Pacific Flight Catering Limited v LSG Sky Chefs New Zealand Limited

IN THE COURT OF APPEAL OF NEW ZEALAND

CA758/2012
[2013] NZCA 561

BETWEEN

AND

PACIFIC FLIGHT CATERING LIMITED
First Appellant

PRI FLIGHT CATERING LIMITED
Second Appellant

AND

LSG SKY CHEFS NEW ZEALAND LIMITED
Respondent

Hearing:	25 June 2013
Court:	O'Regan P, Ellen France and Harrison JJ
Counsel:	R B Stewart QC and J K Goodall for Appellants P G Skelton QC and A Borchardt for Respondent
Judgment:	14 November 2013 at 10.15 am

JUDGMENT OF THE COURT

AThe application for stay is dismissed.
BLSG is to pay Pacific costs calculated as on a standard application for leave to appeal on a band A basis together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

On 22 August 2013 this Court allowed an appeal by the appellants (collectively Pacific) against a decision of the High Court in favour of the respondent LSG Sky Chefs New Zealand Ltd (LSG)[1] and ordered LSG to pay costs of $19,846.65.[2]
[1]LSG Sky Chefs New Zealand Ltd v Pacific Flight Catering Ltd [2012] NZHC 2810.
[2]Pacific Flight Catering Ltd v LSG Sky Chefs New Zealand Ltd [2013] NZCA 386.
LSG has applied to the Supreme Court for leave to appeal against this Court’s substantive judgment.
On 4 November 2013 LSG applied to this Court for an order staying execution of the costs order on condition that the amount be paid into Court within five working days. Mr Skelton QC for LSG submitted that unless the funds were held in an interest bearing deposit pending the final result of its application for leave to appeal there was a risk that Pacific would be unable to repay the costs if LSG’s application was granted and its appeal succeeded because Pacific has no assets in New Zealand and appears to be winding down its business operations here.
On 7 November 2013 Mr Stewart QC for Pacific filed a memorandum in opposition, advising among other things that when applying to this Court for a stay of execution of the costs judgment LSG was aware that Pacific had deposited $2 million in an interest bearing account which is not due to mature until 6 January 2014. The company intends to retain a further $1 million of that amount until April 2015.
On 8 November 2013 LSG filed a memorandum in reply, referring to the existence of a statutory demand served by Pacific on the company and seeking an extension of the terms of its proposed stay.
LSG has failed to satisfy us that any grounds exist to justify an order for stay. The company is ordered to pay Pacific costs calculated as on a standard application for leave to appeal on a band A basis together with usual disbursements.
We expect that Pacific’s counsel will advise LSG if the company’s intentions relating to retention of the further $1 million change.

Solicitors:
Kensington Swan, Auckland for Appellants
Garry Pollak & Co Ltd, Auckland for Respondent

CaseChat Overview and Summary

The Court of Appeal of New Zealand considered a case between Pacific Flight Catering Limited and LSG Sky Chefs New Zealand Limited. This matter involved an appeal against a decision of the High Court, which had ruled in favor of LSG. The appeal was allowed by the Court of Appeal, and LSG was ordered to pay costs of $19,846.65 to Pacific. LSG subsequently applied to the Supreme Court for leave to appeal the substantive judgment of the Court of Appeal. During the pendency of this application, LSG also sought an order to stay the execution of the costs order, arguing that Pacific would be unable to repay the costs if LSG's application for leave to appeal was successful, as Pacific had no assets in New Zealand and appeared to be winding down its business operations. However, Pacific informed the Court that it had deposited $2 million in an interest-bearing account, which was not due to mature until early January 2014, and planned to retain $1 million of that amount until April 2015.

The Court was required to determine whether grounds existed to justify a stay of execution of the costs order. The primary issue was whether LSG could demonstrate a sufficient risk of prejudice if the costs order was enforced while the application for leave to appeal was being determined. The Court also needed to consider the financial position of Pacific and whether it was likely to suffer significant prejudice if it were required to pay the costs at that time.

The Court concluded that LSG had not satisfied the necessary threshold to justify a stay of execution of the costs order. The Court found that Pacific had sufficient financial resources to meet the costs order, with a significant amount of funds deposited in an interest-bearing account, and that there was no evidence to suggest that Pacific would be unable to repay the costs if LSG's appeal was ultimately unsuccessful. The Court of Appeal therefore dismissed LSG's application for a stay and ordered LSG to pay Pacific's costs on a band A basis, along with the usual disbursements. The Court also noted that if Pacific's intentions regarding the retention of the additional $1 million changed, its counsel would inform LSG. This decision underscores the importance of demonstrating a real risk of prejudice to justify a stay of execution of a costs order in the context of an appeal.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established