FOREST HOLDINGS (NZ) LIMITED v SHEUNG [2021] NZCA 108

FOREST HOLDINGS (NZ) LIMITED v SHEUNG [2021] NZCA 108 [14 April 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA416/2020[2021] NZCA 108BETWEEN FOREST HOLDINGS (NZ) LIMITEDApplicantAND THEAN KAI SHEUNGRespondentCounsel: J W Donald for ApplicantNo appearance for RespondentJudgment:(On the papers)14 April 2021 at 10.00 amJUDGMENT OF GODDARD JA The time for bringing the appeal is extended under r 29A of the Court ofAppeal (Civil) Rules 2005 (Rules) to 5.00 pm on Friday, 14 May 2021.B A direction for substituted service is made under r 5(1) of the Rules.Instead of personal service of the notice of appeal, the steps set out at [32]may be taken by the applicant to bring the appeal to the attention of therespondent.C A direction is made that if the respondent does not file an address forservice for the purposes of the appeal, documents other than the notice ofappeal may be served on the respondent in the manner specified at [32(b)and (c)].____________________________________________________________________REASONSThe applications before this Court[1] Forest Holdings (NZ) Ltd (Forest Holdings) wishes to appeal to this Court froma judgment of the High Court declining to grant an order for specific performanceagainst the respondent, Mr Sheung.1 Forest Holdings applies for an extension of timeto bring its appeal to this Court under r 29A of the Court of Appeal (Civil) Rules 2005(Rules). Forest Holdings also applies for an order under r 5(1) of the Rules dispensingwith the need for personal service on the respondent and allowing substituted service.[2] These applications may be determined by a single Judge under s 49(3) of theSenior Courts Act 2016.Background[3] Forest Holdings is the holder of forestry rights on a property in Kaimai whichpermit it to harvest Rimu and Tawa timber. In August 2017, Forestry Holdings enteredinto a joint venture agreement (the Agreement) with Pristine Timber Co Ltd andMr Sheung.[4] Forest Holdings claims that Mr Sheung was required to pay Forest Holdings$1,170,000 (the purchase price) under the Agreement, but failed to do so.The Agreement provided that all parties submitted to the jurisdiction of theNew Zealand courts in respect of any proceedings arising out of or relating to theAgreement. Forest Holdings filed proceedings in the High Court seeking an order forspecific performance of the claimed obligation on the part of Mr Sheung to pay thepurchase price. The High Court proceedings were served personally on Mr Sheung atan address in Kuala Lumpur, Malaysia (Kuala Lumpur address).[5] Forest Holdings has filed evidence (discussed in more detail below) thatMr Sheung resides at, or continues to visit, the Kuala Lumpur address. He appears todivide his time between Kuala Lumpur and China.1 Forest Holdings (NZ) Ltd v Sheung [2020] NZHC 1529.[6] Mr Sheung did not file a statement of defence, or take any other steps, in theHigh Court proceedings. He did not provide an address for service. In default of anappearance by Mr Sheung, the High Court proceedings were set down for a formalproof hearing.[7] Following the formal proof hearing, Duffy J declined to make an order forspecific performance by Mr Sheung in respect of payment of the purchase price.The Judge considered that the Agreement had never become legally enforceable.2And she considered that even if the Agreement had become legally enforceable, therewas no obligation on the part of Mr Sheung to pay the purchase price toForest Holdings.3[8] Forest Holdings filed a notice of appeal in this Court on 29 July 2020, withinthe 20-working-day period prescribed by the Rules.4 But attempts to serve the noticeof appeal on Mr Sheung have been unsuccessful.[9] Rule 31(1) of the Rules provides that an appeal is brought only when theappellant has filed the notice of appeal with the registry and a copy of the notice ofappeal is "served on every person who is a party to the proceeding in the court appealedfrom". Although the notice of appeal was filed with this Court within time, becauseMr Sheung has not been served with the notice of appeal, the appeal has not yet beenbrought in accordance with r 31(1) of the Rules.Evidence in relation to attempts to serve Mr Sheung[10] Forest Holdings has filed affidavit evidence in relation to its attempts to servethe notice of appeal on Mr Sheung. The affidavits are from Kow Yaw Wei, a processserver, dated 4 March 2020 and Chee Kin Sum, a director of Pristine Timber Co Ltd,dated 11 March 2021.[11] Kow Yaw Wei's affidavit describes an attempt to serve Mr Sheung with thenotice of appeal at the Kuala Lumpur address on 29 July 2020. Entry to the premises2 At [19] and [26].3 At [48].4 Court of Appeal (Civil) Rules 2005, r 29(1)(a).was denied by security guards. A second attempt was made on 30 July 2020, but entryto the premises was again denied.[12] Chee Kin Sum's affidavit states that she visited the Kuala Lumpur address on14 February 2021 to see if Mr Sheung was still living there. When she was nearby,she saw Mr Sheung, whom she recognised from previous encounters, entering thepremises, but was not permitted entry by the security guards. She also states that shepreviously corresponded with Mr Sheung by email. To her knowledge, Mr Sheung'semail address remains the same as the email address used for previouscorrespondence. The last time she received an email from Mr Sheung from that emailaddress was July 2018.Application for extension of timeThe law[13] Where the appeal period prescribed by r 29(1) has expired, a party may applyfor an extension of time under r 29A of the Rules. As the Supreme Court said inAlmond v Read, the ultimate question when considering the exercise of the discretionunder r 29A is what the interests of justice require.5 The factors which are likely torequire consideration under r 29A include:(a) the length of the delay;(b) the reasons for the delay;(c) the conduct of the parties, in particular the applicant;(d) any prejudice or hardship to the respondent or to others witha legitimate interest in the outcome; and(e) the significance of the issues raised by the proposed appeal, both to theparties and more generally.5 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].Applicant's submissions[14] Forest Holdings submits that the notice of appeal was filed with this Courtwithin time, on 29 July 2020. The delay in bringing the appeal stems primarily fromthe fact that Mr Sheung has never provided an address for service as he took no partin the High Court proceedings. Three attempts have been made to personally serveMr Sheung with the notice of appeal at the Kuala Lumpur address, all of which havebeen unsuccessful.[15] Forest Holdings submits that as Mr Sheung took no part in the High Courtproceedings, it is unlikely he will oppose the appeal, so there is no prejudice to him ifan extension of time was granted. The proposed appeal is of significant importance toForest Holdings as it wishes to enforce payment of $1,170,000 which it considers it isentitled to under the Agreement. This is not a case where the merits of the substantiveappeal are relevant as the proposed appeal is not "hopeless".6Discussion[16] Forest Holdings filed its application for an extension of time to bring an appealon 16 March 2021, 147 working days after the time for bringing an appeal expired.7Although that delay is considerable, the main cause of the delay has been the inabilityto serve the documents on Mr Sheung. The initial notice of appeal was filed withintime, on 29 July 2020. It is only because the respondent could not be served with thenotice of appeal that the appeal has not been "brought" and an extension of time isneeded.8[17] Forest Holdings has acted reasonably in the steps it has taken to bring itsappeal. It attempted twice to personally serve Mr Sheung immediately after filing thenotice of appeal with this Court. Efforts to personally serve Mr Sheung with thedocuments were also made in February 2021, where Mr Sheung was sighted at hisKuala Lumpur address, but guards prevented entry onto the premises. No unfair6 At [39].7 Court of Appeal (Civil) Rules 2005, r 29(1)(a).8 Rule 31(1).prejudice or hardship to the respondent would arise if an extension was granted, inthese circumstances.[18] The issues raised by the proposed appeal are significant to Forest Holdings: thesum it claims is substantial, and it also says it has an interest in establishing that theagreement has become legally enforceable and remains on foot. It is not necessary toconsider the merits of the proposed appeal before granting an extension of time, incircumstances where the appeal is not plainly "hopeless".9[19] In these circumstances, it is in the interests of justice to grant an extension oftime for Forest Holdings to bring its appeal, under r 29A of the Rules. Forest Holdingswill have until 5.00 pm on Friday, 14 May 2021 to bring its appeal, by serving thenotice of appeal on Mr Sheung in accordance with the directions given below forsubstituted service.Application for substituted service directionsThe law[20] As already mentioned, a copy of the notice of appeal must be served on everyperson who is a party to the proceeding in the court appealed from. That includesevery person named as a party and served with the proceedings in the court appealedfrom, even if that person took no part in the proceedings.10[21] Where service of the notice of appeal is unable to be effected personally, or atan address for service provided in the court below, the appellant may apply to thisCourt for appropriate directions under r 5(1) of the Rules:The Court may give any directions that seem necessary for the just andexpeditious resolution of any matter that arises in a proceeding, whether onapplication by a party or on the Court's own initiative.9 Almond v Read, above n 5, at [39].10 See Matthew Casey and others Sim's Court Practice (NZ) (online loose-leaf ed, LexisNexis) at[CAR31.5].[22] The Rules do not make specific provision in relation to orders for substitutedservice. But relevant guidance is provided by r 6.8(1) of the High Court Rules 2016,which provides:6.8 Substituted service(1) If reasonable efforts have been made to serve a document by a methodpermitted or required under these rules, and either the document has come tothe knowledge of the person to be served or it cannot be promptly served, thecourt may—(a) direct—(i) that instead of service, specified steps be taken that are likely tobring the document to the notice of the person to be served; and(ii) that the document be treated as served on the happening ofa specified event, or on the expiry of a specified time:(c) subject to any conditions that the court thinks just to impose, dispensewith service of a document on a person and give to the party by whomthe document is required to be served leave to proceed as if thedocument had been served.[23] The approach set out in r 6.8(1) of the High Court Rules can be applied byanalogy in this Court, when giving directions under r 5(1) of the Rules.Applicant's submissions[24] Forest Holdings submits that dispensing with personal service is appropriateas Mr Sheung has never provided an address for service, and reasonable efforts havebeen made by Forest Holdings to personally serve the notice of appeal on Mr Sheungat the Kuala Lumpur address with no success. It appears Mr Sheung may be evadingservice.[25] Forest Holdings asks that this Court direct that Forest Holdings may take thefollowing steps instead of personal service:(a) affixing a copy of each document, together with a copy of the order inrelation to service, to Mr Sheung's last known address inKuala Lumpur;(b) posting a copy of each document, together with a copy of the order inrelation to service, to Mr Sheung's last known address inKuala Lumpur; and(c) emailing a copy of each document, together with a copy of the order inrelation to service, to what is believed to be Mr Sheung's last used emailaddress.Discussion[26] Although Mr Sheung took no part in the High Court proceedings, he wasnamed as a party to those proceedings and served with those proceedings. He musttherefore be served with the notice of appeal under r 31(1)(b) of the Rules.11[27] As discussed above, reasonable efforts have been made by Forest Holdings topersonally serve the notice of appeal on Mr Sheung at his Kuala Lumpur address,where he resides or continues to visit. It is quite clear that the notice of appeal cannotpromptly be served on Mr Sheung in person. It seems likely Mr Sheung is evadingservice.[28] This is not a case in which service of the notice of appeal should be dispensedwith entirely. Steps should be taken to bring it to Mr Sheung's attention, so that hehas the opportunity to appear and be heard before this Court if he wishes to do so.I am satisfied by the evidence filed by Forest Holdings that the steps set out above at[25] are likely to bring the notice of appeal to Mr Sheung's attention. It appearsMr Sheung still resides at, or regularly visits, the Kuala Lumpur address. The emailaddress is the address specified in the Agreement for notices and demands to be sentto Mr Sheung under the Agreement. It is the last email address from which CheeKin Sum received an email from Mr Sheung in July 2018. So far as she is aware,Mr Sheung's email address remains the same.11 Casey, above n 10, at [CAR31.5]. Mr Sheung was personally served with the High Courtproceedings.[29] An order under r 5(1) of the Rules of the kind contemplated by r 6.8(1)(a) ofthe High Court Rules is appropriate. Instead of personal service on Mr Sheung,Forest Holdings may serve the notice of appeal in the manner set out above at [25].Forest Holdings has until 5.00 pm on Friday, 14 May 2021 to take those steps.The documents are to be treated as having been served on Mr Sheung for the purposesof r 31 of the Rules upon completion of all three steps.[30] Mr Sheung may elect to file an address for service for the purposes of thisappeal. If he fails to do so, then I direct that documents other than the notice of appealthat must be served on him in connection with this appeal, may be served by sendingthem by post and by email in accordance with paras [25(b) and (c)] above: thosedocuments need not be physically affixed to the Kuala Lumpur address.Result[31] The time for bringing the appeal is extended under r 29A of the Court of Appeal(Civil) Rules 2005 (Rules) to 5.00 pm on Friday, 14 May 2021.[32] A direction for substituted service is made under r 5(1) of the Rules. Insteadof personal service of the notice of appeal, the following steps may be taken by theapplicant to bring the appeal to the attention of the respondent, by 5.00 pm on Friday,14 May 2021:(a) affixing a copy of the notice of appeal, together with a copy of theorders in relation to extension of time and service, to Mr Sheung's lastknown address in Kuala Lumpur;(b) posting a copy of the notice of appeal, together with a copy of the ordersin relation to extension of time and service, to Mr Sheung's last knownaddress in Kuala Lumpur; and(c) emailing a copy of the notice of appeal, together with a copy of theorders in relation to extension of time and service, to the email addressfor Mr Sheung specified in the Agreement.[33] A direction is made that if the respondent does not file an address for servicefor the purposes of the appeal, documents other than the notice of appeal may beserved on the respondent in the manner specified at [32(b) and (c)].Solicitors:Braun Bond & Lomas Ltd, Hamilton for Applicant