CHESTERFIELDS PRESCHOOLS LIMITED (IN LIQUIDATION) v SISSON [2017] NZHC 176 [16 February 2017]

CHESTERFIELDS PRESCHOOLS LIMITED (IN LIQUIDATION) v SISSON [2017] NZHC 176 [16 February 2017]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2016-409-000040[2017] NZHC 176BETWEEN CHESTERFIELDS PRESCHOOLSLIMITED (IN LIQUIDATION)PlaintiffAND THERESE ANNE SISSONDefendantTHE COMMISSIONER OF INLANDREVENUEIntervenerCIV-2016-409-000185BETWEEN THERESE ANNE SISSONApplicantAND THE OFFICIAL ASSIGNEE (REESTATE OF DAVID JOHN HAMPTONFirst RespondentTHE COMMISSIONER OF INLANDREVENUESecond ResondentCIV-2016-409-000453BETWEEN THERESE ANNE SISSONApplicantAND IAG NEW ZEALAND LIMITEDRespondentCIV-2016-409-000637BETWEEN THERESE ANNE SISSONPlaintiffAND COMMISSIONER OF INLANDREVENUEDefendantHearing: 13 February 2017Appearances: T A Sisson - Plaintiff/Defendant/AplicantS Kinsler, P J Shamy and S L Russell for Commissioner ofInland RevenueB M Russell and K M Kendrick for Chesterfields PreschoolsLimited (In Liquidation)G Slevin for Official AssigneeM Mitchell for IAG New Zealand LimitedReasons: 16 February 2017REASONS FOR DECISION OF GENDALL JAs to application for stayIntroduction[1] On 7 November 2016 Therese Anne Sisson (Ms Sisson), the defendant in proceeding ending -40, filed in this Court an application for stay of certain judgments and any execution steps. The application itself specifically sought stay of a judgment and any step in execution thereof in respect of some of the proceedings in this Court in which she was involved, being CIV-2016-409-637, CIV-2016-409-40 and CIV-2016-409-185.[2] In addition, the orders sought by Ms Sisson included a further order requiring that the stay orders remain in place pending appeals of the above judgments to the Court of Appeal.[3] The liquidator of Chesterfields Preschools Limited (In Liquidation), the Commissioner of Inland Revenue and the Official Assignee all oppose the granting of any of the orders sought.[4] On Monday, 13 February 2017, after hearing submissions from all partiesregarding Ms Sisson's stay application I gave my decision dismissing the application. In doing so I indicated that my reasons for the decision would follow. I now give those reasons.Background[5] On 6 October 2015 Associate Judge Osborne in this Court in another proceeding, CIV-2015-409-043, made an order placing Chesterfields Preschools Limited into liquidation. The judgment was later recalled and reissued on 24 November 2015, adding Ms Sisson as a party for the purpose of allowing her to bring an appeal (the liquidation judgment).[6] On 26 October 2015 Ms Sisson appealed the liquidation judgment to the Court of Appeal but this appeal was subsequently deemed abandoned because it was not progressed in a timely manner.[7] Subsequently, however, on 18 October 2016, the Court of Appeal granted Ms Sisson leave to bring this appeal out of time subject to strict compliance with all obligations under the applicable rules.[8] So far as proceeding CIV-2016-409-40 is concerned, on 29 January 2016 the liquidators of Chesterfields Preschools Limited commenced this proceeding seeking relief including orders vesting various property in the liquidators, lifting of certain freezing orders which had been made and removal of a caveat. This proceeding is opposed by Ms Sisson who contends, as I understand it, that the property in question does not belong to the company in liquidation but, instead, it was beneficially held by her for the Anolbe Family Trust.[9] On 22 March 2016 Ms Sisson commenced proceeding CIV-2016-409-185 as an application for a declaration that another property at Augusta Street held in her name was beneficially held not on behalf of her previous partner, Mr Hampton, an undischarged bankrupt, but instead also by the Anolbe Family Trust. These proceedings were ordered to be consolidated on 15 June 2016.[10] Then, on 13 April 2016 Ms Sisson commenced another proceeding, CIV- 2016-409-304 seeking various declarations relating to alleged misconduct by employees of the Commissioner of Inland Revenue. The Commissioner has protested to the jurisdiction of this proceeding and her application to strike it out is scheduled for a call in this Court in the next few days.[11] Then, on 27 July 2016 Ms Sisson commenced proceeding CIV-2016-409-637 seeking an order setting aside the liquidation judgment and the Commissioner of Inland Revenue applied to strike this proceeding out.[12] Then, on 12 August 2016, Ms Sisson applied to this Court for a stay of proceedings CIV-2015-409-043, CIV-2016-409-040 and CIV-2016-409-185 pending resolution of CIV-2016-409-304 and proceeding CIV-2016-409-637. On 16 September 2016 Ms Sisson filed an amended application seeking to stay the enforcement proceedings pending resolution of the proceedings ending -637, -304, -1967, -2057 and -995.[13] A strike out application by the Commissioner of Inland Revenue brought in respect of proceeding ending -637 and Ms Sisson's stay applications were heardbefore Associate Judge Osborne in this Court on 3 October 2016. Following this hearing, Associate Judge Osborne struck out the -637 proceeding and declined Ms Sisson's stay applications.[14] On 31 October 2016 Ms Sisson filed applications for review of these judgments. She has also sought to appeal from the strike out judgment.[15] On 2 November 2016 Ms Sisson filed the present application as a further application to stay the proceedings. My decision given yesterday, 13 February 2017, dismissing her stay application related to proceedings ending -637, -40- and -185. These reasons relate to that decision.Legal position[16] Rule 12 of the Court of Appeal (Civil) Rules 2005 (the Rules) provides for a stay of proceedings and execution pending the determination of an appeal to the Court of Appeal. In particular, r 12(3) of the Rules provides:(3) Pending the determination of an application for leave to appeal or an appeal, the Court appealed from or the Court may, on 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.[17] In granting any such stay, r 12(4) of the Rules provides:(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; and(b) be subject to any conditions that the Court appealed from or the Court thinks fit, including conditions relating to security for costs.[18] Effectively, as I understand it, it is this r 12 of the Rules that Ms Sisson relies upon in bringing her present stay application.[19] McGechan on Procedure notes at para CR12.01 that the general approach to considering an application relating to r 12, and the conditions which may be imposed if a stay is granted, are as follows:CR12.01 Principles(1) General approach(a) An application under r 12(3) requires the Court to balance the competing rights of the party who obtained the judgment appealed from (ie the benefit of that judgment) against theneed to preserve the appellant's position against the event ofthe appeal succeeding: Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.(b) "The object, where it can be fairly achieved, must surely beso to arrange matters that, when the appeal comes to be heard, the appeal Court may be able to do justice between the parties, whatever the outcome of the appeal may be", perBuckley LJ at 676, in Minnesota Mining and Manufacturing Co v Johnson & Johnson [1976] RPC 671 (CA), cited by the Court of Appeal in New Zealand Insulators Ltd v ABB Ltd (2006) 18 PRNZ 459, at [13].(c) Factors to be taken into account in the balancing exercise include:(i) Whether the appeal may be rendered nugatory by the lack of a stay;(ii) The bona fides of the applicant as to the prosecution of the appeal;(iii) Whether the successful party will be injuriously affected by the stay;(iv) The effect on third parties;(v) The novelty and importance of questions involved;(vi) The public interest in the proceeding; and(vii) The overall balance of convenience.Keung v GBR Investment Ltd [2010] NZCA 396 at [11]; Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9].(d) While not included in this list, the apparent strength of the appeal now appears to be generally recognised as an additional factor: Keung v GBR Investment Ltd at [11].(2) ConditionsRule (4)(2) permits the imposition of conditions. Those imposed have included:(a) Strict timetabling.(b) Where a money judgment is appealed, a condition that some or all of the judgment be paid. Where that condition is imposed, it may be made subject to the receiving party giving security for repayment in the event of the appeal succeeding. What is appropriate where a money judgment is appealed is case dependent, and it has been madeclear that it is "preferable not to refer to a 'general rule'": SKIDSProgram Management Ltd v McNeill HC Auckland CIV-2010-404- 1696, 20 December 2011 at [10]–[13].Reasons for decision[20] Generally, it seems there are two key issues to be addressed when considering an application for stay. These are:(a) whether or not the applicant's appeal rights will be rendered nugatoryif a stay is refused; and(b) the merits or apparent strengths of the applicant's appeal.[21] And, in considering any application for stay, it is clear a Court must be engaged in a balancing exercise in considering these matters.[22] I now turn to the individual proceedings for which Ms Sisson seeks a stay here.Stay of proceeding CIV-2016-409-637[23] Proceeding CIV-2016-409-637 was brought by Ms Sisson on 27 July 2016 seeking an order setting aside the earlier judgment liquidating Chesterfields Preschools Limited (the Company). In addition to the present application for a stay of proceeding -637, on 3 November 2016, Ms Sisson filed a separate application in this Court for review of a decision of Associate Judge Osborne delivered on 3 October 2016 in which he struck out that proceeding. That review application alsorelated to this Court's judgment striking out the application brought by Ms Sisson to set aside the liquidation judgment itself. The striking out decision which Associate Judge Osborne delivered was the subject of the application for review to this Court which I also heard yesterday, 13 February 2017.[24] A decision declining that application for review is being released contemporaneously with the present judgment. As I have noted in that judgment, I am satisfied there has been no reasonable basis advanced by Ms Sisson to show that proceeding -637 might succeed. The merits of that proceeding were considered by Associate Judge Osborne in his decision, who concluded amongst other things that Ms Sisson lacked standing to advance the proceeding.[25] In any event, an appeal against the original liquidation judgment placing Chesterfield Preschools Limited into liquidation was brought before the Court of Appeal and, following its earlier abandonment, has later been accepted by the Court of Appeal. That appeal, I am satisfied is the only appropriate way of setting aside the original liquidation judgment.[26] There is as well a reasonable argument in my view that to commence proceedings directed at setting aside a conclusive judgment (which is the subject of an appeal to the Court of Appeal) is a collateral attack and might be thought to be an abuse of process. On this basis I dismissed Ms Sisson's stay application insofar as itrelated to proceeding -637.Stay of proceeding CIV-2016-409-40[27] Ms Sisson has also applied for a stay of this -40 proceeding until her appeal from the judgment placing the company into liquidation is determined by the Court of Appeal.[28] Turning first to the general merits of the appeal, these much depend upon the view taken by the Court of Appeal when the appeal is argued before it. Counsel forthe parties opposing Ms Sisson's stay application have contended that the appeal ismeritless and the proceedings should not be stayed pending the outcome of the appeal. Leaving this matter on one side, however, in my view the stay application, insofar as it affects proceeding -40, must be dismissed here. This is at least in part because, even if the appeal before the Court of Appeal is to succeed ultimately, Ms Sisson's appeal rights would not be rendered nugatory if a stay is refused. A five day hearing of a range of matters involving Ms Sisson and all other parties, originally set down to commence on 28 November 2016 and adjourned at Ms Sisson's request at the last minute, is now underway. This five day hearing commenced on Monday, 13 February 2017. The parties have made all the necessary and lengthy preparations for hearing of the various applications to proceed and are ready to do so.[29] The parties opposing Ms Sisson's stay application indicate they have already incurred significant costs in advance of this hearing and that they would be prejudiced by the granting of any stay. In any event, if a stay is granted this would result in further significant delay.[30] It is my view that, even if Ms Sisson is unsuccessful in proceeding -40 in opposing the application by the liquidators of the company for an order vesting the 854 Colombo Street property and insurance proceeds received in them, I can ensure that at the conclusion of this trial, the parties have the ability to make further submissions on appropriate restrictions which might be imposed by this Court on vesting orders for the property and proceeds that follow. Those orders could then preserve the position until the final decision of the Court of Appeal on the appeal is given.[31] I am satisfied therefore that there is little or no prejudice which Ms Sisson might face if her stay application in respect of proceeding -40 is declined. Certainly, this Court can impose conditions on any orders granted to ensure that her rights relating to her appeal to the Court of Appeal would not be rendered nugatory.[32] It is for all these reasons that the stay application in respect of this application -40 was declined.Stay of proceeding CIV-2016-409-185[33] This proceeding is an application by Ms Sisson for a declaration that a property at 67 Augusta Street, Christchurch, is held on trust by Mr Hampton, her former partner, an undischarged bankrupt, for the beneficiaries of the Anolbe Family Trust and not by Mr Hampton personally.[34] First, it needs to be noted that this proceeding -185 is one brought by Ms Sisson herself. It must seem somewhat strange therefore that it is she who is seeking a stay of this particular proceeding.[35] Secondly, her application for a stay of this -185 proceeding until her appeal from the judgment placing the company into liquidation is determined by the Court of Appeal is curious, given that this Augusta Street property would seem to have nothing whatever to do with the company. That said, and given that I fail to see howMs Sisson's appeal rights to the Court of Appeal might be rendered nugatory if a stayof proceeding -185 is refused, there can be no doubt in my mind that the stay application relating to this proceeding is misplaced and should be refused.[36] But, finally, if I may be wrong in this conclusion, in any event, one further matter is decisive here. For all the reasons outlined above, at the conclusion of the five day hearing between these parties of all the various matters which are before this Court, I am happy to reserve the ability of those parties to make submissions on any restrictions that may be appropriate for the distribution of the Augusta Street sale proceeds, should this be required.Conclusion[37] For all the reasons outlined above, Ms Sisson's stay application wasdismissed on 13 February 2017....................................................Gendall JSolicitors:Lane Neave, ChristchurchPhillip Shamy, ChristchurchMeredith Connell, ChristchurchCopy to Ms Sisson