NEW ZEALAND BLOODSTOCK FINANCE & LEASING LTD v JONES [2022] NZHC 3333

NEW ZEALAND BLOODSTOCK FINANCE & LEASING LTD v JONES [2022] NZHC 3333 [9 December2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-1822CIV-2020-404-1357[2022] NZHC 3333IN THE MATTER of an application to stay enforcementUNDER Rule 17.29 of the High Court Rules 2016BETWEEN NEW ZEALAND BLOODSTOCKFINANCE & LEASING LTDApplicantAND GREGORY JOHN JONESRespondentHearing: On the papersCounsel: A Osama and F King for the ApplicantRespondent in personJudgment: 9 December 2022JUDGMENT OF ASSOCIATE JUDGE SUSSOCKThis judgment was delivered by me on 9 December 2022 at 4pmpursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:McKenna King, HamiltonCopy to:G J JonesIntroduction[1] The applicant seeks to stay enforcement of a costs order of $21,032.00 madeby Harland J in New Zealand Bloodstock Finance & Leasing Ltd v Jones that therespondent is attempting to enforce against the applicant.1[2] The application is made on the basis that the enforcement of the respondent'scosts order will result in a substantial miscarriage of justice for the following reasons:2.1 The Respondent owes the applicant 655,444.57, the majority of whichhas been owing for over two years.2.2 The Respondent has not made any attempts to pay a single cent of the$655,444.57.2.3 Meanwhile the Respondent has confessed to being "stitched for cash".2.4 If the Applicant paid the $21,032.00, it is unlikely they will ever seethat money returned.2.5 A set-off of $102,837.07 is available due to three costs orders thathave been made against the Respondent in the applicant's favour.[3] The grounds on which the respondent opposes the making of the order are asfollows:(a) The judgments to which the applicant refers are [or will be] underappeal and will be costs in the cause depending on the final outcomeof the Court of Appeal's judgment.(b) The judgment obtained by the respondent will not be a cost in thecause. It is a sum owed independent of the plaintiff's claim becauseof the nature of the applications made by the respondent which weresuccessful before Harland J. Those decisions have not been appealed.(c) A substantial miscarriage of justice will not occur if the respondent isentitled to execute his judgment against the applicant.Relevant legal principles[4] Rule 17.29 of the High Court Rules 2016 provides:17.29 Stay of enforcementA liable party may apply to the court for a stay of enforcement or other reliefagainst the judgment upon the ground that a substantial miscarriage of justicewould be likely to result if the judgment were enforced, and the court maygive relief on just terms.1 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 948.[5] In the recent Court of Appeal decision, SRG Global Remediation Services (NZ)Ltd v Body Corporate 197281 the Court held that the following general principles canbe distilled from the case law:2(a) The starting point is that the successful party is entitled to the fruits ofits judgment.(b) The onus is on the applicant seeking a stay of enforcement to persuadethe court to exercise its discretion.(c) A substantial miscarriage of justice must be involved, substantialbeing more than minor or insubstantial.(d) It is not sufficient that a miscarriage of justice might result if thejudgment were enforced. It must be probable rather than possible. Thetest is whether there is a "real and substantial risk".(e) The court must undertake a balancing exercise where it recognises andreconciles the conflicting interests of both parties in such manner aswill best serve the overall interests of justice.(f) The mere existence of a counterclaim is not sufficient. A miscarriageof justice is unlikely to result where a party is required to pay toanother an amount owing and the payer is otherwise free to pursue itsclaim against the other party in the normal way.(g) Other relevant factors may include the apparent strength or weaknessof the claim; the ability of the applicant to meet the judgment that isbeing enforced; and the potential bankruptcy or liquidation of a partyseeking to pursue an apparently strong claim.(footnotes omitted)[6] The applicant further relies on r 14.17 of the High Court Rules which provides:14.17 Set-off if costs allowed to both partiesIf opposite parties are awarded costs against each other, their respective costsmust be set off and the lesser sum must be deducted from the greater, unlessthe court otherwise directs.Procedural history[7] On 5 September 2019, the applicant applied for summary judgment against therespondent, seeking judgment for $431,632.22 plus 10 per cent interest andsolicitor-client costs. On 5 June 2020, Jagose J granted summary judgment in theapplicant's favour.32 SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281 [2022] NZCA 518 at [85].3 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2020] NZHC 1233.[8] In August and September 2020, the applicant initiated bankruptcy proceedings.The respondent applied to set aside the bankruptcy notice and to review the Registrar'sdecision to seal the order. On 28 May 2021, Harland J set aside the sealed order andbankruptcy notice.4 On 21 February 2022, Harland J declined to recall her judgment.5[9] Harland J awarded costs on both decisions ordering New Zealand BloodstockFinance & Leasing Ltd to pay to Mr Jones the sum of $21,032.00.6[10] The respondent has now sealed that order and seeks to enforce it. Therespondent served the respondent's costs order upon the applicant on 20 June 2022.[11] This matter was called in the list on 21 July 2022, following which a Minutewas issued directing the filing and service of submissions so that a decision could bemade on the papers.7[12] Also on 21 July 2022, the Court of Appeal accepted Mr Jones' appeal againstthe costs judgment of Jagose J dated 23 June 2022 for filing. In the costs judgmentJagose J quantified the sum of solicitor-client costs payable by Mr Jones under hisoriginal judgment at $106,421.95 (less GST, if NZ Bloodstock is GST registered) plusinterest at 10 per cent per annum. 8[13] On 25 August 2022, the Court of Appeal dismissed Mr Jones' appeal fromJagose J's decision granting summary judgment to the applicant, New ZealandBloodstock Finance & Leasing Ltd.9 The Court of Appeal recorded that they had beenadvised by counsel that there had been issues in relation to the quantification of thejudgment that the applicant sought to seal. The Court held that it was beyond the scopeof the appeal to express any view on that matter and any disputes on matters ofquantification were to be resolved in the High Court.10 Costs were awarded to the4 Jones v New Zealand Bloodstock Finance & Leasing Limited [2021] NZHC 1228.5 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 231.6 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 948.7 Minute of Associate Judge Sussock dated 21 July 2022.8 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2022] NZHC 1477.9 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2022] NZCA 397.10 At [129].applicant for a standard appeal on a band A basis with an allowance for second counseltogether with usual disbursements.11[14] On 29 September 2022, following the Court of Appeal decision, the applicantserved a bankruptcy notice on the respondent seeking payment of $648,464.99. Therespondent applied to set aside the bankruptcy notice on 13 October 2022, with anotice of opposition filed on 27 October 2022. The respondent's application has beenset down for a hearing on Monday, 13 March 2023.12Application for Stay[15] The applicant submits that the respondent currently owes the applicant$655,444.57, the majority of which he has owed for over two years. This amount ismade up of $645,148.33 comprised of:(a) $431,632.22 in principal debt;(b) $92,540.83 in solicitor-client costs; and(c) $120,975.28 in interest.[16] In addition, Jagose J ordered the respondent to pay $5,755.24 following thedismissal of the respondent's application for leave to appeal and stay of execution ofthe summary judgment decision.[17] On 26 May 2021, the Court of Appeal struck out the respondent's leave toappeal application and again ordered costs to be paid.13 An order for the respondentto pay $4,541.00 has been sealed and served upon the respondent, a copy of whichwas attached to the applicant's memorandum.11 Jones v New Zealand Bloodstock Finance & Leasing Ltd, above n 9, at [136].12 Minute of Associate Judge Andrew dated 10 November 2022.13 Jones v New Zealand Bloodstock Financing and Leasing Ltd [2021] NZCA 213.[18] In total, the applicant therefore says the respondent currently owes theapplicant $655,444.57. The applicant submits that the respondent has not made anypayments and has never indicated that he intends to make payments. Meanwhile therespondent has told the applicant and the Court that he is "stitched for cash".[19] Counsel for the applicant submits that there would be a substantial miscarriageof justice if the applicant is required to pay the respondent's costs order when therespondent owes such a significant sum to the applicant. The applicant says that theinjustice is further aggravated by the respondent's impecuniosity as it would be asignificant injustice to require the applicant to pay the respondent over $20,000 whichthe applicant is likely never to see again.[20] The applicant further refers to r 14.17 of the High Court Rules and says that$102,837.07 is available as a set-off, which is the total amount currently owed to theapplicant for costs orders against the respondent.[21] As outlined above in the summary of the general principles applying to theapplication of r 17.29, the onus is on the applicant seeking a stay of enforcement topersuade the Court to exercise its discretion. A substantial miscarriage of justice mustbe involved, with "substantial" being more than "minor or insubstantial".14[22] The grounds for the respondent's opposition are that each of the judgmentsrelied on by the applicant is subject to the awaited decision of the Court of Appeal inrespect of Jagose J's summary judgment decision, other than the Court of Appealdecision which resulted in an award of costs against Mr Jones for $4,541.00. MrJones records in his submissions that he had offered for the $4,541.00 owed by MrJones to be netted off against the amount owing to Mr Jones of $21,032.00 but thathad not been accepted.[23] However, now that the Court of Appeal has issued its decision dismissing MrJones' appeal from Jagose J's decision granting summary judgment, Mr Jones'grounds for resisting the stay falls away.14 SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281, above n 2, at [85].[24] In the circumstances and weighing the competing interests of both parties, itappears there is a real and substantial risk that a miscarriage of justice would result ifthe judgment were enforced. If the applicant pays the respondent the amount soughtto be enforced it is probable, rather than possible, that the applicant would not recoverthat amount from the respondent when it seeks to enforce its judgment.[25] In these circumstances I consider it is appropriate to grant the application for astay.Result[26] The application by New Zealand Bloodstock Finance & Leasing Ltd for a stayof enforcement of the costs order from Harland J of $21,032.00 is granted.Costs[27] I ask the parties to confer and try to agree costs. If agreement is not able to bereached, memoranda may be filed of no more than three pages (not includingschedules), on behalf of the applicant within 20 working days of receipt of thisjudgment and on behalf of the respondent within a further 10 working days. Costswill then be determined on the papers.__________________________Associate Judge Sussock