Lee v Composite Cladding & Signage Manufacture and Installations Limited [2012] NZCA 579 (10 December 2012)

Last Updated: 19 December 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA782/2012 [2012] NZCA 579

BETWEEN OLIVIA LEE Appellant

AND COMPOSITE CLADDING & SIGNAGE MANUFACTURE AND INSTALLATIONS LIMITED Respondent

Hearing: 4 December 2012

Court: Arnold, Wild and White JJ

Counsel: G J Beresford and A D Gormack for Appellant R G Espie for Respondent

Judgment: 10 December 2012 at 12 pm

JUDGMENT OF THE COURT

A The application for a stay is granted.

2. The $105,847.91 paid into the High Court at Whangarei by Ms Lee is not to be paid out pending further order of the High Court, consequent upon the delivery of its judgment on Ms Lee’s appeal from Judge Sharp’s decision of 16 August 2012.
   

100. The Registrar or Manager of the High Court at Whangarei is directed forthwith to place the $105,847.91 on suitable interest bearing deposit, in consultation with the parties’ solicitors.
     

4. The costs of the application are reserved. Failing agreement, counsel are to file a joint memorandum setting out their respective positions no later than 14 December 2012.

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REASONS OF THE COURT
(Given by Wild J)

[1] By application filed on 29 November Ms Lee applies for a stay, pending determination of her appeal, of two judgments of Lang J in the High Court and of a judgment of Judge Harvey in the District Court.[1] The judgments of Lang J were delivered on 19 and 26 November 2012, that of Judge Harvey on 27 October 2009.
[2] In 2006 Ms Lee entered into a contract with the respondent Composite Cladding & Signage Manufacture and Installations Ltd (we will refer to it as CCS) to clad her new house with aluminium cladding panels. Not satisfied with the result, Ms Lee paid only part of CCS’s bill. The Whangarei District Council refused to issue a code compliance certificate for the house.
[3] CCS subsequently sued Ms Lee for the unpaid part of its bill, about $54,000. Alleging defective workmanship, Ms Lee counterclaimed for special and general damages totalling about $557,000.
[4] The claim and counterclaim were decided by Judge Harvey in the judgment he gave in the District Court at Whangarei on 27 October 2009. That is the judgment of the District Court which Ms Lee seeks to stay pending her appeal.
[5] On its claim, Judge Harvey gave judgment for CCS for $53,979.40 plus interest and costs.
[6] Judge Harvey dismissed Ms Lee’s counterclaim. She had represented herself. Evident from the judgment is that Ms Lee did not understand that mere assertions would not establish her counterclaim, and failed to grasp that evidence was required to prove it. On the counterclaim Judge Harvey entered judgment for CCS, also awarding CCS costs against Ms Lee.
[7] At that point Ms Lee wisely, but unfortunately rather belatedly, engaged her present solicitors to act for her.
[8] Ms Lee then appealed to the High Court. In a judgment on 16 December 2010 Rodney Hansen J dismissed Ms Lee’s appeal against Judge Harvey’s decision on CCS’ claim, but remitted Ms Lee’s counterclaim to the District Court for rehearing.[2]
[9] CCS then obtained orders for the sale of Ms Lee’s home (that is, the home with the aluminium cladding) and an adjoining section of bare land which she owned. Enforcement of those sale orders was averted by Ms Lee’s agreement to pay $105,847.91 into the Whangarei High Court pending the rehearing and determination of Ms Lee’s counterclaim. That agreement was recorded in a minute dated 7 June 2011 by Brewer J.[3]
[10] Ms Lee’s counterclaim was reheard in the District Court at Auckland by Judge Sharp. The hearing ran over eight days on five different occasions between October 2011 and July 2012. In a judgment she delivered on 16 August 2012 the Judge awarded Ms Lee nominal damages of $100.[4] Ms Lee’s appeal from Judge Sharp’s judgment is scheduled for hearing in the High Court at Auckland on 18 February 2013.
[11] In the meantime, in a judgment he gave in the Whangarei High Court on 19 November, Lang J directed “that the funds presently held in Court are now to be paid forthwith to CCS together with any interest they may have accrued”.[5]
[12] Ms Lee applied for a stay of that judgment, which Lang J declined in a further judgment, delivered on 26 November. Those are the two judgments of the High Court which Ms Lee seeks to stay pending her appeal.
[13] On 28 November Ms Lee appealed to this Court from Lang J’s decisions of 19 and 26 November.
[14] As already mentioned, on 29 November Ms Lee filed the stay application that is the subject of this judgment.
[15] Finally, in a minute dated 29 November, Lang J recorded arrangements that effectively extended the High Court’s stay of execution until determination of the present application.
[16] The appeal Ms Lee filed on 28 November is against the two November decisions of Lang J in which he refused to stay the enforcement of Judge Harvey’s judgment pending the determination of Ms Lee’s appeal against Judge Sharpe’s decision on her counterclaim. Although the application for a stay we are dealing with was made under r 12 of the Court of Appeal (Civil) Rules 2005 (which provides for a stay pending the determination of an appeal) it will, if granted, have the effect of determining the substantive appeal. Despite this, given the highly unusual circumstances, we propose to deal with the application on the basis that what is really being sought is a stay until the High Court has determined Ms Lee's appeal against Judge Sharpe's judgment even though this will effectively determine the appeal in this Court
[17] The approach and principles on an application such as this under r 12 are well established. As they apply in the rather unusual situation here, our aim must be to make an order(s) that best achieves justice between the parties, pending the High Court’s decision on Ms Lee’s appeal.
[18] As they apply here, two of the factors to be taken into account in the balancing exercise required in deciding this application are Ms Lee’s bona fides as to the prosecution of her appeal to the High Court, and the apparent strength of that appeal. We are satisfied that Ms Lee is in earnest in prosecuting her appeal. Gauging the merits of the appeal is difficult. But we are at least satisfied that the appeal is reasonably arguable, and is not hopeless. There is, after all, no point in granting a stay to avoid a hopeless appeal being rendered nugatory.
[19] A third factor is whether Ms Lee’s appeal will be rendered nugatory if this application is not granted. Strictly, Mr Espie is correct in saying that it will not be: Ms Lee’s appeal rights will remain intact. However, the practical reality is that, absent a stay, the $105,847.91 Ms Lee paid into the High Court at Whangarei will be disbursed to CCS. CCS will be entitled to deploy those monies in its business, and we have little doubt that it will. We accept Mr Beresford’s submission that Ms Lee is likely to face difficulties in executing any substantial judgment against CCS which she may obtain from the High Court on her counterclaim. Mr Beresford noted that counsel for CCS, in a costs memorandum to the Auckland District Court on 27 August 2012, advised that CCS would be liquidated if Ms Lee’s counterclaim was “even ... partly successful”. So, in financial terms, we accept that if there is no stay Ms Lee’s appeal to the High Court, if successful, may be a Pyrrhic victory.
[20] It needs hardly be said that the just course in this litigation would have been for CCS’ claim and Ms Lee’s counterclaim to have been determined together. Although Ms Lee must accept responsibility for that not occurring, it did not occur. Or, at least, Ms Lee’s counterclaim was not contemporaneously determined on its real merits, whatever they may be. The result is that final determination and (absent a stay) enforcement of CCS’ claim will precede final determination on appeal of Ms Lee’s counterclaim.
[21] To summarise thus far, we accept that in financial terms, Ms Lee’s appeal to the High Court may be rendered pointless if the present application is not granted. The hearing of that appeal is now only about 10 weeks away, the judgment hopefully not much more.
[22] A further r 12 factor we must consider is whether granting a stay will adversely affect CCS. Mr Espie took the position that CCS is entitled to the $105,847.91, and has been since Judge Sharp’s judgment of 16 August. Mr Espie is on sound ground in submitting that the present application and Ms Lee’s earlier attempts to resist payment out of that money all breach the agreement recorded in Brewer J’s 7 June 2011 minute.
[23] However, it is evident to us that no real prejudice will result to CCS from further staying payment out of the $105,847.91 pending the High Court’s determination of Ms Lee’s appeal. That emerges from the affidavits filed in opposition to the present application by Messrs Curd and Coffman, the two directors of CCS. They depose that, despite the current difficult financial climate, CCS has continued winning its share of work, has remained profitable, and continues to cope and to pay its bills. Mr Coffman also deposed that CCS is six months into a three year contract with one of the major oil companies. We infer that that is a major contract for CCS. As Mr Espie acknowledged in the course of argument, there is also no evidence that CCS would not continue in business without the payment.
[24] To summarise, on CCS’ own evidence, no prejudice will result to it from the granting of this application, beyond the prejudice of not being paid out a substantial sum of money to which it became entitled some time ago.
[25] When we weigh up those two competing positions, the balance falls in favour of granting this application.
[26] Before we make formal orders, we mention one matter that caused us considerable concern when counsel mentioned it to us. Counsel advised us that they have only recently discovered that the $105,847.91 paid in to the Whangarei High Court by Ms Lee on or about 7 June 2011 has not been on interest bearing deposit through the Court since then. We cannot understand how this has occurred. As a condition of granting the present application, we direct the Registrar or Manager of the High Court at Whangarei forthwith to place that money on suitable interest bearing deposit, in consultation with Messrs Beresford and Espie. Given the timing outlined in this judgment, it would seem that deposit on a three month term would be best, but we leave that to the Registrar/Manager and to the parties’ solicitors.
[27] No doubt the parties’ solicitors will urgently follow up to ascertain how this most unfortunate situation has come about, and whether anything can now be done to redress it.

Result

[28] The application is granted.
[29] We order that the $105,847.91 paid into the High Court at Whangarei by Ms Lee is not to be paid out pending further order of the High Court, consequent upon the delivery of its judgment on Ms Lee’s appeal from Judge Sharp’s decision of 16 August 2012.
[30] We direct the Registrar or Manager of the High Court at Whangarei in the terms set out in [26] above.
[31] Counsel did not address us on costs. We formally reserve them. Although Ms Lee has succeeded with her application, granting it represents something of an indulgence to her. Our tentative view is that CCS should have costs as for a standard application on a band A basis, with any usual disbursements. If counsel cannot agree costs, they can file a joint memorandum setting out the respective positions no later than 14 December 2012.

Solicitors:
Grimshaw & Co, Auckland for Applicant
R G Espie, Whangaparaoa for Respondent

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[1] Composite Cladding & Signage Manufacture and Installations Ltd v Lee [2012] NZHC 3080; Lee v Composite Cladding & Signage Manufacture and Installation Ltd [2012] NZHC 3164; Composite Cladding & Signage Manufacture and Installations Ltd v Lee DC Whangarei CIV-2008-088-562, 27 October 2009.

[2] Lee v Composite Cladding & Signage Manufacture and Installations Ltd HC Whangarei CIV-2009-488-828, 16 December 2010.

[3] Composite Cladding & Signage Manufacture and Installations Ltd v Lee HC Whangarei CIV-2011-488-176, 7 June 2011.

[4] Composite Cladding & Signage Manufacture and Installation Ltd v Lee DC Auckland CIV-2008-088-562, 16 August 2012.
[5] At [14].