Body Corporate 172108 v Cummins [2025] NZHC 1378 (30 May 2025)

Body Corporate 172108 v Cummins [2025] NZHC 1378 (30 May 2025) Home | Databases | WorldLII | Search | Feedback High Court of New Zealand Decisions You are here: NZLII >> Databases >> High Court of New Zealand Decisions >> 2025 >> [2025] NZHC 1378 Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help Body Corporate 172108 v Cummins [2025] NZHC 1378 (30 May 2025) Last Updated: 9 July 2025 IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE CIV-2021-485-458[2025] NZHC 1378 BETWEEN BODY CORPORATE 172108 Judgment Creditor AND ROBERT JAMES CUMMINS Judgment Debtor Hearing: 31 October 2024 Further written submissions on procedural issues 17, 25 and 31 March 2025 Appearances: J Orpin-Dowell and T Allan for Judgment Creditor R Cummins In Person Judgment: 30 May 2025 JUDGMENT OF ASSOCIATE JUDGE SKELTON TABLE OF CONTENTS Background and procedural history [8] Legal principles — application for adjudication [38] Mr Cummins’ application for leave to adduce further evidence and make further submissions [44] My assessment [47] Issues to be determined [59] Cross-claims [62] Are the cross-claims disputed? [67] Merits of the cross-claims [74] Conclusion on cross-claims [84] Special circumstances [89] BODY CORPORATE 172108 v CUMMINS [2025] NZHC 1378 [30 May 2025] Ability to pay debts [97] Is it otherwise just and equitable not to make an order for adjudication? [108] Summary of key findings [120] Result [124] [1] The judgment creditor, Body Corporate 172108 (Body Corporate), applies for an order adjudicating the judgment debtor, Robert Cummins, bankrupt under s 36 of the Insolvency Act 2006. [2] The application relates to a series of costs orders, in the sum of $167,522.41 (plus interest), made in favour of the Body Corporate against Mr Cummins. They arise from an ongoing dispute over the repair scheme for a unit title apartment building in Auckland, Hobson Apartments. [3] Mr Cummins opposes adjudication on the bases that: (a) he is able to pay his debts; (b) the judgment debts relied on by the Body Corporate are met by genuinely triable cross-claims against the Body Corporate; and (c) it is just and equitable that the Court does not make an order of adjudication because it would be futile and the application has been made for a collateral purpose. [4] After the hearing of the application for adjudication, Mr Cummins applied for leave to file further submissions and adduce further evidence under r 11.8A of the High Court Rules 2016. This application also raised an ancillary privilege issue.1 Mr Cummins also sought an order that the Body Corporate’s application for adjudication not be determined pending the determination of the Body Corporate’s Body Corporate 172108 v Cummins HC Wellington CIV-2021-485-458, 26 February 2025 at [1(b) and (c)]. application dated 19 February 2025 in CIV-2009-404-6868 for further variation of the remediation scheme.2 [5] The parties filed submissions on these procedural issues. After this, it became clear that Mr Cummins was no longer pursuing the application to effectively stay determination of the Body Corporate’s application for an adjudication order.3 The parties agreed that I should determine the remaining procedural issue under r 11A on the papers without any further oral hearing. However, Mr Cummins submitted that if I found I needed to resolve the ancillary privilege issue, then he would seek a further in-person hearing to cross-examine the deponent of an affidavit adduced by the Body Corporate.4 [6] I have determined that leave should not be granted to Mr Cummins to adduce further evidence and/or make further submissions in this proceeding. Therefore, I do not need to determine the ancillary privilege issue. Given these findings, and to avoid further delay in the determination of this proceeding, my determinations on these procedural issues are incorporated into this judgment. [7] It is first necessary to set out the background and procedural history to this matter. Background and procedural history [8] A comprehensive review of the background to this matter is set out in the judgment of the Court of Appeal in CA238/2020.5 It is further traversed in the judgment of Associate Judge Johnston in declining to halt these proceedings,6 and the judgment of Powell J in 2024 in CIV-2009-404-6868.7 I do not propose to repeat the background in full in this judgment. However, I set out below a high-level summary of the background and procedural history. 2 At [1(a)]. Body Corporate 172108 v Cummins HC Wellington CIV-2021-485-458, 14 April 2025 [Minute of 14 April 2025] at [5].4 At [14]–[17]. Cummins v Body Corporate 172108 [2021] NZCA 145, [2021] 3 NZLR 17 [Liquidation Appeal Judgment] at [2]–[30].6 Body Corporate 172108 v Cummins [2023] NZHC 1535 [Halt Judgment] at [3]–[9] and [18]–[31]. 7 Body Corporate 172108 v Meader [2024] NZHC 1280 [Powell J Judgment] at [3]–[46]. [9] The parties are in a long-running dispute over the repair of the Hobson Apartments. Manchester Securities Ltd (in liquidation) (Manchester) — of which Mr Cummins is the sole director and shareholder — has been, at all relevant times, the registered owner of unit 12A on level 12, the entire top floor of the apartment building.8 Manchester was originally the sole trustee for Manchester Securities Trading Trust (Trust), a trust associated with Mr Cummins’ interests. [10] The apartment building was discovered to be leaky and in need of extensive remedial work on all levels. In 2009, the Body Corporate applied to this Court under s 48 of the Unit Titles Act 1972 for approval of a scheme of remediation for the building. [11] Ultimately, in 2010, Heath J approved a remedial scheme.9 The scheme included specific arrangements with Manchester to carry out the repairs to the unit and common property on level 12 and for Manchester’s contribution to the cost of repair of the building.10 Manchester was to contribute to the repairs of common property on levels one to 11 as well as paying for the work on level 12. Manchester’s liability was to be capped at 11.88 per cent (being the unit entitlement of the level 12 unit) of the total cost of repairs to the whole building. The repairs to levels one to 11 were completed in December 2013.11 However, the repairs to level 12 have not yet been completed. [12] From 2012, Manchester has refused to pay any contribution towards the costs incurred to remediate levels one to 11. In March 2013 the Body Corporate applied for an order varying the remedial scheme, which was granted by Fogarty J in March 2017, effectively removing the cap of 11.88 per cent.12 Fogarty J also ordered Manchester to make an immediate interim payment of $321,264.79 (plus GST) to the Works undertaken by Manchester on level 12 have resulted in the addition of a small 13th floor. All references to level 12 in this judgment include the new construction at level 13 unless the context specifically requires otherwise. Body Corporate 172108 v Meader (No 3) HC Auckland CIV-2009-404-6868, 31 August 2010; and Body Corporate 172108 v Meader (No 4) HC Auckland CIV-2009-404-6868, 10 February 2011.10 Body Corporate 172108 v Meader (No 3), above n 9, at [45]–[50]. 11 Manchester Securities Ltd v Body Corporate 172108 [2017] NZCA 527 [Variation Appeal Judgment] at [24] and Powell J Judgment, above n 7, at [23]. 12 Body Corporate 172108 v Manchester Securities Ltd [2017] NZHC 329 [Variation Judgment]. Body Corporate.13 This was calculated by identifying Manchester’s contribution to the cost of repairs of common property on levels one to 11 ($513,247.60 plus GST),14 and allowing Manchester a credit for the other owners’ contribution to the estimated cost of carrying out repairs to the common property on level 12 in the sum of $191,982.81.15 Manchester unsuccessfully appealed the variation decision to the Court of Appeal.16 The Court of Appeal also found that “the scheme has gone badly awry” and “Manchester must take “the lion’s share of the blame”” and “[i]ts conduct can fairly be described as dilatory and prevaricating”.17 [13] In March 2018, the Supreme Court declined Manchester’s application for leave to appeal.18 [14] After the variation decision, the relevant provisions of the scheme relating to the cross-claims asserted by Mr Cummins read as follows: Allocation of Costs 10.1 Where Repairs can be identified with a specific Unit, the Cost of such Repairs shall be borne by the Owner or Owners of that Unit. 10.2 Where Repairs are carried out to Common Property, the provisions of the Act shall apply. 10.3 Subject to any specific provision to the contrary in this scheme, where repairs involve both Units and Common Property, the Cost of such Repairs shall to the extent possible be apportioned to each Owner on the basis of that owner’s legal title to part of the Building. ... 21.2 Manchester shall pay the cost of repairs of common property to all levels calculated in accordance with the unit entitlement (now known as ownership interest) of Manchester’s unit provided however that any Costs incurred by Manchester in respect of project management consultants or other construction-related advisors that do not provide benefit to all other individual proprietors or the body corporate shall be borne solely by Manchester. The costs in respect of project management consultants or other construction-related advisors that Manchester contends provide a benefit to all individual proprietors 13 At [157]. 14 At [149], [153]. At [153]. This credit was based on the estimated “efficient cost” of carrying out the repairs to the common property on level 12 in 2017 in the sum of $217,865.20.16 Variation Appeal Judgment, above n 11. 17 At [43]–[44]. 18 Manchester Securities Ltd v Body Corporate 172108 [2018] NZSC 19. (other than Manchester) or the body corporate shall be made available in writing, together with supporting documentation to the secretary of the body corporate. Any dispute about whether benefit is provided to all individual proprietors (other than Manchester) or the body corporate shall be determined under the dispute resolution provisions of this Scheme. [15] In 2018, Manchester referred a dispute with regard to cl 10.3 of the scheme to arbitration. However, in December 2018, Jagose J granted an interim order prohibiting the parties’ continued participation in the arbitration pending further orders of the Court, on the basis that continuation of the arbitration was unjust.19 [16] Manchester failed to pay the amount of $321,264.79 (plus GST) to the Body Corporate and failed to pay Body Corporate levies after 2012. The Body Corporate issued a statutory demand which Manchester sought to set aside. Manchester contended that it was owed significant sums by the Body Corporate pursuant to cl 21.2 of the remedial scheme which should be set off against the claimed debt.20 The Court of Appeal found that while the claim under cl 21.2 was “not necessarily strong, ... the threshold of a clear and persuasive ground showing a set-off [had], by a fine margin, been crossed by Manchester”.21 However, the Court of Appeal found that:22despite an arguable set-off, and the presence of arbitration clauses and a bona fide dispute, because of Fogarty J’s order for payment immediately and the history we have outlined, we uphold the decision not to set aside the statutory demand. [17] The Body Corporate then filed an application for the liquidation of Manchester. Manchester unsuccessfully sought to stay the liquidation proceedings. This application was dismissed.23 On appeal, the Court of Appeal found that the application sought to circumvent the previous order of the High Court, affirmed by the Court of Appeal, that “the judgment sum must be paid immediately and that the corresponding statutory demand is not subject to compulsory arbitration about Manchester’s set-off- 19 Body Corporate 172108 v Meader [2018] NZHC 3356. Manchester Securities Ltd v Body Corporate 172108 [2018] NZCA 190, [2018] 3 NZLR 455 [Statutory Demand Appeal] at [15].21 At [42]. 22 At [62]. 23 Body Corporate 172108 v Manchester Securities Ltd [2018] NZHC 3307 [Stay Judgment]. claims”.24 The Court held that that the application was “an exemplar of a collateral challenge to final decisions of this Court and an abuse of process”.25 [18] Manchester then unsuccessfully opposed the liquidation.26 Mr Cummins (as sole director and shareholder of Manchester) obtained leave to appeal the liquidation decision to the Court of Appeal.27 The Court of Appeal rejected the argument that the asserted cross-claims pursuant to cls 10.3 and 21.2 of the remedial scheme provided a basis for avoiding liquidation. The Court referred to the decision of the English Court of Appeal in Re Bayoil SA, stating:28 [67] In Bayoil SA the English Court of Appeal affirmed the principle that where a debt on which a liquidation is based is genuinely disputed, as established by evidence, it would be an abuse of process to liquidate on the basis of that debt in the situation where the debt on which the petition is based is not disputed, but there is an alleged cross-claim. In doing so, and in summarising its reasoning, the Court said: Having held that the company had a genuine and serious counterclaim in the arbitration, which it had been unable to litigate, in an amount exceeding the amount of Seawind’s debt, the judge ought to have asked himself whether there were special circumstances which made it inappropriate for the petition to be dismissed or stayed. [68] That is, the counterclaim was for a known amount. Here, notwithstanding affidavit evidence as to the overall amounts spent by Manchester on the level 12 “remediation”, to date the proportion of those amounts which may properly be claimed under has not yet been established. Contrary to Mr Sullivan’s written (outline) submission, it is not accurate to say the Body Corporate does not dispute that Manchester’s set-off amounts under cl 21.2 are more than its claim in liquidation. Moreover, there are here in our view “special circumstances” of the kind that — even if that were not the case — would have made it inappropriate to defer the petition. Those special circumstances are the circumstances and history of this matter since Fogarty J ordered the payment of the judgment debt. [19] In July 2021, Mr Cummins was ordered to pay the Body Corporate costs and disbursements of the substantive application to liquidate Manchester in the amount of $32,818.45.29 24 Manchester Securities Ltd v Body Corporate 172108 [2019] NZCA 408 [Stay Appeal] at [30]. 25 At [29], [38]. 26 Body Corporate 172108 v Manchester Securities Ltd [2020] NZHC 198 [Liquidation Judgment]. 27 Liquidation Appeal Judgment, above n 5. 28 At [67]–[68] (footnotes omitted) citing Re Bayoil SA [1998] EWCA Civ 1364; [1999] 1 WLR 147 (CA). Body Corporate 172108 v Manchester Securities Ltd (in liq) [2021] NZHC 1852 at [21(b)]. The costs award was made against Manchester and Mr Cummins jointly. [20] It is apparent that, prior to Manchester being put into liquidation, by deeds of retirement and appointment executed in December 2018 and March 2019, Manchester retired as trustee of the Trust and Mr Cummins was appointed as continuing trustee.30 As retired trustee, Manchester continues to hold the registered legal title of unit 12A as bare trustee for its successors as such.31 [21] On 13 September 2021, the Body Corporate served Mr Cummins with a bankruptcy notice in respect of the judgment debt of $32,818.45. Mr Cummins unsuccessfully applied to have the bankruptcy notice set aside.32 Mr Cummins’ arguments were rejected by the High Court and the Court of Appeal.33 Mr Cummins did not rely on the cross-claims under cls 10.3 and 21.2 previously asserted by Manchester. [22] Mr Cummins did not comply with the bankruptcy notice, and on 17 March 2022 the Body Corporate filed an application for an adjudication order. In June 2022, Mr Cummins applied to halt the application for adjudication under s 38 of the Insolvency Act. He did so on the basis of alleged cross-claims under cls 10.3 and 21.2 of the scheme previously asserted by Manchester.34 Mr Cummins claimed to be able to use these cross-claims to set off his liability to the Body Corporate as a result of his assumption of the role of trustee of the Trust (pursuant to deeds of appointment and retirement of trustee dated 21 December 2018 and 15 March 2019). Alternatively, he claimed the ability to set off his liability pursuant to an assignment of Manchester’s interest in the litigation, concerning the cross-claims, to him by deed of assignment dated 27 February 2020.35 Associate Judge Johnston found that Mr Cummins had an arguable case that:36 30 Halt Judgment, above n 6, at [30]. 31 At [4]. 32 Body Corporate 172108 v Cummins [2022] NZHC 211 [Setting Aside Judgment]; Body Corporate 172108 v Cummins [2022] NZHC 1031 [Setting Aside Recall Judgment] - Mr Cummins sought the recall of the judgment, asserting that it contained substantial factual and other errors. The judgment was reissued on 13 May 2022 to correct minor factual errors. He also unsuccessfully appealed: Cummins v Body Corporate 172108 [2022] NZCA 658 [Setting Aside Appeal]. 33 Setting Aside Judgment, above n 32, at [33]–[34] and Setting Aside Appeal, above n 32. 34 Mr Cummins also argued that he had a claim for a quantum meruit and caveat damages. However, these arguments were rejected and have not been pursued by Mr Cummins. 35 Halt Judgment, above n 6, at [29]–[36]. 36 At [38]–[39]. It is not apparent that the Court was made aware of the Litigation Agency Agreement entered into between Manchester (by its liquidator) and Mr Cummins (as trustee of the Trust) on 28 March 2022. Mr Cummins entered into this agreement well after the deeds of appointment and [38] ...if, by reason of the s 47 of the Trustee Act 1956, or the deed of assignment, or both, Mr Cummins is entitled to stand in the shoes of Manchester, from a legal perspective there would be effective identity of parties and therefore he is entitled to use the cross-claims. [23] However, he declined to halt the bankruptcy application, holding that: (a) The Body Corporate is seeking adjudication on a judgment debt which is payable immediately and has been outstanding since July 2021.37 This was analogous to the judgment debt that formed the basis of the Body Corporate’s application to liquidate Manchester.38 (b) By contrast, the cross-claims were nothing more than unliquidated claims for damages in arbitral proceedings that may or may not be successful.39 (c) For this reason, he did not accept there was a proper foundation for a halt of the bankruptcy proceedings. In particular, it was not considered by the Court of Appeal to be a proper foundation for setting aside the statutory demand, a stay of the liquidation proceeding, or overturning the decision to liquidate Manchester.40 [24] Associate Judge Johnston did not consider it made any difference that the courts had previously been dealing with a liquidation application, whilst he was concerned with a bankruptcy application. He explained:41 [57] However, as already emphasised, the debt upon which the Body Corporate’s application for adjudication is based is a long outstanding judgment debt that is payable immediately. That is a basis upon which adjudication proceedings may properly be brought. As I have indicated, there is a sense in which such a debt is directly comparable to a claim for unpaid levies. In any event, a central aspect of both the insolvency and liquidation jurisdictions is that a debtor is liable to be bankrupted or liquidated if unable to pay their debts as they fall due so as to protect the public. retirement executed in December 2018 and March 2019, and the deed of assignment dated 27 February 2020 relied on by him in his application to halt the adjudication proceedings. The Litigation Agency Agreement is discussed below at [82]–[83], [86], [109] and [118]. 37 At [43] and [53]. 38 At [44] and [57]. 39 At [44]–[45] and [53]. 40 At [54]. 41 At [57]–[60] (footnotes omitted). [58] In short, I do not consider that there is anything in the argument based on the difference between insolvency and liquidation proceedings, or at least anything that can affect the outcome in this case. [59] As the Court of Appeal has said in related proceedings, “The courts’ insolvency jurisdiction is, in origin, equitable. Equity looks to substance and sees through form”. Given that Mr Cummins’ relies upon equitable set-off which originally accrued to Manchester, it is important to remember that such a claim is an equitable defence: “That the defendant has a claim against the plaintiff will not be enough. There must be an equity justifying the claim as a defence”. For the reasons I have tried to identify, I do not consider that there is in this case an equity standing behind Mr Cummins’ application. [60] Finally, the power to halt an application for adjudication, or eventually to adjudicate a person bankrupt are discretionary powers. As the Court of Appeal said in the liquidation proceedings, the background and history of the dispute between Mr Cummins, his interests, and the Body Corporate, constitute special circumstances which effectively make it inappropriate to defer the Body Corporate’s application for adjudication. [25] Associate Judge Johnston summarised his conclusions on the considerations relevant to whether to order a halt in this way:42 (a) The history of the litigation: the dispute in this case has been before the courts continuously since at least 2010. Mr Cummins and his interests has refused to pay sums owing to the Body Corporate throughout this time, and the judgment debt in the present case has been outstanding since 30 June 2021. While the Court of Appeal has recognised that Manchester has a plausible claim, both this Court and the Court of Appeal have, time and again, refused to regard that claim, a claim for unliquidated damages that may or may not succeed, as providing a foundation for bringing to an end insolvency or liquidation proceedings. The Court of Appeal has described Mr Cummins and his interests as engaging in “dilatory and prevaricating behaviour”. (b) The merits of Mr Cummins’ cross claims: for the reasons set out in this judgment, I consider that Mr Cummins’ arguments lack merit, even although there is a claim in existence which remains to be determined. (c) The stage of Mr Cummins’ cross-claims: I am unaware of when (if ever) Mr Cummins’ claim is likely to be determined, although it is clear that no proceeding alleging quantum meruit or seeking caveat damages currently exists. Given the stay, it seems unlikely that the claim will be determined any time soon. It also appears to me that Mr Cummins’ apparent propensity to take every point he can — good, bad or indifferent — is likely to prolong the time it will take to have his claim determined. (d) Consequences for the parties: given the history of the dispute between Mr Cummins and his interests, and the Body Corporate, the 42 At [105] (footnote omitted). consequences of a halt would be to drag the dispute out, further prolonging the Body Corporate’s attempt to recover an outstanding judgment debt. As the Courts have emphasised, the history of the litigation indicates that the balance of equities does not fall in Mr Cummins’ favour. (e) Consequences for third parties: it appears to me that a halt of the application would be likely to have a negative impact on Mr Cummins’ creditors generally. [26] Mr Cummins applied for leave to appeal against the decision declining to halt the bankruptcy proceedings, but leave was declined.43 Associate Judge Johnston summarised why he had concluded in the Halt Judgment that special circumstances existed as follows:44[33] It is correct that in my judgment at para [60] I concluded that special circumstances existed. Between paragraphs [37]–[60] I tried to explain why I had reached that conclusion. In broad summary: (a) the background to this litigation in which Manchester Securities and Mr Cummins have taken every conceivable point, many of which, in my assessment, have been without substantial merit; (b) the fact that, even if Mr Cummins can claim standing to pursue the claims in question, they are the subject of arbitral proceedings which were commenced years ago, which are stayed and there is no immediate prospect of them being resurrected; (c) the fact that in this proceeding the Court is dealing with a judgment debt for a sum certain, which is payable immediately and that the claim that Mr Cummins relies on is a claim for an unliquidated amount in arbitral proceedings which may or may not be successful; (d) the fact that the evidence demonstrates conclusively (despite Mr Cummins’ rather somewhat vehement attempt to persuade me to the contrary) that he is insolvent in the sense that he is unable to meet his debts as they fall due; (e) the fact that while this dispute is dragged out the necessary remedial work remains incomplete to the serious disadvantage of the Body Corporate and all members. [27] After leave to appeal was declined by Associate Judge Johnston, Powell J released a decision in CIV-2009-404-6868 on:45 43 Cummins v Body Corporate 172108 [2023] NZHC 3169 [Halt Leave Judgment]. 44 At [33]. 45 Powell J Judgment, above n 7. (a) cross applications by the Body Corporate and Manchester (prior to being put into liquidation) seeking declarations as to the effect of the cost allocation provisions in the scheme or, in the alternative, variations to the scheme to reflect their respective contentions as to the appropriate effect of the scheme; and (b) an appeal by the Body Corporate against a preliminary determination by an arbitrator that he had jurisdiction under the reference to arbitration made by Manchester in 2018. [28] Justice Powell found that “[t]he responsibility for what has taken place and the future to complete the remediation of level 12 must rest largely with Mr Cummins” as the sole director and shareholder of Manchester.46 [29] Justice Powell found that the asserted cross-claim under cl 10.3 could not succeed.47 He found that cl 21.2 “provides a limited mechanism for Manchester to make claims for consultant fees”. 48 He held:49[92] It appears from the figures provided by Mr Cummins that as of March 2022 the maximum amount of “project management consultants or other construction-related advisors” claimed to come within cl 21.2 is $1,194,552.61 (excluding GST). It is thus at most only a reasonably small proportion of the total cost expended by Manchester on level 12. It is, in any event, not clear whether all invoices have been made available still less whether at any point any supporting documentation to justify why those costs benefit all of the other owners or the Body Corporate, and it therefore appears that any claim under cl 21.2 remains pending rather than actual. [30] Justice Powell considered that the dispute resolution provisions of the scheme (cl 13) should be varied to “make it clear that no arbitration is to be commenced, by Manchester or deriving from Manchester’s claims, prior to issue of a code compliance certificate”.50 Further, it was appropriate there be “some type of timetable to ensure 46 At [10]. 47 At [87] and [147](c). 48 At [90]. 49 At [92]. 50 At [119]. that any arbitration [of the cl 21.2 claim] is commenced promptly after the issue of a code compliance certificate”.51 Justice Powell varied cl 13 to require that:52 13.4 In the event a notice of objection is given by, for, under or on behalf of Manchester, arising out of or otherwise derived from any rights provided to or claimed by Manchester under this scheme including any claim based on any claim or entitlement arising out of cl 21.2, the dispute is not to be referred to an arbitrator unless: (a) the notice of objection is given within 20 working days of a code compliance certificate being issued in respect of all works on level 12 and 13; and (b) Manchester, or the person or entity claiming for, under or on behalf of Manchester has paid to the Body Corporate prior to the notice of objection being issued: (i) all levies currently outstanding for level 12 (and 13 (if any)) at the date of the notice of objection; (ii) the judgment sum of $321,264.79 (plus GST if any) ordered by Fogarty J to be paid by Manchester to the Body Corporate ([2017] NZHC 329); and (iii) all costs awarded against Manchester in favour of the Body Corporate and unpaid at the date of the notice of objection. [31] Justice Powell also held:53 [118] In considering this variation I am concerned that the current status quo will continue that Manchester or its successor will not complete the remediation of level 12 in a timely fashion, with the result that the prospect of arbitration will continue to hang over the other owners for some time to come. As a result, I reserve leave for the Body Corporate to seek a further variation to the dispute resolution provisions with a view to restricting the ability of Manchester or its successor to arbitrate in the event the remediation of level 12 is not completed within 6 months of the date of this judgment. [32] Further, Powell J made Jagose J’s interim orders of 7 February 2019, concerning the arbitration commenced by Manchester, permanent.54 [33] Justice Powell’s judgment has not been appealed by any party. Mr Cummins applied for leave to appeal as a non-party, but his application was dismissed.55 51 At [117]. 52 At [116]–[120] and Schedule. 53 At [118]. 54 At [145] and [149]. 55 Body Corporate 172108 v Meader & Ors (Manchester Securities Ltd) [2025] NZHC 69. [34] In September 2024, the Court of Appeal declined Mr Cummins’ application for special leave to appeal the Halt Judgment.56 Regarding the cross-claims, the Court of Appeal held: 57 [23] The absence of serious arguability has only been strengthened by the release (after the Associate Judge’s halt and leave decisions) of Powell J’s judgment referred to earlier. As noted, Powell J has permanently stayed the arbitral proceedings, found that the cross-claim under cl 10.3 could not succeed and expressed the view that any residual claim under cl 21.2 “remains pending rather than actual”. So any conceivable strength that Mr Cummins’ cross-claim argument might once have had has all but evaporated. [35] On 19 February 2025, the Body Corporate filed an interlocutory application in CIV-2009-404-6868 seeking an order further varying the dispute resolution provisions of the remediation scheme. In particular, the Body Corporate sought to insert clauses preventing Manchester Securities Ltd, Sage Securities Ltd and Mr Cummins (and any person claiming by, through or under any of them) from bringing: any counterclaim of any kind howsoever arising relating to any work or cost incurred in relation to any part of the work on [level 12 of the Hobson Street Apartments] against the Body Corporate or any owner of any unit in the Body Corporate relating to the cost incurred or to be incurred in carrying on the work on [level 12]. [36] This application is before Powell J and has been timetabled for hearing in July 2025. [37] Since the original costs order which is the subject of the bankruptcy notice, this Court, the Court of Appeal and the Supreme Court have made further costs orders in favour of the Body Corporate against Mr Cummins. He now owes the Body Corporate the sum of $167,552.41, plus interest.58 I understand that Mr Cummins does not dispute the quantum of these judgment debts and that further costs applications by the Body Corporate remain outstanding. 56 Cummins v Body Corporate 172108 [2024] NZCA 303 [Halt Special Leave Judgment]. See also Cummins v Body Corporate 172108 [2024] NZCA 333 [Halt Special Leave Recall Judgment]. 57 At [23]. 58 See HG Metal Manufacturing Ltd v Navaratnam [2022] NZHC 2183 at [26]–[27]. Legal principles — application for adjudication [38] Section 36 of the Insolvency Act provides that the Court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in s 13 of the same Act. [39] Section 13 provides: 13 When creditor may apply for debtor’s adjudication A creditor may apply for a debtor to be adjudicated bankrupt if— (a) the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and (b) the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and (c) the debt is a certain amount; and (d) the debt is payable either immediately or at a date in the future that is certain. [40] Section 37 provides that the Court may, at its discretion, refuse to adjudicate the debtor bankrupt if: (a) the creditor has not established the requirements set out in s 13; (b) the debtor is able to pay his or her debts; (c) it is just and equitable that the court does not make an order for adjudication; or (d) for any other reason an order of adjudication should not be made. [41] A leading authority on the exercise of the discretion is Baker v Westpac Banking Corp.59 In that case the Court of Appeal held:60 59 Baker v Westpac Banking Corp CA212/92, 13 July 1993. 60 At 4–5. It is proper for the court to consider not only the interests of those directly concerned — the petitioner, other creditors, the debtor — but also the wider public interest. A creditor who establishes the jurisdictional facts set out in s 23 is not automatically entitled to an order. On the other hand, it is for an opposing debtor to show why an order should not be made. The court will give proper weight to the commercial judgment of the petitioner but the oppressive use of the bankruptcy process may be a ground for refusing an order. Another ground may be the undoubted absence of assets but that will not necessarily preclude an order given the range of interests involved including the public interest in the continuing oversight of a bankrupt’s affairs and the disqualifications that go with bankruptcy. In the end the court must balance the various considerations relevant to the case and determine whether the debtor has succeeded in showing that an order ought not to be made. [42] Recently, in New Zealand Bloodstock Finance & Leasing Limited v Jones, the Court set out the general principles, as developed through case law, that are relevant to the Court’s discretion to refuse adjudication:61 (a) The onus is on the debtor to show why an adjudication order should not be made. (b) In exercising its discretion, the Court may consider, inter alia, the following factors: (a) the views of all affected parties, including the petitioner, other creditors and the debtor; (b) the wider public interest, including whether adjudication is “conducive or detrimental to commercial morality and the interests of the general public”; (c) the circumstances in which the debt was incurred and whether those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication; (d) whether adjudication would be pointless in the sense that the creditors are unlikely to receive payment; and (e) whether adjudication would render the debtor unable to support themselves. (c) In exercising its discretion, the Court should also remain cognisant of the broader purposes of bankruptcy which include: (a) allowing for administration of the debtor’s estate in the interests of creditors; (b) holding the debtor accountable for their debts; (c) punishing or stigmatising the debtor for misconduct; New Zealand Bloodstock Finance & Leasing Ltd v Jones [2023] NZHC 3542 at [35] (footnotes omitted). (d) protecting the community from a debtor who runs up credit without being able to honour it; and (e) allowing the debtor to eventually take up commercial activity once freed from their liabilities after the discharge of their bankruptcy. (d) Ultimately, the Court must balance the various considerations relevant to an application when concluding whether the debtor has succeeded in showing that the order sought should not be made. [43] The factors relevant to the Court’s exercise of its discretion under s 37 to refuse to order adjudication are similar to those relevant to the exercise of its discretion under s 38 to halt adjudication.62 If an application for a halt is dismissed, the consequence is often an order for adjudication.63 Mr Cummins’ application for leave to adduce further evidence and make further submissions [44] Mr Cummins has applied for leave to file further submissions and adduce further evidence after the end of the hearing of the application for adjudication under r 11.8A of the High Court Rules. [45] Leave will only be granted to file further submissions in exceptional circumstances, for example, where a new matter has arisen since the hearing which has not been anticipated by counsel.64 Regarding leave to adduce further evidence, Gault J stated in Alderton v Sixty-Six Auckland Ltd:65 Even in the case of further submissions after a hearing, leave is required and will only be granted in exceptional circumstances. At least the same constraint applies to further evidence after a hearing. The conventional requirements for adducing further evidence on appeal — before an appeal hearing — are that the further evidence must be fresh, credible and cogent, and that evidence is not regarded as fresh if it could with reasonable diligence have been produced at the trial. Those requirements assist by analogy when considering whether leave should be granted to adduce further evidence after the hearing in this proceeding. 62 Jason Bull (ed) Insolvency Law & Practice (online looseleaf ed, Thomson Reuters) [Insolvency Law & Practice] at [IN37.02]. 63 See, for example, Re Wang, ex parte Westpac New Zealand Ltd (2011) 25 NZTC 20-015 (HC) at [39]; Re Pillay, ex parte ANZ National Bank Ltd HC Auckland CIV-2009-404-4175, 3 December 2009 at [25], [31] and [32]; and Re Wright, ex parte Health Distributors Ltd HC Hamilton CIV-2010-419-121, 5 November 2010 at [6]. 64 Practice Note [1968] NZLR 608. See also Body Corporate 172108 v Flat Bush Finance Ltd [2020] NZHC 3135 at [68], [70] and [75]. 65 Alderton v Sixty-Six Auckland Ltd [2024] NZHC 2263 at [31] (footnotes omitted). [46] Mr Cummins seeks to adduce further evidence in this proceeding. In particular, he seeks to rely on a letter from the Body Corporate’s solicitors to the Body Corporate Committee dated 23 October 2024 (advice letter) and minutes of the Emergency Extraordinary General Meeting (EEGM) of the Body Corporate dated 1 November 2024. Mr Cummins says that he wishes to refer to the contents of these documents in further submissions. The Body Corporate says the advice letter is subject to legal advice privilege, that the privilege has not been waived and the letter is inadmissible. My assessment [47] It is apparent that the advice letter and minutes of the EEGM relate to the variation application made by the Body Corporate on 19 February 2025 in CIV-2009-404-6868. I have reviewed this application and the EEGM minutes which Mr Cummins put before me. Mr Cummins submits that the advice letter, minutes of the EEGM and the 19 February 2025 application together are relevant to the application for adjudication because they disclose: that the BC, whilst purporting to deny the existence of valid cross-claims in pursuit of an adjudication order in this proceeding, has contrived to apply to Powell J, whom it perceives to be favourably biased, to retrospectively extinguish the said cross-claims in the Auckland proceeding. That contrivance is an “exceptional circumstance” in the context of the Insolvency Act. The unanticipated new matter that has arisen post-hearing comprises all of the advice letter, the minutes of the EEGM and the 19 February application. [48] I understand that Mr Cummins intends to submit that the three documents together constitute “tacit acceptance” of the existence and viability of his cross-claims, in particular the claim under cl 21.2 of the remedial scheme. Mr Cummins intends to argue that, because the Body Corporate has tacitly accepted the cross-claims subsist and are “genuinely triable”, the application for an order for adjudication is cynical or oppressive and should be dismissed. [49] The written and oral submissions of counsel for the Body Corporate at the hearing of the application for adjudication made clear that the Body Corporate does not deny the existence of the asserted cross-claims under cls 21.2 and 10.2, at least as contingent claims.66 The Body Corporate disputes the claims on the merits, but contends that, even if the claims are “genuine and...of substance”, an order for adjudication is justified because “special circumstances” exist.67 The present position under the remedial scheme is that the disputed claims may ultimately have to be determined by arbitration under cl 13 of the scheme after completion of the works on level 12. [50] As noted above,68 in his judgment dated 23 May 2024, Powell J reserved leave for the Body Corporate to seek a further variation to the dispute resolution provisions of the scheme with a view to restricting the ability of Manchester or its successor to arbitrate in the event the remediation of level 12 was not completed within six months of the date of the judgment. [51] The six months to complete remediation of level 12 expired on 23 November 2024. Accordingly, the Body Corporate is now seeking a further variation of the dispute resolution provisions intended to restrict Manchester or Mr Cummins’ ability to pursue any extant cross-claims in arbitration proceedings under the remedial scheme.69 [52] Mr Cummins does not seek to adjourn or stay the Body Corporate’s application for adjudication pending the outcome of the 19 February 2025 application.70 That is because he acknowledges the Body Corporate’s position that the application for adjudication is based on the remedial scheme as it currently stands, not as it would be if the variation application is successful. See Powell J Judgment, above n 7, at [92] in respect of the asserted claim under cl 21.2 of the scheme. Re Bayoil SA, above n 28, at 155A–G and 156C–D. See also Associate Judge Johnston’s findings on “special circumstances” in this case in the Halt Leave Judgment, above n 43, at [29]–[35].68 At [31]. 69 Mr Cummins contends that the leave reserved contemplates “any further variation necessary to effect completion of the remediation of level 12...” as reflected in the sealed judgment rather than a further variation of the dispute resolution provisions of the scheme as stated in [118] of the judgment. However, the scope of the leave reserved and the nature of any further variation to the remedial scheme which the Court considers appropriate at this stage are matters to be determined in CIV-2009-404-6868. 70 Minute of 14 April 2025, above n 3. [53] In the circumstances, I am not satisfied there is any “contrivance” in the Body Corporate’s 19 February 2025 application in CIV-2009-404-6868. There is no artificiality, inconsistency or contradiction in the approach taken by the Body Corporate. The Body Corporate recognises the existence of the cross-claims under cls 10.2 and 21.2 of the scheme at least as contingent claims, but disputes the claims on the merits. It contends that, even if the claims have merit, Mr Cummins should be adjudicated bankrupt because “special circumstances” exist. As things stand, the cross-claims may have to be determined by arbitration under the remedial scheme if and when the work on level 12 is completed. However, in accordance with leave reserved by Powell J, because the remediation of level 12 was not completed by 23 November 2024, the Body Corporate is now applying for a further variation of the remedial scheme. [54] The variation application does not involve any “tacit acceptance” that the cross-claims are “genuinely triable” in the sense that the claims are “genuine and... of substance”.71 The express focus of the leave reserved by Powell J and the variation application as filed is to avoid the prospect of arbitration “of any counterclaim of any kind howsoever arising” hanging over the owners indefinitely. Even if the application (together with the underlying advice letter and EEGM minutes) could be construed as “tacit acceptance” that the cross-claims are “genuinely triable”, the Body Corporate’s position is that Mr Cummins should be adjudicated bankrupt nonetheless because “special circumstances” exist. There is no contrivance and the application for adjudication is not cynical or oppressive. [55] Another aspect of the “contrivance” raised by Mr Cummins is that the advice letter allegedly includes “intemperate language regarding the perception of the author that Powell J lacks impartiality/is favourably biased towards the Body Corporate”. Mr Cummins submits that: [t]his must at least raise a question mark over any determination of Powell J that is in favour of the Body Corporate in respect of ... the Body Corporate’s application to retrospectively extinguish the cross-claims. [56] In response the Body Corporate submits that: 71 Re Bayoil SA, above n 28, at 155A–G. There are no exceptional circumstances in the present case that justify the grant of leave. Mr Cummins says that he wishes to make submissions on the legal advice because it includes “intemperate language regarding the perception of the author that Powell J lacks impartiality/is favourably biased toward the Body Corporate”. That is not an accurate reflection of the legal advice. But even if it was, that is not a matter that has any bearing or relevance on the issues your Honour has to determine on the Body Corporate’s application to adjudicate Mr Cummins bankrupt. If there is any substance in relation to Mr Cummins’ complaint of bias (which is not accepted), that is a matter that he will need to address in the proceeding where the bias is said to arise. [57] As noted above, neither Mr Cummins nor the Body Corporate are seeking an adjournment or stay of the application for adjudication pending the outcome of the Body Corporate’s application for further variation of the remedial scheme. The Body Corporate has made it clear, and Mr Cummins acknowledges, that the application for adjudication is based on the scheme as it stands, and not as it would be if the variation application was successful. In not seeking any stay or adjournment of the application for adjudication, Mr Cummins must be taken to acknowledge that the outcome of the variation application has no bearing on my determination of the application for adjudication based on the current scheme. It follows that any perceived lack of impartiality or “favourable bias” towards the Body Corporate on the part of the judge hearing the variation application cannot have any bearing on my determination. However, as I have previously noted, if Mr Cummins intends to allege lack of impartiality in relation to CIV-404-2009-6868, then this must be raised with the judge in that proceeding urgently.72 [58] For the reasons discussed above, I am not satisfied that there is any “contrivance” nor exceptional circumstances that justify leave being granted to Mr Cummins to adduce further evidence (being the advice letter and minutes of the EEGM) and to make further submissions on this evidence and the Body Corporate’s 19 February 2025 application in CIV-2009-404-6868 for variation of the remedial scheme. I am not satisfied that the allegations raised by Mr Cummins provide any basis for alleging cynical or oppressive use of the bankruptcy process. In the circumstances, I do not need to consider and determine the ancillary privilege issue raised in relation to the advice letter. 72 Minute of 14 April 2025, above n 3, at [8]–[13]. Issues to be determined [59] It is apparent that the Body Corporate has established the requirements set out in s 13 of the Insolvency Act. The issue is whether I should exercise my discretion to refuse to adjudicate Mr Cummins bankrupt under s 37 of the Act. [60] The onus is on Mr Cummins to show why an adjudication order should not be made. As noted above, Mr Cummins contends that I should exercise my discretion to refuse to adjudicate him bankrupt because: (a) he is able to pay his debts; (b) the judgment debts relied on by the Body Corporate are met by genuinely triable cross-claims against the Body Corporate; and (c) it is otherwise just and equitable that the Court does not make an order of adjudication because it would be futile and the application has been made for a collateral purpose. [61] It is appropriate to deal with the cross-claims issue first as Mr Cummins’ argument seems to be that he should not be treated as a debtor of the Body Corporate. Cross-claims [62] Mr Cummins submits that he should not be adjudicated bankrupt because he has “established genuinely triable cross-claims against the Body Corporate in an amount that clearly exceeds the total amount of the debts owed to it”. He argues that debts must be assessed on a net basis in the Court’s insolvency jurisdiction.73 Referring to Re Bayoil SA,74 Mr Cummins contends that there is little practical difference between a cross-claim of substance and a serious dispute regarding the underlying indebtedness.75 He says that I should exercise my discretion against 73 See Insolvency Act 2006, s 254. 74 Re Bayoil SA, above n 28. 75 At 154H and 156E–F. adjudication unless there are “special circumstances” making it inappropriate for the application to be dismissed.76 [63] The asserted cross-claims are: (a) a claim under cl 21.2 of the scheme in the sum of $1,914,756.75 for costs in respect of project management consultants or other construction-related advisors incurred in the remediation of level 12 which it is contended provide a benefit to the Body Corporate; and (b) a new claim under cl 10.2 of the scheme in