HUM HOSPITALITY LIMITED v STYLO MEDICAL SERVICES LIMITED [2021] NZCA 377

HUM HOSPITALITY LIMITED v STYLO MEDICAL SERVICES LIMITED [2021] NZCA 377 [13 August2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA176/2021[2021] NZCA 377BETWEEN HUM HOSPITALITY LIMITEDAppellantAND STYLO MEDICAL SERVICES LIMITEDRespondentCourt: Kós P and Brown JCounsel: B J Burt for AppellantR O Parmenter for RespondentJudgment:(On the papers)13 August 2021 at 9 amJUDGMENT OF THE COURTA The application for extension of time to appeal is granted, subject to thefollowing conditions: (a) Hum is to make payment to Stylo of the arrearssum of $92,925.24 within fourteen days; and (b) Hum is to prosecute itsappeal with expedition; the appeal must be instituted within fourteen daysand will then be placed on the fast track.B We make no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Kós P)[1] The applicant, Hum Hospitality Ltd, leased premises in Grafton Road,Auckland, from the respondent, Stylo Medical Services Ltd. The lease commenced inFebruary 2011 and is subject to two eight-year rights of renewal. The final expiry dateis in January 2033. A three-year rent holiday was provided, but a detailed clause inthe lease required Hum to renovate the premises.[2] The relationship has been mutually unsatisfactory. Stylo has made severalattempts to evict Hum, including, most recently, an application in 2019 to cancel thelease for non-payment of rent.[3] On 11 November 2020, Brewer J held that Hum was liable for (a) rental of thepremises on and from 1 December 2016 at the annual rate of $120,000 plus GST andreviewable in accordance with cl 47.1 of the lease; and (b) arrears of rental paymentsof at least $150,000.1[4] The Judge ordered Hum to pay the arrears within one calendar month, failingwhich the lease would be cancelled.2 He also ordered that if Hum defaulted on thepayment of any future rent, the lease would be cancelled unless Hum could show thatthe non-payment had been remedied within 10 working days.3[5] On 7 December 2020 Hum applied for a stay of Brewer J's decision on thebasis that it was not in a position to pay the $150,000. Edwards J declined theapplication.4[6] Ultimately, Hum was able to pay the $150,000 on time. However, it did notinclude GST on its rental payment for January 2021.[7] On 2 February 2021, Stylo applied for permission to seal orders cancelling thelease. Brewer J granted the application.5 Hum applied successfully for a stay fromBrewer J,6 which was however lifted on 24 February 2021.7 Hum continued to file1 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [43]–[44].2 At [44]–[45].3 At [48].4 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 December2020.5 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 February2021.6 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 12 February2021.7 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 February2021.documents challenging the sealed judgment. Quite properly, it was told by Brewer Jthat the correct process for reviewing the orders was by appeal to this Court.8 Humapplied for another stay on 10 March 2021, which was declined by Brewer J.9It appears from submissions that Hum applied for yet another stay in March 2021.That also was declined by Edwards J.10Application for an extension of time to appeal[8] Hum has now lodged an appeal against the November 2020 decision fourmonths (or 66 working days) out of time.11 It applies for an extension of time toappeal. This judgment deals only with that application.[9] Rule 29A of the Court of Appeal (Civil) Rules 2005 provides:29A Extension of time for appealing(1) If the appeal period prescribed by an enactment or the period prescribedby rule 29(1) or (2) has expired, a party who wishes to appeal may makean interlocutory application for an extension of time in which to appeal.(3) If the Court or a Judge grants an extension of time, the party wishing toappeal must bring the appeal—(a) within the time specified by the Court or the Judge when grantingthe extension; or(b) if no time is specified by the Court or Judge, within 20 workingdays after the day of the decision granting the extension of time.[10] The application of r 29A is governed by Almond v Read.12 In deciding whetherto grant an extension of time, the ultimate question when considering the exercise ofthe discretion to extend time is what the interests of justice require. Relevant factorsinclude the length of the delay, the reasons for the delay, the conduct of the parties,particularly of the applicant, any prejudice or hardship to the respondent or to others8 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 9 March2021.9 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 March2021.10 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 15 March2021.11 Filed on 6 April 2021.12 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801.with a legitimate interest in the outcome, the significance of the issues raised by theproposed appeal, both to the parties and more generally, and whether the appeal lacksmerit or is "clearly hopeless".13Length and reasons for delay[11] Hum says that it was unrepresented at the time the High Court decision wasissued due to its previous counsel being appointed to the bench, and its director (aMs Armitage) did not appreciate the significance of the timeframes for an appeal atthe time the decision was issued. It was not until after the time period for bringing anappeal had passed that Hum properly appreciated the implications of the decision.[12] We are unpersuaded by these contentions. Hum had competent counsel whenit applied for the stay in December 2020, and again for the stay on 15 March 2021.To say that counsel "were acting only on the stay", as Ms Armitage does in heraffidavit in support, evades the issue. It is inconceivable these counsel did not adviseabout the more regular course of appeal. It may be noted Ms Armitage does not go sofar as to lay that accusation of incompetence in her affidavit. The parties have litigatedin this Court previously, in 2015.14 This is a very long-running dispute.[13] Hum's explanation is wordy, but entirely unsatisfactory. We do not accept thatit failed to appreciate the need to bring any appeal very promptly. For reasons knownonly to Ms Armitage, it failed to do so. If that were the only obstacle lying in the wayof the application, it might not be fatal, given the period of delay is neither short norlong. But there are other problems.Conduct and prejudice[14] Hum having defaulted in payment of order (a),15 the lease was cancelled inaccordance with the terms of the judgment of 11 November 2020. Stylo has sinceexpended cost in obtaining a possession order in March 2021 and in attempting13 At [38]–[39]. See also Sharma v Wati [2021] NZCA 220; and Kleine v Il Forno Ltd [2021] NZCA207.14 Stylo Medical Services Ltd v Hum Hospitality Ltd [2015] NZCA 405.15 See [3] above.without success to enforce it. That prejudice can however be met by orders for costsshould the appeal be dismissed in due course.[15] Stylo submits that arrears, interest and costs now outstanding amount to some$92,925.24, based on Hum's own calculations. It may be noted that there is noundertaking, effective or otherwise, to make such amounts good as a condition ofextension of time. That is a fundamental obstacle lying in the way of the presentapplication.[16] We note however that the tenant has expended substantial sums in repairs andmaintenance of the property, in accordance with the renovation obligation referred toat [1] above. Ms Armitage says, with no great precision, that Hum has spent"approximately $650,000 in restoring the villa to its former self". Stylo says theevidence of a court-appointed expert puts the actual expenditure at less than $300,000.[17] There is no relevant disentitling conduct on the respondent's part evident to us.Issues and merits[18] Hum's proposed grounds of appeal are, first, that the Judge was not referred toan earlier version of the lease, which was relevant to the interpretation of the rentreview provisions of the lease at issue in the proceeding. Secondly, that the Judge didnot have jurisdiction to order that the lease be automatically cancelled if Hum failedto meet any future payment. Thirdly, that the Judge erred in finding that GST waspayable on the rent under the lease.[19] The probative force of the first point, even if admissible at this juncture, isobscure. We think Mr Parmenter is right on the second point: Brewer J's ordersgranted relief against cancellation conditionally under s 256 of the Property Law Act2007. The condition failing, the cancellation was confirmed. No further hearing wasrequired. The GST point was not taken before Brewer J, as it should have been: atenant must muster its whole argument in defending default; it cannot make its contestby degrees. The terms of the Judge's order (a) above at [3] are clear: GST is payablein addition to the $120,000 rent. These grounds, individually and collectively, are notstrong. However, we do not assess them as being clearly hopeless.Conclusion[20] But for delay, Hum would be entitled as of right to mount this appeal, providedit paid the requisite security for costs. The interests of justice favour grant of extensionin such a case unless there is substantial prejudice or the appeal is clearly hopeless.Neither is really the case here.[21] In this case stays have been sought and (except for a brief period) denied. Styloholds an unstayed judgment entitling cancellation. Hum cannot use an indulgence bythis Court to allow it to institute its appeal out of time as a basis for a de facto stay.We will grant the present application, but on terms to ensure that does not occur.Result[22] The application for extension of time to appeal is granted, subject to thefollowing conditions: (a) Hum is to make payment to Stylo of the arrears sum of$92,925.24 within fourteen days; and (b) Hum is to prosecute its appeal withexpedition; the appeal must be instituted within fourteen days and will then be placedon the fast track.[23] We make no order for costs.Solicitors:Winston Wang & Associates, Auckland for Respondent