PGG Wrightson Real Estate Limited v Routhan
[2022] NZHC 1025
•13 May 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-77
[2022] NZHC 1025
BETWEEN PGG WRIGHTSON REAL ESTATE LIMITED
Applicant
AND
PHILIP WILLIAM ROUTHAN AND JULIE VERONICA ROUTHAN (AS
TRUSTEES OF THE KANIERE FAMILY TRUST)
Respondents
Hearing: 6 May 2022 Appearances:
L J Taylor QC and J Eckford for Applicant (By VMR)
D R Kalderimis and O T H Neas for Respondents (By VMR)
Judgment:
13 May 2022
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 13 May 2022 at 3.45 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
PGG WRIGHTSON REAL ESTATE LIMITED v ROUTHAN [2022] NZHC 1025 [13 May 2022]
[1] On 21 December 2021, I issued a judgment which found PGG Wrightson Real Estate Ltd (PGG) acted negligently and in breach of the Fair Trading Act 1986 in the course of transacting the sale of a West Coast dairy farm to Philip and Julie Routhan.1 I awarded damages of $1,697,600, and costs have since been agreed at $260,000. With interest, the judgment sum payable by PGG to the Routhans is almost $2,000,000.
[2] PGG has appealed that decision to the Court of Appeal, challenging both its liability to pay the judgment sum and quantum. It now applies for a stay of execution of the judgment, pending determination of that appeal.
PGG’s submissions
[3] While acknowledging the starting point is that the successful party is entitled to the fruits of its judgment, counsel for PGG, Mr Taylor QC, says the Court must balance this against the need to preserve the appellant’s position in the event of its appeal succeeding. Here, PGG says the Kaniere Family Trust, of which the respondents are trustees, has no assets. Furthermore, the respondents in their affidavits confirm they also own no assets of value. The judgment sum would be used to meet living expenses, debts relating to the proceeding and legal costs. There is no assurance that any of the sum they would have access to would be repaid in the event PGG is successful in reversing the judgment on appeal.
[4] On the other hand, PGG has demonstrated it can pay the judgment sum. Indeed, it has lodged the entire judgment sum, plus interest and costs, into an independent solicitor’s trust account, pending resolution of the appeal. PGG is also prosecuting the appeal with reasonable diligence. These are all factors which point in favour of the stay being granted.
[5] Mr Taylor emphasised that the usual position where there is a monetary judgment which is being appealed is that in the absence of a compelling reason for paying the judgment sum, and in the absence of security for its repayment, a stay should be granted.
1 Routhan v PGG Wrightson Real Estate Ltd [2021] NZHC 3585.
[6] In this case, Mr Taylor submits the reasons given for payment of part of the judgment sum are not compelling. While Mr Routhan says it is necessary to enable the respondents to have access to justice, Mr Taylor says there is no indication of what portion of the fund is required to protect their interest in the appeal. Furthermore, there is no evidence that they cannot progress the appeal without payment of some of the funds. In any event, he says it is not the applicant’s responsibility to fund the cost of the appeal. The other factors relied on by the Routhans, including giving them “breathing room” for day-to-day living expenses and to pay outstanding legal costs, are not proper reasons for ordering payment of funds.
[7] Mr Taylor also rejects Mr Kalderimis’ analogy with freezing orders, where parties are allowed access to day to day living expenses. He says that is quite a different situation from the present case.
[8]Accordingly, the balance of convenience favours the stay being granted.
The Routhans’ submissions
[9] Counsel for the Routhans, Mr Kalderimis, says the issue is whether the Routhans ought to be kept from the fruits of the High Court judgment on the grounds that they might lack the means to fully satisfy a wholly successful appeal by PGG in circumstances where:
(a)the Routhans are lawfully entitled to their judgment;
(b)the chief dissipation risk identified by PGG, which was prior debts, has been answered by the Routhans’ evidence;
(c)the Routhans live prudently within their means;
(d)the Routhans propose to retain only $400,000 of the judgment sum (down from $600,000 as originally proposed);
(e)without access to a meaningful amount of the judgment sum, the Routhans will be at a real disadvantage in the appeal; and
(f)the prospects of a wholly successful appeal are not high.
[10] The primary ground for the Routhans opposing the stay is that it would pose an access to justice issue as it would jeopardise their ability to pay for ongoing representation for the appeal. The Routhans have not yet been able to settle their final accounts for legal fees in the High Court phase of the proceedings and further fees are now being incurred in responding to PGG’s appeal and the present application.
[11] Mr Kalderimis also says the merits of the appeal support his clients’ position. The primary issue on appeal will ultimately be the quantum of damages rather than liability. PGG does not appear to dispute that its conduct was negligent or in breach of the Fair Trading Act, although it does advance arguments against liability based on the disclaimer and limitation arguments.
[12] Mr Kalderimis acknowledges that a plaintiff would ordinarily give security for payment pending an appeal, but says there is no firm rule to this effect. As Kós P observed in Bathurst Resources Ltd v L&M Coal Holdings Ltd, the Court’s restraint of its own order should be the least necessary to preserve the losing party’s position against the prospect of the appeal proceeding.2 Here, he says the plaintiffs’ decision to reduce that part of the judgment it seeks to enforce to $400,000 points in favour of the stay being limited to only part of the judgment. Furthermore, $260,000 of this relates to costs. This Court has acknowledged that a stay of a costs judgment requires “consideration beyond that which applies to money judgments generally”, because “[s]uccessful parties are intended to have (upon the fixing of costs) the cash flow benefits of the costs to which the Court has found them entitled”.3
Discussion
[13] Rule 12(1) and (2) of the Court of Appeal (Civil) Rules 2005 state that an appeal does not operate as a stay of execution. Rule 12(3) and (4) provide:
2 Bathurst Resources Ltd v L&M Coal Holdings Ltd [2020] NZCA 186, (2020) 25 PRNZ 341 at [19].
3 Walker as liquidator of Gibbston Water Holdings Ltd v Castlereagh Properties Ltd [2015] NZHC 907, [2015] NZAR 944 at [42] and [43].
(3)Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court 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.
(4)An order or a grant under subclause (3) may—
(a)relate to execution of the whole or part of the decision or to a particular form of execution:
(b)be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.
[14] While r 12(3) and (4) gives this Court jurisdiction to grant a stay of execution of the whole or part of the decision, it does not set out any criteria. However, the law on such applications is well settled. As a starting point the successful party is entitled to the fruits of its judgment. An appellant who seeks a stay must show why the usual consequences of a judgment should not follow. The Court will need to balance the competing rights of the party which has obtained judgment against the need to preserve the position in case the appeal succeeds.4 The factors to be taken into account in the balancing exercise when a stay is sought include:5
(a)whether the appeal may be rendered nugatory by the 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;
4 Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.
5 Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].
(g)the overall balance of convenience; and
(h)the apparent strength of the appeal.
[15] I note, too, that courts often refer to what is described as the “general rule” that a stay of a monetary judgment is only granted on provision of security.6 In the present case, security is not offered, nor could it be as the respondents have no assets.
[16] In this case there is nothing about PGG’s position which would militate against a stay. There is no concern about PGG’s ability to pay the judgment sum. It has already been deposited in a solicitors’ trust account. There is also no question of its bona fides in prosecuting the appeal.
[17] On the other hand, there is a real and substantial concern about the Routhans’ ability to repay any amount of the judgment sum which they have access to. Indeed, on their own evidence, any part of the judgment sum which is paid to them will be spent on ongoing legal fees, living expenses and existing debt.
[18] In balancing these factors, I bear in mind what was said in this Court’s decision in Yu v Bradley, which was that the Court should approach an application for stay of execution judgment “with an appropriate degree of flexibility, rather than adopting rigid notions of a ‘normal’ or ‘general’ approach”.7 The Court emphasised that each case will turn on its own facts.8
[19] I accept there is a real risk of dissipation of any part of the judgment sum which is paid and this will make it more difficult for PGG to recover this amount should it succeed on its appeal to the extent its liability is reduced beyond the amount it has paid to the Routhans. That said, I also accept the Routhans should have access to sufficient funds to defend the appeal and advance their cross-appeal. Mr Taylor is critical of the evidence to support the need for such funding, given the Routhans’ legal team has allowed them to pay as and when they can. I consider, as a matter of logic, that unless
6 Wiltshire Investments Ltd v Symons HC Auckland CIV-2010-404-1572, CIV-2010-404-1011, 8 October 2010 at [10].
7 Yu v Bradley [2021] NZHC 1098 at [43].
8 At [43].
there is access to funding for preparation on appeal, the Routhans ability to properly defend the appeal and pursue the cross-appeal will be constrained as a consequence. I consider that is a relevant factor in the exercise of my discretion.
[20] In reaching that view, I make no findings about the prospects of success except to say that the prospect of achieving an adjustment on quantum is more likely than overturning the judgment on liability. This is not a case where it is sufficiently likely the Routhans will have to repay the full judgment sum, such that this should be determinative of the application.
[21] I also consider if PGG is successful on liability, there is at least some prospect of repayment. The Routhans have demonstrated their ability to live within their means and to repay their debts over the past few years. They are proud and determined people who would not relish the prospect of bankruptcy. In any event, as was said in Yu, it is important that “determination of an application for a stay does not become ‘blinkered’ by an assumption that the appeal will succeed, which in turn drives an outcome designed to provide absolute certainty of prompt repayment”.9
[22] However, the Routhans have not been entirely transparent about their need for funds. They have not quantified the extent of their unpaid legal fees, nor have they quantified their anticipated fees on appeal. I also do not consider it appropriate to release funds for living costs or unexpected expenses when no details are given about them and when the Routhans have managed to date on their existing incomes.
[23] In the circumstances, the application for a stay will be granted but not in respect of the entire judgment sum. It will only apply to a sum I consider reasonable to assist with legal fees on appeal.
[24] Accordingly, I order that all the judgment sum, plus interest and agreed costs is stayed, save for the sum of $150,000 which is to be paid to the Routhans.
9 At [46].
[25] Given the mixed success of the parties, costs on this application are to lie where they fall.
Solicitors:
Patient & Williams, Christchurch Parker Cowan Lawyers, Queenstown
Copies to:
L J Taylor QC, Barrister, Wellington D R Kalderimis, Barrister, Wellington O T H Neas, Barrister, Wellington
0
4
1