Tadd Management Limited v Weine
[2023] NZHC 3300
•21 November 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-781
[2023] NZHC 3300
UNDER sections 24–30 and 35 of the Contract and Commercial Law Act 2017 IN THE MATTER OF
the property at 134 Queens Drive, Lower Hutt
BETWEEN
TADD MANAGEMENT LIMITED
Plaintiff
AND
RUTH RENTON WEINE and MICHAEL
DAVID HOFMANN-BODY as trustees of the Ruth Weine Family Trust
DefendantsAND
NEW ZEALAND CONSULTING ENGINEERS LIMITED
Third Party
On the Papers Counsel:
F B Collins for the Plaintiff
M R C Wolff for the Defendants
Judgment:
21 November 2023
JUDGMENT OF GWYN J
(Application for stay of enforcement of judgment)
Solicitors:
Gibson Sheat Lawyers, Wellington Morrison Kent, Wellington
TADD MANAGEMENT LTD v WEINE [2023] NZHC 3300 [21 November 2023]
Introduction
[1] This proceeding arose out of the purchase by the plaintiff, TADD Management Ltd (TADD), of a commercial building in Lower Hutt in December 2017 (property). The vendors of the building were Ruth Weine and Michael Hofmann-Body, as trustees of the Ruth Weine Family Trust (Trust). TADD’s claim was that it relied on representations by the vendors as to the seismic rating of the property. An Initial Seismic Assessment (ISA) provided by the vendors assessed the building as having a 60%NBS (New Building Standard) rating. Subsequently, TADD obtained two Detailed Seismic Assessments (DSAs), the first of which assessed the property at 10%NBS and the second at 30%NBS.
[2] TADD brought claims against the vendors in misrepresentation and/or common mistake. The vendors, in turn, claimed against the engineering firm that had provided the initial ISA, alleging breach of contract, negligence and breach of the Fair Trading Act 1986.
[3] In my judgment of 5 April 2023 (judgment),1 I found for the plaintiff against the defendants, in both misrepresentation and common mistake. I dismissed the defendants’ claims against the third party.
[4] The judgment awarded the plaintiff $609,842.40, together with costs and interest (judgment sum). Costs were subsequently awarded2 to the plaintiff on a 2B scale basis.
Application to stay enforcement of judgment
[5] By application of 23 May 2023 the defendants sought a stay of the judgment on the basis that they have lodged a notice of appeal against the judgment, their appeal will be rendered nugatory if the stay is not granted, and the plaintiff and the third party will not be injuriously affected by the judgment being stayed until resolution of the appeal.
1 TADD Management Ltd v Weine [2023] NZHC 764.
2 TADD Management Ltd v Weine [2023] NZHC 2573; and see also TADD Management Ltd v Weine
[2023] NZHC 1968.
[6]The application for a stay is opposed by the plaintiff.
[7] For the reasons set out in my minute of 13 October 2023,3 there was a considerable delay in the application coming before me. As a result of that delay, it was not possible to afford the parties an oral hearing of the application and I have dealt with it on the basis of the parties’ written submissions.
Defendants’ submissions in support of application
[8] The defendants rely on the principles set out by the Court of Appeal in Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust.4
[9] Their primary submission is that the appeal will be rendered nugatory if the stay is not granted, because the defendants have serious concerns about the plaintiff’s solvency.
[10] These concerns are detailed in an affidavit from Michael Hofmann-Body dated 22 May 2023. Mr Hofmann-Body notes that the Trust is not aware of TADD’s financial position, but does know that TADD is associated with another company, Armstrong Downes Commercial 2012 Ltd (in liq) (Armstrong Downes).
[11] Mr Hofmann-Body observes that Armstrong Downes is in liquidation and there is an ongoing liquidation process. His affidavit attaches a liquidators’ report (for the period 2 May 2022 to 2 November 2022) which records that there are creditor claims against Armstrong Downes of $30.4 million. The liquidators’ report records that claims have been filed against related parties and the liquidator is confident there will be a substantial interim distribution to creditors. Mr Hofmann-Body says that the “Trust considers it very likely” that TADD is being sued, or is at risk of being sued in that process “for a substantial sum of money.”
[12] A memorandum of counsel for the defendants dated 10 October 2023 notes that TADD has sold the property and all other properties owned by it. The defendants’
3 TADD Management Ltd v Weine HC Wellington CIV-2019-485-781, 13 October 2023 (Minute of Gwyn J).
4 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377.
submissions in support of the application state that TADD has made all its management staff redundant. This is confirmed in Mr Taylor’s affidavit which I refer to at [18] below.
[13] On that basis, the defendants say that, if TADD is able to enforce the judgment now, pending the defendants’ appeal, the appeal will be rendered pointless because there is a real risk that the Trust will not be able to recover any money paid to TADD, if the Trust is ultimately successful in its appeal.
[14] The defendants also submit that the appeal involves a novel issue regarding the interpretation of seismic assessments for commercial buildings. The decision on the appeal may impact on NBS rating calculation methodologies in the future. They say too that the interpretation of seismic assessments is a matter of public interest. In the defendants’ submission, the grounds of appeal are strong.
[15] Mr Hofmann-Body confirms that the Trust holds cash assets of $1.5 million on interest-bearing term deposit, sufficient to cover the judgment sum. He gives an undertaking that the Trust will continue to hold that money in the Trust’s solicitor’s trust account and he will not consent to it being released prior to the appeal being heard and a decision released.
[16] For those reasons the defendants say the balance of convenience favours the granting of a stay of execution.
Plaintiff’s submissions opposing the stay application
[17] The plaintiff opposes the application, relying on the relevant principles as set out in Keung v GBR Investment Ltd5 and Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust.6
[18] TADD submits that there is no evidence provided by the defendants to support their speculation that TADD will be unable to repay the judgment amount if the appeal is successful. Mr Taylor, who is one of two co-directors of TADD, has provided an
5 Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [111].
6 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, above n 4.
affidavit in which he addresses the assertion made by Mr Hofmann-Body that TADD is very likely being sued or at risk of being sued by the liquidators of Armstrong Downes. Mr Taylor’s evidence is that a claim was filed by the liquidators but was quickly resolved and settled. The fact of the settlement is recorded in the liquidators’ latest report dated 2 June 2023 (which is attached to Mr Taylor’s affidavit) and the settlement amount has been paid in full. Mr Taylor confirms that TADD does not face any other claims.
[19] TADD says that while the property has been sold to a related entity controlled by the directors, that is not an impediment to recovery by the defendants.
[20] Mr Taylor records that, in response to the defendants’ concern in the High Court proceeding that TADD would not be able to meet costs if unsuccessful, it voluntarily paid security for costs into Court. Mr Taylor confirms that if the appeal is successful TADD would have the ability to repay the amount it is currently entitled to be paid.
[21] The plaintiff also says that, as the defendants’ own submissions acknowledge, in the event the appeal is successful but the judgment sum is not repaid, they would have to commence debt recovery proceedings or alternatively pursue the directors personally. TADD says that the possibility of having to issue debt recovery proceedings if a judgment is reversed on appeal is a risk common to all successful appellants.
[22] TADD addresses the strength of the defendants’ appeal. It says this was a conventional claim for misrepresentation/mistake relating to the sale of a commercial building. It is highly unlikely that both findings of the High Court — that there was a misrepresentation and also a common mistake — will be reversed by the Court of Appeal, as the case turned on a factual assessment as to the meaning of the representations made by the defendants and no novel questions of general or public importance arise.
[23] TADD says it will be injuriously affected by a stay. It has incurred the costs of substantial seismic strengthening work to the building. It issued proceedings in
2019 and obtained judgment on 5 April 2023. The appeal is not to be heard until 12 February 2024, with an unknown period following that before release of any judgment. In all, TADD has or will have absorbed and funded the costs of the strengthening works for between three and four years. The balance of convenience therefore favours a stay being declined.
Discussion
[24] The application is made in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. Subrules 3 and 4 are of particular importance. They provide:
…
(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.
…
[25] The Court is required to balance two principles. First, a successful litigant should not be deprived of the fruits of its litigation.7 Second, an appellant should not be deprived of the fruits of a successful appeal.8
[26]In balancing the two principles, the relevant considerations include:9
(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;
7 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, above n 4.
8 Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87.
9 Court of Appeal (Civil) Rules 2005, r 12 and the commentary in Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9], as approved by the Court of Appeal in Keung v GBR Investment Ltd, above n 5, at [11].
(c)whether the successful party will be injuriously affected by the stay;
(d)the effect on third parties;
(e)the novelty and importance of the questions involved;
(f)the public interest in the proceeding;
(g)the overall balance of convenience; and
(h)the apparent strength of the appeal.
[27] Not all factors apply in every case. Here, no question arises as to the bona fides of the appellant as to prosecution of the appeal. The appeal is to be heard on 12 February 2024.
[28] The defendants do not appeal the findings made against them in respect of the third party and have paid the costs awarded to the third party.
Novelty and importance, public interest
[29] On the one hand, as the plaintiff submits, the case involved the routine application of the Contract and Commercial Law Act 2017, with the judgment ultimately turning on my factual assessment of the representations made by the defendants to the plaintiff and other prospective purchasers of the building. It is also correct, as the defendants contend, that there is little previous authority on the interpretation of seismic assessments for commercial buildings. Ultimately these factors do not assist in the determination of the application.
Strength of the appeal
[30] Nor are the merits of the appeal so obvious as to be a critical factor in favour of a stay.
Will the appeal be rendered nugatory?
[31] The defendants’ application focuses primarily on whether their appeal may be rendered nugatory, submitting there is a real risk that if they make payment of the judgment sum, but then succeed in their appeal, the plaintiff will not be in a position to repay them.
[32] In relation to money judgments, as the authors of McGechan on Procedure note,10 the Court’s approach generally has been that, so long as there is an appropriate assurance of repayment if the appeal is successful, then the party successful at first instance should have its money at once.11
[33] The prospect of litigation by the liquidators of Armstrong Downes against TADD, mooted by Mr Hofmann-Body, is directly met by Mr Taylor’s affidavit, who says there are no current or pending claims against TADD.
[34] There is no evidence before the Court directly relating to TADD’s financial position and whether it would be able to repay the judgment sum. That cuts both ways: on the one hand, the defendants’ speculation about the risk of non-payment is simply that. On the other hand, TADD has chosen not to proffer direct evidence of its financial position in order to support Mr Taylor’s commitment that it would be able to repay the defendants if the appeal were successful.
[35] The question is whether TADD has given an “appropriate assurance” of repayment if successful. In ASB Bank Ltd v Lin,12 Associate Judge Bell held that an appropriate assurance from the Bank was a written undertaking signed by a duly authorised bank officer, that if the appeal went against the Bank it would forthwith refund to the defendants the proceeds of the judgment. However, by its nature, the plaintiff in this case is not in a position to offer the same certainty as a bank.
10 Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [CR12.01(3)].
11 McLeod v New Zealand Pine Co Ltd (1892) 11 NZLR 493 (SC) at 495; and Contributory Mortgage Nominees Ltd v Harris Road No 10 Ltd (2006) 22 NZTC 19, 752 (HC) at [13]–[22].
12 ASB Bank Ltd v Lin [2014] NZHC 106, [2014] NZAR 327 at [26].
[36] Other cases under r 12 are most frequently concerned with whether the party seeking the stay (that is, the unsuccessful party) has offered adequate security.13 In my view, the assessment of what constitutes adequate security or is an “appropriate assurance” in those cases, is not directly analogous to what is required of the successful party where the unsuccessful party seeks a stay.
[37] In this case Mr Taylor’s commitment on oath that TADD would be able to repay, together with TADD’s past record in relation to security, does provide some assurance in the face of what is a speculative concern raised by the defendants.
[38] And ultimately the assurance as to repayment is one factor in the balancing exercise, but not determinative. In the stay decision in Skids Program Management Ltd v McNeill, Woodhouse J said:14
I hesitate to differ from an observation of that eminent Judge, [Williams J in McLeod v The New Zealand Pine Company Ltd] but in my opinion it is unwise to introduce what appears to be absolutes when considering the exercise of the discretion that is involved. This includes the Judge’s suggestion that the applicant’s ability to recover the payment must be “made certain”. Removing material risks for the party required to make the payment is obviously an important consideration. But it is not an absolute. This is perhaps implicit in the sentence in which the Judge refers to seeking to reconcile the conflicting interests “as far as possible”. The absence of absolutes was addressed in a slightly different way by the Court of Appeal in Keung. The Court said that the fact that an appeal will be rendered nugatory if there is no stay is not determinative.15
Prejudice to successful party
[39] I accept there would be material prejudice to the plaintiff if a stay is granted. It will remain out of pocket for the substantial remediation costs it spent on the building and for which it successfully claimed. That is so notwithstanding Mr Hofmann-Body’s assurance for the defendants that the judgment sum will be held in a solicitor’s trust account and available to be paid to TADD if the defendants’ appeal is unsuccessful.
13 See for example Contributory Mortgage Nominees Ltd v Harris Road No 10 Ltd, above n 11; and
Taylor v Asteron Life Ltd [2019] NZHC 2459.
14 Skids Program Management Ltd v McNeill HC Auckland CIV-2010-404-1696, 20 December 2011 at [11].
15 Keung v GBR Investment Ltd, above n 5, at [20], following Cousins v Heslop [2007] NZCA 377, (2007) 18 PRNZ 677.
Overall balance of convenience
[40] Having regard to the factors set out above, I conclude that the overall balance of convenience weighs against granting a stay.
Result
[41] I conclude that, in this case, justice is best met by declining the application for stay of enforcement of the judgment. The application is dismissed.
[42] In consequence, the plaintiff is entitled to immediate payment of the judgment sum, without condition.
Gwyn J
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