YONG QUAN HE, JUN YOU HE AND JUN NA HE V HARD TO FIND BUT WORTH THE EFFORT QUALITY SECOND HAND BOOKS (WELLINGTON) LIMITED (IN LIQUIDATION) CA CA399/07

YONG QUAN HE, JUN YOU HE AND JUN NA HE V HARD TO FIND BUT WORTH THE EFFORT QUALITY SECOND HAND BOOKS (WELLINGTON) LIMITED (IN LIQUIDATION) CA CA399/07 7 December 2007IN THE COURT OF APPEAL OF NEW ZEALAND CA399/07 [2007] NZCA 565BETWEEN YONG QUAN HE, JUN YOU HE AND JUN NA HE Appellants AND HARD TO FIND BUT WORTH THE EFFORT QUALITY SECOND HAND BOOKS (WELLINGTON) LIMITED (IN LIQUIDATION) Respondent Hearing: 3 December 2007 Court: Hammond, O'Regan and Ellen France JJ Counsel: P S J Withnall for Appellants D Smith for Respondent Judgment: 7 December 2007 at 3 pmJUDGMENT OF THE COURT A The application to strike out is dismissed. B The appellants must pay to the respondent costs of $2,500 plus usual disbursements. REASONS OF THE COURT(Given by Ellen France J)Introduction[1] This is an application under r 37 of the Court of Appeal (Civil) Rules 2005 for an order striking out the appeal because of late payment of security for costs.Background[2] In a decision delivered on 25 July 2007, Miller J granted the appellant's application under s 67 of the Judicature Act 1908 for leave to bring a second appeal to this Court: HC WN CIV 2006-485-2078. The appeal, which relates to the effect of an election to distrain for unpaid rent upon the right to terminate for non-payment of that rent, was filed on 8 August 2007. Security for costs should have been provided by 5 September 2007. [3] On 17 September, the respondent sent a facsimile to the appellants recording the Registry's advice that security for costs had not been paid. The respondent said that an application for strike-out would be made if security was not given by 21 September. An application for strike-out was filed on 8 October but was not properly served on the appellants until 30 October. Security was given on 2 November. [4] Meanwhile, on 27 August, the case on appeal was filed. A request for a hearing date to be allocated under r 38 has been made.Discussion[5] Rule 35 of the Court of Appeal (Civil) Rules provides that security for costs "must" be given within 20 working days after the notice of appeal has been filed in the Registry. [6] Under r 11(3) of the Court of Appeal (Civil) Rules 1997, failure to give security within the 14 days allowed resulted in the appeal being treated as havingbeen abandoned. The Court now has a discretion under r 37 to strike out for a failure to comply with r 35. [7] Rule 37 provides as follows:(1) The Court may, on application, make an order striking out an appeal if security for costs is not paid by the time payment is due. (2) The appellant may not apply for the allocation of a hearing date under r 38 (1) if the appellant is in default of any obligation to pay security for costs.[8] The respondent submits that strike-out should be the usual consequence of a failure to comply with r 35 except in two situations. Those situations are, first, where the failure to give security is the result of a genuine slip-up or oversight or matters of that sort, and second, where the failure results from the intervention of an unrelated party such as a postal strike or a courier mishap. The respondent's argument is that such an approach is necessary to give effect to the mandatory requirement in r 35 to give security. [9] Here, the respondent contends there has been no error or intervening event. Rather, despite being put on notice, the appellants simply did not pay on time. [10] In response, the appellants emphasise the timely filing of the case on appeal (within three weeks of the filing of the appeal) and that payment was made very promptly after service of the strike-out application. Against that background, the appellants argue that the disparity between the consequence of losing their appeal rights and what has occurred is too great. [11] For the reasons advanced by the appellants, we agree that strike-out is not appropriate. [12] We accept that there is merit in the respondent's argument given the mandatory terms of r 35. Parties that do not comply with the rule will run the risk of strike-out (see: Reihana v Taupo District Court Registry CA6/06 19 June 2006). However, in the present case, we have to take account of the fact that the appellants otherwise kept matters moving having promptly filed the case on appeal and havingsought a fixture. It is also a relevant contexual matter that the High Court considered leave to appeal was warranted. There is no excuse for the delay in payment following receipt of the respondent's advice that it would seek to strike out but the appellants did pay promptly once the present application was filed. [13] Mr Smith makes the point that the respondent has been put to the cost of the present application. We agree, and Mr Withnall accepted, that there should be costs consequences for the appellants. Mr Withnall suggested something in the order of $1,000 plus disbursements. Mr Smith's submission was that $3,000 plus disbursements would be appropriate. We consider a figure of $2,500 plus disbursements is the appropriate award. That is a significant increase on the usual costs award in these matters and reflects the fact that there was no excuse for the late payment in this case.Result[14] For these reasons, the application to strike out is dismissed. The respondent is entitled to costs of $2,500 plus usual disbursements.Solicitors: Peter J Morahan, Lower Hutt for Appellants Benton Law, Auckland for Respondent