DE MEYER & SLAVICH v INSIGHT LEGAL LIMITED & ORS [2023] NZCA 82

DE MEYER & SLAVICH v INSIGHT LEGAL LIMITED & ORS [2023] NZCA 82 [28 March 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA358/2022[2023] NZCA 82BETWEEN KIRSTY ALICE DE MEYER ANDJOHN KENNETH SLAVICHApplicantsAND INSIGHT LEGAL LIMITEDFirst RespondentNIC SLAVICH LIMITEDSecond RespondentPETER STEVEN SLAVICHThird RespondentANTHONY NICOLAS SLAVICH ANDPETER STEVEN SLAVICH ASTRUSTEES OF THE ESTATE OFNICHOLAS SLAVICHFourth RespondentsFRANA VAN HELLEMONDFifth RespondentMARICA SLAVICHSixth RespondentNICHOLAS SLAVICHSeventh RespondentSLAVICH PROPERTIES LIMITEDEight RespondentCourt: Cooper P and Brown JCounsel: K A de Meyer and J K Slavich in PersonJ Long for First RespondentNo appearance for Second, Fourth and Eighth RespondentsT M Braun for Third, Fifth, Sixth and Seventh RespondentsJudgment:(On the papers)28 March 2023 at 11.00 amJUDGMENT OF THE COURTA The application seeking an extension of time in which to appeal from theHigh Court judgment is declined.B The applicants must pay one set of costs to the third, fifth, sixth and seventhrespondents calculated for an interlocutory application in band A, togetherwith usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Cooper P)[1] This is an application for an extension of time in which to appeal a decision ofthe High Court.1 The application is opposed by the third, fifth, sixth and seventhrespondents. These parties were conveniently referred to as the "participatingdefendants" in the High Court, to distinguish them from other defendants who did notparticipate in the proceeding but reserved their rights.Background[2] The facts are drawn from the High Court judgment. In 2016, Nic Slavich Ltd(the second respondent) sold a farm. The proceeds of sale were held in a trust accountoperated by Insight Legal Ltd (Insight), the first respondent. The applicants,Ms Kirsty de Meyer and Mr John Slavich, together with the third to eighth respondentshave a beneficial interest in the proceeds of sale.[3] However, issues have arisen about Nic Slavich Ltd's accounts. The third, fifth,sixth and seventh respondents (the participating defendants) were concerned about thetreatment of related party loans. In response to a request they made, Mr Graham1 Insight Legal Ltd v Slavich [2022] NZHC 1050 [High Court judgment].O'Brien, a principal in Insight, gave an undertaking on 12 May 2017 to hold the fundson trust and not to disburse them except by agreement or pursuant to a court order.[4] Mr O'Brien's undertaking was a solicitor's undertaking, initially in thefollowing terms:As requested and acting on instructions, I undertake that the net funds fromthe two transactions will be held undisbursed in this firm's trust accountpending resolution of the issues between the shareholders whether by Courtorder or agreement.[5] Following correspondence between the solicitors for the parties, Mr O'Briengave a further undertaking as follows:I personally undertake that I will hold funds on [sic] the amount of $2,162,000in my trust account until our respective clients (or the parties to interpartyissues) agree to its disbursement or a Court directs me to release those funds.[6] Of that amount, $1,515,614.09 was subsequently distributed to the parties byagreement. Mr O'Brien swore an affidavit for the hearing in the High Court in whichhe said that the current balance held in the Insight trust account was $716,505.83.2[7] The High Court proceeding was commenced by Insight and Nic Slavich Ltd.The statement of claim asserted that the undertaking given on 12 May 2017 includedan implied term that the parties would use their best endeavours to resolve the issuesin dispute in a timely manner. It was said that the participating defendants had notcomplied with the implied term. The relief sought included an order that Insight bereleased from its undertaking, and an order that the parties be required to engage inalternative dispute resolution.[8] The participating defendants served a brief of evidence of a Mr Thoms,directed towards refuting the allegation that the participating defendants had not usedtheir best endeavours to resolve the issues in dispute in a timely manner. Upon receiptof this brief, Insight and Nic Slavich Ltd gave notice that they no longer relied on thepleading that the participating defendants had not used their best endeavours to resolvethe disputes in a timely manner. At the outset of the hearing, Edwards J granted leave2 High Court judgment, above n 1, at [8].to delete that allegation in the statement of claim.3 Insight also elected not to pursueits claim that the parties be required to engage in alternative dispute resolution.[9] The only issue arising out of the pleadings that remained alive before the Judgewas whether Insight should be released from its undertaking so it did not have tocontinue to hold the funds.4[10] The Judge considered that the operative undertaking was the secondundertaking, which she found had superseded the first.5 She found that there wasnothing in the wording of the undertaking to suggest that it was subject to an impliedterm, and this was not a case where the undertaking lacked a "timeframe forperformance".6 This, because the undertaking was to hold the sums pendingagreement between the parties, or a court direction as to their release. There was noreason to add a further gloss on the plain meaning of the words of the undertaking.7[11] Another argument pursued by Insight was that it should be released from itsundertaking because it was unnecessary for it to retain the funds, so long as they wereretained on the same terms as currently applied: another stakeholder could hold thefunds. However, nothing had been done to identify or seek the consent of anotherstakeholder, nor had anything been produced in support of a proposition that the Courtcould order the funds to be paid into Court. The Judge held open the possibility thata different stakeholder might be appointed in the future, if there was agreement as towho that should be and on what terms the funds should be held. But for the present,there was no reason to disturb the status quo.8[12] For these reasons and others we need not discuss, the Judge was not satisfiedthat Insight should be released from its undertaking and dismissed the proceeding in ajudgment dated 17 May 2022.3 At [12].4 At [20].5 At [27].6 At [28]–[29].7 At [29].8 At [35].Recall application[13] The applicants applied to recall the High Court judgment. They did so on thebasis that the Judge had referred to the possibility of liquidation of the seventhdefendant (Slavich Properties Ltd) if the alleged debt owed to it by Nic Slavich Ltdwas not paid. It was said that the reference to Slavich Properties Ltd was an error.[14] In a judgment given on 27 June 2022, Edwards J did not accept there was anybasis for recall. She evidently accepted that the reference to Slavich Properties Ltdwas incorrect, but she did not consider this gave rise to a "very special reason"requiring the judgment to be recalled.9 She said:10As I made clear at [20] of the judgment, the only issue rising out of thepleadings was whether Insight Legal Ltd should be released from itsundertaking so that it (as opposed to any other party) did not have to hold thefunds any longer. That issue was not the same as an order directing that thefunds be repaid to [Nic Slavich Ltd]. In addition, an order requiring the partiesto attend arbitration was not an order seeking to enforce an agreement toarbitrate and that relief was not pursued at the hearing.If Ms de Meyer and Mr John Slavich disagree with my characterisation of theissues in the proceeding, then their remedy is an appeal. The application fallsshort of the threshold required for recall and accordingly the application mustbe declined.Appeal[15] On 15 July 2022 the applicants filed an application under r 29A of the Court ofAppeal (Civil) Rules 2005 for an extension of time to appeal against the High Courtjudgment. In that setting Mr John Slavich applied for a waiver of the filing fee and,when that was declined by the Registrar, applied for a review of the Registrar'sdecision.[16] In a judgment delivered on 18 October 2022, Brown J declined the applicationfor review.119 Insight Legal Ltd v Slavich [2022] NZHC 1491 [High Court recall judgment] at [3]–[5], referringto the third category of cases where recall maybe allowed as explained in Horowhenua County vNash (No 2) [1968] NZLR 632 (SC) at 633.10 High Court recall judgment, above n 9, at [6]–[7].11 De Meyer v Insight Legal Ltd [2022] NZCA 486.[17] One of the arguments raised in support of the application for review was thatEdwards J had failed to comply with procedural directions made at an earlier stage byKatz J (then in the High Court). Mr John Slavich claimed that Katz J had effectivelydirected that Ms de Meyer and himself be given an opportunity to file evidence toaddress matters which were relevant to arbitration. He complained that Edwards J hadfailed "to follow directions given by Katz J".[18] In dealing with this issue on the application for review of the Registrar'sdecision, Brown J wrote:12Mr Slavich's complaint is misconceived. The issues for determination at ahearing are governed by the pleadings. Insight, apparently for sound reasons,abandoned its request for relief of a reference to arbitration. As the passagesquoted above record, Edwards J appropriately did not address that issuefurther. In doing so the Judge was not constrained by any interlocutorydirections given by another Judge prior to the hearing.Evaluation[19] The application now before the Court is for an extension of time in which toappeal the High Court judgment.13 The question whether it is appropriate to extendthe time for appealing must be approached on the basis set out by the Supreme Courtin Almond v Read.14[20] In accordance with that judgment, the Court considers:(a) the length of the delay;(b) the reasons for the delay;(c) the conduct of the parties, particularly of the applicant;(d) any prejudice or hardship to the respondent; and12 At [14].13 An application has also been made to extend the time for filing an appeal against the recalljudgment.14 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].(e) the significance of the issues raised by the proposed appeal, both to theparties and more generally.[21] The Supreme Court held that the merits of the proposed appeal will not"generally" be relevant in a case where there has been an insignificant delayattributable to a legal advisor's error and the respondents have suffered no prejudicebeyond the fact of an appeal.15 However, the Supreme Court did contemplate that anextension of time might be refused based on a lack of merit in cases where it can besaid that the appeal is clearly hopeless. The Court referred to cases where, on factswhich are unchallenged, the appeal could not possibly succeed, and where the lack ofmerit is readily apparent.16[22] In the present case the applicants explain the delay on the basis that they werewaiting to hear the result of their application for recall of the High Court judgment.Ostensibly, the application for recall was based upon the Judge's reference to thewrong company as facing liquidation. The Judge declined the application, holdingthat the issue raised did not justify recall and emphasising that the only issue arisingout of the pleadings by the time of the hearing was whether Insight should be releasedfrom its undertaking so that it did not have to hold the funds any longer. In thecircumstances, relying on the application for recall to justify the delay is tenuous.But the delay of 21 working days is not significant and there does not appear to be anyprejudice other than the fact of an appeal.[23] However, we consider the present case is one of those in which the proposedappeal's lack of merit is so clear that an extension of time to file the appeal should notbe granted. The Judge dealt with the only issue that remained live on the pleadings atthe substantive hearing. She decided, contrary to the contention of Insight, that thetime had not yet arrived when it was appropriate for that party to be released from theundertaking given by Mr O'Brien.[24] The applicants apparently wish to pursue on appeal the argument that, inaccordance with the interlocutory minute of Katz J, they should have been allowed to15 At [39(b)].16 At [39(c)].pursue the issue of an order requiring arbitration. But Insight abandoned thatcontention at the hearing and no other party (including the present applicants) hadraised it in a pleading.[25] In circumstances where the Judge has dealt with the only live issue arising onthe pleadings, and in doing so has dismissed the claim to which the present applicantswere defendants, there is demonstrably no merit in the proposed appeal.Result[26] The application seeking an extension of time in which to appeal fromthe High Court judgment is declined.[27] The applicants must pay one set of costs to the third, fifth, sixth and seventhrespondents calculated for an interlocutory application in band A, together with usualdisbursements.Solicitors:Insight Legal, Warkworth for First RespondentBraun Bond & Lomas Ltd, Hamilton for Third, Fifth, Sixth and Seventh Respondents