BARRY JOHN HART V ANZ NATIONAL BANK LIMITED HC AK CIV-2012-404-2583

BARRY JOHN HART V ANZ NATIONAL BANK LIMITED HC AK CIV-2012-404-2583 [28 November 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-404-2583[20123] NZHC 3195BETWEEN BARRY JOHN HARTFirst ApplicantAND WOODHILL STUD LIMITEDSecond ApplicantAND WOODHILL HOLDINGS LIMITEDThird ApplicantAND MALORY CORPORATION LIMITEDFourth ApplicantAND ANZ NATIONAL BANK LIMITEDRespondentHearing: 28 November 2012Counsel: B J Hart in personJ N Bioletti for Corporate ApplicantsL A O'Gorman and A L Williams for RespondentJudgment: 28 November 2012(ORAL) JUDGMENT OF LANG J[on application for stay of execution of judgment and order][1] In this proceeding Mr Hart advanced claims against the ANZ Bank NewZealand Limited ("the Bank") based on alleged breaches of ss 97 and 176 of theProperty Law Act 2007. Both causes of action arise out of the manner in which thebank has endeavoured to exercise its powers as mortgagee of properties owned bythe plaintiffs.[2] The cause of action under s 97 alleges that the manner in which the Bankexercised its powers effectively clogged the plaintiffs' right to redeem themortgages. The claim under s 176 alleges that the Bank has exercised its powers ofsale in respect of the mortgaged properties in a manner that has failed to obtain anappropriate sale price for them.[3] The Bank counterclaimed against the plaintiffs in respect of monies allegedlyowing to it under several banking facilities. The bank then applied for summaryjudgment against the plaintiffs, both in respect of the plaintiffs' claims and in respectof its own counterclaims. In a judgment delivered on 29 October 2012, AssociateJudge Abbott granted the bank's applications.1 He entered summary judgmentagainst the plaintiffs on their substantive claims, and also entered summary judgmentin favour of the bank on its counterclaims.[4] As a consequence, the plaintiffs now have judgment debts against them forsubstantial sums of money. The bank had already served a bankruptcy notice on MrHart in respect of an award of costs2 it received at an interlocutory phase of thisproceeding. Mr Hart had sought to have the bankruptcy notice set aside. In thejudgment that he delivered on 29 October 2012, the Associate Judge dismissed thisapplication. As a consequence, the Bank has now filed a creditor's applicationseeking to have Mr Hart adjudicated bankrupt, and this is due to be called in theAssociate Judge's bankruptcy list on 13 December 2012. The Bank also relies onthe judgment debts arising out of this proceeding in advancing this application.[5] The proceeding comes before the Court today because the plaintiffs seek anorder staying execution of the Associate Judge's judgment pending the1 Hart v ANZ National Bank Ltd HC Auckland CIV-2012-404-2583, 29 October 2012.2 In the sum of approximately $30,000.00.determination of an appeal they have filed in the Court of Appeal against thejudgment of the Associate Judge. They say they have arguable grounds of appealand that, to a large extent, their appeal rights will be rendered nugatory in the eventthat a stay is not granted.[6] The application for stay has two distinct aspects. First, the plaintiffs seek astay of the Associate Judge's ancillary order requiring the plaintiffs to provide thebank with vacant possession of the remaining block of land that it wishes to sellwithin ten working days following service of an order on Mr Hart.3 Although thereis no evidence on the point, I infer that the time for giving and taking of possessionhas now passed.[7] The second aspect of the stay relates to the bankruptcy proceeding currentlybefore this Court.a) The order requiring the plaintiffs to give up possession of the property[8] In order to understand this issue, it is necessary to have regard to thebackground to today's application.[9] This is not the first occasion on which Mr Hart and the plaintiffs haveendeavoured to prevent the bank from selling the properties. The plaintiffs filed anapplication for an interim injunction on 11 May 2012 seeking to prevent the bankfrom exercising its power of sale as mortgagee of the properties. This was listed forcall on 21 June 2012. When the application was called on that date, however, MrHart withdrew the application.[10] The plaintiffs filed a second application for an interim injunction seeking thesame relief on 3 July 2012. This was listed for first call on 12 July 2012. On thatdate, it came before Venning J. The bank had filed documents in opposition to the3 This proceeding concerns eight separate properties. The Bank has already sold all but one of theproperties.application, and the Judge was in a position to hear the application on a defendedbasis. Again, however, Mr Hart sought leave to withdraw the application.[11] Venning J was clearly concerned at the prospect of successive applicationsfor injunctive relief being filed in relation to the bank's exercise of its powers of saleas mortgagee. I infer this from the following passages of the judgment that VenningJ delivered on 12 July 2012:4[3] When the matter was called at 2.15 this afternoon, Mr Hart indicatedhe no longer opposed the bank's opposition in relation to the injunction andindicated he would withdraw the application for interim injunction.[4] Ms O'Gorman opposed the matter being dealt with on that basisgiven what had occurred on an earlier date. In relation to that, I note that the first application for interim injunction by Mr Hart in these proceedings was before the Court on 21 June. On that date counsel was granted leave towithdraw in Mr Hart's presence, and the Court was advised the applicationwas to be withdrawn. The Judge dismissed the application. Ms O'Gormanwas concerned that the same position might arise in relation to the injunction application before the Court today and the bank would be faced with a further application.[5] Given the background to the matter, I indicated to Mr Hart that I would only be prepared to deal with the matter without hearing full argument on it if he undertook that no further application for interim injunction to prevent the bank exercising its powers of sale as mortgagee would be made. Mr Hart sought time to consider his position.[7] After Mr Hart had take time to consider his position, he confirmed that he was prepared to give an undertaking to the Court that he would not pursue further injunctive relief against the bank to prevent the bank'smortgagee sales and also confirmed he would not oppose the application to remove the caveats in the related proceedings.[8] On that basis I consider it unnecessary for Ms O'Gorman and thebank to proceed formally with the opposition to the second application forinjunctive relief. However, I record that Ms O'Gorman was ready and ableto deal with the matter substantively. I also record that the Court had time to deal with the matter substantively and that the applicants, Mr Hart and the related companies, had the opportunity to put their full case in support of the interim injunction before the Court but chose not to do so.[9] Finally, I record the undertaking referred to above. On the basis of the matters I have referred to I formally dismiss the application for interim injunction.4 Hart v ANZ National Bank Ltd HC Auckland CIV-2012-404-2583, 12 July 2012.[12] Ordinarily, in an application for stay of execution of a judgment, the Courtwould take into account a wide range of factors. These are whether the appeal wouldbe rendered nugatory by the lack of a stay, the bona fides of the applicant as to theprosecution of the proposed appeal, whether the successful party will be injuriouslyaffected by the stay and the overall balance of convenience. The strength of theproposed appeal may also be taken into account when considering where the balanceof convenience lies.[13] I consider that the undertaking Mr Hart gave to the Court on 12 July 2012 isdeterminative of this aspect of the application. The spirit, if not the letter, of theundertaking he gave to the Court on that date was that he would not make anyfurther attempts to prevent the bank exercising its power of sale as mortgagee. Thepresent application therefore directly contravenes the spirit of that undertaking. Ifanything, the plaintiffs' position is now worse than it was when the proceeding wasbefore Venning J on 12 July 2012, because summary judgment has now been enteredagainst them in respect of their substantive claims against the bank. They can nolonger claim to have a good arguable case against the Bank. I consider this factoralone is sufficient to justify the Court declining this aspect of the application for stayof enforcement of the Associate Judge's judgment.[14] The Bank has indicated, however, that its preferred outcome in relation to the present application is that a stay should be granted, but on a limited basis so that theplaintiffs can seek a stay from the Court of Appeal. I propose to take that course ofaction, but record my own view of the situation for what it is worth.b) The enforcement of the judgment through bankruptcy proceedings[15] The judgments that the Associate Judge entered against Mr Hart do not formthe basis of the creditor's application for adjudication. As mentioned earlier, the actof bankruptcy alleged in that application relates to Mr Hart's failure to comply witha bankruptcy notice served on him prior to the delivery of the Associate Judge'sjudgment. The judgment debt on which the bankruptcy notice was based an orderfor costs that this Court made against Mr Hart when it dismissed his first applicationfor an interim injunction. The Court would therefore be entitled to determine theadjudication application without having regard to the judgments that the AssociateJudge entered against Mr Hart on 29 October 2012.[16] When exercising its insolvency jurisdiction, the Court has the power to haltbankruptcy proceedings in appropriate circumstances. This may be done where thedebtor is pursuing an appeal against the judgment that founds the bankruptcyproceeding. Although that is not strictly the case in the present proceeding, thecreditor relies on the judgments that the Associate Judge entered against Mr Hart inits application for Mr Hart's adjudication. I propose to leave it to the AssociateJudge who hears the creditor's application on 13 December 2012 to decide whetheror not the bankruptcy proceeding should be halted to enable Mr Hart to exercise hisrights of appeal to the Court of Appeal against those judgments.Result[17] The plaintiffs are granted a stay of enforcement of the orders and judgmentsmade by Associate Judge Abbott on 29 October 2012. The orders are to remain inplace until 14 December 2012 so as to enable Mr Hart to apply to the Court ofAppeal for a stay of execution from that Court.[18] In the event that the plaintiffs obtain a stay of execution from the Court of Appeal prior to 14 December 2012, the orders of this Court will be supplanted by those of the Court of Appeal and will cease to have any effect.[19] In the event that the Court of Appeal has heard an application for stay ofexecution prior to 14 December 2012 but has not delivered judgment on it, the stayof execution granted by this Court shall remain in place until such time as thejudgment of the Court of Appeal is delivered.Lang JSolicitors:Buddle Findlay, AucklandCounsel:J N Bioletti, AucklandCopy to:B J Hart, Auckland