IN THE Court of appeal OF new Zealand

I TE KŌTI PĪRA O AOTEAROA	
 CA483/2019
 [2020] NZCA 345

	
BETWEEN	
PAUL MARK MONNERY, JULIE ANN MONNERY AND DAVID GRIFFITHS AS TRUSTEES OF THE P & J MONNERY FAMILY TRUST
Appellants	
	
AND	
CONVENDIUM LIMITED (IN LIQUIDATION)
Respondent	

Hearing:	
23 June 2020	

Court:	
Brown, Brewer and Hinton JJ	

Counsel:	
C R Carruthers QC for Appellants
D J Chisholm QC and J D Ryan for Respondent 	

Judgment:	
13 August 2020 at 11.30 am	

JUDGMENT OF THE COURT

A	The appeal is dismissed.
B	The cross-appeal is allowed.
C	The first and second named appellants are to pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.
____________________________________________________________________

REASONS OF THE COURT

(Given by Brown J)
Introduction
[1]	The appellants are the trustees of the P & J Monnery Family Trust (the Family Trust), a shareholder in the respondent, Convendium Ltd (Convendium).  According to the company’s records the Family Trust’s shareholder current account was substantially overdrawn when Convendium was placed in liquidation in February 2019.  On 30 August 2019 Associate Judge Bell granted an application by the liquidators of Convendium for summary judgment against the appellants for repayment of overdrawn shareholder advances in the sum of $512,346.73.  Mr and Mrs Monnery appeal against that judgment.
[2]	The liquidators cross-appeal against the Judge’s refusal to grant summary judgment in respect of the larger amount of $560,243.43.  
Relevant background
[3]	Convendium’s business was the development, marketing and sale of cashless payment systems used in vending machines.  The appellants were original shareholders and at the time the company was established they injected funds into the company by way of shareholder advances.  At the date of liquidation they held a little less than 50 per cent of the company’s shares.
[4]	Sandfield Associates Ltd (Sandfield) is a software developer which licensed Convendium to use its software.  Over time Convendium incurred a substantial debt to Sandfield.  On 27 November 2018 Sandfield served a statutory demand under s 289 of the Companies Act 1993 (the Act) in respect of a debt of $339,576 owed by Convendium.  When Convendium failed to comply with that demand, on Sandfield’s application it was put into liquidation on 22 February 2019.  Messrs Christopher McCullagh and Stephen Lawrence were appointed as liquidators.
[5]	In March 2019 Sandfield filed a claim against the appellants alleging they were indebted to Convendium in the sum of $560,243 as a consequence of advances by way of the shareholder current account.  In particular the statement of claim alleged:
11.	Over the period from 2012 until 2015, Mr Monnery (as sole director of Convendium) permitted and allowed Convendium to make advances to the defendants by way of overdrawn current account.  By 31 March 2015, Convendium had advanced $560,243 to the first defendants by way of overdrawn current account (Overdrawn Current Account).
12.	Convendium’s financial records show the current account increasing as follows:

Convendium	2009	2010	2011	2012	2013	2014	2015
	
Profit/(loss)	(909,770)	(248,855)	(49,906)	(45,313)		(117,079)	(142,434)	
Net Assets (negative)	242,585	229,402	305,076	258,575	(32,048)	(153,830)	(391,446)	
Working Capital (negative)	(231,454)	(81,056)	19,032	(41,002)	(158,506)	(401,753)	(628,270)	
Paid Up Capital	1,778,400	2,022,600	2,222,600	2,472,600	2,592,565	2,742,600	2,742,600	
Accumulated deficit (negative)	(1,800,500)	(2,049,400)	(2,099,300)	(2,144,600)	(2,398,562)	(2,506,300)	(2,648,800)	
The defendants’ current account (overdrawn)	264,735	256,207	181,787	(69,401)	(221,954)	(450,061)	(560,243)	
[6]	Sandfield claimed to have standing to seek an order for repayment on the basis that, as a creditor of Convendium, it was an entitled person in relation to the liquidation for the purposes of s 301(1) of the Act.  Summary judgment was sought.
[7]	The appellants filed a statement of defence to Sandfield’s claim in which they admitted the advances to them by Convendium “as shown” in paras 11 and 12 of the statement of claim but asserted that they were under no obligation to repay the overdrawn account because of an agreement pleaded as follows:
10.1	They had a current account with Convendium (which was in credit between April 2009 and 31 March 2011);
10.2	Because Convendium had not made a profit over that period, it was agreed between Paul Mark Monnery, Gregory Peter McCarthy and David Griffiths, after consultation with the Inland Revenue and with the knowledge and concurrence of John Murray Creighton and Bruce Gordon Copeland, that Paul Mark Monnery would not draw a salary of $200,000 to which he was entitled, but would draw on that current account until the company became profitable and an adjustment would be made subsequently;
10.3	Such arrangement was instituted accordingly and the [appellants] were duly charged interest for the period over which the account was overdrawn.
[8]	The appellants’ notice of opposition to Sandfield’s summary judgment application included the following grounds of opposition:
3.1	The money is not owed to [Sandfield] by the [appellants] but is owed by [Convendium].
3.2	The drawings in issue were not from the company but from the shareholders current account.  The payments were debited to the shareholders current account with the company.  Although the money was paid by the company as and when he required it; the payments were debited to the shareholders current account to reflect that the arrangement that they were shareholders funds.  [Sandfield] and the other shareholders knew fully about this arrangement.
[9]	Mr Monnery filed an affidavit in opposition in which he said:
5	In respect of the amount I am alleged to owe Convendium, Sandfield knew full well that:
5.1	I was entitled to a minimum salary of $200,000.
5.2	I took drawings ranging from a minimum of $12,500 to $15,000 net not from the company but from the shareholders.  These payments were debited to the shareholders current account with the company.  The money was paid by the company as and when I required it; but the payments were debited to the shareholders current account to reflect that they were shareholders funds.  Bruce [Copeland] (and other shareholders) knew fully about this arrangement.
5.3	It was agreed with the company’s accountant and managed in the company’s annual returns that, as I had a credit balance with the company, my drawings in the shareholders current account would be debited against that balance, so as to save the company paying tax until it was in funds sufficient to meet my salary, with the adjustment being made then;
5.4	The amount which I had drawn was recorded in each year without dissent from shareholders.  …
Although para 5.3 refers to a drawing arrangement in respect of a credit balance, it is apparent that the arrangement alleged extended to drawings which resulted in the shareholder current account being overdrawn, as recognised in the statement of defence.
[10]	On 17 June 2019 the liquidators made demand on the appellants for repayment of the shareholder current account in the sum of $560,243.
[11]	Then on 24 June 2019 Sandfield filed an application to join Convendium as a second plaintiff.  An amended statement of claim included a second cause of action by Convendium against the appellants seeking repayment of $560,243.
[12]	An amended notice of interlocutory application was also filed on 24 June 2019 in which both Sandfield and Convendium sought summary judgment.  The amended application was supported by a “reply” affidavit of Mr McCullagh of 19 June 2019.
[13]	No further documents were filed by the appellants.
The High Court judgment
[14]	The Judge first explained why s 301 of the Act was not sufficiently broad to encompass the debt claim brought by Sandfield.  Noting that there was no opposition to Convendium being added as second plaintiff, the Judge made an order for joinder and proceeded to consider the second cause of action seeking repayment of the overdrawn shareholder current account.  
[15]	Having reviewed the financial statements of Convendium for the years ending 31 March 2010, 2011 and 2012 and the incomplete financial records for the years ending 31 March 2013, 2014 and 2015, the Judge concluded that the Family Trust’s shareholder current account was overdrawn in the sum of $512,346.73.  He accepted that the demand made by the liquidators on 17 June 2019 was effective to call up the Family Trust’s shareholder current account.
[16]	After reciting that part of Mr Monnery’s affidavit set out above, the Judge stated:
[21]	I accept what Mr Monnery says about the payments he received as coming from shareholders.  I understand that the shareholders he is referring to are himself and his co-trustees as trustees of the P and J Monnery Family Trust.  In short, he is referring to two transactions:  one, a drawing by the shareholders from the company, and the second, a further payment by the shareholders to himself.  While the funds may have gone directly to himself, he is saying that they were routed through the shareholders.  That by itself does not mean that the company is not entitled to look to the shareholders for the drawings debited against their account. 
[17]	The Judge found that Convendium had proved a debt owed by the appellants at least in the amount of $512,346 and concluded that the matters raised by Mr Monnery by way of defence did not bar Convendium from obtaining recovery from the trustees of the Family Trust.
[18]	The Judge declined to exercise the residual discretion not to enter summary judgment, explaining that the fact that a shareholder wishes to pursue complaints against other shareholders is not by itself a reason why the liquidator, acting in the interests of creditors, should not be able to enforce the company’s remedies to realise assets and distribute them to creditors.
Appeal and cross-appeal:  issues
[19]	The notice of appeal identified three grounds of appeal:
1.1.	The finding that the amounts shown in the shareholders current account were repayable on demand is wrong.  It was agreed between [Convendium] and Paul Monnery that he would be paid a salary of $200,000 per annum (which he did not take) and instead the amounts taken were debited to the shareholders current account.
1.2.	The finding that the Appellants were liable to [Convendium] in the amount for which judgment was entered is wrong because the last amount shown as owing by the Appellants on the shareholders current account is recorded in the financial statements for 2012 at $69,401.  Any other sum has not been proven to the requisite standard for summary judgment. 
1.3.	The failure by the Court to exercise its discretion to decline summary judgment when there was evidence that the assets of [Convendium] (which would have been sufficient to repay the amount owing by the Appellants to [Convendium]) were divided unlawfully amongst certain shareholders of [Convendium].
[20]	The cross-appeal asserted that in addition to the evidence led the appellants had, by their statement of defence and notice of opposition to the application for summary judgment, admitted that the quantum of the advances from Convendium to the appellants, which were recorded as an overdrawn shareholder current account, totalled $560,243.43.
[21]	An agreed list of issues added further questions relating to s 161 of the Act and raised the question whether, in the event the appeal was dismissed, the appellants are entitled to a stay of execution of the summary judgment.
Are the trustees liable to repay the deficit in the shareholder current account?
[22]	A shareholder current account is an account maintained in a company’s balance sheet to record transactions between the company and an individual shareholder.  A shareholder current account will reflect a credit where the company is indebted to the relevant shareholder.  This will usually be as a result of a shareholder introducing funds to the company by way of a loan (rather than capital) or in circumstances where a dividend has been declared to the shareholder but not yet paid.  
[23]	In this case, reflecting the advances from the Family Trust, the Convendium shareholder current account for the Family Trust was in credit for the financial years ending 31 March 2010 and 2011, as evidenced in the notes to the financial statements in the 2011 Annual Report:
4	Shareholders Current Account

					  2011			  2010
					     $			    $
					____________________________
The P&J Monnery Family Trust		181,787		256,207
					____________________________
Total owing to shareholders		181,787		256,207
					____________________________
These amounts are unsecured and repayable on demand.  Any advances are subject to interest based on prescribed FBT interest rates.
[24]	A shareholder current account will be shown as overdrawn if the shareholder is indebted to the company.  That will occur, for example as the Judge observed, when drawings are taken by shareholders in the hope that when the company prospers those drawings will be able to be repaid out of distributions from the company.
[25]	During the 2012 financial year, the Family Trust’s current account went into debit in the amount referred to in the second ground of appeal, as evidenced in the notes to the financial statements in the 2012 Annual Report:
4	Shareholders Current Account

					  2012			  2011
					     $			    $
					____________________________
The P&J Monnery Family Trust		(69,401)		181,787
					____________________________
Total owing to shareholders		(69,401)		181,787
					____________________________
These amounts are unsecured and repayable on demand.  Any advances are subject to interest based on prescribed FBT interest rates.
[26]	There were no completed financial statements for subsequent financial years.  However a tax return was filed for the year ending 31 March 2014 which recorded an amount of $450,061.37 as a debit current account balance for the P & J Monnery Family Trust.
[27]	The notice of opposition and statement of defence did not contest the fact that there were debit balances in the Family Trust’s shareholder current account.  However, together with Mr Monnery’s affidavit, they explained that the amounts so debited were funds paid to Mr Monnery from time to time as drawings in lieu of salary for services to Convendium.  
[28]	The appellants’ argument was expressed in their written submissions in this way:
37.	Throughout the period of his involvement with Convendium, Mr Monnery was paid by advances which were recorded in the Shareholders Loan Account.  They were recorded in this way but they were in fact a substitute for salary.  Mr Monnery received no other payment other than the advances shown in the shareholders current account. 
38.	In terms of the agreement with Convendium, as the advances were in lieu of salary, there was never an intention or requirement that they would be repaid.
39.	The terms of the arrangement with him are set out in his affidavit.
[29]	However described, it is plain that the funds were in the nature of remuneration for services provided by Mr Monnery to Convendium.  Whether the remuneration was paid to Mr Monnery directly by Convendium or by the shareholder trustees is an issue we address below.
[30]	Responding to the appellants’ argument Mr Chisholm QC observed that there had not been compliance with s 161 of the Act which relevantly states:
161 	Remuneration and other benefits
(1) 	The board of a company may, subject to any restrictions contained in the constitution of the company, authorise—
(a) 	the payment of remuneration or the provision of other benefits by the company to a director for services as a director or in any other capacity:
(b) 	the payment by the company to a director or former director of compensation for loss of office:
(c) 	the making of loans by the company to a director:
(d) 	the giving of guarantees by the company for debts incurred by a director:
(e) 	the entering into of a contract to do any of the things set out in paragraphs (a), (b), (c), and (d),—
if the board is satisfied that to do so is fair to the company.
(2) 	The board must ensure that forthwith after authorising the making of the payment or the provision of the benefit or the making of the loan or the giving of the guarantee or the entering into of the contract, as the case may be, particulars of the payment or benefit or loan or guarantee or contract are entered in the interests register.
(3)	…
(4) 	Directors who vote in favour of authorising a payment, benefit, loan, guarantee, or contract under subsection (1) must sign a certificate stating that, in their opinion, the making of the payment or the provision of the benefit, or the making of the loan, or the giving of the guarantee, or the entering into of the contract is fair to the company, and the grounds for that opinion.
(5) 	Where a payment is made or other benefit provided or a guarantee is given to which subsection (1) applies and either—
(a) 	the provisions of subsections (1) and (4) have not been complied with; or
(b) 	reasonable grounds did not exist for the opinion set out in the certificate given under subsection (4),—
the director or former director to whom the payment is made or the benefit is provided, or in respect of whom the guarantee is given, as the case may be, is personally liable to the company for the amount of the payment, or the monetary value of the benefit, or any amount paid by the company under the guarantee, except to the extent to which he or she proves that the payment or benefit or guarantee was fair to the company at the time it was made, provided, or given.
…
In the present case there was no evidence of a board resolution, a record in the interests register or a s 161(4) certificate. 
[31]	In his submission in reply to the cross‑appeal Mr Carruthers QC sought to invoke s 161(5).  He noted that the Judge referred to s 161(5) in passing but made no finding on whether the payments to Mr Monnery were “fair”.  Hence Mr Carruthers said that issue remained as an outstanding issue on which further evidence would be required.
[32]	However in the particular circumstances of the present case the focus on s 161 is something of a distraction.  The claim by the liquidators was not against Mr Monnery alleging a personal liability to Convendium for payments made in contravention of s 161.  The claim was against Mr Monnery (together with his co‑trustees) in his capacity as one of the trustees of the Family Trust, a shareholder with an overdrawn current account.  The fairness or otherwise of payments made to Mr Monnery in his personal capacity was not in point so far as the shareholder’s liability to repay was concerned.
[33]	Mr Carruthers further submitted that summary judgment should not have been granted because there are disputed factual issues which are required to be determined at trial.  He pointed out that Mr Monnery’s affidavit is the only evidence of the reasons for and the terms of the agreement referred to in the statement of defence, notice of opposition and affidavit.  It was said that the evidence at trial would involve the internal accountant from Convendium and those members of staff of the external accountants (DFK Oswin Griffiths Carlton) who were involved in dealing with the financial affairs of Convendium.
[34]	In response Mr Chisholm emphasised the well-settled principle that, absent explanation, advances made on a shareholder current account are a due debt owed by the shareholder to the company repayable on demand, citing in particular Mizeen Painters Ltd (in liq) v Tapusoa where Muir J said:
[25]	In the absence of an explanation, drawings must be treated as advances from the company to the shareholders that are repayable on demand.  They remain as repayable advances unless and until a company resolution classifies them otherwise.  When the company’s accounting records provide no explanation for the drawings in the shareholders current account, they must be treated as advances from the company to the shareholders.  The onus is on the defendants as directors and fiduciaries of the company to account to it for funds and establish the legitimacy of any funds taken from the company; in other words, to explain what has become of company property in their hands.
(Footnotes omitted.)
[35]	Mr Chisholm submitted that Convendium is entitled to rely on the financial statements and other accounting records prepared by Convendium while under the control of Mr Monnery as sole director in order to establish Convendium’s assets and liabilities.  The status of the overdrawn current account is proved by financial statements, tax returns and bank statements.  Their reliability is reinforced by the fact that Mr Monnery signed the various financial statements.  The tax return for the year ended 31 March 2014, which was prepared by professional accountants and recorded a debt in the Family Trust’s current account of $450,061.37, was also signed by Mr Monnery on 27 March 2015.  
[36]	However the appellants contended that, by agreeing to the mechanism for payment to Mr Monnery, there had been acquiescence on the part of Convendium and the other shareholders in what occurred, such that the company could not insist on strict compliance with the statutory processes including s 161.
[37]	In response Mr Chisholm submitted that, whatever evidence might be led to support the alleged arrangement, the appellants’ argument amounted to an estoppel which would undermine the statutory scheme in s 161 of the Act.  He argued that an estoppel cannot arise in circumstances where Mr Monnery, who was the sole director of Convendium, is essentially relying on his own unlawful conduct in breach of s 161.  Indeed he contended that Mr Monnery appeared to be asserting that the financial records were in fact a sham to minimise tax.
[38]	In light of that submission, in the course of argument Mr Carruthers was asked if it was the appellants’ case that payments were made to Mr Monnery which were incorrectly recorded as payments made to the three shareholders.  In reply he stated:
I’m not saying that they were incorrectly recorded as payments.  I’m saying that the way in which the payments to Mr Monnery were recorded is that they were recorded in the shareholders loan account and to get to the basis of how and why that was done one needs to go back to the prime records and have evidence as to what was agreed and what was to be done.  I’m not saying that they were incorrect.  I’m not saying it was a sham.  I’m simply saying that what the arrangement was, was the payments to Mr Monnery, the way in which they were recorded was in the shareholders loan account and after all he was in his capacity as a trustee.
[39]	That answer serves to highlight two points of significance for the appeal.  First, it is clear that there is no challenge to the company’s financial records that show that funds were sourced from Convendium via the Family Trust’s shareholder current account.  The second point underscores the appellants’ status as trustees.  It was in that capacity that Mr Monnery (and his co-trustees) originally received the funds debited to the Family Trust’s current account.  Given the explanation that the funds were intended to be a substitute for his salary, it is to be assumed that the funds were then transferred to Mr Monnery or for his benefit in his personal capacity.  That is the thrust of the Judge’s two transactions analysis.
[40]	The Judge’s analysis was attacked in the appellants’ submissions in this manner:
40.	The analysis made by the Associate Judge is not consistent with the evidence.  The arrangement was not that the advances would be made to the shareholders and then by them to Mr Monnery.  The advances were made to Mr Monnery and recorded in the shareholders current account, as outlined already.
(Footnote omitted).
[41]	The difficulty with that criticism of the Judge’s analysis is that in the specified part of his affidavit Mr Monnery expressly stated that the drawings he took were not from Convendium but from the shareholders and that the payments were debited to the shareholder current account with Convendium.  In reaching the conclusion which the appellants challenged, the Judge had done no more than accept Mr Monnery’s evidence that the payments he received came from the shareholders.
[42]	We agree with the Judge’s analysis.  Whatever was the ultimate destination of the funds and whatever arrangement Mr Monnery may have made with other persons, the route by which the advances were extracted from the company’s funds was by the vehicle of debits to the account of a shareholder, namely the Family Trust.
[43]	Irrespective of what arrangement Mr Monnery considers that he made concerning his liability to repay remuneration which he received in lieu of salary, the trustees as the shareholder are liable to repay the deficit in the Family Trust’s shareholder current account. 
The exercise of the discretion not to grant summary judgment
[44]	It was common ground that the nature of the residual discretion is as articulated by this Court in Bromley Industries Ltd v Martin and Judith Fitzsimons Ltd:
[65]	Generally the exercise of the residual discretion not to allow summary judgment will only be invoked in limited cases, such as to avoid oppression or injustice, or where the proceeding involves the actions or possible liability of a third party not before the Court, or if the proceedings are of a particular nature that opportunity should be given to allow discovery, or where the circumstances of the case disclose very unusual features which support a conclusion that the entry of summary judgment would be oppressive or unjust.
[45]	After reference to that passage the Judge concluded:
[30]	This case is not unusual.  Shareholders have taken drawings in the hope that when the company would prosper they would be able to repay out of further distributions from the company.  But the company has failed.  The fact that the shareholders, or that one of them wishes to pursue complaints against other shareholders, is not by itself a reason why the liquidator, acting in the interests of creditors, should not be able to enforce the company’s remedies to realise assets and to distribute them to the creditors.  I decline to exercise the residual discretion not to enter summary judgment.
The Judge’s reference to a dispute among shareholders relates to a proceeding in the Wellington registry of the High Court (CIV-2018-485-482) by Mr and Mrs Monnery against several defendants including Sandfield.
[46]	Mr Carruthers pointed to a number of matters in support of the proposition that summary judgment should have been declined in the exercise of the residual discretion.  The actions of Sandfield and others in conspiring to divide up Convendium’s assets and deprive the company of a revenue stream to the financial disadvantage of Mr Monnery were described as oppressive and unjust.  Furthermore the action of Sandfield in adding Convendium as a plaintiff in order to sue on the shareholders current account was also said to be oppressive and unjust having regard to the agreement asserted by Mr Monnery.  Then there was said to be a connection between this proceeding and the actions and possible liability of third parties in the Wellington proceeding who were not before the Court.  
[47]	However as Mr Chisholm pointed out, Convendium is not a party to the Wellington proceeding and the claims made against the shareholders in that proceeding.  There is no linkage between the Wellington proceeding and the recovery by the liquidators of the overdrawn current account.  The liquidators of the company are required to act in the interests of the creditors.  The steps they have taken to secure repayment of the overdrawn current account are neither oppressive nor unjust, particularly given the history of the insolvency of the company.  
[48]	We accept Mr Chisholm’s submissions.  In our view there are no unusual features about the present case which would justify the exercise of the residual discretion to decline summary judgment.  There was no error in the Judge’s conclusion on this issue.
Cross-appeal
[49]	The Judge concluded that the debt had been proved in the amount of $512,346 but not the figure of $560,243.  Mr Chisholm submitted that, notwithstanding that the High Court was not asked to resolve any material conflicts of evidence regarding quantum, the Judge erred in fact and in law by undertaking his own tracing exercise.  
[50]	The Judge accepted that it was safe to assume that the figure shown in the 2014 tax return of $450,061.37 was correct but he did not consider it was safe to rely on the draft balance sheet as at 31 March 2015 for the reason that it was no more than a draft document.  In evidence in reply the liquidator had presented an analysis of the company’s bank accounts in order to support a conclusion that during 2015 there had been additional drawings by the shareholders on their current account in the amount of $110,182.06.  
[51]	However the Judge was only prepared to accept as shareholders drawings those amounts shown to have been paid to Business Mobile Ltd, which the Judge considered to be a related company.  According to the Judge’s calculations, those payments totalled $62,315.36.
[52]	Mr Chisholm submitted that the Judge overlooked the fact that in their statement of defence the appellants admitted the quantum of the advances received from Convendium as totalling $560,243.43.  The relevant paragraph of the statement of defence read:
11.	They admit that advances by Convendium to the Defendants were as shown in paragraphs 11 and 12 of the Statement of Claim but say such were subject to the agreement as set out in paragraph [10] hereof.
[53]	Mr Carruthers’ rejoinder was that that pleading acknowledged only the amount shown in the accounts of Convendium and that there was no admission that the appellants were liable to repay that amount.
[54]	While the paragraph asserted that there was no liability to repay the pleaded sum because of the terms of the alleged agreement, there was no challenge to the quantum.  Indeed the paragraph admitted that advances were made “as shown”.  
[55]	In our view the statement of defence is to be read as denying a liability to make a payment but not as taking issue with the quantum of the shareholders advances.  In those circumstances and in light of our conclusion that the deficit in the shareholder current account is repayable we consider that summary judgment should have been entered for the amount of the full claim of $560,243.43.  The cross-appeal is allowed.
Stay of execution
[56]	The grant of a stay of execution of the judgment was not addressed in the notice of appeal.  Nor could it have been because it was not a matter before the Judge or addressed by him.  However the agreed issues list includes the question whether, in the event the appeal is dismissed, the appellants are entitled to a stay of execution of the summary judgment.
[57]	The basis for the application lies in the fact of the Wellington proceeding which was commenced prior to the issue of the proceeding the subject of this appeal.  Mr Carruthers explained that the key allegation is that the other shareholders conspired to remove Mr Monnery from the management of Convendium and divided up the assets of the company among themselves.  As a result, the company’s trading income was removed and promised capital contributions were not made.  As a consequence Convendium never derived the funds to enable the adjustment to be made to off-set the advances on account of salary which Mr Monnery received via the shareholder current account.
[58]	Although this Court has jurisdiction under r 12(3) of the Court of Appeal (Civil) Rules 2005 to make orders in relation to the execution of the whole or part of a decision, the rule makes clear that that power is only exercisable pending the determination of an appeal.  However the order sought here concerns the enforcement of the judgment following the determination of the appeal.
[59]	Mr Chisholm submitted that the basis on which the stay is sought is not clear but presumed that reliance was placed on this Court’s jurisdiction to exercise the powers of a Judge of the High Court pursuant to s 103 of the Senior Courts Act 2016.  
[60]	In response Mr Carruthers pointed to r 48(4) of the Rules which states:
The Court may give any judgment and make any order which ought to have been given or made, and make any further or other orders that the case may require.
[61]	Rule 12.12(2) of the High Court Rules 2016 provides that if it appears to the Court on an application for summary judgment that the defendant has a counterclaim that ought to be tried, the Court may give judgment for the amount that appears just on any terms it thinks just.  In Roberts Family Investments Ltd v Total Fitness Centre (Wellington) Ltd it was stated that the defendant should apply for a stay at the time of filing the counterclaim.
[62]	On a summary judgment appeal, r 48(4) would enable this Court to exercise the r 12.12(2) jurisdiction.  However in the present case there was no counterclaim.  The reason is that the appellants do not assert any claim against Convendium.  Hence r 12.12(2) has no application here.  
[63]	In order to obtain a stay of execution of the judgment it would be necessary for the appellants to make application under r 17.29 of the High Court Rules which states:
17.29	Stay of enforcement
A liable party may apply to the court for a stay of enforcement or other relief against the judgment upon the ground that a substantial miscarriage of justice would be likely to result if the judgment were enforced, and the court may give relief on just terms.
[64]	We agree with Mr Chisholm that in the normal course the rule envisages the filing of an application in the High Court.  In the absence of application having been made in the High Court, we do not consider that an order under r 17.29 would be captured by the expression “any order which ought to have been given or made” in r 48(4), although it may possibly fall within the phrase “any further or other orders that the case may require”.
[65]	However, even if there is jurisdiction for this Court at this stage of the summary judgment proceeding to entertain an original application for stay under r 17.29, we do not have before us the material which would require consideration on such an application, in particular the statement of claim, statements of defence and any replies in the Wellington proceeding.  The only material relating to the Wellington proceeding which is before us is Mr Monnery’s affidavit in opposition to the defendants’ applications for security for costs (which is an annexure to his affidavit in opposition to the summary judgment application) and the affidavit of Mr Copeland in support of the application for security for costs and his affidavit and the affidavit of Mr J P Clarke in reply to Mr Monnery’s affidavit (all annexed to Mr Copeland’s reply affidavit on the summary judgment application). 
[66]	If an application under r 17.29 is to be advanced then we consider that the more appropriate venue is the High Court.  The request for this Court to entertain such an application is declined.
Result
[67]	The appeal is dismissed.
[68]	The cross-appeal is allowed.
[69]	The first and second named appellants are to pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.

Solicitors: 
Oakley Moran, Wellington for Appellants
Claymore Partners, Auckland for Respondent