interest).
[12] While the Court considered that there had been statements that were misleading and deceptive, it was not satisfied that OHL was either misled or deceived by that contravention.
[13] As to the contractual warranties claim, the Court upheld one of OHL’s claims that Premier had failed to disclose in writing to OHL its consent to reduced rent and non-enforcement of rent. This constituted a breach of cl 7.1(2) of the SPA.2 Premier was therefore liable to OHL in the amount of the relevant rent for the period from OHL’s acquisition of Unit A to the expiry of the lease. Because Premier had offered to underwrite the rent and OHL had rejected that offer, OHL was not entitled to any damages.
[14] The Court therefore ordered that the funds held on trust (plus interest) be released and paid to Premier.
Approach to application
[15] The application is made under r 12(3) of the Court of Appeal (Civil) Rules 2005, which provides that:
(3)Pending the determination of … an appeal, the court appealed from or the Court may, on an interlocutory application,—
2 At [58].
(a)order a stay of the proceeding in which the decision was given or a stay of execution of the decision; or
(b)grant any interim relief.
[16] The Court has a discretionary power to order a stay of execution pending appeal.3 That order may be subject to any conditions the Court thinks fit.4
[17] While the starting point is that the successful party is entitled to the fruits of its judgment, the Court must balance this against the need to preserve the appellant’s position in the event of the appeal succeeding.5 The object is to arrange matters so that the appellate Court can do justice between the parties, whatever the outcome of the appeal.6 The onus is on the party seeking the stay to persuade the Court that it is in the overall justice of the case to grant the stay.7
[18] The overall approach is a balancing exercise, with all relevant factors to be weighed, as follows:8
(a)whether the appeal may be rendered nugatory by lack of a stay;
(b)the bona fides of the appellant 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
3 ASB Bank v Lin [2014] NZHC 106, [2014] BCL 129 at [9].
4 Court of Appeal (Civil) Rules 2005, r 12(4).
5 Cullen Group Ltd v Commissioner of Inland Revenue [2019] NZHC 3110 at [10].
6 Minnesota Mining and Manufacturing Co v Johnson and Johnson (No 3) [1976] RPC 671 (EWCA Civ) at 676.
7 Philip Morris (New Zealand) Ltd v Liggett & Myers Tobacco Co (New Zealand) Ltd [1977] 2 NZLR 41 (CA) at 42.
8 Keung v GBR Investment Ltd [2012] NZAR 17 (CA) at [11].
(h)the apparent strength of the appeal.
[19] I therefore need to determine whether it is in the overall justice of the case to grant the stay taking account of the above factors.
Is it in the overall justice of the case to grant the stay?
[20] Ordinarily the party seeking a stay is seeking to delay payment of the judgment sum until determination of the appeal. Here, because funds have been held on trust, declining a stay will enable the judgment sum to be paid. The application therefore needs to be considered in that context.
Whether appeal may be rendered nugatory
[21] The appeal will be rendered nugatory if OHL is unable to recover the amount claimed if it is successful on appeal. Ordinarily, a party seeking a stay provides some form of security to remove any risk of non-payment if the appeal is successful. That is not necessary in this case because OHL is simply seeking the status quo where funds are being held on trust.
[22] OHL asserts that keeping the security on trust pending determination of the appeal is necessary because there is a risk that OHL will not be able to recover from Premier. OHL relies on misrepresentations made by Mr Hari (accepted at trial) and says that he cannot be trusted. That combined with the fact that Premier is a trustee of a trading trust and has not disclosed its liabilities indicates that there is a risk that OHL will not be able to recover if it is successful on appeal.
[23] The notes of evidence indicate that Mr Hari did not seek to resile from the misrepresentations or suggest that they had not been made. It would be speculative to rely on the misrepresentations alone, without more, to find that there is a risk of Premier dissipating its assets.
[24] Mr Hari deposes that Premier has no debts and owns a commercial property in Tauranga (with a capital value of $3,150,000) and therefore will be able to meet any judgment should the appeal be successful. Mr Hari says Premier requires the funds
now because it wishes to invest in more property. That further property would be a further asset against which OHL could enforce any judgment if it is successful on appeal.
[25] Premier is free to sell and acquire assets as it pleases. In the absence of any offer of security over the existing Tauranga property or over any future property Premier may purchase, if OHL is successful on appeal there is a risk that it will be unable to recover.
[26] Currently there is security in place which protects OHL should it be successful on appeal. If I decline to grant the stay, that security will no longer be in place. That counts in favour of granting the stay.
Bona fides of the appellants
[27]The bona fides of the applicant in pursuing the appeal are not contested.
Will the successful party be injuriously affected by the stay?
[28] Mr Hari deposes that if Premier is unable to have access to the funds it is “unable to move quickly on a potential purchase of another investment property when the right opportunity comes up.” Premier wishes to re-invest the money in property as soon as it can. Premier says the loss of opportunity is not offset by the interest accruing on the funds. There is no evidence as to the value of interest vs the value of potential capital gains on a potential purchase.
[29] I do not consider that Premier will be injuriously affected by the stay in circumstances where it will be compensated by the payment of interest for the time during which it is unable to use the funds.
Third parties, novelty and public interest
[30] These factors are not engaged. The issues are not novel and there is limited public interest in the appeal. There is also no evidence of any impact on third parties if the stay is granted.
Balance of convenience
[31]In Yu v Bradley, Fitzgerald J considered the balancing exercise noting:9
[19] 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 right in the event the appeal is successful but they have paid over the judgment sum in the interim.
[32] Here, the parties have agreed under the SPA that monies will be held until “determination of compensation.” While counterclaimants do not ordinarily have any security of payment when making a counterclaim, the terms of the SPA, indicate that the parties intended that this occur pending determination of compensation.
[33] The fact that the clause does not refer to “final” determination does not in my view assist Premier. The provision reflects an intention to preserve the purchaser’s ability to recover. Refusing to grant the stay would be contrary to that intention. Practically, those rights are not preserved if a vendor is free to use the funds before the determination of an appeal, contrary to that intention.
[34] Against this, the alleged prejudice to Premier is that it will only be compensated for delay by the payment of interest and loses the opportunity to benefit from capital gains from buying a further investment property. There was no evidence that capital gains (in this current property market) are likely to be greater than interest (in this current interest market).
[35] I therefore consider that the balance of convenience favours granting the application.
Apparent strength of the appeal
[36] Premier says the judgment turns on the trial Judge’s assessment of witnesses and the appeal therefore lacks merit. The grounds of appeal are not limited to findings
9 Yu v Bradley [2021] NZHC 1098 at [19].
arising from the evidence but also include the Court’s application of the law to the facts.10 I do not consider that this factor counts against granting the stay application.
Conclusion
[37] The interests of justice lie in preserving the status quo until the appeal is determined. Premier is entitled to interest so to the extent that it has lost any opportunity to utilise the funds, it will be compensated. I am not satisfied that Premier will be injuriously affected by the stay.
Result
[38] The application for stay of the proceedings pending determination of the appeal is granted.
Tahana J
10 See for example, OHL’s Notice of Appeal, grounds 1(a),1(c) and 1(ci).
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