Stylo Medical Services Limited v Hum Hospitality Limited
[2022] NZHC 1683
•14 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-000365 [2022] NZHC 1683
UNDER
AND
s 244 Property Law Act 2007 IN THE MATTER
of an application for cancellation of Deed of Lease dated 22 January 2011 and possession
BETWEEN
STYLO MEDICAL SERVICES LIMITED
Applicant
AND
HUM HOSPITALITY LIMITED
Respondent
Hearing: 13 July 2022 (by VMR) Appearances:
R Armitage (director) for Applicant R O Parmenter for First Respondent V F Harrison for Second Respondent
Judgment:
14 July 2022
JUDGMENT OF VENNING J STAY AND RELATED ORDERS
This judgment was delivered by me on 14 July 2022 at 3.45 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Auckland Council (V F Harrison)
Winston Wang & Associates, Auckland
Counsel: R O Parmenter, Auckland
Copy to: Applicant
STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTD [2022] NZHC 1683 [14 July 2022]
Application
[1] Hum Hospitality Limited (Hum) has filed an application for stay by way of interim relief pending appeal against a strike-out decision made on 5 July 2022. The document was filed by Ms Armitage, a director of Hum. The application was listed before me in the duty Judge list.
[2]In the application Hum seeks:
(a)the halting of an auction of a property at Grafton Road scheduled for 20 July 2022 pending the determination of Hum’s appeal against a decision of Toogood J of 5 July 2022; and, in the alternative,
(b)[preventing] the dispersing of proceeds of sale, such proceeds to be held in trust pending determination of various matters referred to in the document; and
(c)the stay of any execution of judgments by way of liquidation of Hum.
[3] Mr Parmenter appeared for Stylo. Stylo opposes the application. Ms Harrison appeared for the Auckland Council, a defendant in separate but related proceedings CIV-2016-404-636 (the 2016 proceedings) in which Hum sues Stylo, Auckland Council and others. Auckland Council has also taken separate liquidation proceedings against Hum.1 The Council opposes any stay of its liquidation proceedings.
Hum’s representation
[4] The first issue Mr Parmenter raised was an objection to Ms Armitage representing Hum. Given the apparently urgent nature of the relief sought in the application and that Ms Armitage was before the Court, the Court indicated it would hear from Ms Armitage on this application but without prejudice to whatever ultimate orders the Court might make as to Ms Armitage’s role in the future.
1 Auckland Council v Hum Hospitality Ltd HC Auckland CIV-2022-404-080.
Background
[5] The application arises in the context of a long-running dispute between Hum and Stylo concerning a lease of an old villa in central Auckland. Ms Rosanne Armitage, the sole director and shareholder of Hum, lived at the property for approximately 10 years with her son and various flatmates. Ms Armitage says she made the lounge areas of the villa available for members of the community to congregate and participate in a range of activities. A coffee kiosk at the front of the property was operated on weekends. However, Hum had little income and struggled to meet its rental obligations under the lease.2
Procedural background
[6] There is a considerable procedural background to the matters in issue between Stylo and Hum in relation to the property.
[7] The procedural background was summarised by Toogood J in his minute of 4 July 2022 which the current stay application is focused on:3
[2] On 11 November 2020, [the liability judgment] Brewer J found that Hum was in arrears with its rental payments in the sum of at least $150,000.4 Hum was ordered to pay that sum to Stylo on account of the arrears and the Judge made a direction that if the parties could not agree on the further balance outstanding, they were to file affidavits and memoranda to enable the balance to be determined. The parties could not agree and on 20 December 2021, [the quantum judgment] Brewer J gave judgment for Stylo against Hum in the sum of $106,184.82, being the further amount found to be outstanding as at 12 October 2021.5
[3] Between issuing the liability judgment and the quantum judgment, Brewer J was required to deal with a number of procedural matters either by delivering a judgment or by issuing minutes of the Court. On 11 February 2021, Brewer J issued a minute in which he addressed the consequences of Hum paying the $150,000 on account of rental arrears within one month of the liability judgment but failing to pay any rental due pending resolution of the outstanding quantum issue. In the liability judgment, the following direction was given:
[48] Pending resolution of any dispute as to quantum, the lease will remain in force provided rental payments are paid on time. If Hum defaults
2 Hum Hospitality Ltd v Stylo Medical Services Ltd [2022] NZCA 251 at [2].
3 Minute of Toogood J, dated 4 July 2022: Although the application for stay is referred to as a strike out decision made 5 July 2022, Toogood J’s minute is dated 4 July 2022 on its face.
4 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 (the liability judgment).
5 Stylo Medical Services Ltd v Hum Hospitality Ltd [2021] NZHC 3552 (the quantum judgment).
on the payment of any rental due, then unless Hum can show the non- payment was remedied within 10 working days of being due, the lease is cancelled and Hum must forthwith give possession of the premises to Stylo.
[4] In the minute of 11 February 2021, Brewer J was satisfied that Hum defaulted regarding a rental payment which was due on 1 January 2021 by paying only $10,000 of the rent due but omitting to pay GST on that sum. As a consequence, Stylo submitted that the cancellation paragraph at [48] of the liability judgment was crystallised. The Judge agreed and granted Stylo’s application, directing that orders may be sealed in the form provided.
[5] Being a decision of the Court, the orders made in the minute of 11 February 2021 were appealable by Hum but no notice of appeal was filed.
[6] Water continued to flow under the bridge and numerous orders by minute and judgment were issued Brewer J and other judges of the Court.
[7] On 17 September 2021, Brewer J issued a minute relating to documents presented for filing by Ms Armitage that had been referred to him, pursuant to r 5.35A of the High Court Rules 2016, for consideration under r 5.35B. For reasons which are not relevant at this juncture, the Judge held he was satisfied that the applications filed by Ms Armitage were “plainly an abuse of the process of the Court” and struck them out.
[8] On 21 September 2021, Brewer J issued a further minute relating to an interlocutory application for an order rescinding the strike-out order made in his minute of 17 September 2021, noting that they had not been accepted for filing. The Judge declared that for the Registry to accept the documents for filing would contribute to an abuse of the process of the Court and directed the Registry not to accept them.
[9] On 24 September 2021, Brewer J directed that still further attempts by Ms Armitage to file documents in the proceeding were an abuse of the process of the Court and directed the Registry not to accept them for filing.
[10] Brewer J issued a further minute on 27 September 2021. It is necessary to set it out in full. It reads:
[1] In my minute dated 24 September 2021, I said:
[7] Should Stylo seek to continue the proceeding in order for quantum to be determined, then I will accept an application by Ms Armitage to represent Hum for that purpose. Stylo would have to be heard on any such application, but I would place weight on the fact that Ms Armitage has personally guaranteed the lease.
[2] I now have an interlocutory application by Ms Armitage for an order permitting her to represent Hum on the quantum dispute. Ms Armitage has also tendered a memorandum and an affidavit.
[3] I fear that the application by Ms Armitage is a Trojan Horse in that although it outwardly resembles an application for a very limited purpose, inside it there are all the arguments
Ms Armitage wants to advance to enable Hum to retain possession of the premises.
[4] There is no application from Stylo (of which I am aware) for quantum to be determined by the Court.
[5] I direct the registry to send the interlocutory application to Mr Parmenter as counsel for Stylo, together with a copy of this minute.
[6] I direct Mr Parmenter to advise: (a)
Does Stylo intend to apply to the Court for
determination of quantum? (b)
If so, does Stylo object to Ms Armitage representing Hum on that issue?
[7] The registry is not to accept Ms Armitage’s documents for filing without a further order from me.
[11] There have been further decisions of the Court since the minute of 27 September 2021 was issued, including a costs judgment of Brewer J dated 31 May 2022.6
[12] The latest minute is one delivered by Brewer J on 2 June 2022 in which he referred to a request filed by Ms Armitage on 31 May 2022 asking the Judge to “correct” the liability judgment using the slip rule, r 11.10. The Judge held that he could not do that; first, because he held there was no clerical mistake or error arising from an accidental slip or omission, but principally because the judgment had been sealed; the Judge said he was functus officio (that is, without jurisdiction to deal with the matter) and that the correction of any error was for the Court of Appeal.
[13] It appears that Hum did not appeal the liability judgment but that it has appealed the quantum judgment. That appeal has not progressed in the Court of Appeal because Hum cannot afford to pay the filing fee or security for costs. On 16 June 2022, the Court of Appeal dismissed an application by Hum for a stay of execution of the quantum judgment.7
[8]Toogood J had before him the following documents:8
(a)an interlocutory application for leave to appeal out of time the interlocutory orders made by Brewer J in his minute of 11 February 2021;
(b)a draft notice of appeal against the orders made on 11 February 2021;
6 Stylo Medical Services Ltd v Hum Hospitality Ltd [2022] NZHC 1237.
7 Hum Hospitality Ltd v Stylo Medical Services Ltd [2022] NZCA 251.
8 Minute of Toogood J, dated 4 July 2022 at [14].
(c)an affidavit of Ms Armitage in support of the application for leave to appeal out of time;
(d)a memorandum regarding the application for leave to appeal out of time;
(e)an updating memorandum dated 26 June 2022 regarding the application for further orders by the Court under the slip rule;
(f)an application dated 27 June 2022 for orders under the slip rule; and
(g)an application on 28 June 2022 for stay by way of interim relief pending leave to appeal the 11 February 2021 interlocutory orders out of time.
[9] Toogood J considered the documents were plainly an abuse of the process of the Court and in accordance with r 5.35B directed that the documents not be accepted for filing. He also directed the Registrar was not to accept from Hum any application or memorandum relating to this proceeding without the leave of a judge. (The present application for relief was accepted given the impending auction date and was listed in the duty Judge list before me).
[10] There have been two further relevant developments. In a judgment delivered on 28 June 2022 Brown J in the Court of Appeal dismissed Hum’s application to review the Deputy Registrar’s decision declining to dispense with security for costs in relation to an appeal against the quantum judgment of Brewer J.9 If that appeal is to be maintained Hum has to pay security for costs in the Court of Appeal by 26 July 2022.
[11] The second development is that on 11 July 2022 Associate Judge Taylor issued a minute in the liquidation proceedings adjourning them to 19 August 2022. Relevantly, he also dismissed Ms Armitage’s application to represent Hum in those proceedings. The Judge directed that Hum was to instruct counsel “if it wishes to defend these proceedings”. He also required Hum to apply for an extension of time to appeal the security for costs judgment by 5 August 2022.
9 Hum Hospitality Ltd v Stylo Medical Services Ltd [2022] NZCA 269.
Jurisdiction for the application
[12] The application for stay is made in reliance on Court of Appeal (Civil) Rules 2005, r 12, and High Court Rules 2016, rr 20.10 and 17.29.
[13] High Court Rule 20.10 has no relevance. The rule applies to appeals from the District Court to the High Court.
[14] High Court Rule 17.29 provides the Court may grant a stay of enforcement of a judgment upon the ground that “a substantial miscarriage of justice would be likely to result if the judgment were enforced”.
[15] Under r 12 of the Court of Appeal (Civil) Rules 2005, this Court may order a stay of the proceeding in which the decision was given or grant other interim relief pending the hearing of an appeal. Factors taken into account include:10
·whether the appeal may be rendered nugatory?
·the bona fides of the applicant as to prosecution of the appeal?
·whether the successful party will be injuriously affected?
·the effect on third parties;
·the novelty and importance of questions involved;
·public interest in the proceeding;
·overall balance of convenience; and
·the merits of the appeal.
10 Keung v GBR Investment Ltd [2010] NZCA 396; and Dymocks Franchise Systems (NSW) Pty Ltd v Bigola Enterprises Ltd (1999) 13 PRNZ 48.
The grounds advanced for the stay
[16] Hum seeks to prevent Stylo from selling the property in issue pending a hearing of the appeal against Toogood J’s “strike-out” decision of 5 July 2022.11 In the papers in support Ms Armitage also variously refers to:
(a)Hum’s claim in the 2016 proceedings against the Auckland Council and Stylo and others;
(b)Hum is “near completing” an application to appeal out of time against a security for costs order made by Associate Judge Bell in the 2016 proceedings;
(c)Hum has appealed other costs and “money” orders;
(d)the possession and cancellation step of 11 February 2021 is now before the Court of Appeal; and
(e)the quantum decision is impacted by the 11 February 2021 “order” which is now before the Court of Appeal.
[17] Ms Armitage also notes, inter alia, that Stylo has possession of the property, albeit that some of Hum’s and her belongings remain on the site.
[18] If relief is not granted she says Hum’s right of appeal will be rendered nugatory, particularly as the appeal will deal with the 11 February 2021 order and costs orders. She considers that if Hum is successful on its appeal it will gain back possession of the property and a substantial sum will be due to it.
[19] Ms Armitage also submits that if Hum is liquidated a substantial miscarriage of justice will ensue because Hum will lose the ability to pursue its claims against the Auckland Council and Stylo in the 2016 proceedings.
11 Although referred to as a strike out, Toogood J did not strike out Hum’s proceeding, rather he invoked r 5.35B and directed the documents not be accepted for filing.
[20] Ms Armitage also submits that third parties, such as herself and others will not be able to “reinstitute their belongings” and their place at the property.
[21] She also repeats allegations of unjust enrichment and improper action by Stylo and the Council.
[22] Ms Armitage referred to a number of authorities which discuss the relevant principles.12
Analysis
[23] The principles are settled. As in every case the rules and principles have to be applied to the facts of the particular case. In this case the merits are entirely against Hum and the submissions that Ms Armitage makes for a stay both on a factual and legal basis.
[24] The application pursued by Ms Armitage on behalf of Hum is premised on a misapprehension of the impact of Hum’s appeal against the orders of Toogood J. The orders made by Toogood J were made under r 5.35B. The effect was to direct the Registrar not to accept the documents for filing, and to prevent Hum from filing any further documents in this proceeding without leave. In the event Hum’s appeal against those orders was successful, then at best from Hum’s point of view the application for leave to appeal (out of time) the orders made by Brewer J on 11 February 2021 and a related stay application would have to be considered by this Court.
[25] The appeal against Toogood J’s decision does not open the door to Hum to enable it to revisit matters on appeal which have been finally determined against it, such as the liability decision and Stylo’s right to possession of the property in issue.
12 Dymocks Franchise Systems (NSW) Pty Ltd v Bigola Enterprises Ltd, above n 10; Royal Forest and Bird Protection Society of NZ Inc v Minister of Fisheries [2021] NZHC 2282; Fullers Bay of Islands Ltd HC Auckland CIV-2009-404-7207, 23 February 2011; Palmerston North City Council v Birch [2012] NZHC 3248; Enright v Gold Medal Exports Ltd (1989) 3 PRNZ 243 at 245-246; Raffles Education Corporation Ltd v Mills HC Auckland CIV-2008-404-5258, 16 February 2009; Harnish v Bruce [2014] NZHC 302 at [16]; and Pinson v Pinson (1991) 5 PRNZ 177.
[26] I accept Mr Parmenter’s submission that it is now far too late for Hum to seek to challenge the liability decision (as was also recorded by Brown J in the recent judgment of the Court of Appeal).13 As Brown J noted in that judgment:14
[8] Hum’s notice of appeal purports to give notice of an appeal against not only the quantum judgment, but also the liability judgment and the order granting permission to seal orders cancelling the lease of 11 February 2021. Hum cannot revisit the liability judgment given the outcome of CA176/2021. Nor without leave can it seek to file an appeal long out of time in relation to the 11 February 2021 decision. Hence its current appeal is confined to a challenge to the quantum judgment.
The Court of Appeal confirmed in CA176/2021 that the appeal against the liability judgment lapsed. It would be an abuse to seek to relitigate that again as Ms Armitage apparently proposes.
[27] The requirements of r 17.29 are not met in this case. No miscarriage of justice (let alone a substantial miscarriage of justice) arises if this Court does not stay the effect of Toogood J’s orders. Even if Toogood J’s orders were set aside that could have no practical effect on Stylo’s ability to pursue the sale of the property in issue. It is entitled to possession and to deal with the property as it sees fit.
[28] Nor are the requirements for a stay under r 12 of the Court of Appeal Rules met. The appeal against Toogood J’s judgment will not be rendered nugatory if a stay is not granted. As noted, Toogood J’s orders can have no impact on the previous judgments of this Court and the Court of Appeal. On the other hand, to prevent Stylo dealing with its property would severely prejudice it and would be contrary to those previous judgments.
[29] Ms Armitage says she and other former tenants/occupiers of the property will be affected. However, that submission is based on the premise they have rights in the property which have been determined against them.
[30]There is no public interest in the proceeding.
13 Hum Hospitality Ltd v Stylo Medical Services Ltd, above n 9.
14 (footnote omitted).
[31] The balance of convenience clearly favours Stylo being able to deal with its property.
[32] Ms Armitage also referred to the 2016 proceeding. Hum has had opportunity to pursue its proceedings against the Council and Stylo in the 2016 proceedings. It had three previous fixtures adjourned for a variety of reasons. That 2016 proceeding is currently stayed until Hum pays the security for costs ordered by Associate Judge Bell. Those proceedings are unaffected by the orders of Toogood J in these proceedings.
[33] The reasons given by the Court of Appeal in its judgment of 16 June 2022 in which it refused to stay enforcement of the quantum judgment pending the appeal are worth repeating and are also applicable to this application:15
[14] Hum contends in its application that its appeal right will be rendered nugatory if “the Orders” are not stayed. It is evident that “the Orders” Ms Armitage refers to are other orders not under appeal in this proceeding, namely, the possession order and arrest order. So, for example, Hum contends that its appeal right will be rendered nugatory if the order for Ms Armitage’s imprisonment is executed in the face of what she contends is Hum’s lawful possession of the property. It is also said that Ms Armitage will have lost her home of 10 years and her freedom. But possession of the property has now been given back to Stylo and the arrest order has been quashed. In any case, these are not consequences of execution of the money judgment under appeal in this proceeding and must be put to one side. The only other particulars listed under this head are the contentions that Stylo will be seen to have benefited from its own wrong (alleged misrepresentation and failure to perform) and unjust enrichment. These are not reasons why the appeal right would be rendered nugatory if a stay is not granted.
[34] As to the suggestion Hum would lose the opportunity to pursue any meritorious claim if liquidated, as the Court of Appeal observed in the same judgment, if there was any merit in the appeal (which it doubted) the liquidator would be able to pursue it.
[35] The merits of the appeal do not support a stay. Toogood J’s decision under r 5.35B was a decision open to him on the basis of his review of the proceedings. Hum’s attempt to revisit the liability judgment through the means of seeking to leave to appeal the orders made in the minute of 11 February 2021 is misconceived.
15 Hum Hospitality Ltd v Stylo Medical Services Ltd, above n 2.
[36] Even if it were appropriate for the Court to consider the merits of the proposed application for leave to appeal out of time the 11 February orders of Brewer J on the current appeal, the merits would not support relief. In the minute of 11 February 2021 Brewer J did no more than confirm that Stylo could seal orders for possession. The basis for the orders for possession arose from the liability judgment itself which, as noted, is now beyond challenge.
[37] Ms Armitage’s submission on behalf of Hum that if the quantum judgment appeal succeeded that would enable the reopening of the liability judgment is also misconceived and highlights the difficulties presented by Ms Armitage’s approach to the matter of behalf of Hum. Further, for that appeal to proceed requires Hum to pay security to the Court of Appeal by 26 July 2022 which, on its own evidence, Hum is extremely unlikely to be able to do. As the Court of Appeal said in its stay judgment:16
[7] … Hum is insolvent. Ms Armitage confirms in her supporting affidavit that Hum has no income and is effectively moribund:
74.The only source of income Hum had was the villa and all the monies was going back to [Stylo].
75.However, I am creative and resourceful, if matters were stayed I could bring Hum back to life.
[8] Hum’s liabilities also appear to far exceed its assets. Draft accounts submitted by Ms Armitage in support of Hum’s application for a waiver of the
$1,100 filing fee disclose that it traded at a loss of $158,896 in the year to 31 March 2021 and had negative equity of $519,443 taking account of current liabilities at that date of $2,466,803.
[38] While the Court is conscious of the need to facilitate access to justice, the interests of justice also require the Court to consider the interests of other litigants and parties who are drawn into vexatious proceedings or applications and are forced to incur unnecessary expense to respond to them without a realistic prospect of recovering any costs, as is the position Stylo faces in this case. Further, there is a real risk that the credibility of, and respect for, the Court system generally would be damaged if the Court were to permit such behaviour.
16 Hum Hospitality Ltd v Stylo Medical Services Ltd, above n 2.
Result/orders
[39] For the above reasons the applications for stay in their various guises are dismissed. Stylo is to have costs on a 2B basis.
[40] Mr Parmenter orally sought costs against Ms Armitage. If that application is to be pursued a formal application should be filed. Ms Armitage should have the opportunity to take advice and respond to such an application.
[41] Having reviewed the procedural background to the proceedings and the procedural morass created by the documents filed by Ms Armitage I also make the following orders:
(a)Ms Armitage is not to represent Hum in either these proceedings CIV- 2019-404-365 or CIV-2016-404-636 that are currently before this Court.17
(b)If Ms Armitage purports to file any documents on behalf of Hum in either of the above proceedings they are to be rejected by the Court and returned to her.
[42] For the avoidance of doubt, Stylo is entitled to deal with the property in issue as it sees fit whether by sale or otherwise.
[43] The liquidation proceedings against Hum are to proceed as directed and upon the terms confirmed by the Associate Judge in his recent minute.
Venning J
17 The record in CIV-2016-404-636 currently discloses that Hum is represented by a solicitor.
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