HAVANACO LTD V STEWART CA CA67/05

HAVANACO LTD V STEWART CA CA67/05 17 June 2005IN THE COURT OF APPEAL OF NEW ZEALAND CA67/05BETWEEN HAVANACO LIMITED Applicant AND GORDON RALPH STEWART Respondent Hearing: 13 June 2005 Court: Anderson P, Chambers and O'Regan JJ Counsel: P F Dalkie for Applicant C F Finlayson and T J Lamb for Respondent Judgment: 17 June 2005 at 10 amJUDGMENT OF THE COURT A The application for special leave to appeal out of time is dismissed. B The applicant must pay to the respondent costs in the sum of $1,500 plus usual disbursements. REASONS(Given by Chambers J)Leave to appeal out of time[1] This is in substance, though not in form, an application for special leave to appeal out of time under r 29(4) of the Court of Appeal (Civil) Rules 2005 ("the Rules"). Gordon Stewart, the respondent, opposes the application.[2] The background to the application is this. On 5 April this year Associate Judge Sargisson delivered a decision ordering Havanaco Limited, the applicant, to pay Mr Stewart USD86,210 within ten working days of the date of the judgment. In default of payment, the judge granted Mr Stewart leave to make application to put Havanaco into liquidation. Although the jurisdiction for that order is not stated in the decision, it was clearly made under s 291(1)(a) of the Companies Act 1993. [3] Havanaco advised Mr Stewart and the High Court that it intended to appeal against the judgment. A notice of appeal was filed in this court on 28 April, but Mr Stewart was not served until 10 May. That was out of time. He should have been served no later than 4 May. Because service is an integral part of bringing an appeal, both under the Rules and those they replaced, namely the Court of Appeal (Civil) Rules 1997 ("the 1997 Rules"), the appeal was not brought within time. [4] Havanaco's error was brought to its attention. Havanaco has now applied for leave to extend time. The application was not in proper form. Rule 15 required the application for special leave to appeal to be in form 1. The application was not in form 1. Nor did the applicant comply with other matters prescribed in Part 2 of the Rules.Interests of justice[5] The principles applicable to an application for special leave to appeal out of time under r 29(4) of the Rules are the same as applications to extend time under r 6(3) of the 1997 Rules. The ultimate test is whether granting leave would meet the overall interests of justice: State Insurance Ltd v Brooker (2001) 15 PRNZ 493 (CA) at [9]; French v Public Trust CA197/04 25 November 2004 at [14]. The relevant considerations are conveniently set out in McGechan on Procedure at [CA 6.04(3)].Reason for delay in bringing appeal[6] Havanaco's lawyers made a mistake. They were waiting for this court's registry to send them back service copies. That is not how appeals in this court aredealt with. The appellant files a notice of appeal. Before filing that notice, the appellant makes a copy of it which is then served on the respondent. Havanaco's lawyers' error was not discovered by them until after the appeal period had expired. They immediately served Mr Stewart, but by then they were out of time. [7] Where the reason for delay in bringing an appeal is the applicant's lawyer's fault rather than the applicant's, this court is usually sympathetic to an extension of time: Grey v Elders Pastoral Holdings Limited (1999) 13 PRNZ 353 at [13]. There is no doubt that this case is of that kind. Havanaco is not to blame; the appeal was not brought in time purely as a result of mistake on the part of Havanaco's lawyers. Of course, one could say that the lawyers should have been keeping an eye on the appeal period and should have been making enquiries of the registry as to where the service copies were. There is no evidence that any such enquiries were made. Had they been made, the case officer would have advised Havanaco's lawyers that their wait was in vain: no service copies would be forthcoming. [8] Once the error was discovered, some action was taken, namely service. That was a sensible first step, as Havanaco's lawyers might well have reasoned that their error would be forgiven by, or at least overlooked by, Mr Stewart. Had it been, no doubt the appeal, albeit improperly brought, would have trundled along in the normal way. Unfortunately for Havanaco, Mr Stewart did take the point.Length of delay[9] The second factor of importance in these cases is the length of delay. It was a short delay here. The notice of appeal was in fact filed well within time. The default was purely in serving a copy of the notice of appeal. Security for costs has been paid. [10] Mr Finlayson, for Mr Stewart, was critical of the delay in filing the application for special leave. That application was not filed until 1 June. In the circumstances, we do not regard that delay as inordinate. Once the error was discovered, it was sensible to ascertain whether Mr Stewart would accept late service. Certainly the application for special leave could have been filed a fortnightearlier, but, as it happens, no time has been lost as a result of delay in filing the application, as this court hears these applications in its monthly miscellaneous motions list. Even if Havanaco had moved more swiftly in filing its application for special leave, it would not have been in time for the May miscellaneous motions day. As well, this is not a case where the respondent was unaware of the intention to appeal. Certainly no prejudice was caused by the slight delay in filing the application for special leave.Merits of proposed appeal[11] The third factor of importance relates to the merits of the intended appeal. It was this factor on which Mr Finlayson placed most emphasis. He submitted that the appeal had no merit. It is well recognised that the court will not grant special leave to an appeal which is unarguable: State Insurance (supra) at [19]; Ngati Tahinga and Ngati Karewa Trust v The Attorney-General of New Zealand CA73/02 27 June 2002 at [3]. [12] In order to understand Mr Finlayson's argument on this topic, we need to set out some background information. The Fiduciary Company Limited lent money to Havanaco. Fiduciary subsequently assigned the debts to Mr Stewart. Mr Stewart, as assignee, served a statutory demand on Havanaco when it failed to repay the loans. The statutory demand was contained in a letter Mr Stewart sent to Havanaco on 20 November 2003. That letter also advised that the loans had been assigned to Mr Stewart. We shall refer to this document as the "20 November letter". [13] When Havanaco failed to comply with the statutory demand, Mr Stewart sought an order that Havanaco be put into liquidation under s 241 of the Companies Act. Associate Judge Sargisson found that there was no genuine dispute as to the principal amounts claimed in the statutory demand, although she considered that there was a genuine dispute as to the amount of interest payable. She ordered that, unless the principal were paid within ten working days from the date of her judgment, Mr Stewart could make application to put Havanaco into liquidation [14] Mr Dalkie advised that there were five proposed grounds of appeal.[15] The first ground of appeal was that the judge had been wrong to find that Havanaco had been given notice in writing of the assignment. Mr Stewart relied for that notice on the 20 November letter, which the judge recorded that Geoffrey Cone, Havanaco's director, acknowledged receiving. Mr Dalkie submitted that the notice was not good notice because it was not "under the hand of the assignor", as required by s 130(1) of the Property Law Act 1952. Mr Finlayson submitted that this proposed ground of appeal was hopeless and resulted from a misreading of s 130(1). That subsection does not require the notice of assignment given to the debtor to be "under the hand of the assignor"; what has to be "under the hand of the assignor" is the assignment itself. The assignment from Fiduciary to Mr Stewart was in writing under the hand of the assignor. Mr Finlayson's submission is clearly supported by the discussion in Fenton Garrow and Fenton's Law of Personal Property in New Zealand (6ed 1998) at [12.038]; and see too Van Lynn Developments Ltd v Pelias Construction Co Limited [1969] 1 QB 607 (CA) at 613 and 615. After receiving the notice, the debtor is entitled, of course, to require a sight of the assignment so as to be satisfied that it is valid and that the assignee can give him or her a good discharge. Although at one time Havanaco disputed the validity of the assignment, Mr Dalkie conceded before Associate Judge Sargisson that there was nothing in that point: Stewart v Havanaco Limited HC AK CIV2004-404-923 5 April 2005 at [19]. [16] When we pressed Mr Dalkie for an answer to Mr Finlayson's argument on this topic, he had none. Mr Finlayson's submission on this point is clearly correct: the notice of assignment does not have to be "under the hand of the assignor" in order to comply with s 130(1). This proposed ground of appeal has no chance of success. [17] We do not need to go into the second ground of appeal, as Mr Dalkie accepted that it was dependent on the success of the first ground, which we have already ruled has no chance of success. [18] The third ground of appeal also assumes that a statutory assignment under s 130 has not taken place. That assumption we have found to be wrong and unarguable.[19] Mr Finlayson submitted that the fourth ground of appeal appeared to be the same as the first. That certainly appears to be the case. It once again presupposes that s 130(1) was not complied with. [20] The fifth ground of appeal alleged there were inconsistencies in Associate Judge Sargisson's reasoning. We do not agree. Further, it was argued that the 20 November letter was "equivocal" as to whether it constituted a notice of the assignment as well as a statutory demand. On its wording, that is frankly unarguable. [21] Mr Finlayson has persuaded us that there is no merit in any of the grounds of appeal. Four are based on an obviously incorrect interpretation of s 130(1) of the Property Law Act and the fifth is based on an untenable interpretation of the 20 November letter. Mr Dalkie was not able to suggest any cogent argument in opposition to Mr Finlayson's. He accepted he could point to no authority supporting his interpretation of s 130(1). That does not surprise us, as the suggested interpretation is contrary to the plain words of the section.Conclusion[22] Normally, where the delay in bringing an appeal is the fault not of the intending appellant but rather of his or her lawyer and where the delay is not significant, this court will generally be inclined to grant special leave. But this court will not grant an indulgence in cases where the proposed appeal has no merit. This proposed appeal is clearly in that category. [23] We suspect that there is much in Mr Finlayson's submission that this appeal was being advanced without any real hope of success but solely to delay the date of liquidation. Had the appeal been brought in time, that plan might have worked. But, unfortunately for Havanaco, it allowed the time for appealing to go by. This court observed in Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 91:When once an appellant allows the time for appealing to go by then his position suffers a radical change. Whereas previously he was in a position to appeal as of right, he now becomes an applicant for a grant of indulgence by the Court. The onus rests upon him to satisfy the Court that in all thecircumstances the justice of the case requires that he be given an opportunity to attack the judgment from which he wishes to appeal.[24] In this case, Havanaco has not satisfied us that in all the circumstances the justice of the case requires special leave to be granted. Because the proposed appeal has no merit, we consider the application must fail.Costs[25] Mr Stewart sought costs. Mr Dalkie accepted that, regardless of the outcome of Havanaco's application, Havanaco should have to pay costs to Mr Stewart. The only issue is quantum. [26] Mr Stewart sought costs on a solicitor/client basis. No grounds were put forward for that submission. We can see no basis for costs on an indemnity basis. Costs will be awarded at the standard miscellaneous motions rate.Solicitors: Cone & Co, Auckland, for Applicant Hughes Robertson, Wellington, for Respondent