CRIFFEL DEER LIMITED v ANZ BANK NEW ZEALAND LIMITED [2022] NZHC 2901

CRIFFEL DEER LIMITED v ANZ BANK NEW ZEALAND LIMITED [2022] NZHC 2901 [4 November 2022]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-384[2022] NZHC 2901BETWEEN CRIFFEL DEER LIMITEDFirst PlaintiffPRIME COMMERCIAL LIMITEDSecond PlaintiffMICHAEL ROBERT GARNHAMThird PlaintiffSBF PROPERTIES LIMITEDFourth PlaintiffAND ANZ BANK NEW ZEALAND LIMITEDDefendantHearing: 27 October 2022Counsel: T J Shiels KC for PlaintiffsM G Colson KC and S J Leslie for DefendantJudgment: 4 November 2022JUDGMENT OF CHURCHMAN J[Stay]Introduction[1] I have previously issued two judgments in this matter. Firstly, on 29 July 2022,I struck out the plaintiffs' claims.1 Secondly, on 21 September 2022, I awarded coststo ANZ in the sum of $150,917.55 plus disbursements.21 Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 1851.2 Criffel Deer Ltd v ANZ Bank New Zealand Ltd [2022] NZHC 2418.[2] The plaintiffs have now filed an application for a stay of execution, againstboth decisions pending an appeal to the Court of Appeal (in relation to the first decisiononly), in reliance on r 12 of the Court of Appeal (Civil) Rules 2005. The applicationis opposed by ANZ.[3] I note that there is conflicting authority as to whether the court has jurisdictionto stay the enforcement of a costs decision when only the substantive decision hasbeen appealed. In Lu v Industrial and Commercial Bank of China (New Zealand)Limited3 the Court of Appeal concluded that where a costs decision has not beenappealed, there is no basis for staying enforcement of it when the substantive decisionhas been appealed. The opposite conclusion was reached in Siddiqui v Siddiqui.4However as Mr Colson KC indicated that he was not pursuing the point, I am notrequired to deal with it.Positions of the partiesThe Garnham companies[4] I will refer to all the plaintiffs as the Garnham Companies even though thethird plaintiff is Mr Garnham personally. The Garnham companies seek to preventANZ from enforcing the costs judgment or its securities, while pursuing its appealagainst the strike-out decision. Counsel for the Garnham companies, Mr Shiels KC,says that their appeal will involve the submitting to the Court of Appeal of an amendedstatement of claim:alleg[ing] ongoing oppression continuing up to the present time and willexpressly apply to set aside the 2015 settlement document as being enteredinto while the Plaintiff were the recipients of oppressive conduct.[5] Mr Shiels further says:While it is acknowledged that the evidence is not detailed, Counsel'sinstructions are that it is fully expected that cashflow in the immediate futurewill enable the costs order to be met or the amount placed in trust pending theoutcome of the appeal.3 Lu v Industrial and Commercial Bank of China (New Zealand) Limited [2020] NZCA 538 at [31].4 Siddiqui v Siddiqui [2021] NZHC 2822; and Siddiqui v Siddiqui [2022] NZCA 44.It is not appropriate to debate in detail the merits of the appeal pending theopportunity for new advisers to become fully familiar with the matter, preparean amended Statement of Claim, and file submissions in the Court of Appeal.Given the security margins, it is submitted that little if any weight should beput on the strength of [the] appeal at this stage and that it is particularlyinappropriate for a High Court Judge to be asked to assess the strength of anappeal against his judgment.[6] Mr Shiels submits that the overall balance of convenience favours a stay ofenforcement of the costs order and an interim order restraining enforcement of thesecurities. His argument is that as ANZ has securities to a value higher than the costsjudgment, their position would remain adequately protected if a stay is granted.ANZ[7] Counsel for ANZ, Mr Colson KC, submits that the Court has no jurisdiction togrant an order to prevent ANZ from enforcing its securities, and that it would becontrary to all established authority to grant the stay application. He says that theplaintiffs' application is "in reality a backdoor application for an interim injunctionunder r 7.53without meeting any of the criteria for granting an injunction".[8] Mr Colson submits that the plaintiffs submissions and evidence do not giveany reasons other than ANZ's secured position why a stay should be granted. He saysthat the appeal would not be rendered nugatory by a stay, because ANZ's enforcementof its securities would not prevent the plaintiffs from pursuing their appeal and, ifsuccessful, their claim against ANZ. He says also that the appeal itself is adequate toprotect the plaintiffs' position.5 He says that there is no evidence before the Court thatthe plaintiffs cannot pay the costs order, and that therefore paying the costs ordershould not affect their ability to pursue the appeal.[9] Mr Colson submits that the claim was found to be wholly without merit, time-barred, the subject of a settlement agreement, and unsupported by any credibleevidence. He says that the appeal is hopeless, not bona fides, and that ANZ will beinjuriously affected by the stay, stating:5 Green Meadow Holdings ApS v Sargison [2018] NZHC 2216.the orders sought would entail a serious abrogation of ANZ's rights assecured creditor. Staying the costs order would force ANZ to lend further tocustomers who have been in default of their obligations to the bank for10 years, while remaining out of pocket for its costs.The "further lending" he is referring to is in respect of the quantum of the costsjudgment which is a sum of money that the defendant is entitled to now but which, ifthe application is granted, it would be obliged to effectively lend to the plaintiffs untilthe appeal is disposed of.[10] Mr Colson says that the public interest favours lenders being able to carry ontheir business without being subjected to vexatious litigation, and the ability oflitigants to be able to recover their costs promptly. He says that there is no authorityfor the proposition that a secured creditor should be treated differently on a stayapplication. Overall, he submits that the balance of convenience does not favour thegranting of the orders sought, and that typically a successful litigant is entitled to thefruits of judgment.6 He submits that the application should be dismissed with furtherindemnity costs to ANZ.Discussion[11] The general approach to a stay application involves the balancing of thecompeting rights of the parties. There is a need to provide the benefit of a judgmentto a successful party, while also preserving the rights of an appellant in the event thattheir appeal is successful. The factors noted by the Court of Appeal in Keung vGBR Investment Ltd are to be taken into account in the balancing exercise.7 However,as I have previously stated:8The starting point is the general rule that a party is entitled to enjoy the fruitsof a judgment in its favour and that a party is seeking a stay has to persuadethe Court that if it were not granted, its appeal rights would be renderednugatory.96 See Siddiqui v Siddiqui [2022] NZCA 44.7 Keung v GBR Investment Ltd [2010] NZCA 396.8 Forster v Stobart Holdings Ltd [2022] NZHC 1304 at [29].9 Phillip Morris (New Zealand) Ltd v Leggett & Myers Tobacco Co (NZ) Ltd [1977] 2 NZLR 41(CA).[12] In short, I am of the view that the balancing exercise falls in favour of theapplication being dismissed. I do not accept the plaintiffs' submissions that it isinappropriate to ask a High Court Judge to assess the strength of an appeal against hisjudgment. That is an exercise that the Court is routinely called upon to undertake inrelation to stay applications and applications for leave to appeal. There is no realisticprospect of success on the appeal, and I find it difficult to conclude that the appealitself is bona fides. An amended statement of claim is yet to be filed in the Court ofAppeal. No case on appeal has yet been filed. The plaintiffs are effectively invitingthe Court to grant a stay prior to having the opportunity to adequately enquire into thestrength of the proposed grounds of appeal. Without further information as to thenature of the proposed appeal, the Court may only make an assessment of theinformation that has been put before it, which indicates that the appeal, like theplaintiffs' case in this Court, is wholly without merit. In the substantive judgment Inoted:10As submitted by counsel for ANZ, what Mr Garnham is asking the Court tofind is that he, an experienced commercial property lawyer and investor,executed formal loan documentation for a sum of tens of millions of dollars,while believing the written terms did not reflect the true bargain. This is notplausible. The clarity of the contemporaneous documents makesMr Garnham's claims untenable. The loan documents that were signed, andthe correspondence between ANZ and Mr Garnham, directly contradictMr Garnham's version of events.[13] On my assessment, nothing has changed that position in the interim. However,I note that Mr Garnham has recently had another money judgment made against him,and that the plaintiffs' previous counsel were granted leave to withdraw on the basisthat Mr Garnham had not paid their fees.11 I accept Mr Colson's submission that theplaintiffs have failed to adequately identify why a stay should be granted, and that thefact that ANZ is a secured creditor does not change the situation. It is also clear thatANZ will be injuriously affected by a stay on the basis outlined by Mr Colson. Inthose circumstances, the balance of convenience favours the dismissal of theapplication for a stay. It is also clear that the appeal will not be rendered nugatory ifthe stay is not granted. There is no suggestion that ANZ would not be in any positionto repay the costs award should the substantive appeal be successful.10 Above n 1, at [57].11 See Dunajtschik v Garnham [2022] NZHC 2467; and Criffel Deer Ltd v ANZ Bank New ZealandLtd [2022] NZHC 2175.[14] As to the application for an order preventing the enforcement of ANZ'ssecurities, while it is arguable that the Court may have the jurisdiction to make suchan interim order pending appeal, in the present case there is no appropriate basis fordoing so. As identified by Mr Colson, the plaintiffs' reliance on Brook ValleyCommunity Group Inc v Minister for Environment is misplaced.12 For the reasonsidentified above as to the stay application, I am also of the view that an orderpreventing the enforcement of ANZ's securities pending the appeal is not appropriate.I dismiss that application.Result[15] The applications are dismissed. I award ANZ costs on this matter on a 2B basisplus usual disbursements.Churchman JSolicitors:Stephens Lawyers Limited, Wellington for PlaintiffsBell Gully, Wellington for Defendant12 Brook Valley Community Group Inc v Minister for Environment [2017] NZCA 377.