Pacific Flight Catering Limited v LSG Sky Chefs New Zealand Limited

The Court of Appeal of New Zealand considered a case between Pacific Flight Catering Limited and LSG Sky Chefs New Zealand Limited. This matter involved an appeal against a decision of the High Court, which had ruled in favor of LSG. The appeal was allowed by the Court of Appeal, and LSG was ordered to pay costs of $19,846.65 to Pacific. LSG subsequently applied to the Supreme Court for leave to appeal the substantive judgment of the Court of Appeal. During the pendency of this application, LSG also sought an order to stay the execution of the costs order, arguing that Pacific would be unable to repay the costs if LSG's application for leave to appeal was successful, as Pacific had no assets in New Zealand and appeared to be winding down its business operations. However, Pacific informed the Court that it had deposited $2 million in an interest-bearing account, which was not due to mature until early January 2014, and planned to retain $1 million of that amount until April 2015.

The Court was required to determine whether grounds existed to justify a stay of execution of the costs order. The primary issue was whether LSG could demonstrate a sufficient risk of prejudice if the costs order was enforced while the application for leave to appeal was being determined. The Court also needed to consider the financial position of Pacific and whether it was likely to suffer significant prejudice if it were required to pay the costs at that time.

The Court concluded that LSG had not satisfied the necessary threshold to justify a stay of execution of the costs order. The Court found that Pacific had sufficient financial resources to meet the costs order, with a significant amount of funds deposited in an interest-bearing account, and that there was no evidence to suggest that Pacific would be unable to repay the costs if LSG's appeal was ultimately unsuccessful. The Court of Appeal therefore dismissed LSG's application for a stay and ordered LSG to pay Pacific's costs on a band A basis, along with the usual disbursements. The Court also noted that if Pacific's intentions regarding the retention of the additional $1 million changed, its counsel would inform LSG. This decision underscores the importance of demonstrating a real risk of prejudice to justify a stay of execution of a costs order in the context of an appeal.